Martin Energy Servs., LLC v. M/V Bravante IX

• Full Citation: Martin Energy Servs., LLC v. M/V Bravante IX, 233 F.Supp.3d 1269 (N.D. Fla. 2017)
• Decision Date: 26 January 2017
• Citation: 233 F.Supp.3d 1269
• Docket Number: CASE NO. 5:14cv322–RH/GRJ
• Parties: MARTIN ENERGY SERVICES, LLC, Plaintiff, v. M/V BRAVANTE IX, etc., et al., Defendants.
• Court: U.S. District Court — Northern District of Florida

233 F.Supp.3d 1269

MARTIN ENERGY SERVICES, LLC, Plaintiff,

v.M/V BRAVANTE IX, etc., et al., Defendants.

CASE NO. 5:14cv322–RH/GRJ

United States District Court, N.D. Florida, Panama City Division .

Signed January 26, 2017

Russell Robert Stewart, Russell R. Stewart Esquire, Panama City, FL, Frederick William Mahley, Strasburger & Price LLP, Houston, TX, for Plaintiff.

Christopher A. Lynch, Reed Smith LLP, New York, NY, for Defendants.

OPINION ON THE MERITS

Robert L. Hinkle, United States District Judge

In this interpleader action, two parties assert competing claims to a specific fund that would have been paid in the first instance to another party had that other party not initiated bankruptcy proceedings. As both claimants agree, the fund must properly be distributed outside the bankruptcy proceeding; there will be no share-and-share-alike with other creditors. After a bench trial, this order reaches the substantive result that all parties to the underlying transaction intended—the substantive outcome that would have occurred had there been no bankruptcy.

This result flows from the applicable law and the equitable principles that apply in interpleader actions. The only complicating factor is that a ship is involved and cases can be cited on both sides of the question whether the party who should get the fund acquired a maritime lien. That party has a winning contract or quantum-meruit claim, whether or not it has a winning maritime-lien claim.

I. Facts

Boldini Ltd. is a Brazilian company that, perhaps together with related companies Grupo Bravante and Boldini S.A., arranged to have a ship, the M/V Bravante VIII, built in Panama City, Florida. The record is unclear on the relative roles of Boldini Ltd., Grupo Bravante, and Boldini S.A., and their relative roles make no difference for purposes of this case. This order uses "Boldini" to refer to any or all.

To arrange to have fuel provided to the Bravante VIII, apparently for its maiden voyage, Boldini contacted O.W. Bunker & Trading do Brasil ("O.W. Brasil"). Together with two affiliated entities—O.W. Bunker Middle East DMCC ("O.W. Middle East") and O.W. Bunker USA Inc. ("O.W. USA")—O.W. Brasil arranged for Martin Energy Services, LLC ("Martin"), a company based in Mobile, Alabama, to provide the necessary fuel to the Bravante VIII.

The transaction was structured not as a sale of fuel by Martin to Boldini but as a sale by Martin to O.W. USA, a sale by O.W. USA to O.W. Middle East, and a sale by O.W. Middle East to Boldini. O.W. Brasil functioned only as a broker. Had there been no intervening bankruptcy, Boldini would have paid O.W. Middle East, who would have paid O.W. USA (probably through bookkeeping entries rather than cash), who would have paid Martin. The invoices reflected this. Thus Martin invoiced only O.W. USA., and O.W. Middle East invoiced Boldini.

Even so, Boldini and Martin were not strangers. Martin closely coordinated its delivery of the fuel with Boldini's local agent in Panama City, the Hirth Agency ("Hirth"), and with the Bravante VIII's captain and engineer. The ship was at sea for a test when Martin's barge approached Panama City from Mobile, necessitating logistical changes. Martin coordinated those changes directly with Hirth and the ship's officers; neither O.W. USA nor O.W. Middle East was involved.

Martin delivered the fuel on credit; it was not paid at the time of delivery. In agreeing to this arrangement, Martin relied partly on O.W. USA's creditworthiness—Martin had dealt with O.W. USA on other occasions and had provided it a line of credit. But Martin relied more heavily on the maritime lien that Martin believed it would have against the ship.

Before transferring the fuel, Martin tendered a bunkering certificate it expected an appropriate official to sign. After the transfer, the ship's engineer, with the captain's approval, signed the certificate. The certificate functioned as a receipt and confirmed compliance with governing regulations. But the certificate also had contractual features. The certificate said the sale was subject to Martin's "STANDARD TERMS & CONDITIONS OF SALE," and the certificate added:

No disclaimer stamp of any type or form will be accepted on this bunkering certificate, nor, should any such stamp be applied, will it alter, change or waive MARTIN ENERGY SERVICES LLC's Maritime Lien against the vessel or waive the vessel's ultimate responsibility and liability for the debt incurred through this transaction.

