Trans-Asiatic Oil Ltd., S.A. v. Apex Oil Co., TRANS-ASIATIC

• Decision Date: 04 September 1986
• Docket Number: TRANS-ASIATIC,No. 86-1067,86-1067
• Citation: 804 F.2d 773
• Parties: OIL LTD., S.A., Plaintiff, Appellant, v. APEX OIL COMPANY, et al., Defendants, Appellees. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 773

804 F.2d 773

1987 A.M.C. 1115

TRANS-ASIATIC OIL LTD., S.A., Plaintiff, Appellant, v. APEX OIL COMPANY, et al., Defendants, Appellees.

No. 86-1067.

United States Court of Appeals First Circuit.

Heard Sept. 4, 1986.

Decided Nov. 3, 1986.

Francisco G. Bruno with whom Jorge Carazo Quetglas and Sweeting Gonzalez & Cestero, Hato Rey, P.R., were on brief for plaintiff, appellant.

Pedro J. Santa-Sanchez with whom Jorge I. Peirats and O'Neill & Borges, Hato Rey, P.R., were on brief for defendant, appellee Apex Oil Co.

Before BOWNES and TORRUELLA, Circuit Judges, and CARTER, ^* District Judge.

BOWNES, Circuit Judge.

Plaintiff-appellant Trans-Asiatic Oil Ltd., S.A. appeals a judgment by the United States District Court for the District of Puerto Rico holding that appellant had failed to prove that it was entitled to recover demurrage ¹ against appellee Apex Oil Trans-Asiatic had filed its complaint in accordance with Rule B(1) of the Federal Rules of Civil Procedure Supplemental Rules for Certain Admiralty and Maritime Claims. ² Pursuant to this rule, the District Court of Puerto Rico issued an order attaching approximately $324,000 owed to Apex by the Puerto Rico Electric Power Authority. On appeal by Apex, we upheld the constitutionality of the B(1) attachment procedure, Trans-Asiatic Oil Ltd., S.A. v. Apex Oil Co., 743 F.2d 956 (1st Cir.1984), and remanded the case to the district court. This appeal follows the trial on the merits below.

                Company.   Trans-Asiatic Oil Ltd., S.A. v. Apex Oil Co., 626 F.Supp. 718 (D.P.R.1985)
                

THE FACTS

Trans-Asiatic is a Panamanian corporation with its principal place of business in Israel. In 1978, Trans-Asiatic operated a fleet of twenty-three oil tankers as part of its worldwide marketing of crude oil from the Middle East. The vessel, SEA ROVER, was purchased and registered in the name of Telstar Maritime, Inc., a Liberian corporation formed and jointly owned by a Trans-Asiatic subsidiary in partnership with a ship manager. Telstar's sole revenue came from Trans-Asiatic, which leased the SEA ROVER for a monthly rate of charter hire in accordance with the terms of a ten-year time charter party dated December 14, 1978. ³ Under this arrangement, Trans-Asiatic controlled the SEA ROVER's operation and employment, and earned the vessel's freight and demurrage revenues.

Trans-Asiatic explained that the tense situation in the Middle East necessitated shielding the SEA ROVER from identification with Israel; Arab oil-producing nations had begun to boycott Israeli-operated vessels. Accordingly, in order to prevent the vessel from being linked to a corporation closely associated with Israel, Trans-Asiatic decided to subcharter the SEA ROVER in the name of Telstar, rather than its own name.

On January 6, 1983, Telstar entered into a voyage charter party with GHR Energy Corporation. Consistent with its wish to keep the SEA ROVER from being associated with Israel, Trans-Asiatic was not named on the tanker voyage charter party. It did, however, negotiate the terms of the agreement, and one of its employees signed the charter party on behalf of Telstar. Apex was not a party to the voyage charter While the SEA ROVER was en route to GHR's refinery in Good Hope, Louisiana, OCS sold the crude on board to Apex. In the course of ordering the SEA ROVER to divert to Guayanilla, Puerto Rico, for discharge, GHR reiterated its responsibility under the terms of the charter party. And, on January 21, 1983, GHR expressly agreed to indemnify the SEA ROVER's owners for any loss or damages that might be incurred in delivering the cargo to Apex in Guayanilla.

party, which listed GHR as charterer of the SEA ROVER. GHR had purchased 418,000 barrels of Laguna Crude Oil and thereafter sold the oil to Occidental Crude Sales (OCS). OCS was designated a subcharterer of the SEA ROVER, but GHR expressly agreed to guarantee payment of freight and fulfillment of the charter party terms and conditions.

The district court found that Apex agreed to purchase the Laguna Crude from OCS in Guayanilla for $21.99 per barrel, which included charges for freight, deviation and related costs. The terms of the sale between Apex and OCS provided that Apex would be liable for demurrage incurred at Guayanilla. Apex argued, and the district court found, that it had agreed to be liable only to OCS for any demurrage caused by its own actions in Guayanilla.

