Valero Mktg. & Supply Co. v. Sun
| Decision Date | 28 December 2015 |
| Docket Number | CIVIL ACTION NO. 14-2712 SECTION: "G"(4) |
| Parties | VALERO MARKETING AND SUPPLY CO. v. M/V ALMI SUN, IMO NO. 9579535, her engines, apparel, furniture, equipment, appurtenances, tackle, etc., in rem |
| Court | U.S. District Court — Eastern District of Louisiana |
Before the Court is Plaintiff Valero Marketing and Supply Co.'s ("Valero") "Motion for Summary Judgment," wherein it contends that it is entitled to summary judgment in its favor finding that its maritime lien claim is valid and enforceable against the M/V ALMI SUN, IMO No. 9579535 ("Vessel").1 Having considered the motion, the memoranda in support and in opposition, the record, and the applicable law, the Court will deny the motion.
This lawsuit arises out of a contract dispute wherein Valero, a marine fuel supplier, alleges that it supplied approximately 200 metric tons of marine bunker fuel to the Vessel on or about October 25, 2014 at Corpus Christi, Texas, for which it was never paid.2 Valero contends that it entered into a maritime contract for the supply of fuel bunkers to the Vessel ("Bunker Contract") with O.W. Bunker USA, Inc. ("O.W. USA"), which Valero alleges acted as an agent for the vessel.3The Bunker Contract required payment for the bunkers within 30 calendar days of delivery and provided for the accrual of interest on any late payments.4 The Bunker Contract also contained a provision stating:
IT IS UNDERSTOOD THAT IN CONSIDERATION OF EXTENDING THE ABOVE CREDIT TERMS, VALERO IS ALSO RELYING ON THE CREDIT OF THE ABOVE VESSEL AS UNDER U.S. LAW, AND VALERO EXPRESSLY RETAINS ITS RIGHT OF MARITIME LIEN AGAINST THE VESSEL. ANY ATTEMPT TO IMPAIR OR LIMIT SAID LIEN AGAINST THE VESSEL SHALL NOT BE ALLOWED.5
In a practice common to the marine bunker fuel industry, O.W. Bunker Malta Ltd. ("O.W. Malta") acted as a "middle man," wherein vessel owners or charterers would issue a request to O.W. Malta, who would send it to O.W. USA, who then selected a local fuel supplier—in this case, Valero.6 Valero alleges that it held up its end of the bargain and delivered 199.98 of metric tons of fuel to the Vessel, and that although the "authorized vessel officer" of the Vessel acknowledged receipt of the fuel and stamped Valero's bunkering certificate,7 Valero has never received the $124,388.24 that it is owed for its services.8
According to Valero, after it supplied bunkers to the Vessel, the O.W. Bunker group of companies, including O.W. Malta and O.W. USA, underwent a complete collapse of their worldwide business operation.9 Valero contends that O.W. USA advised Valero that it would not make any ofthe required payments under their sales agreement, and that on November 13, 2014, O.W. USA and other related entities filed for Chapter 11 bankruptcy.10 O.W. Malta, from which the bunkers had been ordered in the first place, also declared bankruptcy at about the same time.11 The owners of the Vessel then commenced arbitration proceedings in London against O.W. Malta and its alleged assignee bank, ING Bank, seeking a declaration of non-liability toward O.W. Malta/ING Bank with respect to their alleged claim for payment.12 Those proceedings remained ongoing as of June 19, 2015.13
On November 26, 2014, Valero filed the instant suit and requested this Court to arrest the Vessel, which the Court granted on the same day.14 Valero and the Vessel's owner then entered into a security agreement whereby a letter of undertaking ("LOU") was posted as the substitute res for Valero's claim against the vessel.15 On April 10, 2015, Verna Marine Co. Ltd. ("Verna"), appearing solely and restrictively as in rem claimant and owner of the M/V ALMI SUN, filed an answer.16 Valero filed the pending motion for summary judgment on June 5, 2015.17 Verna filed an oppositionon June 19, 2015,18 to which Valero filed a memorandum in reply on June 26, 2015.19
Valero argues that there is no genuine disputed issue of material fact, and that the solitary issue before the Court is whether Valero possesses a valid maritime lien upon the Vessel that can be enforced directly against the Vessel in rem (or the LOU) to satisfy the overdue payment for the fuel bunkers in question.20 Valero avers that the matter is controlled by the Commercial Instruments and Maritime Liens Act ("CIMLA"), which provides in relevant part:
According to Valero, CIMLA defines "necessaries" as including "repairs, supplies, towage, and the use of a dry dock or marine railway,"22 and also provides that:
