Trans-Tec Asia v. M/V Harmony Container

• Citation: 435 F.Supp.2d 1015
• Decision Date: 17 August 2005
• Docket Number: No. CV 04-1160 SVW (MANx).,CV 04-1160 SVW (MANx).
• Court: U.S. District Court — Central District of California
• Parties: TRANS-TEC ASIA, Plaintiff, v. M/V HARMONY CONTAINER Its freights, engines, apparel, and tackle, Defendant in rem, Splendid Shipping Sendirian Berhard, Defendant, and The Master of the M/V Harmony Container, Garnishee.

435 F.Supp.2d 1015

TRANS-TEC ASIA, Plaintiff, v. M/V HARMONY CONTAINER Its freights, engines, apparel, and tackle, Defendant in rem,

Splendid Shipping Sendirian Berhard, Defendant, and

The Master of the M/V Harmony Container, Garnishee.

No. CV 04-1160 SVW (MANx).

United States District Court, C.D. California.

August 17, 2005.

COPYRIGHT MATERIAL OMITTED

Gary R. Clouse, Isaacs Clouse & Crose, Santa Monica, CA, J. Stephen Simms, Simms Showers, Baltimore, MD, for Plaintiff.

Bradley M. Rose, Kaye Rose & Partners, Los Angeles, CA, for Defendants.

ORDER GRANTING THE MOTION FOR PARTIAL SUMMARY JUDMENT BY DEFENDANT WV HARMONY CONTAINER IN REM AND CLAIMANT SPLENDID SHIPPING SDN BHD AND DENING TRANS-TEC'S CROSS MOTION FOR PARTIAL SUMMARY JUDGMENT ON CHOICE OF LAW

WILSON, District Judge.

I. INTRODUCTION

This admiralty case arises out of a dispute over unpaid bunkers (fuel). Plaintiff Trans-Tee Asia ("Trans-Tec") sold bunkers to the charterer of Defendant in rem WV Harmony Container ("Vessel"), the Kien Hung Shipping Company Ltd. ("Kien Hung"). Kien Hung later went bankrupt. Its bunkers still unpaid, Trans-Tee filed this action against the Vessel and its Owner, Defendant Splendid Shipping Sendirian Berhard ("Splendid") (collectively "Defendants").

Trans-Tee asserts five causes of action: (1) maritime lien claims in contract against the Vessel and freights; (2) maritime lien claims in tort against the Vessel and freights; (3) maritime claims in contract against the owner; (4) unjust enrichment claims against the owner; and (5) maritime attachment and garnishment of the Vessel and bunkers of the Vessel.¹

Because choice of law is a threshold issue in this case, the Court encouraged the parties to file motions for partial summary judgment on the issue of choice of law. They have now done so. For the reasons set forth below, the Court GRANTS the Motion for Partial Summary Judgment by Defendant M/V Harmony Container in rem and Claimant Splendid Shipping SDN BHD.

II. FACTS²

This case involves six major players or entities: (1) Trans Tec, (2) the Vessel, (3) Splendid, (4) Kien Hung, (5) Halim Mazmin Berhad ("Halim Mazmin"), and (6) Powick Marine (Singapore) Pte. Ltd. ("Powick").

The Vessel is registered (or "flagged") under the laws of Malaysia. Splendid was at all relevant times the registered owner of the Vessel.

Splendid is a Malaysian private company with its principal place of business in Malaysia. At all relevant times, Halim Mazmin, a Malaysian public company, owned 60% of Splendid, and Powick, a Singapore corporation, owned 40%.

At all relevant times, Splendid had a board of five (5) directors operating by simple majority vote. The five directors were: Captain Suresh Abishegam, Tan Sri Dato' Halim Bin Mohammad, Abd Halim Bin A Rahim, Shih Shia Loon and Shih Ming Tuan.³

Trans-Tec is registered as a Singapore "sole proprietorship" with its principal place of business in Singapore.⁴ World Fuel Services (Singapore) Pte. Ltd., a Singapore limited private company, owns Trans-Tec. World Fuel Singapore Holding Company II Pte. Ltd. is the sole shareholder of World Fuel Services (Singapore) Pte. Ltd.⁵ It is not clear what entity owns World Fuel Singapore Holding Company II Pte. Ltd⁶

Powick has been in existence since 1994 and has paid up share capital of Singapore $49,817.842. Upon its incorporation and at all relevant times, Powick's shareholders were: Shih Wen Kuo, Shih Shia Loon, Shih Shia Shung, Shih Shia Hsiang, and Shih Ming Tuan. Its directors were: Shin Wen Kuo, Shih Ming Tuan, Shih Shia Loon, Tan Chak Chew, and Ng Ee Choo Linda.

Kien Hung is a Taiwan corporation with its principal place of business in Taiwan. Kien Hung has 334 registered shareholders. Five of those shareholders are Shih family members: Shih Wen Kuo, Shih Shia Loon, Shih Shia Shung, Shih Shia Hsiang, and Shih Ming Tuan. Collectively, the Shih family members hold 63.4% of Kien Hung's stock. The balance is held by the remaining 329 shareholders. From June 2002 to the present, Kien Hung's directors were Shih Wen Kuo, Shih Shia Loon and Chen Yin. There is no evidence that Kien Hung has ever owned stock in either Splendid or Powick.

