World Fuel Services Trading, DMCC v. M/V HEBEI SHIJIAZHUANG

Filing 100

OPINION AND ORDER: For the reasons set forth above, the Court awardsprejudgment interest to Plaintiff at the prime rate, accruing from November 28, 2012. The parties are ORDERED to submit to the Court, jointly if possible, a proposed order for the C ourt's approval, filed no later than Thursday, April 17, 2014, indicating the prejudgment interest amount Claimant owes toPlaintiff, calculated in accordance with this Opinion and Order, as well as the agreed amount of custodia legis expenses. (See Order and Foot Notes for Specifics) Entered and filed 4/9/14. (Signed by District Judge Mark S. Davis on 4/9/14). Copies provided as directed on4/9/14.(ecav, )

UNITED STATES DISTRICT COURT

r

_.. . -,~

EASTERN DISTRICT OF VIRGINIA

riLLU

Norfolk Division

APR -9 2014

WORLD FUEL SERVICES TRADING,

DMCC, D/B/A BUNKERFUELS
CLLRK. -ji' 1" " "'--. " • COURT

Plaintiff,
Civil Action No.

2:13cvl73

M/V HEBEI SHIJIAZHUANG,
HER ENGINES,

TACKLE,

EQUIPMENT, APPURTENANCES,
ETC., IN REM
Defendant,

HEBEI PRINCE SHIPPING COMPANY,
LTD,
Claimant.

OPINION AND ORDER

This

matter

is

before

the

Court

following

a

hearing

on

April 8, 2014, which was conducted to resolve the damages issues
remaining after the Court granted summary judgment to World Fuel
Services

Trading,

DMCC,

d/b/a

Bunkerfuels

entitling Plaintiff to a maritime lien.
reasons discussed below,

the Court

interest at the prime rate,

the date payment was due,

upon by the parties
judgment.

("Plaintiff"),

ECF No. 97.

For the

awards Plaintiff prejudgment

accruing as of November 28,

2012,

until April 4, 2014, the date agreed

and the date

the

Court

entered summary

I.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

As discussed in greater detail in the Court's April 4, 2014

Opinion and Order,

Tramp Maritime

chartered the M/V HEBEI

Prince
third

Shipping

time

Plaintiff,

through

bunkers

be

2012.

to

terms

the

and

Ltd.

its

broker,
to

Hellas

order

sent

and

conditions"

www.wfscorp.com.

Tramp

vessel

a bunker

Ex.

3,

ECF

an

Tramp's

order

with

for

fuel

Hellas,

or

about October

confirmation

incorporating
("General

Compl.

placed

on

from Hebei

During

Bunkerfuels

the

("Tramp")

("the vessel")

("Claimant").

charter,

delivered

Bunkerfuels

confirming

SHIJIAZHUANG

Company,

consecutive

Enterprises Ltd.

to

Plaintiff's

Terms"),

No.

Tramp,

"general

located

1-3.

27,

at

Plaintiff's

General Terms provided that "[p]ast due amounts shall accrue
interest at a rate equal to the lesser of 2.0 percent per month,
or the maximum rate permitted by applicable law."
at

5.

In

addition,

the

General

Terms

ECF No.

provided

for

a

1-5
"5%

administrative fee" on "amounts more than 15 days past due," and

indicated

"Buyer['s]

agree[ment]

to

pay

external attorneys fees associated with
lien."

Id.

The

bunker

confirmation

terms would be "30 DDD by TTT,"

id.,

. . .

internal

and

enforcing a maritime

stated

which

that

the

payment

the parties

agree

indicated that payment would be due on November 28, 2012.*

1 Plaintiff's

General

Terms

indicate

that

"unpaid invoices

from

Seller to Buyer shall immediately be considered overdue [when] any
invoice of Seller to Buyer is seven (7) days overdue." ECF No. 1-5 at
5.
However, based upon the bunker confirmation payment terms and the
2

Tramp failed to pay for the fuel bunkers and, on April 4,
2013,

Plaintiff

requesting
Eastern

filed

that

a

Verified

the vessel

District

of

Complaint

be arrested

Virginia.

