## Facts

- A Mexican company (TNT) owned the vessel M/V *Caballo Azteca*.
- A Dutch company (FHT), pursuing a claim against a different entity (OSA), caused the vessel to be arrested in Rotterdam as purported security, believing the vessel belonged to OSA.
- TNT alleged the arrest was wrongful because FHT did not reasonably investigate ownership and acted with reckless disregard of TNT’s rights.
- TNT claimed the arrest prevented performance of a charter requiring delivery of the vessel to Port Fourchon, Louisiana by March 15, 2006, causing alleged damages exceeding $10 million.
- The vessel remained under arrest for about six months before TNT first notified FHT of TNT’s ownership and requested release; FHT then promptly arranged to lift the arrest.
- More than a year after the arrest was lifted, TNT sued in the Southern District of New York and obtained an ex parte Rule B order attaching up to $10,220,000 of FHT’s property because FHT could not be found in the district.

## Issues

1. Whether a district court may reduce the amount of a Rule B maritime attachment under Supplemental Rule E(5)–(6) based on a realistic assessment of likely recoverable damages, including mitigation.
2. Whether reducing the attachment from $10,220,000 to $15,000 was an abuse of discretion.

## Decision

- The Second Circuit affirmed the order reducing the Rule B attachment to $15,000.
- The court held that Supplemental Rule E(5) and Rule E(6) authorize a district court to fix and reduce security when the attachment is excessive in relation to the claim fairly stated, including in light of mitigation.
- The court held the district court acted within its discretion in treating TNT’s six-month delay in contacting FHT as limiting recoverable damages and in finding TNT’s claimed losses largely speculative or overstated.

## Legal Principles

- Rule B provides maritime plaintiffs a means to obtain security when a defendant is not found within the district, but Rule E functions to prevent unfairly excessive restraints on a defendant’s property.
- Under Rule E(5), security must be set in an amount sufficient to cover the plaintiff’s claim “fairly stated,” with interest and costs; the court is not required to accept the plaintiff’s pleaded damages figure.
- Under Rule E(6), a court may reduce security for good cause, including when the attachment is excessive relative to a reasonable estimate of recoverable damages.
- In determining excessiveness, courts may consider limitations on recovery such as failure to mitigate damages and may discount speculative or unsupported consequential damages.
- Appellate review of a Rule E reduction is for abuse of discretion.

## Conclusion

The Second Circuit confirmed that maritime attachment security may be recalibrated under Supplemental Rule E to match a claim fairly stated, and that courts may reduce an attachment as excessive based on likely recoverable damages, including reductions attributable to the plaintiff’s failure to mitigate.


Transportes Navieros y Terrestres S.A. de C.V. v. Fairmount Heavy Transp. N.V., 572 F.3d 96 (2d Cir. 2009)