Praxis Energy Agents Pte LTD v. M/V Pebble Beach
Praxis Energy Agents Pte LTD v. M/V Pebble Beach
Opinion of the Court
Pending before the Court is Plaintiff Praxis Energy Agents Pte Ltd's ("Praxis" or "Plaintiff") Motion for Summary Judgment and for Fed. R. Civ. P. 54(b) Final Judgment Entry (D.I. 22), Sithonia Shipholding S.A.'s ("Sithonia" or "Defendant") Motion for Discovery Prior to Filing Opposition to Praxis' Motion for Summary Judgment (D.I. 37), and Sithonia's Cross Motion for Summary Judgment (D.I. 39-4). Sithonia has appeared as owner of Defendant in rem , the M/V PEBBLE BEACH (hereinafter, the "Vessel"). The parties have not requested oral argument.
I. BACKGROUND
Unless otherwise stated, the following facts are not disputed. On August 29, 2014, Sithonia, as owner of the Vessel, entered a Charter Party agreement with Greatwin Carrier (Holdings) Co., Ltd. ("Greatwin"). (D.I. 37-4) Relevant to this suit, Greatwin agreed that it "will not procedure [sic ] suppliers, necessaries or services including, inter alia, bunkers on the credit of the owners or the vessel or in the owner's name or the vessel's name and if required will provide evidence thereof to the owners." (Id. at 9)
On September 2, 2014, while in Russia, Greatwin placed an order with Praxis for bunkers (i.e., marine fuel) for the Vessel. (D.I. 22-2) (Affidavit of Pritam Singh ("Singh Aff.") at 1) That same day, Praxis emailed Greatwin a Bunker Nomination (i.e., purchase order) which provides, in relevant part, "the acceptance of marine fuels ... by the nominated vessel shall be deemed to constitute the clear acceptance of our standard terms and conditions, which include expressly seller's maritime lien rights." (Id. at 2, Ex. 1) (all caps removed) A representative from Greatwin confirmed the Bunker Nomination that same day. (Id. at 2, Ex. 2) Praxis' General Terms and Conditions for the Sale of Marine Bunker Fuels and Lubricants ("Terms and Conditions") (which the parties presume are the "standard terms and conditions" referenced in the Bunker Nomination) provide under Section 10.00 "Maritime Lien":
Where Products are supplied to a Vessel, in addition to any other security, the agreement is entered into .... It is agreed and acknowledged that the sale of Products to the Buyer and/or their acceptance on the Vessel create a maritime lien over the Vessel for the price of the Products, such maritime lien afforded to the Company over the Vessel.... In case the Buyer is not the owner of the Vessel, it hereby expressly warrants that it has the authority of the owner to pledge the Vessel's credit and create a lien upon her as aforesaid and that he has given notice of the provisions of this Clause to the owner. The Company shall not be bound by any attempt by any person to restrict, limit or prohibit its lien or liens attaching to a Vessel, either by clausing the Physical Supplier's delivery receipts or otherwise.
*775(Id. Ex. 3 § 10.00) The Terms and Conditions further provide that General Maritime Law of the United States of America governs the agreement. (Id. Ex. 3 § 22.01) Praxis subcontracted Alliance-Bunker, a local physical supplier, to deliver the bunkers to the Vessel. (Id. at 2)
On September 8, 2014, Nikolaos Pantelias, Operations Manager at Evalend Shipping Company S/A ("Evalend"), which is the Ship Manager for the Vessel, emailed Alliance-Bunker after learning that Greatwin arranged for Alliance-Bunker to deliver fuel to the Vessel. (D.I. 39-1) (Affidavit of Nikolaos Pantelias ("Pantelias Aff.") at 1) With subject line "MV Pebble Beach Due to Bunker For Charterers Account," the email provided the text of the above-cited provision in the Charter Party agreement limiting Greatwin's authority to procure bunkers on the credit of the Vessel and further stated, "under no circumstances your contractual partner can receive bunkers on credit against a maritime lien on the vessel." (Id. Ex. A) The email continued:
You are hereby put on notice that any bunkers to be delivered on board the vessel is for the account of the charterers and charterers alone and charterers have no right to allow any such rights to be vested to you in connection with said bunkers.
