Leopard Marine & Trading, Ltd. v. Easy St. Ltd., Docket No. 16-1356-cv

• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
• Writing for the Court: POOLER, Circuit Judge
• Citation: 896 F.3d 174
• Parties: LEOPARD MARINE & TRADING, LTD., Plaintiff-Appellee, v. EASY STREET LTD., Defendant-Appellant.
• Docket Number: August Term, 2016,Docket No. 16-1356-cv
• Decision Date: 13 July 2018

896 F.3d 174

LEOPARD MARINE & TRADING, LTD., Plaintiff-Appellee,
v.
EASY STREET LTD., Defendant-Appellant.

Docket No. 16-1356-cv
August Term, 2016

United States Court of Appeals, Second Circuit.

Argued: February 16, 2017
Decided: July 13, 2018

896 F.3d 178

Appearing for Appellant: BRITON P. SPARKMAN (George M. Chalos, on the brief), Chalos & Co, P.C., Oyster Bay, NY.

Appearing for Appellee: CHRISTOPHER H. DILLON, Burke & Parsons, New York, NY. David S. Bland, Julie Maria Araujo, Bland & Partners PLLC, New Orleans, LA

Before: POOLER, PARKER, and LIVINGSTON, Circuit Judges

Judge Debra Ann Livingston dissents in a separate opinion.

POOLER, Circuit Judge:

We decide here whether Easy Street Ltd., a Cypriot fuel supply company, has a valid maritime lien against a vessel, the M/V Densa Leopard (the "Vessel"). A maritime lien is "[a] lien on a vessel," given for one of several purposes, including "to secure the claim of a creditor who provided maritime services to the vessel." Black’s Law Dictionary 1065 (10th ed. 2014). In this case, the Vessel’s owner, Leopard Marine & Trading, Ltd., a Maltese company, sued for a declaratory judgment that Easy

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Street may not exercise the maritime lien because of laches. The United States District Court for the Southern District of New York (Rakoff, J. ), sitting in admiralty, declined to abstain on grounds of international comity in deference to an ongoing suit in Panama in which Easy Street has attempted to exercise the lien. The district court then issued a declaration that laches has extinguished the lien.

We determine that the federal courts have jurisdiction to declare a maritime lien unenforceable; that abstention on the basis of international comity is not required in this case; and that the district court did not abuse its discretion in ruling that laches extinguished the lien. We thus AFFIRM the district court’s judgment.

BACKGROUND

I. Factual Background

This case arises from an ocean vessel’s unpaid fuel bill. In 2011, the Vessel’s owner, Leopard Marine, chartered¹ the Vessel to Allied Maritime, Inc., thus allowing Allied to operate the Vessel for a period of time. As part of the chartering agreement, Allied gave Leopard Marine a cargo lien worth the amount owed for using the Vessel.

On August 23, 2011, Allied bought fuel for the Vessel from Easy Street in Mejillones, Chile, at a price of $848,847.60. Allied agreed to pay Easy Street for the fuel by September 26, 2011. By purchasing the fuel, a maritime lien arose on the Vessel in Easy Street’s favor, which would allow Easy Street to seize the Vessel pursuant to the lien if the fuel bill went unpaid. See Itel Containers Int’l Corp. v. Atlanttrafik Exp. Serv. Ltd. , 982 F.2d 765, 766 (2d Cir. 1992) ("A maritime lien is[ ] a special property right in the vessel, arising in favor of the creditor by operation of law as security for a debt or claim. The lien arises when the debt arises, and grants the creditor the right to appropriate the vessel, have it sold, and be repaid the debt from the proceeds."). Under American law, Allied, as the charterer of the Vessel, could give third parties such liens even without the Vessel’s owner’s consent. See 46 U.S.C.A. §§ 31341, 31342.

Allied returned the Vessel to Leopard Marine on November 4, 2011, with significant fuel left in it. On December 2, 2011, Leopard Marine provided Allied a payment credit of $409,853.10 for the fuel’s value, and Allied made the final payment for use of the Vessel, which was set off in part by the fuel credit.

