Neftehim Bunker Jsc v. Ridgebury Nicholas A M/V
Filing
84
ORDER AND REASONS denying Neftehim Bunker, JSC's 70 MOTION for Summary Judgment; granting in part & deferring in part ING Bank's 71 Cross MOTION for Summary Judgment (Response/Memorandum in Opposition). This matter is STAYED AND ADMINISTRATIVELY CLOSED pending the ruling of the Fifth Circuit in Valero Marketing and Supply Co. v. M/V ALMI SUN. Signed by Judge Jane Triche Milazzo.(ecm)
.
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
NEFTEHIM BUNKER JSC
CIVIL ACTION
VERSUS
NO: 14-2774
RIDGEBURY NICHOLAS A M/V
SECTION: “H”(1)
ORDER AND REASONS
Before the Court are Cross Motions for Summary Judgment filed by
Neftehim Bunker, JSC (“Neftehim”) (Doc. 70) and ING Bank (“ING”) (Doc. 71).
For the following reasons, Neftehim’s Motion is DENIED and ING Bank’s
Motion is GRANTED IN PART and DEFERRED IN PART.
BACKGROUND
This case began as a vessel seizure case. Koch Shipping, LLC, (“Koch”)
the time charterer of the M/V RIDGEBURY NICHOLAS, entered into a supply
contract with the now-defunct O.W. Bunker Switzerland for a bunker supply.
In order to fulfill its contractual obligation, O.W. Bunker contracted with its
Danish affiliate, O.W. Denmark, who in turn contracted with Neftehim, who
actually provided the bunker supply. On November 5, 2014, Plaintiff Neftehim
1
supplied bunker fuel to the M/V RIDGEBURY NICHOLAS at the port of UstLuga, Russia. Because it was never paid for this bunker supply, Neftehim
arrested the vessel in the Eastern District of Louisiana on December 8, 2014
pursuant to Supplemental Admiralty Rule C, contending that it holds a
maritime lien on the vessel based on the supply of “necessaries” in the amount
of $486,000 (the value of the bunker supply). After the Court ordered the vessel
seized, Koch posted a bond to secure its release.
This case mirrors a situation that has occurred worldwide. O.W. Bunker
was one of the world’s largest bunker suppliers until its collapse and
bankruptcy in 2014. This has spawned an avalanche of litigation related to
O.W.’s failure to pay for bunker supplies. Typically, shipping companies (like
Koch) would contract with O.W. Bunker for their bunker supply. In turn, O.W.
Bunker would contract with entities (like Neftehim) who would physically
supply the bunkers. When O.W. Bunker collapsed, the suppliers, such as
Neftehim, were never paid for the bunkers they supplied.
In this case, Koch’s vessel, the M/V RIDGEBURY NICHOLAS, was
supplied pursuant to this type of arrangement. As previously noted, Neftehim
filed this suit asserting a maritime lien on the vessel for the unpaid bunker
supply, seeking $486,000. The vessel was released from arrest on a $729,000
bond. ING, who accepted assignment of O.W. Bunker’s rights in the latter’s
dissolution proceedings, was taking steps to assert a $503,820 claim for the
same bunker supply by arresting the same vessel in a different jurisdiction.
On December 31, 2015, Koch filed a motion seeking leave to assert a
counterclaim for interpleader and injunctive relief against Neftehim, O.W.
Bunker, ING Bank, and any other third parties. In order to avoid double
payment for the same debt, Koch moved the Court to convert the vessel bond
2
into an interpleader bond and enjoin other suits regarding the same bunker
supply. The Court granted this Motion. At this point Koch does not dispute
that it owes the debt to someone, it is just unsure to whom. Neftehim and ING
have filed cross motions for summary judgment, each arguing that it is entitled
to claim a maritime lien for the same bunker supply.
LEGAL STANDARD
Summary judgment is appropriate “if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with affidavits, if
any, show that there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.”1 A genuine issue
of fact exists only “if the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.”2
In determining whether the movant is entitled to summary judgment,
the Court views facts in the light most favorable to the non-movant and draws
all reasonable inferences in his favor.3 “If the moving party meets the initial
burden of showing that there is no genuine issue of material fact, the burden
shifts to the non-moving party to produce evidence or designate specific facts
showing the existence of a genuine issue for trial.”4 Summary judgment is
appropriate if the non-movant “fails to make a showing sufficient to establish
the existence of an element essential to that party’s case.”5 “In response to a
properly supported motion for summary judgment, the non-movant must
identify specific evidence in the record and articulate the manner in which that
Fed. R. Civ. P. 56(c) (2012).
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
3 Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528 (5th Cir. 1997).
