Argued: March 15, 2018
from the United States District Court for the Southern
District of New York Katherine B. Forrest, District Judge,
assignee of a maritime fuel contract supplier and the
physical supplier assert competing maritime lien claims
arising from the delivery of fuel to a vessel. To effect
actual delivery of the fuel, the contract supplier
subcontracted with an intermediary, who re-subcontracted with
the physical supplier. After delivery of the fuel but before
any party received payment, the contract supplier and the
intermediary declared bankruptcy. Both the assignee of the
contract supplier and the physical supplier asserted maritime
liens for the unpaid fuel against the vessel. The District
Court denied both maritime liens and sua sponte
entered summary judgment in favor of the vessel. The assignee
of the contract supplier and the physical supplier appealed.
We AFFIRM IN PART, VACATE IN
PART, and REMAND for further
proceedings consistent with this opinion.
Stephen Simms and Casey L. Bryant, Simms Showers LLP,
Baltimore, MD., for CEPSA International B.V.
D. Bercaw and Robert J. Stefani, King, Krebs & Jurgens,
PLLC, New Orleans, LA, and Bruce G. Paulson and Brian P.
Maloney, Seward & Kissel LLP, New York, N.Y., for ING
H. Power and Marie E. Larsen, Holland & Knight LLP, New
York, N.Y., for M/V TEMARA, IMO No. 9333929, her engines,
tackle, equipment, furniture, appurtenances, etc.
Before: PARKER, WESLEY, and LIVINGSTON, Circuit Judges.
BARRINGTON D. PARKER, CIRCUIT JUDGE.
appeal requires us to decide which parties are entitled to a
maritime lien under the Commercial Instruments and Maritime
Liens Act ("CIMLA"), 46 U.S.C. §
31301 et seq.
2014, the charterer of a vessel contracted with a supplier to
buy bunkers (marine fuel). To fulfill its obligation, the
contract supplier subcontracted with an intermediary, who, in
turn, subcontracted with another entity, the physical
supplier, who then delivered the bunkers. After the bunkers
were delivered, but before anyone was paid, the contract
supplier and the intermediary entered bankruptcy. In order to
get paid, the assignee of the contract supplier and the
physical supplier asserted competing maritime liens against
the vessel. We must decide which party was entitled to do so.
assignee of the contract supplier and the physical supplier
cross-moved for summary judgment. The United States District
Court for the Southern District of New York (Katherine B.
Forrest, Judge) concluded that neither the contract
supplier (and, thus, its assignee) nor the physical supplier
were entitled under CIMLA to maritime liens and denied their
motions for summary judgment. Without providing notice to the
parties, the District Court then sua sponte entered
summary judgment in favor of the vessel.
affirm in part, vacate in part, and remand for further
proceedings. We agree with the District Court that the
subcontractor physical supplier was not entitled to a
maritime lien because it did not provide the bunkers on the
order of an entity specified in CIMLA. However, we disagree
with the District Court that the bunker contract
supplier-and, thus, its assignee-was not entitled to seek a
maritime lien. A contractor is entitled to assert a maritime
lien under CIMLA when it contracts with an entity specified
in the statute for the delivery of necessaries and those
necessaries are delivered pursuant to that arrangement, even
if by a subcontractor. We also conclude that the District
Court's sua sponte entry of summary judgment was
appeal flows from the collapse of O.W. Bunker and Trading A/S
("O.W. Denmark") and its international
subsidiaries (collectively with its international
subsidiaries, the "O.W. Bunker Group"), a
world-wide operation which was in the business of supplying
bunkers to ships operating in international commerce.
Following the collapse of the O.W. Bunker Group, many of its
customers were unsure where to direct payment and, because
they faced competing claims from various unpaid parties,
those customers were concerned that their vessels would be
subject to arrest while the payment issues were sorted out.
provides to a specific class of creditors a special type of
statutory lien-a maritime lien-as security for a discrete
category of debts. Under CIMLA, a party who provides
necessaries (such as bunkers) to a vessel is entitled to
assert a maritime lien. 46 U.S.C. § 31342. A maritime
lien grants a provider of necessaries a suite of powerful
rights: the right to arrest the vessel, to have it sold, and
to be paid from the proceeds. Maritime liens promote maritime
commerce by providing additional recourse-beyond in
personam claims against counterparties-by enabling the
assertion of a lien directly against the vessel, thereby
encouraging the prompt payment of debts and the existence of
a reliable market for the servicing and supplying of vessels,
which are obviously essential to maritime commerce. Unpaid
entities who have supplied necessaries but who do not qualify
for maritime liens may have in personam claims.