The Master reading this message in copy will ensure that an appropriate stamp will be inserted in the BDN [Bunker Delivery Note] on completion of the bunkering and obtain the signature of your representative prior to bunkering that you are aware of the above quoted stipulation.
(Id. Ex. A) The email attached a form letter ("Skipper Letter") (id. Ex. B), which "was to be delivered by the Master of the [Vessel] to the Master of the bunker barge [to sign] before the bunkers were delivered." (Id. at 2) The Skipper Letter is written as a statement from the skipper of the barge Carnival "[f]or and on Behalf of the Physical Supplier [Alliance-Bunker]." (Id. Ex. B) The Skipper Letter provides that the barge Carnival, on behalf of Alliance-Bunker, acknowledges "that vessel's charterers are the party responsible for the payment of the value of the bunkers the vessel will receive and Owners, the Master and the crew will not be called upon to pay any sums in connection therewith." (Id. Ex. B) The Skipper Letter further provided that "[a]ny maritime lien rights that the physical Suppliers [Alliance-Bunker] may have under the terms of this sale or otherwise are hereby fully and unreservingly waived." (Id. Ex. B)
Captain Domingo Bautista Dacillo, Master of the Vessel, received the September 8 email and form Skipper Letter. (D.I. 44-1) (Affidavit of Captain Domingo Bautista Dacillo ("Dacillo Decl.") at 1)
Captain Dacillo affirms that on September 11, 2014 he signed the Skipper Letter, which was delivered to the Captain of the barge Carnival, who also signed the Skipper Letter before any bunkers were delivered. (Id. at 2) Mr. Singh claims that the signed Skipper Letter is not genuine and that the signature is fake. (Singh Aff. at 3) From 9:30 PM on September 11 to 1:30 AM on September 12, Alliance-Bunker delivered the bunkers. (Id. Ex. 4)
It is undisputed that a Bunker Delivery Note (i.e., receipt) was provided to the Vessel for the delivery, which was signed by the Captain of the Vessel. (Id. Ex. 4) The Bunker Delivery Note attached to the Singh Affidavit contains a "no lien" stamp that states:
The goods and / or services being hereby acknowledged receipt for and / or ordered are being accepted and / or ordered solely for the account of Messrs Greatwin Carrier (Holdings) Co. Ltd. of the m.s. Pebble Beach and not for the *776account of said ship or her owners. Accordingly, no lien or other claim against said ship can arise therefrom.
(Id. Ex. 4) However, Mr. Singh affirms that this "no lien" stamp "was added only after the bunkers were pumped into [the Vessel] and the supply was completed." (Id. at 3)
Ultimately, Greatwin failed to pay Praxis by the due date of October 10, 2014 and has still not paid for the bunkers. (Id. Ex. 7) Nevertheless, Praxis paid for Alliance-Bunker's services on October 14, 2014. (Id. at 3)
About one year later, on August 21, 2015, when the Vessel arrived at the port of Rio Grande, Brazil, Praxis filed a pleading in Brazil against Evalend, Sithonia, and Greatwin asking the Court to detain the Vessel pending deliberation from the Court and to grant a Writ of Preliminary Attachment as to the Vessel until defendants provide a security for the amount of $270,000 (the "Brazilian Action"). (D.I. 39-2 at 3-4, 18) A Brazilian attorney, Dr. Arthur Rocha Baptista, who represented the Vessel, Evalend, and Sithonia in the Brazilian Action, referred to it as "a lawsuit of arrest proceedings" in which the "Brazilian court ordered that the [Vessel] should be arrested and that the [V]essel not depart from the port of Rio Grande, Brazil." (D.I. 16-1) (Affidavit of Dr. Arthur Rocha Baptista ("Baptista Aff.") at 1-2) The defendants in the Brazilian Action provided security to obtain the release of the Vessel. (Id. at 3) On October 11, 2016, Praxis' Brazilian Action was dismissed, a decision which was affirmed on March 30, 2017. (Id. ) The security provided remains in the custody of the Brazilian court. (Id. )
Nearly two years later, on May 12, 2017, when the Vessel arrived at the port of Wilmington, Delaware, Praxis filed a complaint in this Court seeking issuance of a warrant for arrest of the Vessel in rem . (D.I. 1, 5) The warrant was issued the same day. (D.I. 9) Two days later, the Vessel was released on provision of security through a Letter of Understanding ("LOU"), which was replaced by a surety bond on August 22. (D.I. 10, 21) On June 16, 2017, Sithonia appeared as owner of the Vessel, answered the Complaint, filed a Counterclaim, and sought countersecurity for the counterclaim from Praxis. (D.I. 16) Praxis answered the counterclaim on July 5 (D.I. 19) and filed its pending motion for summary judgment on November 27. On December 22, the Court ordered Praxis to provide the countersecurity and stayed the proceedings until it was paid. (D.I. 26) Praxis paid the countersecurity on April 20, 2018 and, as a result, the Court lifted the stay on June 4. (D.I. 32) On June 14, the Court issued a Scheduling Order, which set a briefing schedule for Praxis' summary judgment motion and set fact discovery to close on September 30. (D.I. 36) The following day, Sithonia filed its pending Rule 56(d) motion for discovery and, thereafter, on June 27, filed its cross-motion for summary judgment.
