Cockett Marine Oil Limited v. Lion MV et al

Filing 43

ORDER granting 14 Motion to Vacate the arrest and attachment. Signed by Judge Martin L.C. Feldman on 5/12/2011. (cms, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
COCKETT MARINE OIL LIMITED

CIVIL ACTION

v.

NO. 11-464

M/V LION, her engines, tackle,
appurtenances, etc., in rem, and
CHARBONS ET FUELS UK, Ltd.,
CHARBONS & FUELS, SAS,
ELMAR SHIPPING CO., S.A., and
EVANDROS NAVIERA, in personam

SECTION "F"

ORDER AND REASONS
Before the Court is defendant Evandros Compania Naviera SA,
Panama’s motion to vacate the arrest and attachment of the M/V
LION.

For the reasons that follow, the motion is GRANTED.
Background
This admiralty and maritime case concerns a United Kingdom-

based global marine fuel supplier’s attempt to recover a debt
arising from the supply of fuel oil bunkers in Russia to a Greekflagged vessel, the M/V LION, which was owned by a Panamanian
company, managed by a Greek company, and chartered by a United
Kingdom-based company.
The M/V LION is an ocean-going bulk cargo carrier flying under
the flag of Greece; it is owned by Evandros Compania Naviera SA,
Panama, managed by Elmar Shipping Co. SA, and during the relevant
time, was chartered to Charbons Et Fuels UK Limited pursuant to a
charter party dated October 11, 2010. Charbons Et Fuels UK Limited
was obligated by the charter party to provide and pay for the fuel

1

for the vessel.
On January 18, 2011 Cockett Marine Oil Limited supplied bunker
fuel to the M/V LION in the port of Murmansk, Russia.

The

agreement between Cockett and Charbons Et Fuels SA for the sale and
delivery of the bunkers was subject to Cockett’s standard terms and
conditions;1 neither the vessel’s owner or manager was a party to
the fuel supply agreement. Cockett’s Standard Terms and Conditions
applicable to the sale of marine bunker fuels contains a liens
provision:
10.0 LIENS Where Product is supplied to a Vessel, in
addition to any other security, the Agreement is
entered into and Product is supplied upon the faith
and credit of the Vessel, it is agreed and
acknowledged that a lien over the Vessel is thereby
created for the Price of Product supplied and that
the Company in agreeing to deliver Product to the
Vessel does so relying upon the faith and credit of
the Vessel.
The Buyer, if not the owner of the
Vessel, hereby expressly warrants that he has the
authority of the owner to pledge the Vessel’s
credit as aforesaid and that he has given notice of
the provisions of this Clause to the owner. The
Company shall not be bound by any attempt by any
person or entity to restrict, limit or prohibit its
lien or liens attaching to a Vessel unless notice
in writing of the same is given to the Company
before it sends its Confirmation to the Buyer....
The Standard Terms and Conditions also contains a choice of law
provision, in which the contracting parties chose English law to
govern all disputes:
1

As such, according to Evandros, Evandros was not a
party to the sale agreement and had no notice of the bunker sale or
delivery for over a month after it occurred.
2

21.0 JURISDICTION The Agreement and all claims and
disputes arising under or in connection with the
Agreement shall be governed by English law and any
dispute arising out of or in connection with the
Agreement shall be subject to the exclusive
jurisdiction of the English Courts.
So however
that nothing in this Clause shall, in the event of
a breach of the Agreement by the Buyer, preclude
the Company from taking any such action as it shall
in its absolute discretion consider necessary, the
Company shall have the power to enforce a judgment
of the English Courts (whether or not subject to
appeal), safeguard and/or secure its claim under
the Agreement in any court or tribunal or any state
or country.
The invoice issued by Cockett to Charbons Et Fuels SA provides that
the $236,600 fuel cost must be paid within 30 days from the date of
delivery.

Cockett maintains that it has not been paid.