However, due to the complexities of international maritime
commerce, collection on these claims can be considerably more
problematic than is the case with maritime liens.
relevant chain of events began in October 2014 when Copenship
Bulkers A/S ("Copenship"), the
time-charterer of the M/V TEMARA (the "TEMARA,
" or the "Vessel"), contracted with a
contract supplier, O.W. Denmark, for the delivery of 400
metric tons of bunkers to the Vessel in Balboa, Panama. After
receiving the order, O.W. Denmark issued a sales order to
Copenship confirming the details of the sale. The
confirmation lists O.W. Denmark as the "seller, "
Copenship as the "buyer, " and CEPSA International
B.V. ("CEPSA") as the "supplier."
The confirmation provided that "acceptance of the marine
bunkers by the vessel . . . shall be deemed to constitute
acceptance of the said general terms[.]" The
confirmation reflected the agreed-upon price for the
fuel-$536.00 per metric ton-and specified that payment would
be due 30 days after delivery. The sales agreement between
O.W. Denmark and the charterer was governed by the "OW
Bunker Group Terms and Conditions of sale [sic] for Marine
Bunkers Edition 2013" (the "O.W.
Terms"). JA at 103-14. Clause L.4(a) of the O.W.
Terms ("Clause L.4(a)") made them fluid by
These Terms and Conditions are subject to variation in
circumstances where the physical supply of the Bunkers is
being undertaken by a third party which insists that the
Buyer is also bound by its own terms and conditions. In such
circumstances, these Terms and Conditions shall be varied
accordingly, and the Buyer shall be deemed to have read and
accepted the terms and conditions imposed by the said third
Id. at 111.
next step of the transaction, O.W. Denmark subcontracted with
its subsidiary, O.W. USA, for the purchase of the bunkers.
O.W. USA issued a sales order confirmation to O.W. Denmark,
listing O.W. Denmark as the "buyer" and O.W. USA as
the "seller." The confirmation reflected a price of
$529.00 per metric ton and called for payment within 30 days
third and final stage of the transaction, O.W. USA
subcontracted with the physical supplier, CEPSA, for the
actual delivery of the bunkers. CEPSA issued a confirmation
to O.W. USA listing CEPSA as the "seller, " O.W.
USA as the "buyer, " and reflecting a price of
$526.00 per metric ton. O.W. USA then memorialized the
transaction in its own confirmation. Neither confirmation
referenced O.W. Denmark or the charterer of the Vessel, but
both referenced the Vessel. CEPSA physically supplied the
bunkers to the Vessel and CEPSA provided a bunker receipt
that the Vessel's chief engineer signed and stamped with
the names of the Vessel and its owner.
delivery of the bunkers, each party in the contractual chain
invoiced its respective counterparty, at different prices,
reflecting a markup at each stage of the transaction: O.W.
Denmark invoiced the charterer, Copenship, JA at 115 ($536
per metric ton); O.W. USA invoiced O.W. Denmark, JA at 130
($529 per metric ton); and CEPSA invoiced O.W. USA, JA at 90
($526 per metric ton). As the invoices came due, O.W. Denmark
entered insolvency proceedings in Denmark, the O.W. Bunker
Group collapsed, and the various O.W. Bunker Group entities
then entered insolvency proceedings around the world.
December 2013, almost a year before the O.W. Bunker
Group's collapse, ING Bank N.V.
("ING") and O.W. Denmark entered into a
$700 million revolving credit agreement, funded by a
syndicate of lenders, which provided working capital for the
O.W. Bunker Group. ING contends that the credit agreement was
secured by, among other things, an assignment of O.W. Bunker
Group receivables from the bunker transactions it had