In July 2000, Splendid entered into a New York Produce Exchange charter party contract with Kien Hung for a 10 year charter of the Vessel (the "Charter Party"). Among other things, the Charter Party provided that (1) the Charterers were to "provide and pay for all the fuel except as otherwise agreed" and (2) the Charterers "would 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 of the vessel." (Abishegam Decl. ¶ 7, Ex. G, ¶ 2, 18.) The Charter Party further provided that "the Charter Party shall be governed by and construed in accordance with English law and any dispute arising out of this Charter Party shall be referred to arbitration in London in accordance with the Arbitration Acts 1950 and 1979 or any statutory modification or re-enactment therefor for the time being in force." (Abishegam Decl. ¶ 11, Ex. G, ¶ 53.)

In or about July 2002, Powick provided a continuing written guarantee (the "Guarantee") to Trans-Tec, for and on behalf of Kien Hung, in consideration for Trans-Tee agreeing to supply bunkers to Kien Hung or vessels under charter to Kien Hung. The Guarantee was limited to U.S. $5 million and governed by Singapore law. The parties to the Guarantee agreed to submit to the jurisdiction of the Singapore courts for enforcement of the Guarantee.

On February 17, 2003, C.L. Wu ("Wu"), a manager for Kien Hung in its Taiwan office, faxed a bunker inquiry ("Bunker Inquiry") to Vivian Huang ("Huang") of Yee Foo Marine Industrial Co. Ltd. ("Yee Foo"), Trans-Tee's representative in Taiwan throughout 2002 and 2003.⁷ Huang was Kien Hung's account representative at the time. The Bunker Inquiry requested a quote for bunkers to be provided to the Vessel for bunkering at Busan, South Korea on February 24, 2003. Huang faxed the Bunker Inquiry to Margaret Quek ("Quek") of Trans-Tee's Singapore office. Quek provided Huang with a bunker quote. Huang communicated the quote to Wu. In response, Wu faxed Huang a bunker order ("Bunker Order"). The Bunker Order stated: "Many thanks for your quotation on Feb/17/2003. Please arrange the follows [sic] and confirm by return." (Huang Decl. ¶ 7, Ex. C.) Huang then faxed the Bunker Order to Quek. Quek sent an email to Huang confirming the sale of 1150 metric tons of Grade 380CST RMG35 bunker fuel for the Vessel ("Bunker Confirmation"). Huang then faxed the Bunker Confirmation to Wu.

The Bunker Confirmation provided:

This confirmation incorporates seller's standard terms and conditions dated January 3, 2000. Pls inform us if you require a copy.

All sales are on the credit of the vessel. Buyer is presumed to have authority to bind the vessel with a maritime lien. Disclaimer stamps placed by the vessel on the bunker receipt will have no effect and do not waive the seller's lien. Pls advise this office immediately of any errors, omissions or changes involving any of the items above.

(Ashby Decl. ¶ 4, Ex. B.)

Trans-Tee's standard terms and conditions are allegedly set forth in a document entitled "The Trans-Tee Services Group of Companies General Terms and Conditions" ("Terms and Conditions"). The Terms and Conditions state:

Effective January 3, 2000, the following terms of sale and supply shall constitute the General Terms and Conditions ("General Terms") of the Trans-Tee Service Group of companies, headquartered at 700 S. Royal Poinciana Blvd., Miami Springs, Florida 33166 including but not limited to Trans-Tee Services, Inc.; Trans-Tee Services (UK) Ltd.; Trans-Tee International S.A.; Casa Petro S.A. and Trans-Tee Asia, a division of World Fuel Services (Singapore) Pte. Ltd. Unless otherwise agreed, the General Terms shall apply to every sale of marine petroleum products ("Products") entered into between a particular Trans-Tee Group company as seller ("Seller"), and any buyer of such Products ("Buyer").

(Ashby Decl. ¶ 6, Ex. C.) The Terms and Conditions contain a Choice of Law Clause, a Payment Clause, a Credit and Security Clause, and a Merger and Integration Clause. The Choice `of Law Clause provides:

17. Law and Jurisdiction: Seller shall be entitled to assert its lien or attachment in any country where it finds the vessel. Each Transaction shall be governed by the laws of the United States and the State of Florida, without reference to any conflict of laws rules. The laws of the United States shall apply with respect to the existence of a maritime lien, regardless of the country in which the Seller takes legal action.

(Ashby Decl. ¶ 6, Ex. C, ¶ 17.) The Payment Clause provides:

7. Payment: ... (b) Any individual bunker transaction not requiring cash advance shall require credit approval by Seller's Credit Department in Miami, Florida. This approval, which will occur prior to Seller's transmittal to Buyer of a confirmation, shall be construed as the binding act in a bunker transaction and it is agreed that contract formation has occurred in Florida and that bunkers have been provided in Florida within the scope of 42 USC 31326....

(Ashby Decl. ¶ 6, Ex. C, ¶ 7.) The Credit and Security Clause provides:

8. Credit and Security: (a) Products supplied in each Transaction are sold and effect on the credit of the receiving vessel, as well as on the promise of the Buyer to pay thereof, and it is agreed and the Buyer warrants that the Seller will have and may assert a maritime lien against the Receiving Vessel for the amount due for the Products delivered. This maritime lien shall extend to the vessel's freight payments for that particular voyage during which the bunkers were supplied and to freights on all subsequent voyages.

(Ashby Decl. ¶ 8, Ex. C, ¶ 8.) The Merger and Integration Clause provides:

1. Incorporation and Merger: Each sale of Products shall be...