Sing Fuels Pte Ltd. v. M/V Lila Shanghai (IMO 9541318)

• Decision Date: 01 July 2022
• Docket Number: 21-1607
• Parties: SING FUELS PTE LTD., Plaintiff - Appellant, v. M/V LILA SHANGHAI (IMO 9541318), her engines, freights, apparel, appurtenances, tackle, etc., in rem, Defendant - Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

39 F.4th 263

SING FUELS PTE LTD., Plaintiff - Appellant,

v.M/V LILA SHANGHAI (IMO 9541318), her engines, freights, apparel, appurtenances, tackle, etc., in rem, Defendant - Appellee.

No. 21-1607

United States Court of Appeals, Fourth Circuit.

Argued: March 10, 2022

Decided: July 1, 2022

ARGUED: Briton Paul Sparkman, CHALOS & CO, P.C., Houston, Texas, for Appellant. Dustin Mitchell Paul, VANDEVENTER BLACK, LLP, Norfolk, Virginia, for Appellee. ON BRIEF: George M. Chalos, CHALOS & CO, P.C., Oyster Bay, New York, for Appellant. Edward J. Powers, VANDEVENTER BLACK, LLP, Norfolk, Virginia, for Appellee.

Before WILKINSON and DIAZ, Circuit Judges and FLOYD, Senior Circuit Judge.

Affirmed by published opinion. Senior Judge Floyd wrote the opinion in which Judge Wilkinson and Judge Diaz joined. Judge Wilkinson wrote a separate concurring opinion.

FLOYD, Senior Circuit Judge:

This dispute concerns whether an international trader of bunker fuel is entitled to a maritime lien on a vessel under the Commercial Instrument and Maritime Lien Act (CIMLA), 46 U.S.C. §§ 31301 –43. Because, in this case, the bunker trader failed to show that it procured the vessel's fuel "on the order of the owner or a person authorized by the owner," § 31342(a), we affirm the district court's judgment denying the maritime lien.

I.

A.

Built in 2011, the M/V LILA SHANGHAI (the Vessel) is a gross tonnage bulk carrier owned by Autumn Harvest Maritime Co. (Autumn Harvest).¹ As the owner, Autumn Harvest time-chartered the Vessel to Bostomar Bulk Shipping Pte Ltd. (Bostomar) from April 25, 2019, to December 31, 2019. To memorialize their arrangement, Autumn Harvest and Bostomar entered into a maritime contract known as a time charter party.² The time charter party provided "[t]hat whilst on hire the Charterers shall provide and pay for all the fuel except as otherwise agreed ...."³ J.A. 792. It foreclosed charterers from unilaterally placing liens on the Vessel, expressly stating: "Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have priority over the title and interest of the owners in the vessel." J.A. 795. In the event of "any dispute" between Autumn Harvest and Bostomar about the Vessel and their respective obligations, the time charter party required "the matter in dispute ... be referred to three persons at [sic] Singapore" for arbitration proceedings. J.A. 795.

After agreeing to those provisions, Bostomar sub-chartered the Vessel to Medmar Inc. (Medmar), a company in Greece known for chartering ships for international voyages.⁴ On June 10, 2019, Medmar received the Vessel for an excursion from Argentina to India. While sailing to India, the Vessel needed bunkers to complete its journey.⁵ Around June 28, 2019, Costas Mylonakis, an employee of Windrose Marine, contacted Appellant Sing Fuels Pte. Ltd. (Sing Fuels) to order the Vessel's bunkers.

A worldwide trader of bunkers, Sing Fuels's main office is in Singapore, but it also maintains offices in South Africa, Dubai, Greece, and the United Kingdom. In typical transactions, such as here, a potential customer contacts a salesperson with Sing Fuels and asks about a delivery of bunkers to a given port. After receiving the request, Sing Fuels's salesperson then contacts physical suppliers who can deliver the bunkers, obtains multiple prices for the customer's consideration, and eventually finds an agreeable price. Sing Fuels then issues a sales and purchase order for both the customer and the physical supplier.

On July 1, 2019, Sing Fuels transmitted its Sales Order Confirmation, which included the Terms and Conditions of Sale for Marine Fuels 2017 (bunker contract), only to Mylonakis's e-mail address affiliated with Windrose Marine. Within the e-mail, which did not copy Medmar, Sing Fuels stated: "MERE RECEIPT OF THIS CONFIRMATION SIGNIFIES ACCEPTANCE OF RESPONSIBILITY FOR PAYMENT OF OUR BUNKER INVOICE BY EACH AND ALL OF THEM." J.A. 522. The e-mail also asked Mylonakis to obtain Medmar's signature and company stamp on the Sales Order Confirmation, which billed the request for bunkers to an account associated with Medmar.⁶ Mylonakis never returned any memorialized document from Medmar. Sing Fuels exclusively communicated with Mylonakis for this transaction, considered Mylonakis to be Medmar's fuel broker, and never spoke directly with Medmar. Mylonakis also never communicated with Medmar, he conferred instead with a mysterious entity called M.A.C. Shipping.