Upon learning that the M/V LION was in the Port of New
Orleans, on February 25, 2011, Cockett sued the M/V LION, in rem,
Charbons Et Fuels UK, Ltd., Charbons & Fuels, SAS, Elmar Shipping
Co. S.A., and Evandros Naviera, in personam.2

Cockett asserts an

in rem claim against the vessel, in which it seeks to enforce a
maritime lien for necessaries; Cockett also asserts in personam
claims for breach of contract or, alternatively, for conversion or

2

According to the allegations of the verified complaint:
Charbons Et Fuels UK Ltd. is a foreign corporation existing under
the laws of, and having its principal place of business located in,
the United Kingdom; Charbons & Fuels SAS is a foreign corporation
existing under the laws of, and having its principal place of
business located in, France; Elmar Shipping Co. S.A. is a foreign
corporation existing under the laws of, and having its principal
place of business located in, Greece; Evandros Naviera is a foreign
corporation existing under the laws of, and having its principal
place of business located in, Panama.
3

unjust enrichment against Evandros, Elmar, and Charbons.3

Along

with the verified complaint, Cockett also requested that the Court
issue an arrest warrant for the M/V LION. Based on the allegations
of the verified complaint and, pursuant to Rules B and C of the
Supplemental Rules for Certain Admiralty and Maritime Claims of the
Federal Rules of Civil Procedure, the Court issued an arrest
warrant that same day; a writ of foreign attachment also issued.
The U.S. Marshals then arrested the M/V LION; an order permitting
movement of the arrested vessel was issued the next day.

Evandros

posted security to obtain the release of the vessel; an order
granting the motion for leave to file the $325,000 release bond was
granted, and the M/V LION was released on March 2, 2011.
Evandros Compania Naviera SA, Panama, making a restricted
appearance under Supplemental Rule E(8) as owner and claimant of
the M/V LION and with full reservation of all rights and defenses,
now seeks to vacate the warrant of arrest and writ of attachment
issued on February 25, 2011 against the M/V LION on the grounds
that Cockett Marine Oil Limited does not possess a maritime lien
against the vessel under U.S. law, Russian law, or English law, and
has no claim in personam against Evandros, and is, therefore, not
entitled to proceed against the M/V LION in rem or in personam.4
3

Cockett filed a verified first supplemental and amending
complaint on March 17, 2011.
4

The parties dispute whether Elmar has made a Rule E(8)
restricted appearance sufficient to consider the motion to vacate
4

I.
Standard Applicable to Motion to Vacate
The special remedies and procedures available to admiralty and
maritime claimants are governed by the Supplemental Rules for
Admiralty or Maritime Claims, as part of the Federal Rules of Civil
Procedure.

Rule E(4)(f) of the Supplemental Rules for Admiralty

and Maritime Claims calls for a prompt, post-attachment and postarrest hearing in proceedings under Supplemental Rules B and C.5

to be pursued by Elmar as well. Because Elmar did not join in the
initial moving paper and has apparently not made a Rule E(8)
restricted appearance, the Court considers this motion to be
pursued by Evandros alone. Elmar must file its own papers adopting
Evandros’s arguments, if necessary.
5

Supplemental Rule B concerns the attachment and
garnishment procedure available in the context of in personam
actions:
(a) If a defendant is not found within
the district when a verified complaint praying
for
attachment
and
the
affidavit
required...are filed, a verified complaint may
contain a prayer for process to attach the
defendant’s tangible or intangible personal
property...in the hands of the garnishees
named in the process.
(b) The plaintiff or the plaintiff’s
attorney must sign and file with the complaint
an affidavit stating that...the defendant
cannot be found within the district.
The
court must review the complaint and affidavit
and, if the conditions of this Rule B appear
to exist, enter an order so stating and
authorizing
process
of
attachment
and
garnishment....
Fed.R.Civ.P.Supp.R. B. See also In re Murmansk Shipping Co., No.
00-2354, 2001 WL 699530, at *2 (E.D. La. June 18, 2001)(“[i]n
considering the propriety of an attachment, the court’s inquiry is
limited to an assessment of whether the underlying complaint
alleges an in personam action grounded in maritime law and whether
5

Pursuant

to

Supplemental

Rule

E(4)(f),

a

person

claiming

an

interest in property arrested or attached is entitled to a hearing
“at which the plaintiff shall be required to show why the arrest or
attachment should not be vacated or other relief granted consistent
with these rules.”

Fed.R.Civ.P.Supp.R. E(4)(f).

