World Fuel Services, Inc. v. SE Shipping Lines Pte. Ltd. et al
Filing
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ORDER & REASONS: IT IS ORDERED plas' 49 Motion for Summary Judgment is GRANTED except with respect to quantum as there are material questions of fact at issue in that regard; IT IS FURTHER ORDERED that plas' 55 Motion to Dismiss, or alt ernatively, for Summary Judgment Against, SE Shipping Line PTE Ltd. Counterclaim and Defenses is DENIED with respect to striking the Answer and Counterclaim, GRANTED with respect to the counterclaims brought by SESL and MOOT as to defenses alleged by SESL. Signed by Judge Stanwood R. Duval, Jr on 11/8/2011. (rll, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
WORLD FUEL SERVICES, INC.
VERSUS
CIVIL ACTION
NO. 10-4605
SE SHIPPING LINES PTE LTD.
SECTION “K”(3)
ORDER AND REASONS
Before the Court are World Fuel Services’ Motion for Summary Judgment (Doc. 49) and
World Fuel Services’ Motion to Dismiss, or Alternatively, for Summary Judgment Against, SE
Shipping Lines PTD LTDs Counterclaim and Defenses. (Doc. 55). Having reviewed the
pleadings, memoranda and the relevant law, the Court finds that the defenses of waiver,
equitable estoppel, and accord and satisfaction are unavailable to defendant; however, there are
material question of fact concerning the issue of quantum precluding the entry of judgment in
that regard.
Background
SE Shipping Lines PTE LTD (“SESL”) and World Fuel Services, Inc. “World Fuel”
entered into agreements for the sale and purchase of bunkers for use on ships operated by SESL
and agreed that World Fuel’s General Terms and Conditions controlled those agreements.
(Statement of Undisputed Material Facts No. 1, Doc. 49-2) (hereafter “SOF”). A series of
deliveries of fuel were made to SESL between at least March, 2009 and August, 2010. The dates
of deliveries and the payment due dates are undisputed. (SOF No. 2). Under the General Terms
and Conditions payment for bunker purchases were required to be made in full on or before the
due date set forth in the invoice.
Specifically, Paragraph 7 of the General Terms and Conditions concerns payment under
the contract, and subparagraph (c) provides for past due amounts to accrue interest and to be
subject to an administrative fee should the amounts at issue be more than15 days past due. In
addition, the relevant provision states:
All payments received from [SESL] after an invoice is overdue shall first be
applied to interest, legal collection costs and administrative fees incurred before
they will be applied to the principal amounts on a subsequent delivery. [SESL]
may not designate application of funds to a newer invoice so long as there are any
unpaid charges, interest, collection costs or administrative fees on a previous one.
This shall not be construed, however, as preventing [World Fuels’] option to
choose application of funds in instances where subsection (h) below shall apply.
Any waiver by [World Fuels] of interest charges or administrative fees on a
particular invoice shall not be construed as a waiver by [World Fuels] of its
right to impose such charges on subsequent deliveries.
(Doc. 54-1, Exh. 4, p. 17 of 50, at 21) (emphasis added). Subparagraph (h) also provides:
In the event that more than one invoice is past due at the same time, [World
Fuels] shall be entitled, at is sole discretion, to specify the particular invoice to
which any subsequent payments shall be applied.
Id.
Paragraph 15 entitled “Additional Provisions” states at subparagraph (b):
No waiver of any of the provisions of this Agreement shall be effective unless it
is in writing and signed by the party against whom it is asserted, and any such
waiver shall only be applicable to the specific instance to which it relates and
shall not be deemed to be a continuing or future waiver of any breach.
Id. at 26 (emphasis added).1
Thus, for a period of time, SESL paid for bunkers supplied after the stated due date set
out on the corresponding invoices and did not pay interest on those amounts. (SOF No. 6;
1
Paragraph 17 provides that “The General Terms and each Transaction shall be governed by the General
Maritime Law of the United States and, in the event that the General Maritime Law of the United States is silent on
the disputed issue, the law of the state of Florida, without reference to any conflict of laws rules which may result in
the application of the laws of another jurisdiction.” (Doc. 54-1, p. 28 of 50).
2
Defendant’s Response to Plaintiff’s Statement of Undisputed Material Facts No. 6 (“RSOF”)).