II. LEGAL STANDARDS
Under Rule 56(a) of the Federal Rules of Civil Procedure, "[t]he court shall grant *777summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp. ,
To defeat a motion for summary judgment, the nonmoving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita ,
"It is well established that a court is obliged to give a party opposing summary judgment an adequate opportunity to obtain discovery." Shelton v. Bledsoe ,
III. DISCUSSION
A. Cross-Motions for Summary Judgment
Praxis argues that summary judgment should be granted in its favor based on the following reasoning. The Bunker Nomination incorporated Praxis' Terms and Conditions, which states that any disputes relevant to the agreement are governed by the General Maritime Law of the United States of America, so U.S. admiralty common law and the Commercial Instruments and Maritime Lien Act ("CIMLA," previously called the Federal Maritime Lien Act or "FMLA") applies. The CIMLA (
Sithonia counters that Praxis' motion should be denied and, instead, summary judgment should be entered in favor of Sithonia. It makes three independent arguments for its position. First, Sithonia argues that since it was not a party to the contract between Praxis and Greatwin it is not bound by the U.S. choice-of-law clause in the Terms and Conditions, so there is no basis to apply U.S. law to invoke a maritime lien. Second, Sithonia argues that since it already provided security for the release of the Vessel from arrest in Brazil, Praxis no longer has a right to assert a second maritime lien against the Vessel related to the same conduct, so the arrest in Delaware was invalid. Third, Sithonia argues that Praxis had notice that Greatwin was barred from incurring maritime liens against the Vessel and, therefore, Praxis cannot invoke a maritime lien against the Vessel.
1. Application of U.S. Choice-of-Law Clause
Sithonia argues that "because Sithonia was not a party to the Agreement between Praxis and Greatwin, the Vessel is not bound by the U.S. choice of law and maritime lien clauses included in Praxis' Terms and Conditions." (D.I. 39 at 3-4) Yet Sithonia concedes that "maritime liens arise only by operation of law and not by contract." (Id. at 16; see also In re World Imports Ltd. ,
"United States maritime law governs whether the choice-of-law provision is enforceable." Triton Marine Fuels Ltd. S.A. v. M/V Pacific Chukotka ,
In Triton Marine ,
The Second Circuit, on the other hand, considered maritime choice-of-law factors and applied British law instead of a contractual choice-of-law provision requiring U.S. law, because "maritime liens arise separately and independently from the agreement of the parties, and rights of third persons cannot be affected by the intent of the parties to the contract." Rainbow Line, Inc. v. M/V Tequila ,
The action here is brought in rem against the Vessel rather than in personam against Sithonia, so whether Sithonia was a party to the supply agreement is not decisive. The Court finds the Fourth Circuit's analysis in Triton Marine is reasonable and concludes that U.S. law applies to the present dispute. The Court will next consider whether Praxis was entitled to enforce a maritime lien against the Vessel when it arrived in Delaware.
