World Fuel Services Trading, DMCC v. M/V Hebei Shijiazhuang
Docket: Civil Action No. 2:13cv173
Court: District Court, E.D. Virginia; April 4, 2014; Federal District Court
A motion for summary judgment was filed by World Fuel Services Trading, DMCC (WFS DMCC), alongside a cross-motion from Hebei Prince Shipping Company, Ltd. (Prince), and a request from Prince for additional discovery under Fed. R. Civ. P. 56(d). Following a hearing on March 27, 2014, the Court dismissed Prince's Rule 56(d) motion as moot, denied Prince's cross-motion for summary judgment, and granted WFS DMCC's motion for summary judgment.
The case stems from a fuel bunker transaction involving Tramp Maritime Enterprises Ltd., which chartered the M/V HEBEI SHIJIAZHUANG from Prince. Tramp sought a price quote for bunker fuel to be delivered at Khor Fakkan, UAE, on October 27, 2012. An email from Tramp confirmed the order, designating the buyer as the vessel and Tramp, while identifying Bunkerfuels Hellas, a division of WFS DMCC, as the seller. The confirmation detailed payment terms and stated that all sales were secured by the vessel's credit, asserting the buyer's authority to bind the vessel with a maritime lien, irrespective of any disclaimers. Additionally, the confirmation referenced WFS’s general terms and conditions, accessible on their website.
A list of twelve entities is identified as the "Marine Group of companies," including World Fuel Services, Inc., and various subsidiaries and affiliates involved in selling petroleum products. The document states that all subsidiaries of World Fuel Services Corporation that have sold or will sell petroleum products are included, regardless of their existence at the time of the agreement. The “Credit and Security” section outlines that products sold are on the credit of the Receiving Vessel, and the Buyer warrants that the Seller holds the right to assert a maritime lien against the vessel for unpaid amounts. Any disclaimer of lien on a Bunker Delivery Receipt does not negate this lien. Sales are made to the registered owner of the vessel, making them liable for payment, even if ordered by an agent or other third party.
The “Law and Jurisdiction” section specifies that the General Maritime Law of the United States will govern the terms and transactions, with Florida law applicable in cases not covered by maritime law. The Seller retains the right to assert liens or claims in any jurisdiction where the vessel is located.
On October 29, 2012, APSCO delivered bunkers to a vessel in Khor Fakkan, and the chief engineer signed Bunker Delivery Notes containing a “no lien” disclaimer. On April 4, 2013, the Plaintiff filed a Verified Complaint in court for unpaid fuel costs amounting to $809,420.50, asserting a maritime lien based on the provided necessaries, as per 46 U.S.C. 31341 and 31342. The Plaintiff also filed a Motion for Issuance of Warrant of Maritime Arrest, anticipating the vessel's arrival in the Eastern District of Virginia within two weeks.
The Court granted Plaintiff's motion for a Warrant of Maritime Arrest, leading to the vessel's arrest around April 8, 2013. A stipulation on April 10, 2013, permitted the release of the vessel in exchange for an $850,000 cash bond from Claimant. Plaintiff filed for summary judgment on December 17, 2013, claiming entitlement to a maritime lien on the vessel. Claimant opposed the motion on January 15, 2014, arguing lack of subject matter jurisdiction, disputed material facts regarding contractual privity, and denial of an in rem lien on the specific facts presented. Subsequent filings included Plaintiff’s reply on February 6, 2014, and Claimant's cross-motion for summary judgment on March 10, 2014, which reiterated its earlier defenses. Both motions are now ready for review.
The standard for summary judgment requires the movant to demonstrate no genuine dispute of material fact exists. The existence of a factual dispute alone does not defeat a properly supported motion; rather, a genuine issue of material fact must be presented. The trial judge's role is to prevent factually unsupported claims from proceeding and to evaluate whether a fair-minded jury could find for the non-moving party based on the evidence, while construing all facts in the light most favorable to that party. The judge does not weigh evidence or make credibility determinations.
A ruling on summary judgment necessitates consideration of the substantive evidentiary standard applicable at trial, meaning that a mere scintilla of evidence from the plaintiff is insufficient to counter a well-founded summary judgment motion from the defendant. If the non-movant's evidence is merely colorable or not significantly probative, summary judgment may be granted. In cases involving cross-motions for summary judgment, each motion must be evaluated separately.