Martin's Ex. 8.

Boldini did not disclaim a maritime lien at any stage of the transaction. Quite the contrary, Boldini knew—or would have known had it sought to find out—that under United States law, delivery of the fuel would create a lien. Likewise, no O.W. entity disclaimed a maritime lien. That a lien came into existence upon delivery of the fuel was beyond doubt; the only issue was who possessed the lien. For its part, Martin expected payment from O.W. USA, but Martin believed it had a lien entitling it to recover against the ship if payment was not made.

II. Proceedings

All of this was a straightforward commercial transaction that came off without a hitch. The fuel met standards; the fuel was successfully loaded; and the ship sailed away. The transaction came off without a hitch, that is, until, shortly after delivery of the fuel, the O.W. entities collapsed. At that point no payment had been made by anyone. The parent O.W. entity, O.W. Bunker & Trading A/S, initiated bankruptcy proceedings in the Netherlands.

O.W. Middle East initiated bankruptcy proceedings in Dubai. O.W. USA initiated bankruptcy proceedings in Connecticut.

ING Bank N.V. ("ING") was the lead participant in a syndicate that provided working capital for the O.W. entities prior to their collapse. The syndicate held a security interest in assets that included receivables of O.W. Middle East and O.W. USA. ING has authority to act for the syndicate and asserts, without objection from the O.W. entities or anyone involved in the bankruptcy proceedings, that ING is entitled to collect outside of the bankruptcy proceedings the receivables of O.W. Middle East and O.W. USA. This includes receivables arising from the sale of fuel for the Bravante VIII. In short, ING holds and may enforce in this proceeding any relevant right that otherwise would belong to any O.W. entity.

Martin and ING assert conflicting claims for payment for the fuel. A tortuous and now irrelevant procedural background began with Martin's filing of this action and attachment of a different ship—the Bravante IX—as a means of obtaining quasi-in-rem jurisdiction over Boldini. Boldini submitted to this court's in personam jurisdiction, filed a counterclaim for interpleader, deposited into the court's registry the disputed principal amount plus an allowance for interest, and was discharged. Martin and ING appeared in personam and asserted their conflicting claims. As all parties agree, the court has jurisdiction over the entire controversy, which will properly be resolved in this action.

The action was tried to the court. This order sets out the court's findings of fact and conclusions of law.

III. The Equitable Outcome

The intended result of this transaction was this. Boldini would pay $290,100 and would receive 300 metric tons of fuel on board the Bravante VIII. Martin would provide the fuel, deliver it, and receive $286,200. The O.W. entities would pocket the difference: $3,900. ING would advance nothing and would be more secure—not less—in that its borrowers would be better off by $3,900 than its borrowers would have been had this transaction never occurred.

The parties' intended result can easily be achieved in this action. Boldini has paid into the court's registry the agreed amount, $290,100. Boldini has received the fuel on board the Bravante VIII and by now undoubtedly has consumed it. Martin delivered the fuel and can be paid the agreed amount, $286,200, from the court's registry. ING, acting to enforce the rights of the O.W. entities, can receive from the court's registry the same $3,900 the O.W. entities would have received. This will leave ING $3,900 better off than it would have been had its borrowers not entered this transaction in the first place. Interest can be added as appropriate.

As a matter of common sense and simple fairness, anyone seeking to do justice in this situation would distribute the fund in precisely this way, achieving the parties' intended result. Giving the entire $290,100 to ING would provide it a windfall—a payment far beyond anything it could have achieved from the underlying transaction. The bankruptcy proceedings ought not impair ING's security, but neither should ING reap a windfall from those proceedings.

ING says, though, that Martin has no claim against Boldini or the Bravante VIII or the fund, and so cannot recover in this action, no matter how inequitable that might be. This order addresses in turn whether Martin has a contractual claim, a maritime lien, or a quantum-meruit claim. As it turns out, here, as in most other things, the law makes sense. ING's contrary position does not.

IV. Contract

Boldini initially contacted O.W. Brasil to arrange to purchase fuel. This led to entry into a contract between Boldini and O.W. Middle East. The contract was with O.W. Middle East regardless of whether Boldini knew of O.W. Middle East's involvement. This is so because O.W. Brasil acted only as an agent for O.W. Middle East—an agent for a disclosed or undisclosed principal. The contract between Boldini and O.W. Middle East was entered into at arm's length; these were unrelated entities.

O.W. Middle East in turn contracted with O.W. USA. This was not an arm's length contract, but that does not matter. The involvement of these two O.W. entities instead of either alone does not affect the analysis in any way.

O.W. USA entered into a contract with Martin requiring Martin to deliver fuel aboard the Bravante VIII. This was again an arm's length contract. In entering into this...