As characterized by SESL, World Fuel “did not seem to mind.” Apparently on a number of
occasions, the Singapore representative of World Fuel “explained”2 that interest invoices were
generated automatically by the World Fuel billing system and could in fact be ignored.
(Declaration of Gaurav Bansal, CEO of SESL, Doc.. 54-1, Exh. 1, ¶5). Furthermore, SESL was
never invoiced for administrative fees. Id. at ¶ 6.
By August of 2010, the issue of interest payments came to a head. Kevin Bryant, a VicePresident with World Fuel, apparently met with principals of SESL and explained that by virtue
of the late payments, World Fuel had incurred financing costs for the delays totaling latepayment interest in the amount of $85,592.43. (Doc. 54-1, Exhibit 3, e-mail correspondence
dated 17 August 2010). Three alternative resolutions to this dilemma were offered. Id. None
was implemented by SESL. World Fuels then apparently visited SESL’s offices again on
September 28, 2010. At that time, its representative presented SESL with a copy of a statement
of account with unpaid and outstanding invoices for a total of $106,219.03. World Fuels sought
immediate payment of that amount by December 9, 2010 and warned that failure to do so would
result in World Fuels beginning legal collections actions. (Doc. 49-5, Page 1 of 2, E-mail dated
3 December 2010 from Jos Heijmen, Senior Vice-President Risk Management of World Fuel
Services).
On December 7, 2010, Capt. Alay K. Sharma of SESL responded stating that nothing
was due. He cited Paragraph 7 of the General Terms and Conditions. Based on SESL’s
interpretation of the contract, he contended that any claim or potential claim by World Fuel had
2
This explanation was apparently verbal as the Court is unaware of any written proof of a waiver of interest
payments.
3
been waived because World Fuel had never even suggested that it wished to apply any overdue
sum to the principal mount on any subsequent invoice as provided in Paragraph 7(h). (Doc. 54-1,
Page 32 of 50, Exh. 6, e-mail dated 7 December 2010 from Operations-SE Shipping to Jos
Heijmen). Apparently by e-mail of December 13, 2010, Jos Heijmen for World Fuels gave
SESL one last opportunity to pay $106,219.00 by the 14th of December to avoid legal collections
action. (Doc. 54-1, p. 34, Exh. 7). SESL refused and with that, the instant suit was filed by
World Fuels on December 22, 2010.
World Fuels now contends that by using the payment allocation formula as set forth in
the General Terms and Conditions and applying all SESL payments to outstanding interest,
administrative fees and invoices, SESL is indebted to World Fuels in the amount of $773,494.44
as of December 13, 2010. SESL argues that this “ex post facto” application of the terms of the
contract is improper and that the legal doctrines of waiver, equitable estoppel, and/or accord and
satisfaction at a minimum preclude any recovery by WFS. SESL also relies on the Court’s
decision World Fuel Serv., Inc v. MAGDALENA GREEN M/V, E.D.LA. C.A. No. 11-452, Doc.
34 for the proposition that it does not owe any amount to World Fuels.
In the MAGDALENA GREEN matter, which was filed on February 23, 2011, the issue
presented was whether a valid maritime lien on the M/V MAGDALENA GREEN existed by
virtue of bunkers that had been provided by World Fuels to that vessel. A specific e-mail was
presented therein which indicated unequivocally that World Fuels had considered that invoice
satisfied. Indeed, in response to a request for reconfirmation of this, World Fuels wrote, “Thanks
- confirmed all paid.” (Doc 14, Ex. C, C1-C2). WFS then generated a receipt confirming the
payment, which detailed the total paid to be $241,520.24, with $74,180.56 for the M/V UTA and
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$167.339.68 for the M/V MAGDALENA GREEN. (Doc. 14, Ex. D) in C.A. No.11-452. Based
on that writing the Court granted the time charterer’s motion to vacate the arrest of the M/V
MAGDALENA GREEN. The Court notes that the third page of Exhibit “D” in the
MAGDALENA case consists of another invoice (Doc. 14-5 p. 3 of 3) which recognizes that
$167,309.68 was received on September 16, 2010 and that World Fuel charged SESL’s account
for 11 days of interest at 2.00% (05-SEP-10 to 16-SEP-10) per month pro rata. Nonetheless, all
that was decided by this Court in that case at the time was that World Fuels had relinquished any
maritime lien on the vessel. The decision did not address the contractual rights vis-s-vis World
Fuel and SESL.
With that as background, the Court will now turn to the legal issues at hand.
