Bunkers International Corporation v. Wuchow M/V et al

Filing 69

ORDER & REASONS: denying 38 Motion for Partial Summary Judgment without prejudice to being refiled, if deemed appropriate, at a later stage of these proceedings. Signed by Judge Carl Barbier on 3/23/16. (sek)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

BUNKERS INTERNATIONAL
CORPORATION

CIVIL ACTION

VERSUS

NO: 15-5221

M/V WUCHOW ET AL.

SECTION: “J”(3)
ORDER & REASONS

Before the Court is a Motion for Partial Summary Judgment
(Rec.

Doc.

38)

filed

by

Plaintiff,

Bunkers

International

Corporation (“BIC”); an opposition thereto (Rec. Doc. 39) and
supplemental memorandum (Rec. Doc. 64) filed by Defendant, China
Navigation

Co.

Pte.

Ltd.

(“China

Navigation”);

an

opposition

thereto (Rec. Doc. 42) and supplemental memorandum (Rec. Doc. 57)
filed

by

Third-Party

Defendant,

Petroleo

Brasileiro

S.A.

(“Petrobras”); and a reply (Rec. Doc. 53) filed by BIC. Having
considered the motion and legal memoranda, the record, and the
applicable law, the Court finds that the motion should be DENIED,
without prejudice, for the reasons set forth below.
FACTS AND PROCEDURAL BACKGROUND
This case involves multiple, competing claims to payment for
marine “bunker” fuel provided to the M/V WUCHOW, a vessel owned
and operated by China Navigation. In July 2015, China Navigation
arranged with BIC to have approximately 450 metric tons of bunker

fuel delivered to the vessel at Parangua, Brazil. BIC then arranged
with Petrobras to supply the bunkers to the vessel.
On August 3, 2015, Petrobras delivered the bunkers to the
vessel. The chief engineer of the vessel accepted delivery of the
bunkers by signing and affixing the vessel’s seal on a bunker
delivery

note

provided

by

Petrobras.

On

the

following

day,

Petrobras issued an invoice to BIC in the amount of $137,278.07
for the bunkers delivered to the vessel. In turn, BIC issued an
invoice to China Navigation for $139,078.43 for the same bunkers,
presumably including a markup for its role in the transaction.
After China Navigation received the invoice, but before the
invoice became due, BIC filed for Chapter 11 bankruptcy protection
in the United States Bankruptcy Court for the Middle District of
Florida. See In re Bunkers Int'l Corp., No. 15-7397 (Bankr. M.D.
Fla. filed Aug. 28, 2015). Subsequently, China Navigation was
informed that BIC never paid Petrobras for delivery of the bunkers
to the vessel. As a result, China Navigation did not pay BIC.
Litigation
verified

began

complaint

on

October

against

China

16,

2015,

Navigation

when
in

BIC

filed

personam

a

and

against the M/V WUCHOW in rem, seeking to recover the amount
claimed due for providing bunkers to the vessel. (Rec. Doc. 1.)
BIC alleges that China Navigation breached its obligations under
a maritime contract with BIC by failing to pay BIC for the bunkers.
Because China Navigation could not been found within the district,
2

BIC sought attachment of the M/V WUCHOW while it was located within
the district pursuant to Rule B of the Supplemental Rules for
Admiralty or Maritime Claims and Asset Forfeiture Actions. Aside
from the Rule B attachment, BIC also sought arrest of the M/V
WUCHOW pursuant to Rule C, asserting a maritime lien against the
vessel protecting its right to payment for the bunkers provided.
Soon after, BIC and China Navigation reached an agreement whereby
China Navigation deposited $200,000 into the registry of the Court
to serve as substitute security for the vessel pursuant to Rule
E(5)(a). (Rec. Doc. 11.)
On November 13, 2015, making a restricted appearance as owner
and claimant of the M/V WUCHOW pursuant to Rule E(8), China
Navigation

filed

complaint

against

a

counterclaim
Petrobras

against

under

the

BIC

and

federal

third-party
interpleader

statute. (Rec. Doc. 25.) China Navigation acknowledges that it
owes payment for the bunkers it received, but it does not want to
pay for the same bunkers twice. Accordingly, China Navigation asks
the Court to determine whether BIC or Petrobras is the proper party
to whom payment should be made. On January 18, 2016, Petrobras
filed an answer to the third-party complaint, a counterclaim
against China Navigation, and a crossclaim against BIC, claiming
entitlement to payment for the bunkers based on its contract with
BIC and a maritime lien against the vessel. (Rec. Doc. 35.) In

3

short,

multiple

parties

assert

claims

to

payment

by

China

Navigation for the bunkers.
BIC filed the instant Motion for Partial Summary Judgment
(Rec. Doc. 38) on January 21, 2016. China Navigation and Petrobras
filed oppositions on February 1 and February 3, respectively, to
which BIC filed a reply on February 17, 2016. In addition, China
Navigation

and

Petrobras

filed

supplemental

memoranda

to

supplement their oppositions to BIC’s motion.
LEGAL STANDARD
Summary judgment is appropriate when “the pleadings, the
discovery and disclosure materials on file, and any affidavits
show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.”
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (citing Fed. R.
Civ. P. 56(c)); Little v. Liquid Air Corp., 37 F.3d 1069, 1075
(5th Cir. 1994). When assessing whether a dispute as to any
material fact exists, a court considers “all of the evidence in
the record but refrains from making credibility determinations or
weighing

the

evidence.”

