Valero Marketing & Supply Co. v. M/V Almi Sun, IMO
Opinion of the Court
This case asks whether a bunker supplier, having entered into a contract with a bunker trader that later went bankrupt, is entitled to assert a maritime lien against the vessel that physically received its fuel. Because that supplier cannot show that it provided necessaries "on the order of the owner or a person authorized by the owner," we affirm the district court's denial of a maritime lien.
I.
While in Corpus Christi, Texas, the Almi Sun (the "Vessel") needed refueling. Almi Tankers S.A., an agent for the Vessel's owner Verna Marine Co. Ltd., contracted with O.W. Bunker Malta, Ltd., a fuel trader, to procure bunkers. During negotiations, Almi Tankers requested the name of the physical supplier, and O.W. Malta named Valero Marketing & Supply Company. O.W. Malta issued a final sales order confirming Valero as the supplier and listing itself as the seller. Another O.W. Bunker entity, O.W. Bunker USA, Inc., then contracted with Valero to purchase the fuel. O.W.'s involvement ended there. Valero coordinated delivery directly with the Vessel, and Vessel agents tested and *292verified the bunkers' quality. After delivery was completed, an authorized officer of the Vessel signed the bunkering certificate, and Valero submitted an invoice to O.W. USA.
In early November 2014, Almi Tankers learned that the O.W. Bunker group of companies faced significant financial problems and might be unable to pay Valero. Almi Tankers requested "written confirmation and evidence of payment," and "reserve[d] the right to make remittance directly to the physical supplier and ... hold any balance due ... for payment." O.W. Bunker and other related entities filed for bankruptcy shortly thereafter.
Valero then brought this in rem action seeking a maritime lien for the amount owed for the bunkering plus interest and fees. Verna appears as the in rem claimant of the Vessel defending the action on the Vessel's behalf. Both Valero and Verna moved for summary judgment, and the district court granted summary judgment in favor of Verna. Valero timely appeals.
II.
We review the " 'district court's grant of summary judgment de novo, applying the same standards as the district court.' "
III.
The Commercial Instruments and Maritime Liens Act ("CIMLA") governs the circumstances under which a party is entitled to a maritime lien. In relevant part, CIMLA states that a person providing necessaries to a vessel "on the order of the owner or a person authorized by the owner" is entitled to a maritime lien on the vessel.
(1) the owner; (2) the master; (3) a person entrusted with the management of the vessel at the port of supply; or (4) an officer or agent appointed by-(a) the owner; (b) a charterer; (c) an owner pro hac vice; or (d) an agreed buyer in possession of the vessel.5
We apply the provisions of CIMLA stricti juris to ensure that maritime liens are not "lightly extended by construction, analogy, or inference."
*293It is not unusual for an entity supplying necessaries to a vessel to lack privity of contract with the owner of that vessel, and to instead contract with an intermediary. In Lake Charles , we recognized two lines of cases that deal with such circumstances: the general/subcontractor line of cases and the principal/agent, or "middle-man," line of cases.
As it happened in Lake Charles , ED&F Man Sugar, Inc. entered into an agreement to purchase rice from Broussard Rice Mill, Inc. In that agreement, the parties assigned the responsibility of providing stevedoring services to Broussard. Broussard, working through an agent, awarded Lake Charles Stevedores ("LCS") the bid to load the rice onto the vessel. LCS loaded the rice, and the vessel's agents signed activity sheets and receipts. When Broussard failed to pay, LCS asserted a maritime lien for its services.
We found those facts to be "more akin to those in which general contractors have been engaged to supply a service and have called upon other firms to assist them in meeting their contractual obligations."
Ken Lucky typifies the middle-man line of cases.
The Ninth Circuit found that Marine Fuel was entitled to a lien because the parties agreed that the order originated from Bulkferts, the subcharterer, an entity with authority to bind the ship.
IV.
In this case, there is no dispute that bunkers qualify as necessaries and that Valero provided those necessaries to the Vessel. The sole inquiry before us is whether Valero furnished the necessaries to the Vessel "on the order of the owner or a person authorized by the owner." We conclude that it did not.
The record shows that Verna, through its agent Almi Tankers, contacted OW Malta because it was a "reputable bunker trader[ ]"; that during negotiations, Almi Tankers asked who would be the bunker fuel supplier, and it did not object to Valero's selection; that the sales order confirmation listed Valero as the supplier; that Valero provided the entire bunkering service that Almi Tankers contracted for, with no assistance from O.W. or its affiliates; that the Vessel's agents monitored and tested Valero's performance; and that Almi Tankers expressed concern about O.W.'s ability to pay Valero.