The Claimant filed a Rule 56(d) motion seeking additional discovery time after responding to the Plaintiff's summary judgment motion. Claimant noted that only 73 pages of documents were produced and that several depositions remained incomplete, requesting more time to prepare the case for trial. However, since the discovery deadline has passed and the Claimant submitted its own motion for summary judgment with sufficient evidence, the Court dismissed the Rule 56(d) motion as moot, indicating compliance with the scheduling order.
The Plaintiff seeks summary judgment based on undisputed facts: that an agreement for fuel bunkers was made through the time-charterer Tramp, which incorporated Plaintiff's terms and conditions that explicitly select U.S. law, and that Plaintiff is entitled to a maritime lien under the Federal Maritime Lien Act (FMLA). In contrast, the Claimant asserts that the agreement does not involve the parties, is not governed by U.S. law, and that even if it were, the general maritime law referenced does not include statutes like the FMLA. The Claimant also argues that Plaintiff had actual notice of its anti-lien agreement with Tramp, precluding Plaintiff's entitlement to a maritime lien.
Since the Claimant’s grounds for its cross-motion mirror its defenses against the Plaintiff's motion, and the Court has granted the Plaintiff's motion while denying the Claimant's, all factual disputes and rational inferences must be viewed in favor of the Claimant.
Before assessing the validity of the U.S. law choice-of-law provision in the General Terms, the Court must first examine whether this provision is valid under the law of the country where the contract was formed. The Claimant argues that Greek law governs the contract's formation due to the dispute arising from a contract made in Greece between two Greek parties involving the delivery of bunkers to a foreign vessel in a foreign port by a foreign supplier. A declaration from Greek attorney Andreas Nassikas supports this assertion, noting the close connection of the contract to Greece through the parties' presence and negotiations there.
The Plaintiff contends that even if Greek law applies to the contract's formation, their lien remains valid. The Fourth Circuit has established that, barring public policy concerns, choice-of-law provisions in maritime contracts are generally enforceable. However, since the U.S. choice-of-law provision is not explicitly stated in the contract but is incorporated by reference, the Court must first determine which country’s law governs the contract formation before evaluating the validity of the U.S. provision. This analysis aligns with maritime choice-of-law principles established in the Supreme Court’s Lauritzen decision, which federal courts in admiralty should follow.
A court should evaluate several factors under Lauritzen to determine the applicable law: 1) the location of the wrongful act, 2) the law of the flag, 3) the injured party's allegiance, 4) the defendant shipowner's allegiance, 5) the place of contract, 6) the accessibility of a foreign forum, and 7) the law of the forum. In this case, the Claimant asserts that Greek law governs contract formation, a position that the Plaintiff does not strongly contest. The Court recognizes that other jurisdictions, including the United Arab Emirates, China, and Hong Kong, could potentially apply, but ultimately concludes that Greek law is appropriate. The Claimant successfully argues that the Plaintiff lacks privity of contract with other transaction parties, asserting that the Plaintiff did not arrange or perform any contract. The Plaintiff counters that it acted as the seller, with Vogas of Bunkerfuels Hellas serving merely as a broker. Under Greek law, an agent can act on behalf of a principal if the principal allows it, and if the principal does not intervene when aware of the agent's actions, the doctrine of ostensible authority applies. This doctrine parallels U.S. agency law, which similarly allows agents to bind principals in business dealings with third parties.
In *Allianz Ins. Co. v. Cho Yang Shipping Co. Ltd.*, the court addresses principles of agency law, highlighting that an agent can possess actual authority through explicit permission from the principal or apparent authority, which allows the agent to affect the principal's legal relations based on third-party beliefs stemming from the principal’s actions. The existence of an agency relationship may be determined as a matter of law if facts are undisputed or if a reasonable jury could only interpret them in one way.