Delta

&

Pine

Land

Co.

v.

Nationwide

Agribusiness Ins. Co., 530 F.3d 395, 398 (5th Cir. 2008). All
reasonable inferences are drawn in favor of the nonmoving party,
but

a

party

cannot

defeat

summary

judgment

with

conclusory

allegations or unsubstantiated assertions. Little, 37 F.3d at
1075. A court ultimately must be satisfied that “a reasonable jury
4

could not return a verdict for the nonmoving party.” Delta, 530
F.3d at 399.
If the dispositive issue is one on which the moving party
will bear the burden of proof at trial, the moving party “must
come forward with evidence which would ‘entitle it to a directed
verdict if the evidence went uncontroverted at trial.’” Int'l
Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1264-65 (5th Cir.
1991). The nonmoving party can then defeat the motion by either
countering with sufficient evidence of its own, or “showing that
the moving party’s evidence is so sheer that it may not persuade
the reasonable fact-finder to return a verdict in favor of the
moving party.” Id. at 1265.
If the dispositive issue is one on which the nonmoving party
will bear the burden of proof at trial, the moving party may
satisfy its burden by merely pointing out that the evidence in the
record is insufficient with respect to an essential element of the
nonmoving party’s claim. See Celotex, 477 U.S. at 325. The burden
then shifts to the nonmoving party, who must, by submitting or
referring to evidence, set out specific facts showing that a
genuine issue exists. See id. at 324. The nonmovant may not rest
upon the pleadings, but must identify specific facts that establish
a genuine issue for trial. See, e.g., id. at 325; Little, 37 F.3d
at 1075.

5

DISCUSSION
The issues central to this case overlap significantly with
multiple cases pending in federal courts across the country. In
particular, the bankruptcy of O.W. Bunker & Trading A/S, one of
the world’s largest suppliers of shipping fuel, has caused a
“litigation frenzy,” in which at least twenty-five interpleader
actions are currently pending in the Southern District of New York.
See Hapag–Lloyd Aktiengesellschaft v. U.S. Oil Trading LLC, No.
15-97, 2016 WL 731776, at *1 (2d Cir. Feb. 24, 2016), aff'g UPT
Pool Ltd. v. Dynamic Oil Trading (Singapore) PTE. Ltd., No. 149262, 2015 WL 4005527 (S.D.N.Y. July 1, 2015). In each of these
actions, the entities that physically delivered the fuel to the
vessels, like Petrobras, are seeking to collect payment based on
maritime liens, while the bankrupt entities, like BIC, assert
claims to payment based on competing maritime liens as well as
maritime contracts. See id.
In the instant motion, BIC seeks partial summary judgment on
its claim against China Navigation for breach of contract. BIC
insists that its in personam claim against China Navigation is
distinct from its in rem claim against the vessel, and therefore
any argument concerning maritime liens or Petrobras is irrelevant
to the instant motion.
BIC’s arguments are substantially similar to arguments made
in the litigation pending in New York. The Second Circuit recently
6

held

that

because

the

in

personam

claims

against

the

vessel

interests and the in rem claims against the vessels arise out of
the same debt, they are “inextricably interrelated,” and therefore
subject

to

interpleader.

Hapag–Lloyd,

2016

WL

731776,

at

*3

(concluding that “the claims alleged in this action concern the
same enrichment to Hapag–Lloyd—i.e., the value of the bunkers,
payment for which is the entitlement claimed by all parties—and
are

thus

likewise

‘inextricably

interrelated.’”

(footnote

omitted)); see also UPT Pool, 2015 WL 4005527, at *6 (“[B]ecause
there is only one underlying debt, any interpleaded in personam
claims

against

the

Vessel

Interests

are

merely

alternative

procedural devices to obtain the same relief as would be obtained
by arresting the Vessel.”). 1
Thus, the Second Circuit concluded that both the in personam
claims based on maritime contracts and the in rem claims based on
maritime

liens

were

subject

to

interpleader.

“It

is

well

established that the interpleader statute is ‘remedial and to be
liberally construed,’ particularly to prevent races to judgment
and

the

unfairness

obligations.

of

multiple

and

potentially

conflicting

Hapag–Lloyd, 2016 WL 731776, at *3 (quoting State

1

Indeed, BIC’s purported maritime lien would be extinguished if BIC received
payment from China Navigation pursuant to its invoice. See Hapag–Lloyd, 2016 WL
731776, at *3 n.17; World Fuel Servs., Inc. v. Magdalena Green M/V, 464 F. App'x
339, 341 (5th Cir. 2012) (“Where, as here, the debt is repaid and satisfaction
is acknowledged, the lien ceases to exist.”). In such a case, BIC could not
recover both through a contract with China Navigation and through a lien on the
vessel, thereby further demonstrating the relationship between the purported
maritime liens and the interlocking contracts.