To carry its

burden, the arresting or attaching party must present sufficient
evidence

to

show

that

there

were

“reasonable

grounds”

for

attachment and that the arrest is supported by “probable cause.”
See Diesel Specialists, LLC v. M/V MOHAWK TRAVELER, No. 09-2843,
2009 WL 1036085, at *1 (E.D. La. April 17, 2009)(Engelhardt, J.);
see also In re Murmansk Shipping Co., No. 00-2354, 2001 WL 699530,

the attachment was necessary to effectuate jurisdiction”).
Supplemental Rule C, governing in rem actions, permits a
plaintiff to initiate an in rem action against a vessel to enforce
a maritime lien. See
Fed.R.Civ.P. Supp. R. C(1)(a) (further
providing that a party who may proceed in rem may also, or in the
alternative, proceed in personam against any person who may be
liable). Supplemental Rule C’s technical requirements include:
(2) Complaint. In an action in rem the complaint must:
(a) be verified;
(b) describe with reasonable particularity
the property that is the subject of the
action; and
(c) state that the property is within the
district or will be within the district
while the action is pending.
(3) Judicial Authorization and Process.
(a) Arrest Warrant.
(i) The court must review the complaint and
any supporting papers. If the conditions for
an in rem action appear to exist, the court
must issue an order directing the clerk to
issue a warrant for the arrest of the
vessel...
Fed.R.Civ.P. Supp.R. C.
6

at *2 (E.D. La. June 18, 2001)(Vance, J.).
If the Court determines that the arrest or seizure was
wrongful, damages may be recoverable: the burden is on the party
pursuing a claim for wrongful arrest to demonstrate that the
arresting

party

negligence.”

acted

with

“bad

faith,

malice,

or

gross

See Marastro Compania Naviero v. Canadien Maritime

Carriers, Ltd., 959 F.2d 49, 53 (5th Cir. 1992).
II.
A.

Rule C in rem arrest of the M/V LION

Evandros first contends that Cockett cannot show that the
vessel’s arrest was supported by probable cause; that is, because
Cockett does not have a maritime lien against the M/V LION, it is
therefore not entitled to proceed in rem against the vessel.

The

Court agrees.
A maritime lien is a special property right in a vessel that
gives the lien-holder priority over some claimants.

See Effjohn

Int’l Cruise Holdings, Inc. v. A&L Sales, Inc., 346 F.3d 552, 556
(5th Cir. 2003).

Because a maritime lien “arises in favor of the

creditor by operation of law”, it cannot be created by contract.
See id.; see also Bominflot, Inc. v. THE M/V HENRICH S, 465 F.3d
144, 147 (4th Cir. 2006)(“[a]dopted from civil law, maritime liens
are stricti juris and cannot be created by agreement between the
parties; instead, they arise by operation of law, often depending
on the nature and object of the contract”).

7

As the Fourth Circuit

Court of Appeals has observed: “Because maritime liens confer such
a powerful right, most nations–including England–limit or preclude
their application.”

Bominflot, 465 F.3d at 147.

With regard to

claims for necessaries, including bunkers, very few countries, such
as the United States and France, recognize a maritime lien.

See

Marine Oil Trading Ltd. v. Motor Tanker Paros, 287 F. Supp. 2d 638,
644-45 (E.D. Va. 2003).

Accordingly, whether Cockett is entitled

to a maritime lien against the M/V LION such that it can maintain
its Rule C claim, turns on which law controls: if U.S. law applies,
then Cockett likely could maintain a lien for necessaries;6 if
English law applies, however, then no such maritime lien exists for
necessaries and its Rule C claim fails.
Because Cockett’s Standard Terms and Conditions applicable to
its provision of necessaries to the M/V LION on behalf of Charbons
Et Fuels SA provides a jurisdiction clause that chooses English
6

The Commercial Instruments and Maritime Lien Act
(formerly known as the Federal Maritime Lien Act) provides:
A person providing necessaries to a vessel on
the order of the owner or a person authorized
by the owner–
(1) has a maritime lien on the vessel;
(2) may bring a civil action in rem to enforce
the lien; and
(3) is not required to allege or prove in the
action that credit was given to the vessel.
46 U.S.C. § 31342.
Evandros insists that, even if U.S. law applies, Cockett
could not maintain its Rule C claim because no lien would arise
here, where a foreign supplier of goods services a foreign-flagged
vessel in a foreign port.
The Court need not address this
assertion because Cockett chose English law to govern the
necessaries contract.
8

law, the Court need not indulge a choice of law analysis.7

While

it is clear that the parties to the contract for provision of
bunkers chose English law (and indeed that Cockett was the drafter
of the Standard Terms and Conditions making the selection of
English law), there is other language in the contract that requires
further analysis.
The final paragraph of Cockett’s Standard Terms and Conditions
provides that “[t]he Agreement and all claims and disputes arising
under or in connection with the Agreement shall be governed by
English law and any dispute...shall be subject to the exclusive
jurisdiction of the English Courts.”