4 Engstrom v. First Nat’l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995).
5 Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
1
2
3
evidence supports that party’s claim, and such evidence must be sufficient to
sustain a finding in favor of the non-movant on all issues as to which the nonmovant would bear the burden of proof at trial.”6 “We do not . . . in the absence
of any proof, assume that the nonmoving party could or would prove the
necessary facts.”7
Additionally, “[t]he mere argued existence of a factual
dispute will not defeat an otherwise properly supported motion.”8
LAW AND ANALYSIS
These Motions seek to resolve who (if anyone) holds a maritime lien
relative to the bunker supply.9 As a preliminary matter, the Court must
determine the law applicable to Neftehim’s claim. Neftehim argues that the
Court should apply the laws of the United States, which it argues grant it a
maritime lien pursuant to the Commercial Instrument Maritime Lien Act
(CIMLA).
ING contends, however, that Russian law should apply to
Neftehim’s claim.
Should Russian law apply, Neftehim does not have a
maritime lien and the analysis of its claim ends there. If, however, the laws of
the United States are applicable to Neftehim’s claim, the parties disagree as
to whether ING is entitled to a lien under CIMLA. ING claims that it, not
Neftehim, is the proper party to assert a maritime lien relative to the bunker
supply.
John v. Deep E. Tex. Reg. Narcotics Trafficking Task Force, 379 F.3d 293, 301 (5th
Cir. 2004) (internal citations omitted).
7 Badon v. R J R Nabisco, Inc., 224 F.3d 382, 394 (5th Cir. 2000) (quoting Little v.
Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)).
8 Boudreaux v. Banctec, Inc., 366 F. Supp. 2d 425, 430 (E.D. La. 2005).
9 This motion seeks to resolve the in rem claims relative the bunker supply. ING
Bank also asserts that it is entitled to in personam claims against Koch, and has filed a
motion to compel arbitration of those claims. The parties have agreed to postpone hearing
on that motion pending the Court’s ruling on the in rem claims, which potentially render
the in personam claims moot.
6
4
I. Choice of Law with Regard to Neftehim’s Claim
In its Motion, Neftehim asserts that the Court should apply the law of
the forum to this dispute. ING disagrees, asserting that the Court should
conclude, through a more nuanced choice of law analysis, that Russian law
applies to this claim. The parties agree that if Russian law applies Neftehim
may not claim a maritime lien.
Neftehim’s argument with regard to choice of law relies on a line of cases
involving the recognition of foreign judgments. First, it cites to the Second
Circuit case of D’Amico Dry Ltd. v. Primera Maritim (Hellas) Ltd.10 There, the
court considered whether admiralty jurisdiction applied in an action by a
judgment creditor to enforce a judgment rendered by an English court.11 The
judgment at issue was heard in the commercial division, not the admiralty
division, of the English court.12 Nevertheless, the court found that the suit to
enforce the English judgment fell within the U.S. court’s maritime jurisdiction
because the underlying claim would be deemed maritime under U.S. law.13
The court specifically noted that “[t]he question [of] whether a claim belongs
in one or another court is jurisdictional and procedural. Under choice of law
principles, the law of the forum state is used for such a question.” 14 Neftehim
also directs the Court to Flame v. Freight Bulk Pte. Ltd. a Fourth Circuit case
wherein the court adopted the reasoning of D’Amico in answering a similar
question.15
756 F.3d 151 (2d Cir. 2014).
Id. at 153.
12 Id. at 154.
13 Id. at 162.
14 Id. at 161.
15 762 F.3d 352 (4th Cir. 2014).
10
11
5
ING responds, arguing that the Court should apply the choice of law
analysis set forth by the Fifth Circuit in Gulf Trading & Transp. Co. v. Hoegh
Shield.16 In that case, the court began by noting that the Supreme Court, in
Lauritzen v. Larson, first set forth a modern approach to maritime choice of
law problems.17 The Court noted, however, that the Lauritzen test, articulated
in the context of a Jones Act tort claim, does not neatly apply in maritime lien
cases.18 Nevertheless, the court noted that Lauritzen was useful inasmuch as
it established that “[m]aritime law . . . has attempted to avoid or resolve
conflicts between competing laws by ascertaining and valuing points of contact
between the transaction and the states or governments whose competing laws
are involved. The criteria, in general appear to be arrived at from weighing of
the significance of one or more connecting factors between the shipping
transaction regulated and the national interest served by the assertion of
authority.”19 Accordingly, the court turned to the Restatement of Conflict of
Laws for applicable principles.