Standard for Motion for Summary Judgment
Rule 56(a) of the Federal Rules of Civil Procedure provides that summary judgment
should be granted "if the movant shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law." The party moving for summary
judgment bears the initial responsibility of informing the district court of the basis for its motion,
and identifying those portions of the record "which it believes demonstrate the absence of a
genuine issue of material fact." Stults v. Conoco, 76 F.3d 651 (5th Cir.1996), citing Skotak v.
Tenneco Resins, Inc., 953 F.2d 909, 912-13 (5th Cir.), quoting Celotex Corp. v. Catrett, 477
U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). When the moving party has
carried its burden under Rule 56, its opponent must do more than simply show that there is some
metaphysical doubt as to the material facts. The nonmoving party must come forward with
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"specific facts showing that there is a genuine issue for trial." Matsushita Elec. Industrial Co. v.
Zenith Radio Corp., 475 U.S. 574, 588, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Tubacex,
Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir.1995).
“A genuine issue of material fact exists ‘if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.’ ” Pylant v. Hartford Life and Accident
Insurance Company, 497 F.3d 536, 538 (5th Cir. 2007) quoting Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment evidence must
be “viewed in the light most favorable to the nonmovant, with all factual inferences made in the
nonmovant’s favor.” Bazan ex rel Bazan v. Hildago County, 246 F.3d 481, 489 (5th Cir. 2001),
citing Anderson v. Liberty Lobby, Inc., 477 U.S. at 255, 106 S.Ct. at 2513.
[C]onclusory statements, speculation, and unsubstantiated assertions cannot
defeat a motion for summary judgment. The Court has no duty to search the
record for material fact issues. Rather, the party opposing the summary judgment
is required to identify specific evidence in the record and to articulate precisely
how this evidence supports his claim.
RSR Corporation v. International Insurance Company, 612 F.3rd 851,857 (5th Cir. 2010).3
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In its opposition to World Fuel’s motion, SESL contends that the motion is premature and that the Court
should defer ruling on it as provided by Fed. R. Civ. P. 56(d); however, the Court finds no merit in this assertion. As
discussed, infra, the terms of the contract at issue are clear.
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Analysis
A.
World Fuel Services’ Motion for Summary Judgment
In the case at bar, World Fuel maintains that based on the contractual provisions of the
General Terms and Conditions outlined above, that SESL owes World Fuels $773,494.44, plus
all costs and expenses, including attorneys fees, associated with World Fuels collection efforts
against SESL. In response, SESL contends that under the legal doctrines of waiver, equitable
estoppel and accord and satisfaction, there are issues of material fact that preclude the relief
sought by motion.
Waiver
SESL argues that under Florida law,4 World Fuels has waived its right to the additional
payments it seeks. “Waiver is ‘the intentional relinquishment of a known right.’” WSG W. Palm
Beach Dev. LLC v. Blank, 990 So.2d 708, 715 (Fla.4th DCA 2008) (citation omitted).
Furthermore, “it is axiomatic that . . . [a] party may waive any rights to which he or she is legally
entitled, by actions or conduct warranting an inference that a known right has been
relinquished.’” Sacred Heart Health Systems, Inc. v. Humana Military Healthcare Services, Inc.,
601 F.3d 1159, 1181 (5th Cir. 2010). However, the common law rule of wavier can be modified
by contract. Id. at 1182. As noted in Sacred Heart Health Systems by the United States Court of
Appeals for the Fifth Circuit:
“Florida courts have consistently enforced [anti-waiver] clauses,” Nat’l Home
Communities, L.L.C. v. Friends of Sunshine Key, Inc., 874 So.2d 631, 634
(Fla.Dist.Ct.App.2004), . . . . In Rybovich Boat Works, Inc. v. Atkins, 587 So.2d
519 (Fla.Dist.Ct.App.1991), for example, the court strictly enforced an anti4
SESL contends that waiver has been fully developed under Florida law, but not so with respect to the
United States General Maritime Law. It appears that World Fuels has for the most part relied on Florida law as well.
Thus, the Court applies Florida law on waiver for purposes of this issue.
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waiver clause providing that “no waiver of any rights or obligations hereunder
shall be deemed to have occurred unless in writing signed by the party against
whom such waiver is asserted and no waiver shall be deemed a wavier of any
other or subsequent right or obligation;” the court held that the ‘buyer’s
affirmative defenses of waiver and estoppel were defeated as a matter of law by
the provisions of the contract itself.’Id. at 522.