These facts do not demonstrate that Valero provided the bunkers to the Vessel "on the order of the owner or a person authorized by the owner." Valero provided the bunkers at O.W.'s request, and O.W. is not a "person [ ] presumed to have authority to procure necessaries[.]"
Despite Valero's urging, we decline to apply Ken Lucky . As mentioned supra , the Ninth Circuit's holding-that the physical supplier could assert a lien-turns on the parties' concession that the physical supplier sold the bunkers to an entity with authority to bind the vessel.
V.
The dissent says that we fail to follow Lake Charles because in that case, "we made clear that the 'subcontractor' line of cases is itself divided into two lines of cases: (1) cases requiring 'an entity with authority to bind the vessel' to 'direct that the general contractor hire a particular subcontractor in order for that subcontractor to be entitled to a lien'; and (2) cases requiring the subcontractor to be 'identified and accepted by the vessel's owner or charterer prior to performance.' " The dissent's view likely emerges from the following passage in Lake Charles :
In keeping with the notion that subcontractors may acquire liens where the vessel's owners retain control over their selection and/or performance, the Ninth and Second Circuits require that an entity with authority to bind the vessel direct that the general contractor hire a particular subcontractor in order for that subcontractor to be entitled to a lien. See Port of Portland, 892 F.2d at 828 ; Farwest Steel Corp. v. Barge Sea-Span 241 ,828 F.2d 522 , 526 (9th Cir. 1987) ; Integral Control Sys. Corp. v. Consolidated Edison Co. of New York, Inc. ,990 F.Supp. 295 , 301 (S.D.N.Y. 1998). In other cases in which subcontractors have been found to be entitled to a lien, those subcontractors were identified and accepted by the vessel's owner or charterer prior to performance. See Stevens, 913 F.2d at 1525, 1534 ; Turecamo of Savannah, Inc. v. United States,824 F.Supp. 1069 , 1072 (S.D. Ga. 1993). Owner involvement in directing, testing, and/or inspecting subcontractor performance has also been cited in support of finding a lien in favor of a subcontractor. See Stevens , 913 F.2d at 1535 ; cf. Marine Coatings , 932 F.2d at 1375 n.9 (listing operator's inspecting subcontractor work and giving provisional and final acceptance to work performed by the subcontractor among evidence that supported court's conclusion that a genuine issue of fact existed regarding general contractor's authority to bind the vessel). Based on these cases, we agree with the district court that LCS has not shown it was entitled to a lien under the circumstances presented here.24
We do not read Lake Charles as the dissent does. To these eyes, the above specifies three factual scenarios that color the general proposition that a subcontractor is not entitled to a lien, "unless it can be shown that an entity authorized to bind *296the ship controlled the selection of the subcontractor and/or its performance."
Even assuming that Lake Charles divided the subcontractor line of cases into "two lines of cases" sub silentio , Valero cannot establish that it falls in either one. Verna, through Almi Tankers, neither "direct[ed] that the general contractor hire a particular subcontractor" nor "identified and accepted" Valero "prior to performance." The record merely shows that Verna, through Almi Tankers, was aware that Valero would physically supply the bunkers.
The dissent also says that the majority opinion "creates an unnecessary circuit split with the Eleventh Circuit," citing Galehead and likening this case to Marine Coatings and Stevens .
To begin, a review of the facts and holding in Barcliff dispel any notion that we create a circuit split.
To reach that holding, the Barcliff court reviewed its jurisprudence on maritime liens. It began with the circuit's general rule, as set forth in Galehead , which provides: "Where the owner directs a general contractor to provide necessaries to its vessel, a subcontractor retained by the general contractor to perform the work or provide the supplies is generally not entitled to a maritime lien."
This "significant-and-ongoing-involvement exception" emerged from Marine Coatings and Stevens . The Barcliff court proceeded to review these cases, explaining that Marine Coatings "involved extensive maintenance, such as painting, coating, and cleaning" and that Stevens involved "repair work."
