Exxon Corp. v. Central Gulf Lines, Inc.

• Decision Date: 03 March 1989
• Docket Number: No. 86 Civ. 9445 (WCC).,86 Civ. 9445 (WCC).
• Citation: 707 F. Supp. 155,1989 AMC 2467
• Parties: EXXON CORPORATION, Plaintiff, v. CENTRAL GULF LINES, INC., in personam and the M/V GREEN HARBOUR (ex William Hooper) in rem, her engines, boilers, tackle, etc. and a certain Letter of Credit No. P 621208 dated December 26, 1984 issued by the Chase Manhattan Bank, N.A., in rem., Defendants.
• Court: U.S. District Court — Southern District of New York

707 F. Supp. 155

1989 AMC 2467

EXXON CORPORATION, Plaintiff,

v.

CENTRAL GULF LINES, INC., in personam and the M/V GREEN HARBOUR (ex William Hooper) in rem, her engines, boilers, tackle, etc. and a certain Letter of Credit No. P 621208 dated December 26, 1984 issued by the Chase Manhattan Bank, N.A., in rem., Defendants.

No. 86 Civ. 9445 (WCC).

United States District Court, S.D. New York.

March 3, 1989.

Nourse & Bowles, New York City (Armand M. Pare, Jr., of counsel), for plaintiff.

Bigham Englar Jones & Houston, New York City (Francis A. Montbach, Karin A. Schlosser, of counsel), for defendants.

OPINION AND ORDER

WILLIAM C. CONNER, District Judge.

This is an in rem action to enforce maritime liens under 46 U.S.C.App. § 971. Plaintiff alleges that it has not been paid for bunker fuel furnished to defendant's vessel in Saudi Arabia and New York, and that it is therefore entitled to liens. Defendant contends that no enforceable liens exist. The parties have cross-moved for summary judgment pursuant to Rule 56, Fed.R. Civ.P. Plaintiff's lien claim for the delivery in Saudi Arabia is dismissed for want of admiralty jurisdiction. Judgment is granted in plaintiff's favor, however, with respect to the fuel delivered in New York.

BACKGROUND

Defendant Central Gulf Lines, Inc. ("Central Gulf") is the owner of a vessel, the Green Harbour ex William Hooper (the "Hooper"). The Hooper was built in the United States with subsidies and financing provided by the federal government. She is classified by the American Bureau of Shipping, and flies the United States flag. Her port of registry is New Orleans, Louisiana.

The Hooper was chartered by a bareboat charter party to the Waterman Steamship Corporation ("Waterman"). Waterman used the Hooper in its U.S. flag common carrier service between ports in the United States and ports in the Middle East.

For forty years, plaintiff Exxon Corporation ("Exxon") was Waterman's exclusive worldwide supplier of gas and bunker fuel oil. Waterman and Exxon negotiated a marine fuel requirements contract in 1983. The unsigned document set minimum and maximum purchase limits. It provided that the fuel would be provided by the "Seller" (Exxon) or by "Supplying Companies, referred to in Seller's `International Contract Price List for Marine Fuel Delivered as Ships' Bunkers.'" Exhibit 3 to Affidavit of James E. Sharkey.

When Waterman wished to make a purchase pursuant to this agreement, it telephoned Exxon, providing the details of the vessel to be bunkered and the place and approximate time of loading. Exxon would either effect delivery on its own, or direct its local supplier to deliver the bunkers to the vessel. Exxon would invoice Waterman for the fuel supplied, and if a local supplier was used, pay its supplier.

Apparently, Exxon did not rely on local suppliers when providing ships with fuel in New York. Exxon alleges that on October 7, 1983, it supplied the Hooper with 41.929 tons of gas oil in New York. Exxon invoiced Waterman for $13,241.63 on October 18, 1983.

Whenever Exxon procured bunker fuel for Waterman vessels at the port in Jeddah, Saudi Arabia, it used a local supplier, Arabian Marine Operating Co., Ltd. ("Arabian Marine"). The agreement controlling the relationship between Exxon and Arabian Marine provided that: "Exxon shall solicit and arrange for the sale of marine fuels to international customers having bunkering requirements at the port of Jeddah. Arabian Marine shall supply marine fuels to those customers nominated by Exxon." In return for Exxon's services, Arabian Marine agreed to pay Exxon a "commission." Under the terms of the agreement, Exxon would never actually own the fuel. "Title to all fuel delivered by Arabian Marine to the nominated customers solicited by Exxon will pass directly from Arabian Marine to the customer at the flange of the receiving vessel." Exhibit 4 to Affidavit of James E. Sharkey.

Around January, 1982, Arabian Marine began providing its customers with certain discounts at Jeddah. Since Exxon's company policy did not permit it to participate in this practice in Saudi Arabia, it suggested that Waterman make its own arrangements for price and supplies. Waterman elected to negotiate directly with Arabian Marine. Exhibit 4 to Affidavit of James E. Sharkey.