This general choice of law

provision quite clearly chooses English law to govern disputes
arising out of Cockett’s provision of bunkers.

However, there’s

more to the Jurisdiction Clause: “So however that nothing in this
Clause shall, in the event of a breach of the Agreement by the
Buyer, preclude the Company from taking any such actions as it
shall in its absolute discretion consider necessary, the Company
shall

have

the

power

to

enforce

a

judgment

of

the

English

Courts..., safeguard and/or secure its claim under the Agreement in
any court or tribunal or any state or country.”

This portion of

the Jurisdiction Clause expands Cockett’s right to bring its claims
in a forum other than the English courts.
7

But it does not affect

The Court notes that both sides seem to agree, although
for different reasons, that a choice of law analysis is
unnecessary.
9

the choice of law provision. Cockett argues, however, that another
provision of its Standard Terms and Conditions does affect the
general choice of English law; the LIENS provision:
Where Product is supplied to a Vessel, in addition to any
other security, the Agreement is entered into and Product
is supplied upon the faith and credit of the Vessel, it
is agreed and acknowledged that a lien over the Vessel is
thereby created for the Price of Product supplied and
that the Company in agreeing to deliver Product to the
Vessel does so relying upon the faith and credit of the
Vessel.
The Buyer, if not the owner of the Vessel,
hereby expressly warrants that he has the authority of
the owner to pledge the Vessel’s credit as aforesaid and
that he has given notice of the provisions of this Clause
to the owner.
The Company shall not be bound by any
attempt by any person or entity to restrict, limit or
prohibit its lien or liens attaching to a Vessel unless
notice in writing of the same is given to the Company
before it sends its Confirmation to the Buyer....
To the extent that Cockett submits that this provision reserves the
right to obtain a lien on a vessel (as indeed it purports to do),
other courts have refused to permit the general lien language
(which itself cannot give rise to a maritime lien) to trump an
unqualified English choice of law provision. See Bominflot, Inc. v.
THE M/V HENRICH S, 465 F.3d 144 (4th Cir. 2006)(holding that English
law applied to seller’s claim of a maritime lien against vessel
that purchased fuel oil bunkers, noting that “[w]ere we to conclude
otherwise, we would allow [the plaintiff] to escape its own choice
of law clause through the ambiguity and sloppiness of other
[contractual] provisions”); see also Marine Oil Trading Ltd. v.
MOTOR

TANKER

PAROS,

287

F.

Supp.

2d

638,

644-45

(E.D.

Va.

2003)(analyzing similar contract terms, including a choice of
10

English

law,

and

noting

the

existence

of

a

separate

liens

provision, but holding that English law should apply to determining
the existence of a maritime lien including because ambiguity in a
contract is to be construed against the drafter and “there is no
language signaling an intent to invoke the specific maritime lien
law of a particular forum”); see also Marine Oil Trading Ltd. v.
M/V SEA CHARM, No. 02-2281, 2003 WL 292309, at *6 (E.D. La. Feb.
10, 2003)(Berrigan, J.)(granting summary judgment in favor of the
owner of the in rem defendant, noting that the contract for fuel
oil bunkers did not provide for an express modification respecting
choice of law); see also Ocean Marine Mut. Ins. Assoc. (Europe)
O.V. v. M/V LIA, No. 99-2515, 1999 WL 679671, at *3-4 (E.D. La.
Aug. 27, 1999)(Sear, J.)(vacating vessel arrest when confronted
with similar contractual language, noting that “[n]othing in [this
contract] carves out an exception for maritime lines to the clear
choice of law provisions...selecting English law, or indicates, in
any way, that Plaintiff...agreed that United States law governs the
creation of maritime liens”).

The Court finds these authorities

persuasive; because Cockett has not shown that English law is
inapplicable, it has failed to carry its burden to show probable
cause for the arrest of the M/V LION.8
8

Accordingly, because

In attempting to support its assertion that this Court
should apply local law to determine whether a maritime lien
existed, Cockett invokes Liverpool and London Steampship Prot. and
Indem. Assoc. v. QUEEN OF LEMAN M/V, 296 F.3d 350 (5th Cir. 2002).
However, Cockett omitted the feature of the contract in that case
11

Cockett has not shown probable cause for the arrest of the M/V
LION, the arrest must be vacated and its Rule C claim must be
dismissed.
B.

Rule B in personam attachment

Cockett contends that “only in the event that this Court were
to conclude that the lien is not authorized” the Court should
consider Cockett’s in personam claim against the defendants for
breach of contract and conversion/unjust enrichment.