Against this background, Marine Coatings and Stevens are inapplicable in light of Barcliff and Galehead . Though Barcliff determined that the physical supplier had waived its argument concerning the Galehead exception, no circuit split results by following the holding in Barcliff . We are unaware of a case in the Eleventh Circuit, and the dissent proffers none, that applies Marine Coatings and Stevens to find that a subcontractor may acquire a lien for a one-off transaction in which the vessel owner was merely aware of the subcontractor's identity.
VI.
We affirm the district court's grant of summary judgment for Verna.
Green v. Life Ins. Co. of N. Am. ,
Fed. R. Civ. P. 56(a).
Cox v. Wal-Mart Stores East, L.P. ,
Atlantic & Gulf Stevedores, Inc. v. M/V Grand Loyalty ,
In subsequent decisions, however, we have clarified our "respect for the principle of stricti juris ," counseling against application of the sweeping language set forth in Atlantic & Gulf Stevedores to the present case. See Lake Charles Stevedores, Inc. v. P rofessor V ladimir P opov MV ,
Marine Fuel Supply & Towing, Inc. v. M/V KEN LUCKY ,
Lake Charles ,
Ken Lucky ,
Lake Charles ,
See Marine Coatings of Ala., Inc. v. United States ,
Barcliff ,
Id. at 1072.
See Galehead ,
See ING Bank ,
Dissenting Opinion
*298The majority opinion fails to follow our prior precedent in Lake Charles Stevedores, Inc. v. Professor Vladimir Popov MV ,
I agree that Valero is a subcontractor under the "general contractor/subcontractor" line of cases. Lake Charles explains the general proposition that "subcontractors hired by those general contractors are generally not entitled to assert a lien on their own behalf, unless it can be shown that an entity authorized to bind the ship controlled the selection of the subcontractor and/or its performance."
The Eleventh Circuit has embraced the second line of cases. In Marine Coatings of Alabama v. United States , the Eleventh Circuit addressed the question of the availability of a subcontractor lien in a repair services contract.
Likewise, in Stevens Technical Services., Inc. v. United States , the Sealift Antarctic needed a "major overhaul."
Here, the majority opinion significantly understates Almi's involvement in the bunkering transaction when it describes it as a "one-off transaction in which the vessel owner was merely aware of the subcontractor's identity." To the contrary, the parallels to Stevens , in light of the standards adopted in Lake Charles , are clear: (1) during negotiations with O.W., Almi made a point to discover who would perform the bunkering; it did not object to Valero's selection and thus impliedly approved Valero prior to finalizing the bunkering agreement; (2) Almi knew that O.W., as a "reputable bunker trader," could not bunker the vessel itself but would purchase bunkers from a physical supplier; (3) the contract with O.W., which designated Valero as the supplier, was fully authorized by a party with authority to bind the vessel; (4) the vessel's agents engaged directly with Valero and tested and approved of Valero's bunkers; and (5) the vessel's agents approved of the bunkers and signed a certificate confirming performance.
The majority opinion's reliance on Barcliff, LLC v. M/V Deep Blue, IMO No. 9215359 is misplaced. See
Although a subcontractor, the interactions between the vessel and Valero are such that Valero is entitled to assert a maritime lien. That O.W. was expected to pay Valero is not the point; "[e]xpectations that payment for the services would be made by some party other than the vessel does not vitiate a lien by one who, as permitted under [the Act], is not required to prove reliance on the credit of the vessel."
For these reasons, I conclude Valero is entitled to relief. From the majority opinion's decision to the contrary, I therefore respectfully dissent.
Compare Galehead ,
Verna argued in its brief and at oral argument that it has already paid OW Malta for the fuel in order to settle a contractual arbitration dispute in the United Kingdom; that this decision will result in Verna being forced to pay twice for the same fuel. That reality is one of Verna's own making-an attempt to extinguish O.W.'s claims while this action was pending. I note that Almi Tankers expressed concern to O.W. regarding the conglomerate's financial situation and reserved the right to pay Valero directly, ultimately deciding to pay O.W. Verna's unilateral decision does not control the outcome here.
Reference
- Full Case Name
- VALERO MARKETING & SUPPLY COMPANY, Plaintiff-Appellant v. M/V ALMI SUN, IMO NO. 9579535, Her Engines, Apparel, Furniture, Equipment, Appurtenances, Tackle, Etc., in Rem; Verna Marine Company, Limited, Appearing Solely and Restrictively as Claimant of the M/V Almi Sun, Defendants-Appellees
- Cited By
- 19 cases
- Status
- Published