Triton Marine Fuels v. M/V Pacific Chukotka

Decision Date29 July 2009
Docket NumberNo. 07-1908.,07-1908.
Citation575 F.3d 409
PartiesTRITON MARINE FUELS LTD., S.A., Plaintiff-Appellant, and Bridge Oil, Ltd., Plaintiff, and Crescent Towing and Salvage Company, Inc.; Cooper/T. Smith Mooring; Canton Port Services LLC; ISS Marine Services, Inc., d/b/a Inchcape Shipping Services; Bunker Holdings, Ltd., Intervenors/Plaintiffs, v. M/V PACIFIC CHUKOTKA, apparel, freights, etc., IMO No. 8800224, Defendant-Appellee, and Emerald Reefer Lines, Ltd.; Green Pacific A/S; Emerald Reefer Lines, Llc; Intertransport Co., LLC; Intertransport, Ltd., Defendants, and The Master of the M/V Pacific Chukotka, Garnishee.
CourtU.S. Court of Appeals — Fourth Circuit

ARGUED: Geoffrey S. Tobias, Ober, Kaler, Grimes & Shriver, PC, Baltimore, Maryland, for Appellant. David W. Skeen, Wright, Constable & Skeen, LLP, Baltimore, Maryland, for Appellee. ON BRIEF: Manuel R. Llorca, Llorca & Hahn LLP, Norwalk, Connecticut, for Appellant.

Before SHEDD, Circuit Judge, JOSEPH F. ANDERSON, JR., United States District Judge for the District of South Carolina, sitting by designation, and MARTIN K. REIDINGER, United States District Judge for the Western District of North Carolina, sitting by designation.

Reversed and remanded with instructions by published opinion. Judge REIDINGER wrote the opinion, in which Judge SHEDD and Judge ANDERSON joined.

OPINION

REIDINGER, District Judge:

In this maritime action, Triton Marine Fuels Ltd., S.A. ("Triton"), a Panamanian corporation, alleges that it supplied the M/V PACIFIC CHUKOTKA ("PACIFIC CHUKOTKA" or "Vessel") with fuel bunkers in a foreign port but was never paid. Triton brought an in rem claim against the Vessel in federal district court, asserting a maritime lien under the Federal Maritime Lien Act, 46 U.S.C.A. § 31342(a) (West 2007) ("FMLA"). Upon a motion for summary judgment filed by the PACIFIC CHUKOTKA's owner, Green Pacific A/S ("Green Pacific"), the district court dismissed Triton's in rem action against the Vessel. Triton now appeals, arguing that the district court erred in concluding that a maritime lien did not arise in favor of Triton under the FMLA. For the reasons that follow, we reverse the district court's grant of summary judgment in favor of Green Pacific and remand with instructions to enter summary judgment in favor of Triton.

I.

The material facts are not in dispute. On December 30, 2005, Green Pacific, a Norwegian company, bareboat chartered1 the PACIFIC CHUKOTKA to Intertransport Company LLC ("Intertransport"), a Russian company. The bareboat charter provided that Intertransport was to operate and manage the Vessel in all respects for its own account and to purchase fuel for its own account and at its own expense. The charter further prohibited Intertransport and its agents from incurring any maritime liens on the Vessel and specifically required the posting of a notice on the Vessel to the effect that the charterer had no authority to create, incur or permit any such lien. There is no evidence, however, that any such notice was ever posted.

In June 2006, Green Pacific delivered the Vessel to Intertransport, which then sub-chartered the Vessel to Emerald Reefer Lines, Ltd. ("ERL"), a Cayman Islands corporation with its principal place of business in Seattle, Washington. At the time of the subject transaction, the PACIFIC CHUKOTKA was registered provisionally under the laws of Malta but thereafter sailed under a Russian flag.

The PACIFIC CHUKOTKA was among a number of vessels owned by Green Pacific which delivered cargos of sea food to various destinations, including the United States. In its capacity as a sub-charterer ERL operated the vessels and had the option to purchase them at a later time.

On August 2, 2006, an employee of Ocean Transportation Services LLC, ERL's agent in Seattle, sought a supply of fuel bunkers for the PACIFIC CHUKOTKA to be delivered in Odessa, Ukraine. The request was sent to Triton Marine Fuels Canada Inc. ("Triton Canada") a Canadian corporation in Quebec, Canada, which serves as an agent for Triton. Triton Canada responded that same day, confirming ERL's request for delivery of fuel bunkers by Triton to the Vessel in Odessa between August 3 and August 8, 2006 ("Bunker Confirmation"). The Bunker Confirmation identifies ERL as the buyer acting "[o]n behalf of the M/V `Pacific Chukotka' and jointly and severally her Master, Owners, Managing Owners/Operators, Managers, Disponent Owners, Charterers, and Agents." (J.A. 030). The Bunker Confirmation also contains a choice-of-law provision, which states: "This agreement shall be governed and construed in all particulars by the laws of the United States of America, and the parties hereby agree to the jurisdiction of the United States District Courts." (J.A. 032).