The plaintiff asserts it entered into a contract with the vessel and Tramp Maritime for supplying bunkers and marine gas oil, supported by a bunker confirmation that identifies the seller as “BUNKERFUELS A DBA/DIVISION of WFS Trading DMCC.” A declaration by Jos Heijmen, a senior vice president at WFS Corp., confirms Bunkerfuels Hellas is affiliated with WFS DMCC and serves as a local contact for Greek ship operators, facilitating inquiries for fuel delivery. Heijmen states that Bunkerfuels Hellas forwarded a fuel inquiry to WFS DMCC, which authorized Vogas to enter into a contract with Tramp on its behalf.
In opposition to the plaintiff's motion for summary judgment, the claimant fails to provide specific facts or evidence that raise a genuine issue for trial regarding the plaintiff's involvement in the contract. The claimant’s own cross-motion for summary judgment does not demonstrate any genuine issue regarding the plaintiff's privity to the contract, merely arguing the lack of identification of the plaintiff as “Bunkerfuels” or any organizational link to WFS DMCC. The claimant references an invoice related to another WFS Corp. entity, asserting that the plaintiff’s connection to the transaction is solely based on the seller designation in the bunker confirmation.
Claimant's argument regarding a lack of privity between Plaintiff and Tramp is deemed insufficient to present a genuine issue of material fact. Heijmen's declaration confirms that Bunkerfuels Hellas had explicit authorization to act on behalf of Plaintiff, with Vogas exercising ostensible authority to enter into a contract with Tramp. The Court finds that the payment processes involving Plaintiff’s parent corporation and APSCO do not alter the determination of Plaintiff's involvement in the contract. The evidence strongly suggests that there is only one reasonable interpretation supporting Plaintiff’s privity with Tramp.
Additionally, Claimant argues that the bunker confirmation did not properly incorporate Plaintiff's General Terms per Greek law, as Tramp allegedly did not have reasonable notice of these terms and they were not explicitly linked to Plaintiff. Plaintiff counters that Greek law allows for incorporation by reference, and the navigation required to access the General Terms does not negate reasonable notice. Furthermore, the General Terms are interpreted as not being an exhaustive list.
Regarding the validity of a U.S. choice of law provision, Mr. Nassikas asserts that such a term is valid if clearly stated in the contract. However, for incorporation by reference to a website, the reference must be explicit. In opposition, Plaintiff presents Mr. Karamitsios' declaration, emphasizing that for the general terms to apply, Tramp must have known or had the opportunity to know their contents, in accordance with applicable international law ratified by Greece.
The General Terms are located at www.wfscorp.com/Marine/pdf/Marine-Terms.pdf, requiring two additional clicks from WFS Corp.'s home page to access. The bunker confirmation directs recipients to request a copy of the General Terms if needed. The Court concludes that the bunker confirmation validly incorporated these General Terms, rejecting Mr. Nassikas's assertion that the reference lacked clarity because the terms were not immediately accessible. The Court cited a precedent indicating that reasonable notice of terms is sufficient, even if the directions could be clearer. Additionally, the bunker confirmation offered an opportunity to request the General Terms, reinforcing their incorporation.
Regarding the applicability of the General Terms to the Plaintiff, the Claimant contends that the terms do not identify Plaintiff specifically as covered. The Plaintiff contends that the list is not exhaustive and provided evidence that it is a subsidiary of WFS Corp. Although the General Terms do not name Plaintiff, they state that the "Marine Group of companies" includes, but is not limited to, subsidiaries and affiliates. The evidence supports that the General Terms apply to Plaintiff as a subsidiary engaged in selling marine petroleum products and services. The Court finds no genuine dispute over whether the General Terms apply to Plaintiff, concluding that the bunker confirmation indicates Plaintiff's adoption of these terms.
Claimant asserts that even if the General Terms were incorporated into the bunker confirmation, the governing law is limited to the "General Maritime Law of the United States," which Claimant argues excludes U.S. maritime statutes like 46 U.S.C. 31341 and 31342, relevant to Plaintiff's claims. Plaintiff counters that the term "general maritime law" encompasses applicable maritime statutes and case law, indicating an agreement to govern the transaction under U.S. law, thus necessitating the application of 46 U.S.C. 31342. Claimant emphasizes that the agreement only specifies "the general maritime law of the United States," not the entirety of U.S. law. The general maritime law derives from federal court jurisprudence, combining traditional common law rules and newly established rules, covering various contracts such as charter parties and salvage. Historically, before 1910, maritime liens were governed by state law and general maritime law, but subsequent legislation has codified federal lien law while preserving general maritime law unless explicitly contradicted by statutes. Statutes affecting common law or general maritime law are interpreted favorably towards retaining established principles unless a clear statutory purpose indicates otherwise. In interpreting legislation, the statutory text serves as the primary evidence of Congressional intent regarding changes or continuations in law, and admiralty courts must respect the boundaries set by federal statutes.