Valero contends that the maritime lien conferred by CIMLA is statutory in nature and does not require a contract between the parties.24 Where CIMLA's requirements are satisfied, according to Valero, the necessaries supplier possesses a maritime lien against the vessel to which it supplied the necessaries, and a statutory right of recovery against the vessel irrespective of the contractual relationship between them.25 Thus, Valero avers, if the statutory requirements of 46 U.S.C. § 31342 are satisfied, Valero possesses a maritime lien under CIMLA.26 Here, Valero argues, each of the requirements of CIMLA has been satisfied, and therefore summary judgment is warranted in Valero's favor.27
First, Valero argues, there is no legitimate dispute that bunkers are "necessaries" under CIMLA, as they are useful to the Vessel to which they are supplied, and enable it to perform its particular function.28 Similarly, Valero avers, there is no dispute that the bunkers supplied by Valero were pumped directly into the bunker tanks of the Vessel and so were supplied "to a vessel," as confirmed by the "Bunkering Certificate" issued by Valero and signed and stamped by theAuthorized Vessel Officer of the Vessel.29 Finally, Valero argues that the Vessel's owner and/or charterer are undisputedly parties under CIMLA § 31341(a) that possess the authority to procure necessaries for a vessel, and that Valero ultimately delivered the bunkers to the Vessel upon their order.30 Valero contends that this is true even in the absence of a direct contract between Valero and the Vessel interests.31 Therefore, according to Valero, "it is not necessary for Valero to establish an agency relationship or privity between the Vessel interests and O.W. USA or OW Malta, the 'middleman' parties . . . ."32
According to Valero, the Fifth Circuit has noted that there are two lines of cases dealing with the situation where no contract exists between the supplier and vessel interests: (1) the general contractor/subcontractor line of cases, and (2) the middle-man line of cases.33 Valero quotes the Fifth Circuit's decision in Lake Charles Stevedores, Inc. v. PROFESSOR VLADIMIR POPOV MV for the proposition that "[u]nder the middle-man line of cases, despite what can be a large number of intermediaries, the ultimate supplier of the necessaries may obtain a maritime lien under certain circumstances," circumstances which Valero contends are met here.34
Valero relies on a Ninth Circuit case that it contends is directly on point and clearly establishes that Valero possesses a maritime lien that may be enforced here.35 In Marine Fuel Supply& Towing, Inc. v. M/V Ken Lucky, Valero contends, the vessel's sub-charterer Bulkferts, through its managing agent Eurostem, ordered bunkers for the vessel through a broker, Brook.36 According to Valero, Brook placed the order through Gray Bunkering, which in turn placed the order with supplier Marine Fuel, who delivered the bunkers and invoiced Brook via Gray Bunkering.37 Valero avers that Brook subsequently went into receivership and failed to pay for the bunkers, so Marine Fuel arrested the vessel and asserted a maritime lien for the provision of necessaries.38 According to Valero, the vessel owner contested the lien on the ground that Brook was not the agent of Bulkferts and thus was not authorized to procure necessaries for the Vessel.39 Valero asserts that the Ninth Circuit rejected this argument, stating that an agency relationship between Brook and Bulkferts was not required in order to entitle Marine Fuel to a maritime lien under CIMLA.40
Valero contends that the Ken Lucky court distinguished its holding that Marine Fuel possessed an enforceable maritime lien from an earlier ruling by the court in Farwest Steel Corp. v. Barge Sea-Span, where the court held that a general repair contractor was not endowed with sufficient "management" authority to support a necessaries lien.41 According to Valero, the Ken Lucky court explained that Farwest involved an order of steel by a contractor repairing the vessel, and thus no one with authority to lien the vessel originated the order; by contrast, Bulkferts clearlypossessed statutory authority to bind the vessel.42
Valero alleges that a Fifth Circuit case, L&L Oil Co. v. M/V Rebel, also supports the conclusion that Valero possesses a valid maritime lien claim.43 There, Valero alleges, Enjet, which was a voyage charterer of a vessel and in the business of supplying fuel, had an agreement with the vessel interests by which they agreed to buy fuel from Enjet for a voyage.44 According to Valero, Enjet arranged fuel delivery through L&L,...
To continue reading
Request your trial