Addax Energy SA v. M/V Yasa H. Mulla

• Decision Date: 22 January 2021
• Docket Number: No. 18-2438,18-2438
• Citation: 987 F.3d 80
• Parties: ADDAX ENERGY SA, Plaintiff - Appellee, v. M/V YASA H. MULLA, (IMO No. 9442512), her tackle, engines, etc. in rem, Defendant - Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

987 F.3d 80

ADDAX ENERGY SA, Plaintiff - Appellee,

v.M/V YASA H. MULLA, (IMO No. 9442512), her tackle, engines, etc. in rem, Defendant - Appellant.

No. 18-2438

United States Court of Appeals, Fourth Circuit.

Argued: September 9, 2020

Decided: January 22, 2021

ARGUED: James H. Power, HOLLAND & KNIGHT LLP, New York, New York, for Appellant. Lauren Brooke Wilgus, BLANK ROME LLP, New York, New York, for Appellee. ON BRIEF: Marie Elizabeth Larsen, Christine Nicole Walz, HOLLAND & KNIGHT LLP, New York, New York, for Appellant Steven M. Stancliff, CRENSHAW, WARE & MARTIN, P.L.C., Norfolk, Virginia, for Appellee.

Before MOTZ, AGEE, and KEENAN, Circuit Judges.

Affirmed by published opinion. Judge Keenan wrote the majority opinion, in which Judge Motz joined. Judge Agee wrote a dissenting opinion.

BARBARA MILANO KEENAN, Circuit Judge:

Addax Energy SA (Addax) filed this in rem action against M/V Yasa H. Mulla (the vessel), an ocean vessel, invoking the district court's admiralty jurisdiction under 28 U.S.C. § 1333. Addax had entered into a fuel supply agreement with the charterer of the vessel, a non-party to this action. When the charterer failed to pay the amount due, Addax filed the present in rem action against the vessel to enforce a maritime lien under the Commercial Instruments and Maritime Lien Act (the CIMLA), 46 U.S.C. § 31301 et seq ., and Supplemental Admiralty Rule C. In its defense, the vessel asserted that Addax's right to a maritime lien was extinguished when Addax settled its breach of contract claim with the charterer in a separate proceeding.

The district court granted summary judgment to Addax, concluding that the maritime lien arose by operation of law and was unaffected by Addax's settlement agreement with the charterer. After a bench trial held to determine the amount of damages, the court entered judgment in favor of Addax.

Upon our review, we conclude that the settlement agreement did not extinguish Addax's right to a maritime lien, and that Addax was entitled to enforce that right in the district court. Additionally, we reject the vessel's arguments regarding the value of the lien, the expenses awarded to Addax, and the vessel's due process rights. We therefore affirm the district court's judgment.

I.

Addax is based in Switzerland and supplies bunker fuel to ships and vessels. In February 2017, Addax entered into a fuel supply contract with non-party Windrose SPS Shipping & Trading (Windrose), the charterer of the vessel. The purchase price for the fuel was $320,997.77. Windrose failed to pay the amount due after receiving delivery of the fuel.

As a result of Windrose's default, Addax filed a claim against Windrose in a Swiss bankruptcy court. In those proceedings, Addax and Windrose entered into a settlement agreement in November 2017 (the settlement agreement). Under the settlement agreement, in exchange for Addax agreeing to suspend the Swiss proceedings, Windrose agreed to pay in installments a total of $344,481.81, including the invoiced amount plus interest and fees. As part of this total, the parties agreed that Windrose would assign to Addax Windrose's claim, worth at least $100,000, against third-party Cargill International (the Cargill claim). The vessel was not a party to the settlement agreement.

Since executing the settlement agreement, Windrose has paid Addax a total of $40,000 toward the debt.¹ In December 2017, Addax filed the present in rem action against the vessel in the Eastern District of Virginia. In its complaint, Addax sought to arrest the vessel to enforce its maritime lien pursuant to the CIMLA in order to recover the outstanding amount of the debt plus interest, fees, and expenses.

On December 13, 2017, the district court issued an arrest warrant for the vessel, and a representative of the United States Marshals Service (Marshals Service) effectuated the arrest on December 27, 2017. The vessel was released on January 2, 2018 after its owner, Yasa Shipping, deposited cash security into the registry of the court. The parties proceeded to discovery and, in April 2018, the vessel filed a motion to vacate the arrest. In November 2018, the district court denied the vessel's motion to vacate, concluding that the settlement agreement did not extinguish Addax's right to a maritime lien. For the same reasons, the court also granted Addax's motion for summary judgment, holding that Addax was entitled to the requested lien.