2. Impact of Brazilian Action on U.S. Maritime Lien
Sithonia argues that a Vessel cannot be arrested twice for the same claim, so the prior arrest of the Vessel in Brazil causes its arrest in Delaware to be invalid. (D.I. 39 at 8-11) The Brazilian Action and the present suit indisputably arose from the same claim based on Clause 10.00 of Praxis' Terms and Conditions concerning maritime liens. (Id. at 8; D.I. 39-2 at 4) It is further undisputed that the Brazilian *780Action was (at least initially) brought against Evalend, Sithonia, and Greatwin, and not the Vessel in rem . (D.I. 39-2 at 3-4)
It is well-established in the Third Circuit that the predicate for a valid arrest of a ship through an in rem action is the existence of a valid maritime lien. See Petroleos Mexicanos Refinacion v. M/T King A ,
As stated in The Law of Admiralty : "With respect to a lien in suit the effect of release is to transfer the lien from the ship to the fund represented by the bond or stipulation. The lien against the ship is discharged for all purposes and the ship cannot again be libeled in rem for the same claim."
Praxis argues that the Brazilian Action was quasi in rem , not in rem , since the Vessel was not a named defendant. (D.I. 43 at 8) Rather than arguing its position, Praxis provided the Court with extensive block quotations (sometimes extending nearly two pages) from cases supposedly supporting its position. While such briefing techniques are discouraged, particularly because it leaves the Court guessing as to what the arguments are, the Court has considered all of the cases cited by Praxis in reaching its conclusions. Praxis notes that there are three types of actions - in personam and in rem actions, which may arise from the same claim but be brought separately against a person and property, respectively, and quasi in rem actions, which permit attachment of property to satisfy the claim when the Court has no jurisdiction over the person. (Id. at 10) (citing Belcher Co. of Ala. v. M/V Maratha Mariner ,
Praxis cites cases that consider whether an attachment precludes a later arrest to enforce a maritime lien. The Belcher Court explained that since "Dutch law does not recognize the concept of maritime lien" - meaning "an in rem action could not be brought in the Netherlands" - "the attachment there filed" "does not convert ... into an in rem proceeding."
Unlike the Netherlands and India, it is undisputed that Brazil does recognize maritime liens. (D.I. 43 at 12 (citing Bominflot ,
In order for the Court to grant summary judgment to either Praxis or Sithonia, there must be an answer to the following question without any genuine issues of material fact that may impact the answer: In the Brazilian Action, did Praxis have a separate basis of substantive liability against Sithonia in personam or was the Vessel in rem arrested in accordance with Praxis' maritime lien? Sithonia points to several paragraphs in the pleading in the Brazilian Action which seem to indicate that the action was brought in connection with the maritime lien. (Id. at 3) Furthermore, the pleading provides that the lawsuit is based on Clause 10.00 of the agreement between Praxis and Greatwin, a clause which is entitled "Maritime Lien." (Singh Aff. Ex. 3) However, the cover page and conclusion of the pleading provides that Praxis is requesting a writ of preliminary attachment. (D.I. 39-2 at 3, 18) Praxis admits that "the Brazil Court recognized initially that Praxis was asserting claims quasi in rem against Sithonia (attaching its property, the Vessel), but only then held (for reasons that Praxis continues to appeal) that Praxis had no quasi in rem claim under Brazil law ." (D.I. 43 at 13) (emphasis added) Based on this concession, the Court understands that the Brazil Court ultimately concluded that the Brazilian Action was one in rem rather than quasi in rem . Since "[a] maritime lien and a proceeding in rem are correlative; where one exists, the other can be taken, and not otherwise," Petroleos Mexicanos Refinacion ,
3. Presumption of Charterer's Authority to Bind Vessel
Having concluded that the Brazilian Action precluded Praxis from enforcing its maritime lien in Delaware, it is unnecessary to address whether Sithonia adequately rebutted the statutory presumption that Greatwin had authority to bind the Vessel. Nevertheless, the Court will briefly consider the arguments.
"Although a charterer is presumed to have authority to bind the vessel, the lien does not vest absolutely as a matter of law."
*782Belcher Oil Co. v. M/V Gardenia ,
Here, it is undisputed that Greatwin did not have authority from Sithonia to bind the Vessel or Sithonia. (D.I. 37-4) The central dispute concerns whether Praxis had actual knowledge of this fact.
