Bominflot, Inc. v. The M/V Henrich S

• Decision Date: 04 October 2006
• Docket Number: No. 05-2242.,05-2242.
• Parties: BOMINFLOT, INCORPORATED; Bominflot Ltd, Plaintiffs-Appellants, v. THE M/V HENRICH S (IMO No.9158513), her engines, tackle, nets, gear, apparel, appurtenances, etc., in rem, Defendant-Appellee, and Hamburg Sud, as Successor-in-Interest to Kien Hung, Defendant, and H + H Schepers Reederei GMBH & Co KG MS Heinrich S, Intervenor/Defendant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 144

465 F.3d 144

BOMINFLOT, INCORPORATED; Bominflot Ltd, Plaintiffs-Appellants, v. THE M/V HENRICH S (IMO No.9158513), her engines, tackle, nets, gear, apparel, appurtenances, etc., in rem, Defendant-Appellee, and Hamburg Sud, as Successor-in-Interest to Kien Hung, Defendant, and H + H Schepers Reederei GMBH & Co KG MS Heinrich S, Intervenor/Defendant.

No. 05-2242.

United States Court of Appeals, Fourth Circuit.

Argued May 23, 2006.

Decided October 4, 2006.

David B. Marvel, Robertson & Hollingsworth, Charleston, South Carolina, for Appellants. Julius H. Hines, Buist, Moore, Smythe, McGee, P.A., Charleston, South Carolina, for Appellee.

Before WIDENER, WILLIAMS, and KING, Circuit Judges.

Affirmed by published opinion. Judge WILLIAMS wrote the opinion, in which Judge KING concurred. Judge WIDENER wrote a separate dissenting opinion.

WILLIAMS, Circuit Judge.

Appellants Bominflot, Inc. and Bominflot Ltd. (collectively "Bominflot") appeal a district court order dismissing their maritime lien claim against Appellee THE M/V HENRICH S ("the Vessel"). We hold that because English law applies to this dispute, Bominflot cannot enforce a maritime lien against the Vessel. We therefore affirm the district court.

I.

This case arises out of three provisions of fuel oil, known as "bunkers," delivered by Bominflot to the Vessel in February and March 2003.¹ Each provision was subject to contractual language contained in "Bominflot International Group of Companies General Conditions of Sale and Delivery effective from July 1, 2000" ("General Conditions"). (J.A. at 21-22.) Bominflot is an international conglomerate organized under the laws of the United States and the United Kingdom that, among other things, specializes in providing bunkers to vessels. The Vessel, a German-flagged ship owned by German firms, was—during the time of the relevant bunker deliveries—under time charter to Kien Hung Shipping Co. Ltd. of Taiwan ("Kien Hung").² Kien Hung has since become insolvent and has liquidated its assets. Bominflot alleges that it never received any payment for the bunkers.

On August 28, 2003, Bominflot brought this action in the United States District Court for the District of South Carolina under 28 U.S.C.A. § 1333 (West 1993) (granting district courts original jurisdiction in civil admiralty cases). Bominflot claimed, inter alia, a maritime lien against the Vessel pursuant to Rule C of the Federal Supplemental Rules of Certain Admiralty and Maritime Claims in conjunction with the Federal Maritime Lien Act (FMLA), 46 U.S.C.A. § 31342 (West Supp. 2005).³

The district court dismissed the action under Rule 12(b)(6) of the Federal Rules of Civil Procedure, finding that Bominflot had failed to state a claim upon which relief may be granted because English law applied to the dispute and English law does not recognize the existence of maritime liens for bunkers.

Bominflot timely appealed. We have jurisdiction to review the district court's final order under 28 U.S.C.A. § 1291 (West 1993).

II.

We review de novo the district court's grant of the Vessel's 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted. Davani v. Va. Dep't of Trans., 434 F.3d 712, 715 (4th Cir.2006). "[A] Rule 12(b)(6) motion should only be granted if, after accepting all well-pleaded allegations in the plaintiff's complaint as true and drawing all reasonable factual inferences from those facts in the plaintiff's favor, it appears certain that the plaintiff cannot prove any set of facts in support of his claim entitling him to relief." Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir.1999).

Bominflot points to two specific clauses of the General Conditions in support of its argument that it is entitled to a maritime lien against the Vessel. The first clause relates to the enforcement of a lien against the Vessel:

7.14 Products and services delivered under a Contract shall be made not only on the account of Buyer but also on the account of the receiving vessel. Buyer warrants that Seller has the rights to assert and enforce a lien against the receiving vessel for the amount of the Products and Services provided, plus without limitation, any other expenses related to enforcement of the lien.