7

Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 533 (1967)). As the
Fifth Circuit has explained, an interpleader action typically
involves two stages. Rhoades v. Casey, 196 F.3d 592, 600 (5th Cir.
1999). “In the first stage, the district court decides whether the
requirements for rule or statutory interpleader action have been
met by determining if there is a single fund at issue and whether
there are adverse claimants to that fund.” Id. In the second stage,
if the district court finds that the interpleader action has been
properly

brought,

“the

district

court

will

then

make

a

determination of the respective rights of the claimants.” Id.
By filing the instant motion for partial summary judgment,
BIC has essentially asked the Court to bypass the first stage of
the interpleader action and decide the merits of its claim under
stage two. Although admittedly, on its face, this action appears
to present a classic textbook example of interpleader, see Hapag–
Lloyd, 2016 WL 731776, at *3, a decision has not been rendered on
the stage-one issue. For this reason, BIC’s motion for summary
judgment is premature at this time. See Progressive Am. Ins. Co.
v. Thorn, No. 06-717, 2007 WL 1381576, at *3 (M.D. Ala. May 8,
2007) (denying motion for summary judgment as premature because
stage one of the interpleader claim had not yet come before the
court by motion or otherwise). 2

2

China Navigation requests that the Court award it legal fees and costs
associated with opposing BIC’s motion. The award of attorney’s fees in an
interpleader action is in the discretion of the district court, and fees are

8

Additionally, in its opposition, Petrobras asks the Court to
defer ruling on the motion to allow time for Petrobras to conduct
discovery. A district court may deny or defer considering a motion
for summary judgment if the nonmovant files an affidavit showing
that “for specified reasons, it cannot present facts essential to
justify its opposition.” Fed. R. Civ. P. 56(d); accord Adams v.
Travelers Indem. Co. of Conn., 465 F.3d 156, 162 (5th Cir. 2006).
Rule 56(d) motions for additional discovery are “‘broadly favored
and should be liberally granted’ because the rule is designed to
‘safeguard non-moving parties from summary judgment motions that
they cannot adequately oppose.’” Am. Family Life Assur. Co. of
Columbus v. Biles, 714 F.3d 887, 894 (5th Cir. 2013) (quoting Raby
v. Livingston, 600 F.3d 552, 561 (5th Cir. 2010)).
This case is in its infancy. No discovery has occurred and
disclosures have not been exchanged. In accordance with Rule 56(d),
Petrobras attached an affidavit setting forth several issues on
which

it

wishes

to

conduct

discovery,

including

the

agency

relationship between the parties, China Navigation’s knowledge
regarding which party would provide the vessel with bunkers, and
the authority of the parties ordering bunkers to bind the vessel.
These issues are relevant to the contractual relationships between

available when the interpleader is a disinterested stakeholder, and is not in
substantial controversy with one of the claimants. Rhoades, 196 F.3d at 603.
For the same reasons that BIC’s motion for summary judgment is premature, the
Court finds that China Navigation’s request for attorney’s fees is premature.

9

China Navigation, BIC, and Petrobras, and the related claims to a
maritime lien. Accordingly, here, as in other civil cases, the
filing of a summary judgment motion in advance of any discovery is
premature.
It is worth noting that this is the second time BIC has filed
a motion for summary judgment in the case. The first motion, which
was filed less than two weeks after BIC filed suit, was denied as
premature. (Rec. Doc. 32.) The Court instructed BIC to refile its
motion “at a more appropriate time, after all parties have had an
opportunity to file responsive pleadings.” Id. at 3. Although all
parties have had an opportunity to file responsive pleadings—BIC
filed its second motion three days after Petrobras filed its
answer—the Court finds that BIC’s motion is again premature, for
the reasons discussed above.
The Court concludes that summary judgment is premature as the
litigation of this matter is still in its infant stages. This
action presents, as the Southern District of New York aptly put
it, “interesting and apparently novel questions regarding the
interplay among the United States bankruptcy law, maritime law and
the federal interpleader statutes.” UPT Pool, 2015 WL 4005527, at
*1. Because

the

various

relationships

in

this

case

may,

for

example, require the Court to “untangle complicated questions of
subrogation and set-offs among the parties as it determines payment
obligations,” Hapag–Lloyd, 2016 WL 731776, at *3 n.18, this Court
10

has serious doubts as to the wisdom of granting summary judgment
before, at the very least, full and fair discovery.
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Plaintiff’s Motion for Partial
Summary Judgment (Rec. Doc. 38) is DENIED without prejudice to
being refiled, if deemed appropriate, at a later stage of these
proceedings.
New Orleans, Louisiana, this 23rd day of March, 2016.

CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

11