The

with

the

Court,

upon arrival

Court

granted

in the

Plaintiff's

request and the vessel was arrested on or about April 8,

2013.

On

joint

April

10,

2013,

Plaintiff

and Claimant

agreed,

by

stipulation, that Plaintiff would release the vessel from arrest
in exchange for a cash bond deposited by Claimant with the Court
in the amount of $850,000.

On April 4,
Plaintiff,

2014,

finding,

ECF No.

11.

the Court granted summary judgment to

"as

a

matter

of

law,

that

Plaintiff

is

entitled to a maritime lien against the vessel."

ECF No. 97 at

34.

the

However,

the

Court

reserved

judgment

on

following

damages issues indicated in the March 27,

2014 final pretrial

order:

for

"the

maritime

total

lien

prejudgment

on

amount
the

Vessel,

interest,

and

administrative charges,
and interest."
ECF No.

85 at

Id.

in

21) .

Judge

Plaintiff

whether

whether

which

Plaintiff

Plaintiff

is

is

legis expenses,

Motz

it

has

entitled

entitled

a
to

to

attorney fees

(internal quotation marks omitted)

(quoting

The Court also pointed the parties to

the

Frederick Motz in Triton Marine Fuels,

v. M/V PACIFIC CHUKOTKA,

which

to

custodia[]

2009 opinion by Judge J.
Ltd.

due

671 F.

observed

that

Supp. 2d 753

"an

FMLA

(D. Md. 2009),

lien

does

not

parties' agreement indicated at the April 8, 2014 hearing, the Court
accepts November 28, 2012 as the date the payment became overdue.
3

necessarily
Id.

at

cover

all

it

to

withdrew

its

the

underlying

contract."

the

award

claim

for

of

custodia

legis

2013 order,

began

Court

to

to

accrue

fees

and

the

5%

determine

and

"fully compensate

the

expenses,

granted

by

the

ECF No. 24, was whether the final

amount had yet been determined.2
the

attorney's

The parties confirmed that the only dispute

Court's October 8,

for

of

2014 hearing, Plaintiff informed the Court

administrative fee.
as

terms

760.

At the April 8,
that

the

Thus, the only remaining issues

are

the

date

prejudgment

[Plaintiff]

for

from

interest

its

which

rate

loss."

interest

that

Triton,

will

671

F.

Supp. 2d at 764.
II.

STANDARD OF REVIEW

"The award of prejudgment interest in admiralty cases rests
within

the

sound

discretion

of

the

Valleejee & Sons v. M/V VICTORIA U,

1981) .

Under maritime law,

district

661

F.2d

820,

828

(4th

794

interest

awarded

which

the

313

(4th Cir.

and,

in practice,

is well-

U.S. Fire Ins. Co. v. Allied Towing Corp., 966

M/V CHAD G,

is

F.2d 310,

Ameejee

an award of prejudgment interest is

"the rule rather than the exception,

nigh automatic."

court."

Cir.

1992)

F.2d 1026,

claimant

"as
was

(quoting Reeled Tubing,

1029

(5th Cir.

compensation
rightfully

for

1986)).

the

use

entitled."

2 The Court instructed counsel to visit the U.S.

Inc.

v.

Prejudgment

of
Id.

funds

to

(quoting

Marshal's office

after the April 8, 2014 hearing and submit briefing to the Court if a
dispute remained.
4

Noritake
Cir.

Co.

v.

1980)).

M/V

HELLENIC

627

F.2d

724,

728

(5th

Where a contractual interest rate is "greater than

necessary to

compensate

may,

discretion,

in

CHAMPION,

its

accurate reflection of

[a lienholder]
award

for

its

interest

loss."

[the]

an

Triton,

loss,"

rate

a court

that

671 F.

is

Supp.

"an

2d at

764-65.

"When

awarding

discretion with

prejudgment

regard to

the

interest begins to accrue."

Corp.,

718

Norfolk

&

(E.D.

xover

Supp.

