16-4032-cv ING Bank N.V. v. JAWOR M/V

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

1 At a stated Term of the United States Court of Appeals for the Second Circuit, held at the 2 Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the 3 10th day of July, two thousand eighteen. 4 5 Present: BARRINGTON D. PARKER, 6 RICHARD C. WESLEY, 7 DEBRA ANN LIVINGSTON, 8 Circuit Judges. 9 _____________________________________________________ 10 11 ING Bank N.V., 12 13 Plaintiff-Appellant, 14 15 16 v. 16-4032-cv 17 18 19 JAWOR M/V, IMO No. 9452608, her engines, tackle, equipment, furniture, appurtenances, etc., 20 in rem, 21 22 Defendant in rem-Appellee. 23 24 25 26 _____________________________________________________ 27 28 Appearing for ING Bank N.V.: Bruce G. Paulsen, Brian P. Maloney, 29 Seward & Kissel, LLP, New York,

32 James D. Bercaw, King, Krebs & 33 Jurgens, PLLC, New Orleans, LA. 34 1 2 Appearing for JAWOR M/V, IMO No. 9452608: Michael James Dehart, Michael E. 3 Unger, Freehill Hogan & Mahar 4 LLP, New York, N.Y. 5 6 7 8

9 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND

10 DECREED that the judgment of the District Court is VACATED IN PART, AFFIRMED IN

11 PART, AND REMANDED.

12 Appellant ING Bank N.V. (“ING”) appeals from a judgment of the United States District

13 Court for the Southern District of New York (Forrest, J.). The District Court entered summary

14 judgment to defendant in rem JAWOR M/V (the “Vessel”) on ING’s maritime lien claim against

15 it for the provision of bunkers to the Vessel. The claim was brought under the Commercial

16 Instruments and Maritime Liens Act (“CIMLA”),

et seq. In addition, the

17 Court reduced the amount of security posted to permit the Vessel’s release from arrest. We

18 assume the parties’ familiarity with the underlying facts, procedural history, and issues for

19 review.

20 As relevant to this appeal, ING is the purported assignee of the O.W. Bunker Group, a

21 global collection of entities and subsidiaries that was engaged in the business of supplying

22 bunkers to ships in maritime commerce. In 2014, the charterer of the Vessel, a Chinese entity

23 called Able Glory Maritime Co., Ltd. (“Able Glory”), ordered bunkers from O.W. Bunker

24 Middle East DMCC (“O.W. Bunker Middle East”) to fuel the Vessel in Singapore in preparation

25 for the Vessel’s voyage to Australia. O.W. Bunker Middle East then used the services of a

26 subcontractor, O.W. Bunker Far East (S) Pte Ltd. (“O.W. Bunker Far East”) to supply the

27 bunkers to the Vessel. O.W. Bunker Far East then subcontracted with Coastal Energy Pte Ltd.

2 1 (“Coastal”) for the supply of the bunkers, who, in turn, subcontracted the actual supply of the

2 physical bunkers to a local physical supplier, Triton Bunkering Services Pte Ltd. (“Triton”). On

3 October 30, 2014, Triton delivered the bunkers to the Vessel in Singapore. The O.W. Bunker

4 Group then entered bankruptcy, and the bunkers were never paid for.

5 In June 2016, ING, acting as assignee of the O.W. Bunker Group, filed a complaint in

6 rem in the United States District Court for the Eastern District of Louisiana, asserting a maritime

7 lien against the Vessel for the unpaid bunkers. The Vessel was then arrested in New Orleans but

8 was released shortly after the Louisiana District Court approved the deposit of $926,053.93, with

9 an interest rate of 6%, into the registry of the court to serve as security.

10 In August 2016, the case was transferred to the Southern District of New York, where

11 ING moved for summary judgment on its maritime lien claim. The District Court denied ING’s

12 motion and instead sua sponte entered summary judgment in favor of the Vessel. The District

13 Court also entered an order reducing the security to $457,305.99 and reducing the interest rate to

14 3.5%. This appeal followed.

15 On appeal, ING argues that the District Court erred in granting summary judgment sua

16 sponte to the Vessel on ING’s maritime lien claim, and that the District Court erred in reducing

17 the security and the interest rate. We agree with the first contention and disagree with the

18 second. We therefore vacate the entry of summary judgment in the Vessel’s favor and affirm the

19 reduction in security.

20 The District Court denied ING’s application for a maritime lien on the ground that its

21 assignor, O.W. Bunker Middle East, had not “provid[ed]” bunkers to the Vessel, as required by

22 CIMLA, because it hired subcontractors to undertake the actual supply of the bunkers and

23 because, in the District Court’s view, the record did not establish that O.W. Bunker Middle East

3 1 faced any financial risk in its contractual obligations with its subcontractors. This rationale is

2 inconsistent with CIMLA. Instead, “[t]o assert a maritime lien, all a bunker contractor must

3 establish is that it contracted with a statutorily-authorized person for the delivery of bunkers and

4 that the bunkers were delivered pursuant to that contractual arrangement.” ING Bank N.V. v.

5 M/V TEMARA,

(2d Cir. 2018). And, “a supplier may provide necessaries to a

6 vessel indirectly through a subcontractor because when a subcontractor does so pursuant to its

7 contract with a contractor, the subcontractor’s performance is attributable to the contractor.”

8 at 519. There is no dispute that O.W. Bunker Middle East was hired to supply bunkers by the

9 Vessel’s charterer (Able Glory), and there is no dispute that the bunkers were delivered to the

10 Vessel under that arrangement. Consequently, O.W. Middle East (or ING, as its purported

11 assignee) may assert a maritime lien against the Vessel for the unpaid bunkers. The District

12 Court’s risk analysis was an incorrect application of CIMLA. We therefore vacate the District

13 Court’s grant of summary judgment to the Vessel, and remand for further proceedings.

14 Moreover, the manner in which the District Court granted summary judgment to the

15 Vessel—sua sponte and without notice or an opportunity to be heard—was inconsistent with

16 Federal Rule of Civil Procedure 56(f) and was thus improper. For the reasons we explained in

17 M/V TEMARA,

, ING was prejudiced by the sua sponte entry of summary

18 judgment.

19 As to the District Court’s order reducing security, there was no abuse of discretion. The

20 District Court reduced the security in this case pursuant to Supplemental Admiralty Rule E(6) of

21 the Federal Rules of Civil Procedure, which provides, in relevant part, that “[w]henever security

22 is taken the court may, on motion and hearing, for good cause shown, reduce the amount of

23 security given[.]” Supp. Adm. Rule E(6). ING argues this reduction was erroneous as a matter

4 1 of law because Supplemental Admiralty Rule E(5)(a) requires that the interest be set at 6% and

2 fixing it at any other rate was an error of law and an abuse of discretion. But, we held in

3 Chemoil Adani Pvt. Ltd. v. M/V MARITIME KING, No. 16-3944,

(2d Cir.

4 July 9, 2018) (per curiam), that Supplemental Admiralty Rule E(6) broadly permits the District

5 Court, in its discretion, to reduce a security interest rate, including one imposed under

6 Supplemental Admiralty Rule E(5)(a). Chemoil Adani,

, at *2-3.

7 Accordingly, the District Court did not abuse its discretion in reducing the interest rate from 6%

8 to 3.5%.

9 We have considered ING’s other arguments and find them to be without merit.

10 Accordingly, the judgment of the District Court is VACATED IN PART, AFFIRMED IN

11 PART, and REMANDED FOR FURTHER PROCEEDINGS.

12 13 FOR THE COURT: 14 CATHERINE O’HAGAN WOLFE, CLERK 15 16

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