Evandros

contends that Cockett has failed to plead a prima facie case for in
personam

liability

based

conversion/unjust enrichment.

on

breach

of

contract

and

The Court agrees.

Regarding Cockett’s breach of contract claim, Cockett’s first

that distinguishes it from this case and the other district court
cases cited by this Court. In QUEEN OF LEMAN, the choice of law
provision provided that English law generally governed the
contract, the contract chose the English High Court of Justice as
its choice of forum (with the qualification that nothing prejudice
the plaintiff’s right to “commence proceedings in any jurisdiction
to enforce its right of lien on ships or to otherwise obtain
security by seizure, attachment, or arrest of assets for any
amounts owed to” the plaintiff.
Id. at 353. However, the
contract’s lien provision stated that the plaintiff would have a
“lien on ships” and then specifically provided for the application
of local law, in stating that the application of English law was
subject “to the right of the [plaintiff]... to enforce its right of
lien in any jurisdiction in
accordance with local law in such
jurisdiction.”
Id. at 353.
This Court agrees with the other
courts that have determined that the Standard Terms and Conditions
at issue here are materially different from the contract terms in
the QUEEN OF LEMAN. See Bominflot, Inc. v. THE M/V HENRICH S, 465
F.3d 144 (4th Cir. 2006); see also Marine Oil Trading Ltd. v. MOTOR
TANKER PAROS, 287 F. Supp. 2d 638, 642-645 (E.D. Va. 2003); see
also Marine Oil Trading Ltd. v. M/V SEA CHARM, No. 02-2281, 2003 WL
292309, at *4-7 (E.D. La. Feb. 10, 2003).
12

amended complaint alleges no link between Evandros and the failure
to pay for the supply of bunker fuel.

And Cockett has failed to

show that the marine fuels invoice, which is specifically addressed
to the Charbons entity that did not charter the M/V LION, or any of
the other evidence Cockett has submitted to support its breach of
contract claim, created an agreement between Cockett and Evandros
sufficient

to

maintains

that

sustain
it

has

a

breach

of

satisfied

contract

the

Rule

8

claim.

Cockett

notice

pleading

requirements and that its allegations would survive a Rule 12(b)(6)
challenge.

The Court disagrees.

Regarding

the

conversion/unjust

enrichment

claim

against

Evandros, Cockett alleges at paragraphs XXIV and XXV of its amended
complaint:
Upon information and belief, the charter party between
Evandros and/or Elmar and Charbons UK and/or Charbons
France for the M/V LION terminated between the time the
vessel departed Murmansk, Russia, and the time it arrived
in the Port of New Orleans.
Following the termination of the charter party, Elmar and
Evandros benefitted from the use of the bunker fuel on
board the M/V LION, and supplied by Cockett, because it
was consumed during the voyage between Murmansk, Russia
and the Port of New Orleans.
Given these allegations, Cockett’s conversion/unjust enrichment
claim hinges on the timing of the termination of the time charter
between Evandros and Charbons Et Fuels SA.
the

conclusory

statement

of

fact

Evandros contends that

regarding

the

charter’s

termination is not only factually wrong, but could have been

13

investigated before seeking arrest of the vessel. Evandros submits
evidence that supports its assertion that the LION had already
arrived in the Port of New Orleans at 1845 hours on February 8,
2011 and that, eight days later on February 16, 2011, Charbons
cancelled the time charter.

Accordingly, Evandros’s evidence

supports the proposition that the LION’s charterer, Charbons Et
Fuels SA, was the party that benefitted from the fuel consumed
between Russia and New Orleans.

That is, because the M/V LION’s

arrival in New Orleans preceded the termination of the time
charter,

Evandros

could

not

have

benefitted

from

the

LION’s

consumption of the bunker fuel to get to New Orleans.

In light of

this

allegations

evidence

disproving

Cockett’s

only

factual

attempting to link Evandros to its allegations of conversion/unjust
enrichment, Cockett has failed to carry its burden of showing
reasonable grounds to maintain its Rule B attachment claim against
Evandros.
Accordingly,

Evandros’s

attachment is GRANTED.9

motion

to

vacate

the

arrest

and

The Court will release the substitute

security filed by Evandros, once appropriate papers are filed.
New Orleans, Louisiana, May 12, 2011
______________________________
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE
9

To the extent Evandros seeks damages for bad faith
arrest and attachment, the Court denies without prejudice that
request as insufficiently supported.
14