Allied did not pay Easy Street—the fuel provider—when the fuel invoice was due, and Easy Street undertook efforts to recover the amount owed under the invoice. Demitrios Chasampalis, the only full-time employee of Easy Street in 2011, stated that he sent electronic notices and attended "about 100 meetings," "in person ... [i]n Allied offices," between when the invoice was issued in 2011 and sometime in 2012. App’x at 240, 246-47. During the meetings, which occurred "almost every two [or] three days," he "demanded payment of the invoice," among other outstanding issues between the two companies. App’x at 249-50. He testified that he did not seek "a settlement" of the money that was owed, but instead demanded payment of the invoice in full. App’x at 249-50. On March 16, 2012 and April 20, 2012, evidently after scores of in-person meetings had already been held, Allied sent two written notices to Easy Street, each promising to pay within a month. App’x at 321-24. But Allied did not honor either of the

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notices, and ultimately never paid the fuel bill.

On April 15, 2012, Allied entered into involuntary bankruptcy proceedings following a motion by third-party creditors. On November 6, 2012, a Greek court declared Allied bankrupt, and ruled that Allied was "considered (retrospectively) to have stopped payments to its creditors since [January 1, 2012]." App’x at 325. The parties agree that seeking recovery from the bankruptcy estate would be futile.

Easy Street never considered suing Allied before its bankruptcy, at least in part because of the companies’ strong ties to each other. Chasampalis stated that the relationship between Allied and Easy Street was "such that they had me like their son," and that he "believed in them." App’x at 254.

It was also not until at least September of 2012, after Allied entered into involuntary bankruptcy proceedings, that Easy Street considered pursuing remedies against Leopard Marine, and began tracking the Vessel for arrest. Although there is some dispute as to when Easy Street first informed Leopard Marine that Allied’s bill was unpaid, the earliest Easy Street claims to have done so was in October of 2013. In any event, Easy Street sent Leopard Marine an email on March 30, 2015, demanding payment of $1,394,807.76—the amount of the unpaid fuel bill plus interest and legal fees.

During 2011 and 2012, the Vessel passed through a number of ports where Easy Street could have arrested it and exercised the maritime lien. Easy Street conceded in the district court that the Vessel was in the Port of Vancouver, Canada, from March 17, 2012 until March 22, 2012, in Panama from April 4, 2012 to April 5, 2012, and in Brazil from June 5, 2012 to June 12, 2012. The district court noted, and Easy Street does not dispute, that exercise of its maritime lien would have been legally possible—even if costly and protracted—in each of those ports.

On April 19, 2015, Easy Street arrested the Vessel in Panama, exercising its maritime lien for the unpaid fuel in an in rem action there.² The next day, Leopard Marine commenced this action, seeking a declaratory judgment that Easy Street’s lien is barred by laches, and also seeking attorneys’ fees and costs.

II. Proceedings Below

This appeal reviews two orders entered by the district court. The first denied Easy Street’s motion to dismiss, brought under two theories: international comity and lack of personal jurisdiction. Leopard Marine & Trading, Ltd. v. Easy St., Ltd. , No. 15-cv-3064, 2015 WL 4940109 (S.D.N.Y. Aug. 6, 2015) (hereinafter "Motion to Dismiss Order"). Easy Street first argued that the Panamanian courts had already exercised jurisdiction over part of the proceedings, and so the district court should abstain from considering the case, either through dismissal or stay. The district court concluded that this case did not raise the "exceptional circumstances" necessary for abstention. The court also determined that it had personal jurisdiction because of a United States forum selection clause in the fuel supply contract between Easy Street and Allied, even though Leopard Marine was not a party to that contract. The court reasoned that, because American law allows a party chartering a vessel to bind the vessel’s owner to contracts, Easy Street should have foreseen that Leopard Marine, the Vessel’s owner, might later seek to enforce any favorable provision—including a choice-of-law provision—in a contract between Easy Street and Allied.

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The second order considered whether, on the basis of laches, Easy Street should be foreclosed from enforcing its maritime lien against the Vessel. Leopard Marine & Trading, Ltd. v. Easy St. Ltd. , No. 15-cv-3064, 2016 WL 3144058 (S.D.N.Y. Apr. 8, 2016) ("Summary Judgment Order"). The court concluded that laches barred the exercise of the lien, as Easy Street had delayed exercising the lien and the delay prejudiced Leopard Marine. The court focused, in particular, on the fact that Easy Street waited until after Allied had gone bankrupt to exercise the lien, which eliminated a number of otherwise reasonable means of repayment. Had Leopard Marine known that Easy Street intended to enforce the lien on the Vessel to be repaid for the fuel, Leopard Marine could have exercised its own lien against Allied’s cargo pursuant to the chartering agreement, or pursued an arbitration against Allied in London. But after Allied entered bankruptcy, these were no longer realistic possibilities.

Easy Street appealed the district court’s decisions not...