With regard to the contract at issue, the court directed that the following
factors should be considered: (a) the place of contracting, (b) the place of
negotiation of the contract, (c) the place of performance, (d) the location of the
subject matter of the contract, and (e) the domicile, residence, nationality,
place of incorporation and place of business of the parties.20 In the broader
658 F.2d 363 (5th Cir 1981).
345 U.S. 571 (1953).
18 Under Lauritzen, the Supreme Court directed courts to consider the following
factors in maritime tort cases: (1) the place of the wrongful act, (2) the law of the flag, (3)
the allegiance or domicile of the injured, (4) the allegiance of the defendant shipowner, (5)
the place of contract, (6) the inaccessibility of a foreign forum, and (6) the law of the forum.
345 U.S. at 583.
19 Hoegh Shield, 658 F.2d at 366.
20 Id.
16
17
6
context of the maritime lien, the court looked to (a) the needs of the
international system, (b) relevant policies of the forum, (c) relevant policies of
other interested states, (d) the protection of justified expectations, (e) the basic
policies underlying the particular field of law, (f) certainty, predictability and
uniformity of result, and (g) ease in determination and application of the law
to be applied.21 ING also directs the Court to the Ninth Circuit case of Gulf
Trading Transp. V. M/V Tento, wherein now-Justice Kennedy authored an
opinion holding “that choice of law questions involving maritime liens are to
be resolved by weighing and evaluating the points of contact between the
transaction and the sovereign legal systems touched and affected by it.”22
The Court finds that the appropriate analysis is the more complex choice
of law analysis set forth in Hoegh Shield and Tento. The simplistic lex loci
forum approach advanced by Neftehim, while appropriate in confronting
procedural issues, is not dispositive to a choice of law issue where, as here, the
question is whether to apply the substantive law of one forum or another. A
review of the factual underpinnings of Hoegh Shield and similar cases is
helpful prior to engaging in a choice of law analysis of the matter before the
Court.
The Hoegh Shield court ultimately found that U.S. law applied to the
transaction at issue, which involved bunkers furnished to a foreign vessel by
an American supplier within the jurisdiction of the United States.23 The court
particularly noted that the congressional intent with regard to the Maritime
Lien Statute is that “an American supplier of goods, services or necessaries to
a foreign vessel obtains a maritime lien in the vessel when the goods or services
Id.
694 F.2d 1191, 1195 (9th Cir. 1982).
23 Hoegh Shield, 658 F.2d at 366
21
22
7
are supplied or performed in the United States.”24 The Court also noted that
it is reasonably expected that the Maritime Lien Statute would apply to protect
a supplier when necessaries are furnished to a vessel by an American supplier
in an American port.25 The court finally noted that the polices and interests of
other governments favored the application of U.S. law.26 Though the contract
was formed in Great Britain, the United States had a greater interest in
protecting an American supplier of fuel to a non-English vessel in an American
port.27
Conversely, in Ocean Ship Supply Ltd. v. M/V Leah, the Fourth Circuit
applied the above factors to result in an application of foreign law. 28 This case
is similar to the matter at bar. There, a Canadian corporation filed a complaint
against a ship seeking payment for supplies furnished to the ship’s previous
owner.29 The supplies at issue were ordered by a non-American ship and
furnished by a Canadian corporation in a Canadian port. The plaintiff arrested
the vessel in an American port, and argued that U.S. law relative to liens
should apply to the matter. Defendant argued that Canadian law, under which
there would be no viable lien, should be applied.30 The court, citing Hoegh
Shield, held that the choice of law factors pointed to an application of Canadian
law.31
The court specifically noted that the dispute involved a Canadian
corporation, a Canadian port, and a foreign ship.32 The mere fact that the
Id. at 367
Id.
26 Id.
27 Id. at 368.
28 729 F.2d 971, 973 (4th Cir. 1984).
29 Id.
30 Id.
31 Id.
32 Id.
24
25
8
vessel put in at an American port was “simply a fortuitous incident in the
context of this litigation.”33
Likewise, in Dresdner Bank v. M/V Olympia Voyager, the Eleventh
Circuit also applied the Hoegh Shield factors to find that foreign law applied
to a dispute.34 In that matter, the court had to decide whether U.S. law was
properly applicable to govern a transaction between a Liberian ship owner and
a Greek travel agency for travel services benefiting a Greek-flagged cruise
vessel while it was in an American port.35 The court noted that, under the
restatement analysis, the choice of law is largely determined by which
sovereign entity has the most significant relationship with the transaction at
issue.36 The court found that the place of contracting and negotiation was
Greece, and the parties were domiciled in Greece and Liberia.37 The Court also
found that the contract was performed in Greece when the plaintiff travel
agency purchased tickets there.
