Admiralty – Jurisdiction – Venue – Ship Repair Payment

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A Norfolk U.S. District Court says the Eastern District of Virginia is a proper venue for this action by plaintiff shipyard against the City of Key West, Florida, seeking payment of over $1 million for repair work performed on the U.S.A.F. Hoyt S. Vandenberg, and the shipyard has stated a claim for a constructive trust on the city’s tax revenues and project revenue.

The question raised by defendant Key West is whether In re Louisville Underwriters, 134 U.S. 488 (1890), holds that admiralty venue is proper wherever a district court has personal jurisdiction, or only where the defendant may be served with process. Key West, taking the latter position, claims because it could not have been served with process within the territorial boundaries of the Eastern District of Virginia, this is not the proper venue for the action.

Key West’s argument essentially makes the court’s ability to entertain an admiralty action dependent on the rules governing service of process. Such a posture misconstrues the relationship between service of process, personal jurisdiction and venue that exists today. Service of process requirements do not determine whether venue is appropriate, and In re Louisville should not be construed to so hold.

The court concludes that, in admiralty, venue is appropriate where there is personal jurisdiction over the defendant. In this action, Key West has conceded that its contacts with Virginia are sufficient to justify service of process under the Virginia long-arm statute and to fulfill the requirements of constitutional due process. Venue is proper in this district, and Key West’s motion to dismiss or, in the alternative, transfer, is denied.

The court denies defendant’s motion to dismiss plaintiff shipyard’s count V seeking a constructive trust on Key West’s tax revenues, project revenue or other economic benefits. The negotiation of the underlying contract and the performance of the repair work on the ship took place in Virginia. The court will apply Virginia law in determining whether plaintiff has stated a claim. Here, the shipyard alleges constructive fraud, and it has alleged facts sufficient to support each of the elements of constructive fraud. Key West’s assertion that the benefits it purportedly received from the alleged constructive fraud have not been traced to the funds on which the shipyard seeks a constructive trust is a factual matter not to be decided on a Rule 12(b)(6) motion.

Defense motions denied.

Colonna’s Shipyard Inc. v. The City of Key West, Fla. (Davis, J.) No. 2:10cv63, Aug. 27, 2010; USDC at Norfolk, Va.; John D. Padgett for plaintiff; Charles B. Lustig for defendant. VLW 010-3-453, 14 pp.