2d

Portsmouth

2:08cvl34,
44

F.

Va.

Oct.

awards

determinations

of
of

663

Line

rate

(E.D.

R.R.

2009 U.S.

2009)

interest

Co.

1982)).

The Court may consider sources
forum

state,"

when

the

M/V

broad

*43-

to

its

Indep.

(quoting

prime

at

No.

discretion

extends

such as

also

MARLIN,

676 F.2d 23,

"average

see

LEXIS 104327,

begins.'"

v. Vessel Morania Abaco,

the

v.

interest

Inc.

in

has

2010);

court's

Transp.,

rate

Court

the date

and

Va.

Dist.

("A trial

prejudgment
when

the

Norfolk S. Ry. Co. v. Moran Towing

Belt

9,

interest

658,

2009 AMC 2465,

interest,

Bulk

25

(2d Cir.

"the statutory

rate

or

adjusted

prime rate," or "the yield on short-term U.S. Treasury Bills,
an

as

appropriate gauge by which to award a plaintiff prejudgment

interest."

Supp.

Great

2d 131,

155-56

typically

awarded

court,

its

in

Lakes

Bus.

Trust

(S.D.N.Y.

from

the

discretion,

2012).

date

may

v.

of

"elect

M/T

ORANGE

SUN,

855

F.

"Prejudgment interest is
the
to

loss,"
start

although

the

accrual

the
of

interest . . . 'from the date the damaged party loses the use of
5

its

funds,

made. '"
No.

e.g.,

(E.D.

"To

2009

Va.

party to pay it."

Ark-White
Such

time

expenditures

2009

Towing

would

make

it

1 Thomas J.

Co.,

a

Dist.

interest,

696

321,

327-28

include

award

"an

Petroleum Co.

v.

1988)).

However,

F.2d
Stokes

discretion of
whether it
Div.,

Scotland,

"essential

1992)

1190,
Oil

of

claim."

losing

Cir.

less

Law

Co. v.
1983)).

delay

than

in

that

complex legal and

U.S.

Fire

Ins.,

966

(citing Nunley v. M/V Dauntless
1204

Co.,

(5th

863

each

case,

and

Cir.

F.2d

rests

the tribunal which has

Gypsum

118

find

1250,

1989);
1258

Phillips
(6th Cir.

damages should be allowed "depends upon the

be a court or a

Nat'l

at

the United States Supreme Court instructs that

whether interest on

circumstances

the

unwarranted

substantially

bad[-]faith

(4th Cir.

for

(5th

issues,

and a

must

Admiralty & Mar.

factual

863

104327,

court

a genuine dispute regarding liability,

Colocotronis,

M/V MARLIN,

LEXIS

inequitable

Schoenbaum,

F.2d

damages

the

sought,

F.2d at 828 n.14

v.

actually

(citing Inland Oil & Transp.

circumstances"

suit,

U.S.

Co.

were

9, 2009).

(5th ed. 2011)

"peculiar

bringing

2465,

prejudgment
that

at 121

AMC

Oct.

deny

circumstances

§ 3-2,

the

Norfolk & Portsmouth Belt Line R.R.

2:08cvl34,

*43-44

from

U.S.

jury."

Co.,

515

507,

518-19

rationale

for

U.S.

to

much

in

(1886)).

the

pass upon the subject,

City of Milwaukee v.
189,

awarding

very

196

(1995)

(quoting

Recognizing

prejudgment

Cement

that

interest

is

The
the

to

ensure that an injured party is fully compensated for its loss,"
6

id.

at

195,

the

Supreme

Court

has held that

faith dispute over

liability nor the

[alone]

the

justifies

denial

of

"neither a good-

existence of mutual

prejudgment

interest

fault
in

an

rate,

2%

admiralty . . . case," id. at 199.
III.