38
The court therefore reversed the finding of
the district court and held that Greek law applied to the matter before it.39
Turning to the matter at bar, the contractual choice of law factors
militate in favor a finding that Russian law applies to this dispute. These
factors include (a) the place of contracting, (b) the place of negotiation of the
contract, (c) the place of performance, (d) the location of the subject matter of
the contract, and (e) the domicile, residence, nationality, place of incorporation
and place of business of the parties. The contract at issue was negotiated and
Id.
446 F.3d 1377 (11th Cir. 2006).
35 Id.
36 Id.
37 Id.
38 Id.
39 Id.
33
34
9
executed in Denmark and Russia, and the bunkers were delivered in Russia.
The subject matter of the contract was a Russian delivered bunker supply, and
the parties to the contract are Russian and Danish actors. Though Koch, the
defendant-ship owner in this matter, is a U.S. corporation, there is no evidence
that Koch was a party to the contract or indeed that Neftehim was even aware
of Koch’s identity at the time the bunkers were delivered. Furthermore, the
vessel is a Marshall Islands flagged vessel.
The general choice of law factors likewise militate in favor of an
application of Russian law.
These factors include (a) the needs of the
international system, (b) relevant policies of the forum, (c) relevant policies of
other interested states, (d) the protection of justified expectations, (e) the basic
policies underlying the particular field of law, (f) certainty, predictability and
uniformity of result, and (g) ease in determination and application of the law
to be applied. Factor (a) does not appear to be particularly relevant. Factor
(b) does not militate in favor of an application of U.S. law, as the congressional
intent of the maritime lien statute is to protect an American supplier who
supplies goods in an American port.40 Neftehim, a Russian supplier suppling
goods in a Russian port, does not fall within the intended ambit of this
protection. Factor (c) militates in favor of Russian law, as Russia has an
interest in governing transactions between its citizens and foreign companies
that are performed within its territory.
Factor (d) weighs in favor of an
application of Russian law, as Neftehim cannot reasonably have expected to
claim an American maritime lien with regard to a transaction confected in
Russian, performed in Russian, between Russian and Danish parties, to supply
a Marshall Islands flagged vessel. Factor (e) does not appear to be relevant.
40
Hoegh Shield 658 F.2d. at 367.
10
Factor (f) leans against the law of the United States, as it would not lead to
predictability or certainty to subject this transaction to U.S. law. Factor (g) is
neutral, as the parties agree that if Russian law applies then Neftehim’s in
rem claim must fail.
Looking to the governmental interests involved, it is clear that the
United States’ interest in this dispute is minimal. Though the vessel at issue
was chartered by an American company, the actual contract by which
Neftehim supplied the bunkers involved no American party and no American
vessel. It was not performed at an American port. Just as in M/V Leah, the
fact that the vessel was seized in an American port is “simply a fortuitous
incident in the context of this litigation.”41 The Court finds that Russian law
applies to the Neftehim transaction, meaning that it acquired no maritime lien.
Accordingly, Neftehim’s in rem claims are dismissed.
II. ING’s Claim to a Maritime Lien
Because the Court finds that U.S. law does not apply, it need not consider
the parties’ argument relative to whether Neftehim may claim a maritime lien
under CIMLA. The Court will, therefore, proceed directly to the arguments
concerning whether ING may claim a maritime lien for the bunker supply
pursuant to its assignment of O.W.’s rights. The state of the law in this area
is far from clear. Indeed, courts nationwide have come to different conclusions
on the same issue. The Court notes that in the case of Valero Marketing and
Supply Co. v. M/V Almi Sun, a different section of this Court considered issues
arising from the O.W. collapse that are similar to the matter at bar.42 That
41
42
Id.
160 F.Supp.3d 973 (E.D. La. 2016).
11
case is pending on appeal to the Fifth Circuit.43 The Court finds that the
Circuit’s disposition of that matter will likely provide meaningful guidance as
to the resolution of ING’s in rem claims. Accordingly, the Court will defer
ruling on that issue until such a time as the Court of Appeals issues its ruling.
Because the resolution of the in rem claims is potentially dispositive of this
entire matter, this case is stayed and administratively closed, subject to the
right of any party to move to reopen the case following the Court of Appeals’
ruling in the above referenced matter.
CONCLUSION
For the foregoing reasons, Neftehim’s Motion is DENIED and ING’s
Motion is GRANTED IN PART and DEFERRED IN PART. This matter is
STAYED AND ADMINISTRATIVELY CLOSED pending the ruling of the
Fifth Circuit in Valero Marketing and Supply Co. v. M/V ALMI SUN.
New Orleans, Louisiana this 9th day of November, 2016.
____________________________________
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE
Valero Marketing and Supply Co. v. M/V Almi Sun, No. 16-30194 (5th Cir. filed
March 7, 2016).
43
12
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?