Id. at 1182-83.
Clearly, the provisions of the General Terms and Conditions contemplate past due
amounts to accrue interest and to be subject to an administrative fee if an amount is more than 15
days past due. (Doc. 54-1, Exh. 4, ¶ 7(c) , p. 17 of 50, at 21). The contract also provides that
payments received after an invoice is overdue “shall be” applied to interest, legal collection costs
and administrative fees before being applied to principal amounts on a subsequent delivery. In
addition, as noted above, World Fuel can choose to which invoice it applies funds where more
than one invoice is past due.
The most salient of the contract provisions are the anti-waiver clauses contained therein.
Subparagraph 7(c) states “Any waiver by [World Fuel] of interest charges or administrative fees
on a particular invoice shall not be construed as a wavier by [World Fuels] of its right to impose
such charges on subsequent deliveries.” (Doc. 54-1 p. 21 of 50). Moreover, Paragraph 15(b)
provides specifically, “No waiver of any of the provisions of this Agreement shall be effective
unless it is in writing and signed by the party against whom it is asserted, and any such waiver
shall only be applicable to the specific instance to which it relates and shall not be deemed to be
a continuing or future waiver of any breach.” (Doc. 54-1, P. 26 of 50). This provision is nearly
identical to that found in Sacred Heart Health Systems. Thus, clearly, from the contractual
language, and under Florida law, this anti-waiver clause must be enforced. SESL’s contentions
are without merit in this regard as the Court has not found any specific written and signed waiver
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with regard to any interest fees including that concerning the M/V MAGDALENA GREEN
considering that the e-mail stating “Paid in Full” was accompanied by a new invoice for interest
due.
Equitable Estoppel
The United States General Maritime Law recognizes the doctrine of equitable estoppel
which is based on “ a notion of fair dealing and good conscience. It is designed to aid the law in
the administration of justice where without its aid injustice might result.” Gibbs ex rel. Gibbs v.
Carnival Cruise Lines, 314 F.3d 125, 133 (3rd Cir. 2002) citing Marine Transp. Svcs. Seas-Barge
Group, Inc. v. Python High Perf. Marine Corp., 16 F.3d 1133, 1138 (11th Cir. 1994) (internal
quotation omitted). As stated by Justice Breyer in Oxford Shipping Co., Ltd. v. New Hampshire
Trading Corp., 697 F.2d 1, 4 (1st Cir. 1982) and cited in Gibbs:
Traditionally, the doctrine of equitable estoppel operates to preclude a party who
has made representations of fact through his words or conduct from asserting
rights which might perhaps have otherwise existed as against another person, who
has in good faith relied upon such conduct, and has been led thereby to change his
position for the worse, and who on his part acquired some corresponding right.
Gibbs, 314 F.3d at 133. As such, three elements must be satisfied for the doctrine to apply:
(1) a representation of fact by one party contrary to a later asserted position; (2) good faith
reliance by another party upon the representation; and (3) a detrimental change in position by the
later party due to the reliance. Marine Transp. Svcs., 16 F.3d at 1139.5
SESL maintains that World Fuel changed its position with regard to SESL’s liability for
interest charges and administrative costs because World Fuel applied payments to the actual
costs of the bunkers initially and has since reversed course applying the amounts first to interest
5
These elements as defined under maritime law are similar to that of Florida’s equitable estoppel law. Id.at
n.8; Eclipse Medical, Inc. v. American Hydro-Surgical Instruments, Inc., 262 F.Supp.2d 1334 (S.D. Fla. 1999)
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and administrative costs where these had “never been mentioned.” Next SESL contends that it
relied on the alleged representations that World Fuels would not pursue a claim for interest
charges and administrative costs. SESL maintains had it known that World Fuels would take
such a position, it would not have continued doing business with it satisfying the second
element. Finally, SESL argues that it suffered a change in position because World Fuel’s course
of dealing lulled SESL into believing that World Fuels would not claim interest and
administrative cases and SESL “acted accordingly.”
SESL’s position ignores the clear, unambiguous terms of the contract. For any waiver of
any of the provision of the General Terms and Conditions to be effective, such waiver was
required to signed, in this instance by World Fuels. In addition, any such written waiver was
made applicable only to the specific instance to which it related. The contract specifically states
that any waiver “shall not be deemed to be a continuing or future waiver of any breach.”