A.
Plaintiff

per month,

DISCUSSION

Prejudgment Interest Rate

asserts

that

the

contractual

interest

or 24% per year, is the appropriate rate that would

compensate Plaintiff for its lost opportunity costs.
also observes that,

$850,000,

the

interest

because the maximum award it can receive is

jointly

posted by Claimant,
rate,

Plaintiff

stipulated

amount

of

the

security

bond

even if the Court did award the contractual

Plaintiff

would

effectively

receive

prejudgment

interest of only approximately 7.5% per year rather than 24% per

year.

In

interest
should

the

rate
award

Plaintiff's

event
is

the

Court

appropriate,

prejudgment

counsel

disagrees
Plaintiff

interest

asserts

has

at

that

the

argues
the

that

prime

remained

at

asserts

that

contractual

3.25%

the

rate,

Court
which

during

the

relevant time period.
Claimant,

on the other hand,

the Court should

not award Plaintiff any prejudgment interest at all,
event

that

interest

is

the

Court

necessary,

determines

the Court

some

amount

of

but in the
prejudgment

should award such interest

at

the 3-month Treasury bill rate, which Claimant's counsel asserts

is presently .03%.

See Triton, 671 F. Supp. 2d at 765 (awarding
7

prejudgment

interest at 3-month Treasury

that "a rate based on

compensates

'short-term,

[plaintiff]

for

bill

rate,

observing

risk free obligations'

its

loss

of

the

fairly

price

of

the

necessaries").

The
that

Court

render

Plaintiff.

not

finds

"peculiar

inequitable
U.S.

delay

no

in

the

Fire Ins.,

bringing

substantially

less

Id.

frivolous,

Supreme

suit;

than

but,

Court

rather,

has

U.S.

Grace & Co.

that

App.

LEXIS

(observing "that

was

damages

sought;

the

"a

interest

will

issues

parties'

good-faith

does

not

not

to

be

were

at

**9-10

award of

refused simply because the

dispute

not

not

which

the

the

denial

of

515 U.S. at 199.

Nos.

(4th

prejudgment

was

dispute,"

"justif[y]

Loveland Co.,

26980,

case

Plaintiff did

award

the

City of Milwaukee,

S.C.

an

prejudgment

this

Plaintiff did not bring suit in bad

held

v.

of

the

Furthermore,

prejudgment interest."
W.R.

award

in

966 F.2d at 828 n.14.

particularly complex; and,
faith.

circumstances"

88-1311,

Cir.

-1318,

Jan.

31,

interest may

case is complex,"

Cf.
1990

1990)

[not]

be

especially if the

case is no more complex than the

run of admiralty cases and if

the

unnecessarily

claimant

itself

complexity").
contractual

has

However,

interest

rate

not

the
of

Court

2%

also

per month,

added

finds

or 24%

per

to

its

that

the

year,

greater than necessary to compensate Plaintiff for its loss.

Claimant
presented

observed
no

at

evidence

the
or

April

8,

witnesses
8

2014
to

show

hearing,
its

is

As

Plaintiff

actual

"lost

opportunity
Plaintiff

costs."

has

not

Furthermore,
established

the

that

Court

it

did,

observes
in

that

fact,

forgo

subsequent business for lack of funding, or that it was required
to borrow funds in order to continue its business.

Accordingly,
Court,

prime

exercising

the

discretion

afforded

to

the Court awards prejudgment interest to Plaintiff at the

rate,

observing that

[plaintiff]

"the

prime

rate

best

compensates

which is a better measure of the harm suffered

as a result of the loss of the use of money over time."
Detection,

Inc.

Dist.

v.

Smiths

LEXIS

150376,

(citations

and

internal

Valleejee,

661

F.2d

at

to

Detection

at

follow

been

urged

commercially").
is the cost of

Morpho

*4

quotation
313

the

(E.D.

marks

Va.

2:llcv498,

Oct.

omitted);

that

17,

see

district

interest

2013

2013)

Ameejee

courts

rate

the Government,'

[plaintiff's]

Detection,

No.

Morpho

"have

prevailing

x[t]he 3 month Treasury Bill rate

raising funds by

(quoting Stryker Corp.