On August 5, 2006, the bunkers were delivered to the PACIFIC CHUKOTKA in Odessa. That same day, Triton submitted an invoice to ERL in Seattle requesting payment of $260,400.00 by November 2, 2006, by telegraphic transfer through a New York bank to Triton's account in London. ERL never paid for the bunkers and is now insolvent.

On December 15, 2006, Triton filed this in rem action against the PACIFIC CHUKOTKA in the United States District Court for the District of Maryland, seeking to enforce a maritime lien under United States law. Thereafter, the Vessel was arrested while discharging cargo in the port of Baltimore. In January 2007, Green Pacific posted security to obtain the Vessel's release.

Green Pacific moved for summary judgment on Triton's in rem claim. Triton, in turn, filed a cross-motion for summary judgment. The district court, assuming the application of United States law, concluded that no maritime lien arose as a result of the bunkers transaction because "the FMLA is not to be applied extraterritorially to confer a maritime lien upon the plaintiff." (J.A. 089). Accordingly, the district court granted Green Pacific's motion for summary judgment, denied Triton's motion, and dismissed Triton's in rem action against the Vessel. This appeal followed.

II.

We review the district court's grant of summary judgment de novo, applying the same standards as those applied by the district court. Catawba Indian Tribe of S.C. v. City of Rock Hill, 501 F.3d 368, 370-71 (4th Cir.2007). Summary judgment is proper "if 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." Fed.R.Civ.P. 56(c).

III.

This appeal requires the Court to address two principal issues. First, the Court must determine whether the choice-of-law provision in the Bunker Confirmation is enforceable as it applies to Triton's in rem action against the Vessel. Second, if the choice-of-law provision is enforceable, and United States law therefore applies, the Court must determine whether Triton is entitled to a maritime lien under United States law.

For the following reasons, we conclude that the choice-of-law provision in the Bunker Confirmation should be enforced with respect to Triton's in rem claim against the Vessel. We further conclude that Triton is entitled to a maritime lien as a matter of law.

A.

In determining the enforceability of the choice-of-law provision in the contract, we look to principles of federal maritime law. See generally M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972); Richards v. Lloyd's of London, 135 F.3d 1289, 1292-93 (9th Cir.1998) (en banc); but see Trans-Tec Asia v. M/V HARMONY CONTAINER, 518 F.3d 1120, 1124 (9th Cir.) (applying traditional choice-of-law principles to determine which country's law determines the validity of choice-of-law provision in contract), cert. denied, ___ U.S. ___, 129 S.Ct. 628, 172 L.Ed.2d 639 (2008). "In the absence of a contractual choice-of-law clause, federal courts sitting in admiralty apply federal maritime choice-of-law principles derived from the Supreme Court's decision in Lauritzen v. Larsen, 345 U.S. 571, 73 S.Ct. 921, 97 L.Ed. 1254 (1953), and its progeny." Chan v. Soc'y Expeditions, Inc., 123 F.3d 1287, 1296 (9th Cir.1997). Where the parties have specified in their contract which law should apply to their transaction, however, "admiralty courts will generally give effect to that choice." Hawkspere Shipping Co. v. Intamex, S.A., 330 F.3d 225, 233 (4th Cir.2003) (quoting Chan, 123 F.3d at 1297). It is well established under federal maritime law that absent a compelling reason of public policy, a freely negotiated choice-of-law clause in a maritime contract should be enforced. See Bremen, 407 U.S. at 12-13, 92 S.Ct. 1907 ("There are compelling reasons why a freely negotiated private international agreement, unaffected by fraud, undue influence, or overweening bargaining power, such as that involved here, should be given full effect."); Lauritzen, 345 U.S. at 588-89, 73 S.Ct. 921 (1953) ("Except as forbidden by some public policy, the tendency of the law is to apply in contract matters the law which the parties intended to apply."); Bominflot, Inc. v. M/V HENRICH S, 465 F.3d 144, 148 (4th Cir.2006) ("Because no `other law' is specified on the face of the contract, and public policy does not counsel against it, we will respect the parties' intentions and apply English law.").

The parties do not appear to dispute that United States maritime law governs whether the choice-of-law provision is enforceable. Green Pacific, however, argues three reasons as to why the choice-of-law provision is unenforceable in this case: first, that Green Pacific was not a party to the contract and thus did not assent to such choice of law; second, that it would be fundamentally unfair to adversely affect Green Pacific's rights in its property (the Vessel) based upon a choice-of-law provision to which it did not agree; and third, that the choice-of-law provision selecting United States law is an indirect...

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