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
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