When the Vessel reached Port Elizabeth, South Africa, it physically received bunkers on two occasions in July (the July bunkers) from South African Marine Fuels, a subsidiary of Addax Energy SA. First, on July 10, 2019, the Vessel received 595.888 metric tons, 380 centistokes (cst), of bunkers. Second, on July 12, 2019, the Vessel received 459.038 metric tons, 380 cst, of bunkers. The Vessel received, in total, 1,049.296 metric tons, 380 cst, of bunkers, amounting to $532,312.48 in fuel. See J.A. 551 (tax invoice for the July bunkers). For both deliveries, either the Vessel's Master or Chief Engineer indicated receipt of the bunkers. See J.A. 549–50 (Bunker Delivery Notes). All the July bunkers were consumed by the Vessel.

Medmar returned the Vessel to Bostomar on August 12, 2019, with Sing Fuels still awaiting payment for the July bunkers. By October 2019, payment for the July bunkers was still outstanding, so Sing Fuels sent Autumn Harvest a notice of nonpayment, requesting an immediate disbursement in the amount of $540,527.71. See J.A. 552–54 (notice to Autumn Harvest requesting payment for the July bunkers). In February 2020, Sing Fuels formally met with Autumn Harvest to discuss the payment for the July bunkers. Autumn Harvest refused to pay. In the wake of the collapsed negotiations, Sing Fuels paid the physical supplier of the July bunkers.

According to Sing Fuels, over the course of 2019, it engaged in eight transactions with Medmar and always obtained timely payments, including for a delivery of bunkers totaling $300,000.00 in May 2019.⁷ Yet, Sing Fuels never identified what corporate entity or who within that entity paid those bills for Medmar. Without knowing where to turn after Medmar's payment default on the July bunkers, and its discussions with Autumn Harvest exhausted, Sing Fuels started tracking the Vessel on a regular basis.⁸ Even though Sing Fuels had opportunities to arrest the Vessel at other ports, including in the United Kingdom and India, it declined to do so. Instead, it waited until the Vessel docked in the United States and then availed itself of our federal courts to recoup payment for the July bunkers.

B.

Pursuing an action in rem, Sing Fuels filed its Verified Complaint against the Vessel in the United States District Court for the Eastern District of Virginia on April 22, 2020. It sought two forms of relief against the Vessel. First, moving under Rule C of the Supplemental Rules of Admiralty and Maritime Claims and Asset Forfeiture Actions, Sing Fuels requested the Vessel's arrest at port in the Eastern District of Virginia. Second, upon a successful arrest, it wanted a maritime lien placed on the Vessel pursuant to the CIMLA, 46 U.S.C. §§ 31301 –43, for the amount owed on the July bunkers, $532,312.48.

On April 24, 2020, the district court issued a warrant for the Vessel's arrest upon its arrival in Virginia. The United States Marshals Service arrested and seized the Vessel, with the National Maritime Services (NMS) serving as the Vessel's substitute custodian. Four days later, on April 28, 2020, Autumn Harvest posted its Letter of Undertaking to serve as substitute security, allowing it to stand in the Vessel's place. After approving Autumn Harvest as substitute security, the court ordered NMS to release the Vessel, and Autumn Harvest filed its Answer to the Verified Complaint on June 1, 2020.⁹

When settlement discussions failed, a bench trial ensued. With the parties stipulating to certain facts and exhibits, the district court held its one-day trial on February 23, 2021. Sing Fuels only proffered two witnesses, both of whom it employed: (1) Ulrich Rasmussen, a vice president of credit risk, and (2) Stella Lykouri, a senior bunker trader. See J.A. 446 (Rasmussen's testimony); J.A. 502 (Lykouri's testimony); see also Witness List, Sing Fuels Pte. Ltd. v. M/V Lila Shanghai , 534 F. Supp. 3d 551 (E.D. Va. 2021) (No. 4:20-cv-00058-RAJ-LRL), ECF No. 41-1. Sing Fuels never called Mylonakis to testify, nor did it call anyone associated with Medmar, Windrose Marine, or M.A.C. Shipping.¹⁰ See Witness List, Sing Fuels Pte. Ltd. , 534 F. Supp. 3d 551 (No. 4:20-cv-00058-RAJ-LRL), ECF No. 41-1. In terms of exhibits, Sing Fuels submitted the bunker contract, bunker delivery notes, an invoice, and four e-mails, all involving the July bunkers, into evidence. Exhibit List, Sing Fuels Pte. Ltd. , 534 F. Supp. 3d 551 (No. 4:20-cv-00058-RAJ-LRL), ECF No. 41-2. It did not provide any other documents showing prior transactions involving Medmar, Mylonakis, Windrose Marine, or M.A.C. Shipping. See id. At the trial's conclusion, the court ordered the parties to submit post-trial briefs within thirty days.

After receiving the parties' post-trial briefs, the district court issued its order and opinion in favor of the Vessel on April 20, 2021, entering a judgment that same day. Sing Fuels Pte. Ltd. v. M/V LILA SHANGHAI , 534 F. Supp. 3d 551, 555 (E.D.Va. 2021). Making findings of fact and conclusions of law, the court first determined that United States law, as opposed to Singapore law, governed the parties' dispute. Id. at 563–66. Applying United States law, the court then turned to the existence of a maritime lien and whether equitable laches barred Sing Fuels's action. Id. at 566–73.

The court first held that Mylonakis did not possess any actual, apparent, or presumed authority to hold the Vessel liable for the July bunkers. Id. at 566–69. Regarding actual authority, the...