(J.A. at 22.) The second clause is a choice of law clause and forum selection provision:

18. Governing Law

18.1 This agreement is subject to the law and jurisdiction of the courts of England, or other law and jurisdiction as specified by Seller in the Contract. However, nothing in this clause shall, in event of breach of the agreement by Buyer, preclude Seller from taking any such action as it shall in its sole discretion consider necessary to enforce, safeguard or secure its rights under the Contract in any court or tribunal in any state or country.

(J.A. at 22.)

Bominflot contends that when read together, these clauses required the district court to apply United States law, which allows for a maritime lien for bunkers, even though Section 18.1 states that the contract was subject to the law of England, which does not. As we explain below, the General Condition clauses cannot be read to provide that U.S. maritime lien law should have applied. We begin by explaining—to the extent necessary—the scope and object of maritime liens in England and the United States, before reaching the merits of Bominflot's argument.

A.

A maritime lien serves as a powerful, unusual in rem enforcement in admiralty:

The maritime lien has been described as one of the most striking peculiarities of Admiralty law, constituting a charge upon ships of a nature unknown alike to common law and equity. It arises by operation of law and exists as a claim upon the property, secret and invisible. A maritime lien may be defined as: (1) a privileged claim, (2) upon maritime property, (3) for service done to it or injury caused by it, (4) accruing from the moment when the claim attaches, (5) traveling with the property unconditionally, (6) enforced by means of an action in rem.

Griffith Price, The Law of Maritime Liens 1 (1940), quoted in Black's Law Dictionary 943 (8th ed.2004). "Quite different from a common law lien, a maritime lien is not simply a security device to be foreclosed if the owner defaults. The vessel itself is viewed as the obligor whether or not the owner is also obligated." Amstar Corp. v. S/S Alexandros T, 664 F.2d 904, 908-909 (4th Cir.1981).

Adopted from civil law, maritime liens are stricti juris and cannot be created by agreement between the parties; instead, they arise by operation of law, often depending on the nature and object of the contract. See The Steamship Yankee Blade, 60 U.S. 82, 89, 19 How. 82, 15 L.Ed. 554 (1856) (holding that maritime liens are "`stricti juris,' and cannot be extended by construction, analogy, or inference"); see also Redcliffe Americas Ltd. v. M/V Tyson Lykes, 996 F.2d 47, 50 (4th Cir.1993) (noting that a "maritime lien is a secret one, arising by operation of law"). As explained by Lord Justice Scott in the English case of The Tolten, a maritime lien "comes into existence automatically without any antecedent formality . . . and confers a true charge upon the ship and freight of a proprietary kind in favour of the `privileged' creditor. The charge goes with the ship everywhere, even in the hands of a purchaser for value without notice. . . ." United Afr. Co., Ltd. v. "Tolten", (1946) 79 Ll. L. Rep. 349, 356.

Because maritime liens confer such a powerful right, most nations—including England—limit or preclude their application. In England, admiralty judges traditionally recognized only a select group of maritime claims subject to maritime liens, "the principal being bottomry,⁴ salvage, wages, masters' wages disbursements and liabilities, and damage." The Ripon City, (1897) P. 226, 242. Notably, claims for necessaries, including bunkers, are absent from this list. Claims for necessaries in England have therefore traditionally been "available only against the property of the person who owes the debt for necessaries; and the arrest need not be of the ship in question, but may be of any property of the defendant within the realm." The Heinrich Bjorn, (1885) 10 P.D. 44, 54. As such, they are similar to blanket liens against the debtor's property, not maritime liens against the vessel that travel with the ship.

The United States as well as a number of civil law nations, however, allow for broader use and enforcement of maritime liens, including the creation of a statutory right to a maritime lien for necessaries, see 46 U.S.C.A. § 31342 (providing that "a person providing necessaries to a vessel on the order of the owner or a person authorized by the owner . . . has a maritime lien on the vessel"), and William Tetley, Maritime Liens and Claims 551 (2d ed.1998) (noting that only a few nations, including the United States, give a claim for necessaries maritime lien status), which include bunkers, see 46 U.S.C.A. § 31301(4) (West Supp.2005) (defining "necessaries" as "includ[ing] repairs, supplies, towage and the use of a dry dock or marine railway"). Moreover, Rule C of the Federal Rules of Civil Procedure's Supplemental Rules for Certain Admiralty and Maritime Claims provides: "An action in rem may be brought . . . [t]o enforce any maritime lien . . . [w]henever a statute of the United States provides for a maritime action in rem."

The distinction between U.S. and English maritime lien law is central to this case because under U.S. law, a company supplying a vessel with bunkers has a maritime lien on the vessel; whereas under English law, that company would have only a less powerful statutory right in rem, which is only a right to arrest the debtor's ship (or other property). See The John G. Stevens, 170 U.S. 113, 117, 18 S.Ct. 544, 42 L.Ed. 969 (1898) ("Claims for necessaries [in England] do not possess, ab origine, a lien, but carry only a statutory remedy against the res, which is...