(Doc. 54-1, Exh. 4, p. 17 of 50, at 26, ¶ 15(b)). Thus, SESL could not reasonably rely on any
verbal “waiver”, and it was on notice that even if it had received a written waiver, of which this
Court is unaware, it would have pertained only to that particular invoice. Thus, the doctrine of
equitable estoppel is unavailable to SESL.
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Accord and Satisfaction
Relying on Florida law,6 defendant also contends that through the operation of accord
and satisfaction, World Fuels has no claim. “An accord and satisfaction results when: (1) the
parties mutually intend to effect a settlement of an existing dispute by entering into a
superseding agreement; and (2) there is actual performance in accordance with the new
agreement. Compliance with the new agreement discharges the prior obligations.” Martinez v.
South Bayshore Towe, L.L.L.P.,. 979 So.2d 1023 (Fla. App. 3rd Dist. 2008). Again, the Court
finds that the clear, unambiguous terms of the contract were not overridden. Clearly, there was
no intent on the part of World Fuels to come within the construct of accord and satisfaction.
Waiver required specific written, signed action on the part of World Fuels as to each and every
invoice that SESL contends was “satisfied”. Furthermore, SESL’s continued reference to the
M/V MAGDALENA is misplaced since World Fuels presented it with a bill for interest
contemporaneously with the confirmation of the payment in that instance. (Doc. 14, Ex. D) in
C.A. No.11-452.
Conclusion
Thus, the Court finds that none of the defenses offered by SESL–waiver, equitable
estoppel or accord and satisfaction–is available to it. However, the Court finds that as to
quantum, there are material questions of fact that preclude a decision and World Fuel’s motion
for summary judgment in that respect shall be denied.
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Neither party has provided the Court with any briefing concerning accord and satisfaction under the
general maritime law. As such, the Court will apply Florida law as discussed above in this instance.
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B.
World Fuel Services’ Motion to Dismiss, or alternatively, for Summary Judgment
Against, SE Shipping Line PTE Ltd. Counterclaim and Defenses
World Fuel also has filed a Motion to Dismiss, or Alternatively, for Summary Judgment
seeking the dismissal of SESL’s counterclaim and its defenses. Considering the foregoing
analysis, this motion is rendered moot for the most part as a result of the Court’s ruling
concerning World Fuel Services’ Motion for Summary Judgment (Doc. 49). The Court will not
strike SESL’s answer at this stage of the proceedings. Clearly, no prejudice has been suffered by
World Fuel and such action would be overly draconian in light of the posture of the case. As to
the defenses raised in SESL’s Answer and Counterclaim, in light of the Court’s findings with
respect to the validity of SESL’s claims, these defenses have been rejected. Specifically as to the
Eighth Defense concerning ownership of the bunkers and the Ninth Defense concerning the issue
of whether SESL was found within this district, the Court has previously rejected both of these
contentions when the Court denied SESL’s Motion to Vacate and SESL’s Motion for
Reconsideration.
As to the counterclaims lodged, SESL’s counterclaim for waiver has been rejected by the
Court in this ruling and for the same reasons assigned herein, World Fuels’ motion for summary
judgment will be granted. As to SESL’s claim for wrongful attachment, it fails as the Court’s
findings demonstrate that World Fuel did not act in bad faith, malice or gross negligence, as
required for such a cause of action to lie. Marastro Compania Naviera, S.A. v. Canadian
Maritime Carriers, Ltd., 959 F.2d 49 (5th Cir. 1992). Rather World Fuel acted as provided for
and agreed to by SESL under the provisions of the General Terms and Conditions that governs
the two parties’ transactions. Accordingly,
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IT IS ORDERED World Fuel Services’ Motion for Summary Judgment (Doc. 49) is
GRANTED except with respect to quantum as there are material questions of fact at issue in that
regard.
IT IS FURTHER ORDERED that World Fuel Services’ Motion to Dismiss, or
alternatively, for Summary Judgment Against, SE Shipping Line PTE Ltd. Counterclaim and
Defenses (Doc. 55) is DENIED with respect to striking the Answer and Counterclaim,
GRANTED with respect to the counterclaims brought by SESL and MOOT as to defenses
alleged by SESL.
New Orleans, Louisiana, this 8th day of November, 2011.
STANWOOD R. DUVAL, JR.
UNITED STATES DISTRICT COURT JUDGE
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