As of this time, Exxon was no longer involved in Waterman's purchase of bunkers in Jeddah. As a matter of courtesy to their long-time customer, Exxon allowed Waterman to use its communications system so that Waterman could more easily transmit its orders to Arabian Marine. Exxon was no longer informed of the specifics of these deliveries, and received no payments on account of them.

On September 29, 1983, Waterman placed an order with Arabian Marine for the delivery of bunker fuel to be delivered to the Hooper in Jeddah on October 25, 1983. In mid-October, 1983, Arabian Marine informed Exxon that, due to Waterman's financial condition, it would no longer deal directly with Waterman, and suggested that the previous arrangement be restored. Exxon consented. On October 26, 1983, Arabian Marine delivered 4,242.47 tons of bunker fuel oil to the Hooper pursuant to the original agreement. Exxon was invoiced for this delivery on October 31, 1983. The invoice was paid by Exxon on November 15, 1983. Waterman was invoiced for $763,644.60 on November 8, 1983.

Waterman filed a Chapter 11 reorganization proceeding on December 1, 1983. On November 14, 1984, Exxon, Central Gulf, and Waterman reached an agreement under which Central Gulf consented to assume personal liability for the deliveries if this Court decides that the Hooper is liable in rem on account of the deliveries. Central Gulf also provided Exxon with a letter of credit as security for its promise.

A reorganization plan for Waterman was confirmed on June 19, 1986. It entitled Exxon to pursue this claim. Exxon has received, under the reorganization plan, certain cash and stock dividends. Exxon admits that its claim should be diminished by the amount that it receives under the reorganization plan.

DISCUSSION

Standard for Summary Judgment

A party seeking summary judgment must demonstrate that "there is no genuine issue as to any material fact." Fed.R. Civ.P. 56(c); Knight v. U.S. Fire Insurance Company, 804 F.2d 9, 11 (2d Cir. 1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987). "When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). It must demonstrate that there is a "genuine issue for trial." Id. at 587, 106 S.Ct. at 1356. "In considering the motion, the court's responsibility is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried, while resolving ambiguities and drawing reasonable inferences against the moving party." Knight 804 F.2d at 11. The inquiry under a motion for summary judgment is thus the same as that under a motion for a directed verdict: "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 2512, 91 L.Ed. 2d 202 (1986).

Choice of Law

Plaintiff Exxon contends that American law should govern whether maritime liens exist in this case. Defendant does not oppose this contention. I agree that this case should be decided according to American law. The United States has a significant interest in this case. The shipowner, the charterer, the ship, and the plaintiff were all American. On the other hand, Saudi Arabia has no interest in having its law apply in this case. The only foreign participant in this transaction, Arabian Marine, was not injured. See Lauritzen v. Larsen, 345 U.S. 571, 582-90, 73 S.Ct. 921, 928-32, 97 L.Ed. 1254 (1953); Rainbow Line, Inc. v. M/V Tequila, 480 F.2d 1024, 1026-27 (2d Cir.1973).

The Maritime Liens

Plaintiff Exxon claims that it is entitled to liens under Section 30, Subsec. P of the Federal Maritime Lien Act (the "Act"). The Act provides, in pertinent part:

Any person furnishing ... supplies ... or other necessaries, to any vessel, whether foreign or domestic, upon the order of the owner of such vessel, or of a person authorized by the owner, shall have a maritime lien on the vessel, which may be enforced by suit in rem, and it shall not be necessary to allege or prove that credit was given to the vessel.

46 U.S.C.App. § 971.

Defendant Central Gulf denies the existence of the Saudi Arabian lien on three alternative grounds: (1) Exxon did not "furnish" the Hooper with bunker fuel in Jeddah; (2) Exxon's intervention in the Jeddah transaction was a response to Arabian Marine's request, not Waterman's "order"; and (3) Exxon did not rely on the credit of the Hooper. Defendant denies the existence of the New York lien on the ground that there is no proof that Exxon delivered gas to the Hooper in New York.

Among the cases cited by defendant in support of its contention that Arabian Marine, not Exxon, "furnished" the bunker fuel in Jeddah is Peralta Shipping Corp. v. Smith & Johnson (Shipping) Corp., 739 F.2d 798 (2d Cir.1984), cert. denied, 470 U.S. 1031, 105 S.Ct. 1405, 84 L.Ed.2d 791 (1985). While defendant does not frame its argument in jurisdictional terms, I am persuaded that Peralta deprives me of admiralty jurisdiction over Exxon's Saudi Arabian claim. On the other hand, defendant's defense with respect to the New York delivery is meritless. Plaintiff is thus entitled to judgment on that claim.

The Saudi Arabian Delivery

A prerequisite to the existence of a maritime lien based on a breach of contract is that the subject matter of the contract must fall within the admiralty jurisdiction. E.S. Binnings,...