On January 25, 1983, the same day that Apex and OCS solidified the terms of their crude oil transaction, GHR was sent an invoice totalling over $439,000. This sum represented the total freight and deviation costs of transporting the SEA ROVER's cargo to Puerto Rico. On January 26, 1983, Trans-Asiatic learned that GHR was close to filing for bankruptcy and that it would be unable to pay for the freight and deviation costs it owed to Trans-Asiatic under the charter party. The charter party specifically provided that freight costs were to be paid "before breaking bulk"--that is, before discharge of the cargo. Thus, when the SEA ROVER arrived in Guayanilla on the morning of January 27, it was apparent to Trans-Asiatic that GHR would be unable to fulfill its obligation under the charter party to pay freight costs before unloading the cargo. Trans-Asiatic, therefore, instructed the master of the vessel by telex not to release the cargo, as Trans-Asiatic was "asserting its lien on the cargo for freight, deviation and all other charges due from charterer, GHR Energy Corp." Trans-Asiatic then informed Apex that discharge would be delayed until it received full payment of freight and deviation costs.

On January 27, 1983, Apex paid $390,229.06 in freight charges to Trans-Asiatic. Apex had deducted $49,038, which represented money owed by Trans-Asiatic to GHR for bunker oil supplied to another vessel in Trans-Asiatic's fleet. Trans-Asiatic had agreed to allow GHR to deduct this sum from any freight costs it might incur. Thus, Apex availed itself of a credit GHR could have taken had GHR made the freight payments. The $390,229.06 paid by Apex represented all that Trans-Asiatic would have been entitled to receive from GHR.

Nevertheless, Trans-Asiatic, insisting that the bunker fuel credit arrangement solely involved itself and GHR, demanded payment of the additional $49,038. Discharge of the Laguna Crude was withheld until January 31, when Apex acceded to Trans-Asiatic's demand and paid the additional $49,038. On January 31, 1983, Apex also instructed Banque Paribas to issue and deliver to Trans-Asiatic a letter of indemnity. This letter was sent to facilitate cargo discharge without presentation of the bill of lading. The letter's cosignors, Apex and Banque Paribas, agreed to indemnify Trans-Asiatic against "all loss, costs (including cost as between attorney or solicitor and client) you or any of you may suffer or be put to by reason of the delivery of the said goods to us or our order." The district court specifically noted that the letter of indemnity made "no reference to demurrage." 626 F.Supp. at 721. The court further found that the terms of the letter expired upon delivery of the cargo and return of the bill of lading.

Even after the freight payments were made and the letter of indemnity was received by Trans-Asiatic, further discharge delays ensued. The district court found that these delays could not be attributed to Apex. ⁴ In addition, the court found no evidence that Trans-Asiatic had suffered any damages due to the delays in unloading the SEA ROVER's cargo. The Guayanilla voyage was the SEA ROVER's last commercial venture and, upon its completion, the vessel was sold by Telstar.

ANALYSIS

The issues we consider are: (1) whether the appeal is moot because the district court lost jurisdiction when it dissolved the attachment; (2) whether Apex is liable to Trans-Asiatic for demurrage under the voyage charter party, bill of lading or contract of sale between Apex and OCS; and (3) whether Trans-Asiatic must show actual damages in order to recover on a demurrage claim.

Jurisdiction

On December 23, 1985, the district court entered judgment against Trans-Asiatic. Trans-Asiatic failed to move for a stay of the judgment and did not request a supersedeas bond until after the expiration of the ten-day automatic stay of Rule 62(a) of the Federal Rules of Civil Procedure. ⁵ On January 9, 1986, Apex filed a motion for dissolution of the attachment and release of the garnished funds. Trans-Asiatic did not oppose Apex's motion. On January 21, 1986, Trans-Asiatic filed a timely notice of appeal to this court. On January 31, 1986, the district court granted Apex's motion and ordered that the attached funds be surrendered to Apex. Subsequently, Trans-Asiatic filed a motion for reconsideration of the district court's order and for permission to post a supersedeas bond to stay the judgment pending appeal. After the district court denied this motion, Trans-Asiatic filed an emergency motion in this court requesting a stay of the judgment pending appeal. We denied Trans-Asiatic's motion, noting that it had neither moved for a stay nor offered to file a supersedeas bond within the ten-day limit imposed by Rule 62(a).

Apex contends that the attachment obtained pursuant to Rule B(1) constituted the sole basis of the district court's jurisdiction and, therefore, release of the security renders this appeal moot, because the departure of the garnished funds leaves nothing remaining upon which the jurisdiction of this court, or the court below, can attach. Trans-Asiatic counters that the dissolution of the attachment is immaterial because Apex has consented to in personam jurisdiction.

The same basic issue was confronted recently by the Ninth Circuit in Teyseer Cement Co. v. Halla Maritime Corp., 794 F.2d 472 (9th Cir.1986). Teyseer sued Halla for damages resulting from the sinking of a ship chartered by Halla which was carrying cement owned by Teyseer. Jurisdiction was obtained pursuant to...