The district court conducted a bench trial to determine the value of the maritime lien and the resulting damages to which Addax was entitled. The court deducted the $40,000 already paid by Windrose pursuant to the settlement agreement, and awarded Addax the balance due on the invoice, $280,997.77. The court also awarded Addax prejudgment interest and custodia legis expenses that Addax was required to pay to the Marshals Service and to the substitute custodian of the vessel while the vessel was in custody. The vessel now appeals.

II.

The vessel primarily argues that the district court lacked admiralty jurisdiction, because the settlement agreement between Addax and Windrose, the charterer of the vessel, was a non-maritime contract that superseded the underlying fuel contract, thereby extinguishing Addax's maritime lien. The vessel also asserts that Addax lacks standing to bring this in rem action, because Addax assigned its interest in the maritime lien to a third party. Additionally, the vessel contends that the district court (1) should have credited the value of the Cargill claim against the lien, (2) improperly awarded Addax custodia legis expenses, and (3) violated the vessel's due process rights by denying the vessel a prompt hearing under the admiralty rules. We will address each argument in turn.

A.

We first consider the vessel's contention that Addax lacks standing to assert its maritime claim, because Addax purportedly assigned its right to collect the receivables from the fuel invoice to a third-party financing company. According to the vessel, by assigning its contractual rights to a third party, Addax necessarily also assigned its right to enforce the lien in rem. The vessel thus contends that Addax has not satisfied its burden to establish it has suffered an injury in fact for purposes of Article III standing. We disagree with the vessel's analysis.

As an initial matter, we observe that the question whether Addax assigned its right to collect receivables to a third party does not implicate Addax's standing under Article III. The requirements of Article III standing ensure that a plaintiff has presented a live case or controversy over which the federal courts have jurisdiction. See DaimlerChrysler Corp. v. Cuno , 547 U.S. 332, 342, 126 S.Ct. 1854, 164 L.Ed.2d 589 (2006). Addax plainly has satisfied the "irreducible constitutional minimum" of Article III standing, namely, that Addax was injured due to non-payment of the invoice it issued, and that this injury is traceable to the defendant vessel and is redressable by a favorable decision of the district court. Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S. Ct. 1540, 1547, 194 L.Ed.2d 635 (2016) (citing Lujan v. Defs. of Wildlife , 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ).

Rather than Article III standing, the true principle underlying the vessel's argument relates to whether Addax is the real party in interest under Federal Rule of Civil Procedure 17, which requires that "[a]n action [ ] be prosecuted in the name of the real party in interest." Fed. R. Civ. P. 17(a)(1). In making this determination, the question we must answer is whether Addax "was legally entitled to pursue" the maritime lien on its own behalf, or whether the claim belonged to a third-party assignee. Martineau v. Wier , 934 F.3d 385, 391 (4th Cir. 2019) ; see also 6A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 1542 (3d ed. Supp. 2020) ("[I]f the [plaintiff] has assigned all interest in the claim before the action is instituted, the person no longer is the real party in interest."); id. § 1545 (discussing applicability of real party in interest rule to assignments).²

A defendant may assert as an affirmative defense under Rule 17 that the plaintiff is not the real party in interest. Cranpark, Inc. v. Rogers Grp., Inc. , 821 F.3d 723, 730 (6th Cir. 2016). In such circumstances, when the plaintiff has moved for summary judgment, the defendant must show that there is a genuine dispute of material fact regarding whether the asserted claim belongs to the plaintiff or to a third party. See Fed. R. Civ. P. 56(a) ; Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ("The moving party is entitled to a judgment as a matter of law [when] the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof." (internal quotation marks omitted)).

In asserting that Addax assigned its right to the maritime lien, the vessel relies heavily on the June 2017 invoice that Addax submitted to Windrose seeking payment for the fuel delivery. The following language appeared at the bottom of the invoice:

Please note that due to our financing structure, this invoice has been assigned in accordance with our legal and contractual obligations. The payment of this assigned invoice has to be made exclusively and irrevocably to our account as per following payment instructions.

The record before us lacks information about any such assignment, including the name of the assignee or the terms of any agreement reached. Indeed, other than the above language on the invoice, nothing in the record suggests that an assignment actually was made.

Addax's corporate designee testified at his deposition that the language at issue on the invoice was included as a matter of standard company practice, and that this language did not necessarily indicate that an assignment had been made. The corporate designee was unaware whether...