It is undisputed that Evalend emailed the barge Carnival informing them of Greatwin's limited authority with respect to maritime liens. What is disputed is whether the email and the form Skipper Letter attached to the email, acknowledging on behalf of Alliance-Bunker that Greatwin cannot incur a maritime lien, was ever received by Alliance-Bunker or Praxis. Also disputed is whether the Bunker Delivery Note was stamped with a "no lien" stamp before or after delivery of the bunkers. Praxis points to a letter dated May 12, 2017 from the owner of the barge Carnival, but failed to submit a formal declaration or affidavit. Sithonia contends that the May 2017 letter must not be considered as it is an unsworn statement that is not based on personal knowledge. (D.I. 39 at 14) (citing Fed. R. Civ. P. 56(c)(4) )
Sithonia's arguments fail for two reasons. First, as Praxis argues, Sithonia's evidence, even if taken as true, does not rebut the strong statutory presumption that Greatwin had authority, because there is no evidence that Praxis , as opposed to the barge Carnival or Alliance-Bunker, ever received notice of Greatwin's limited authority to incur maritime liens.
Second, "the addition of a 'no-lien stamp' or 'disclaimer stamp' affixed to a bunker delivery note is insufficient to provide such notice." Bomin ,
Accordingly, the Court concludes that there is a genuine issue of material fact as to whether Praxis had actual knowledge of Greatwin's limited authority to bind the Vessel. Nevertheless, as discussed above, since Praxis was not entitled to enforce a *783maritime lien against the Vessel when it arrived in Delaware, this conclusion does not affect the outcome of the pending motions.
B. Motion for Discovery
Having already determined that Praxis' summary judgment motion will be denied and that Sithonia's summary judgment motion will be granted, the Court further finds that Sithonia's motion for discovery is moot.
IV. CONCLUSION
For the reasons stated, Praxis' Motion for Summary Judgment and for Fed. R. Civ. P. 54(b) Final Judgment Entry (D.I. 22) will be denied, Sithonia's Cross Motion for Summary Judgment (D.I. 39-4) will be granted, and Sithonia's Motion for Discovery Prior to Filing Opposition to Praxis' Motion for Summary Judgment (D.I. 37) will be denied as moot. An appropriate Order follows.
ORDER
At Wilmington, this 25th day of September, 2018 :
For the reasons set forth in the Memorandum Opinion issued this date, IT IS HEREBY ORDERED that:
1. Praxis' Motion for Summary Judgment and for Fed. R. Civ. P. 54(b) Final Judgment Entry (D.I. 22) is DENIED.
2. Sithonia's Cross Motion for Summary Judgment (D.I. 39-4) is GRANTED.
3. Sithonia's Motion for Discovery Prior to Filing Opposition to Praxis' Motion for Summary Judgment (D.I. 37) is DENIED AS MOOT.
4. The Clerk of Court shall release the surety bond in the amount of Two Hundred Twenty Two Thousand, Three Hundred and Thirty Seven Dollars and No Cents ($222,337.00) provided by Travelers Casualty and Surety Company of America on behalf of Praxis to the appropriate party.
5. The parties shall meet and confer and, no later than September 28, submit a joint status report indicating how the case should proceed.
In support of Praxis' assertions that the signed Skipper Letter is not genuine and that the Bunker Delivery Note did not contain a "no lien" stamp until after delivery, Praxis submitted a letter from Dmitry Korotkiy, the owner of the barge Carnival, dated May 12, 2017. (Singh Aff. Ex. 6) The letter provides: "neither our skipper/Master of the barge Mr. Cherniy D.V., nor our company, have ever signed the attached alleged acknowledgment... nor have we/has he ever been notified by any party whatsoever in respect of the alleged points of the said document before or after the supply. We only noted after the supply, a stamp at the right upper corner of the also attached Bunker Delivery Note, which however was placed after the supply was completed." (Id. )
Reference
- Full Case Name
- PRAXIS ENERGY AGENTS PTE LTD v. M/V PEBBLE BEACH, its Engines, Tackle, Apparel and Freights, in rem.
- Cited By
- 1 case
- Status
- Published