Inc.,

(noting

"In contrast,

not generally reflect a
time."

a

. . . because the prime rate represents the cost of

borrowing money,

U.S.

this

2013

U.S.

and thus does

loss of use of money over
Dist.

LEXIS

150376,

at

*4

Inc.,

891

F.

v. Intermedics Orthopedics,

Supp. 751, 833 (E.D.N.Y. 1995)); see also M/T ORANGE SUN, 855 F.
Supp.

2d

at

156

(2012

case

awarding

prejudgment

interest

at

prime rate, observing that, "given artificially low T-bill rates

for

the past period,

an

award of prejudgment

interest at

that

rate would not be adequate").3
B. Date from which Prejudgment Interest Accrues

Plaintiff

asserts

interest at the
should

accrue

that,

if

the

Court

contractual interest rate,

beginning

on

November

2012,

date

the

interest

necessaries

Provos Mar.,

1999

U.S.

(awarding
were
Court

should accrue

S.A.

Dist.

were

LEXIS

provided
awards

to

the

Nos.

12012,

prejudgment

at

interest

beginning on November 28,

*8

the

at

29,

both

2012,

vessel.
99-26,

(E.D.

La.

if

argues

all,

it

J. P.

47,

106,

29,

the

the

See

July

date

Claimant

interest

2012,

the

Civ.A.

"from

vessel").

prejudgment

to

date

Plaintiff alleges that

from October

provided

v. M/V AGNI,

the

On the other hand,

Court awards a lower interest rate,

prejudgment

prejudgment

prejudgment interest

28,

parties agree the payment became overdue.

the

awards

29,

1999)

necessaries

that,

if

should

the

accrue

since Plaintiff had given Tramp

until that date to pay for the fuel bunkers.

"The

Court

agrees

with

the

weight

of

authority

that

prejudgment interest should start to accrue from the date of the

loss," e.g.,

the date the invoice became due.

3 In Triton,

Judge

"three-month Treasury bill

Motz

M/V MARLIN,

awarded prejudgment

average

rate"

of

2.34

interest

percent,

2009

at

the

which

was

slightly below the prime rate of 3.25 percent and which the parties
agreed
"was
a
reasonable
[rate]
(assuming
the
Court
denied
[plaintiff's] request for contractual interest)."
Triton,
671 F.
Supp. 2d at 765 n.10.
The current three-month Treasury bill rate, as
of April 4, 2014, according to the Claimant in this case, is .03
percent.

See

also

the

website

for

the

Federal

(http://www.federalreserve.gov/releases/hl5/data.htm).
10

Reserve

at

U.S.
v.

Dist.
MSL

LEXIS

Int'l,

137131,

at

104327,
LLC,

at

No.

*18-19

45;

see also Atl.

13-CV-00209,

(S.D.N.Y.

"prejudgment interest

Aug.

and awarding

"on the

invoices

the

date

these

by

which

16,

U.S.

2013)

Dist.

Ltd.
LEXIS

(finding

that

should commence when MSL breached each of

the four invoices"
date

2013

Forwarding,

it

can

prejudgment

became

be

said

due").
that

interest beginning
After all,

Plaintiff

that

should

is

have

expected to be paid.
IV.

For

the

prejudgment

reasons

interest

from November

28,

CONCLUSION

set

to

2012.

forth

Plaintiff

jointly if possible,

approval,

filed

indicating

Plaintiff,

the

later

prejudgment

the

Court

at

the

prime

parties

The

the Court,

no

above,

rate,

are

ORDERED

to

awards

accruing
submit

to

a proposed order for the Court's

than

Thursday,

interest

amount

April

17,

Claimant

2014,

owes

to

calculated in accordance with this Opinion and Order,

as well as the agreed amount of custodia legis expenses.
The
Order

Clerk is REQUESTED to send a copy of this Opinion and

to all
IT

IS

counsel

of record.

SO ORDERED.

/fiYUfe-

/s/
Mark

UNITED

Norfolk,

Virginia

April _9_, 2014

11

STATES

S.

Davis

DISTRICT

JUDGE