Congress, not federal courts, is responsible for establishing federal legal standards. When a statute directly addresses an issue, courts cannot alter its meaning, as emphasized in various Supreme Court cases. The general maritime law must adhere to the resolutions provided by statutes. Prior to the Federal Maritime Lien Act of 1910, maritime law regarding contract liens on chartered vessels was encapsulated in two significant Supreme Court cases: *The Kate* and *The Valencia*. These cases established that a materialman must inquire about the charter's terms if they know or should know a ship is under charter, and that a charterer's obligation to pay for services can negate a lien for those services if the materialman was aware of the charter's terms.
The Federal Maritime Lien Act of 1910 did not change existing maritime lien principles but aimed to clarify and simplify the rules, abolishing the distinction between services provided in home and foreign ports. It established that no lien arises if the supplier knew or could have reasonably ascertained that the charterer lacked the authority to bind the vessel for repairs or supplies. In 1971, Congress removed the duty imposed on suppliers to inquire about charter party terms, meaning that suppliers are not required to know about "no lien" clauses unless explicitly informed by the vessel owner or a reliable source.
A statutory presumption renders a prohibition of lien clause ineffective against suppliers of necessaries unless they have actual knowledge of such a clause in a charter. Actions under the federal statute indicate that the pre-statutory general maritime law does not apply, particularly following the 1971 amendment to the Federal Maritime Lien Act (FMLA), which removed the duty-of-inquiry requirement. This amendment signifies Congress's intent to clarify that suppliers of necessaries do not have a duty to investigate the terms of a charter. The Claimant acknowledges that the general maritime law regarding vessel liens for necessaries has been preempted by this amendment, arguing that without adherence to FMLA requirements, suppliers are not entitled to maritime liens under general maritime principles.
Plaintiff claims entitlement to a maritime lien under 46 U.S.C. 31341 and 31342 based on Tramp’s authority to bind the vessel for necessaries, the provision of fuel, and the lack of actual knowledge regarding a prohibition of lien clause. The Claimant counters, asserting that previous no-lien stamps provided to the Plaintiff indicated that Tramp lacked authority to incur such maritime lien claims. Under American law, a maritime lien secures creditors who provide necessaries on the ship's credit, with the vessel itself acting as the obligor, irrespective of the owner's obligations.
Charterers and their agents are generally presumed to have the authority to bind a vessel for the procurement of necessaries, as outlined in maritime law and supported by 46 U.S.C. § 31341. This presumption benefits suppliers since they are not required to investigate the authority of the vessel's manager beyond observing their control. However, a maritime lien does not arise if necessaries are ordered by someone lacking authority, provided the vessel owner can demonstrate that the supplier knew about this lack of authority. Actual knowledge of a prohibition of lien clause can also negate the presumption of authority. Suppliers must be aware of any lack of authority to make informed business decisions about supplying the vessel. The burden of proof rests on the party challenging the supplier's lien, requiring them to show the supplier's actual knowledge of a no lien clause or lack of authority. In this case, the supplier's entitlement to a maritime lien hinges on whether they received actual notice that their claim was beyond the authority of the charterer. The claimant did not establish a material fact dispute regarding the supplier's actual knowledge of a no lien clause in the charter party.
Claimant presented no evidence establishing that Plaintiff had actual notice of the no-lien provisions in the charter party relevant to the bunker delivery notes. Previous cases, such as O.W. Bunker Malta, support the notion that lack of actual notice to employees outside the accounting department negates Claimant's position. Even if Plaintiff received notice of the no-lien provision, it would only imply constructive knowledge that Tramp might not have had the authority to bind the vessel, as indicated by Lake Union Drydock Co. v. M/V Polar Viking. Current statutes require actual knowledge of a no-lien provision, contrasting with earlier legal standards. Furthermore, actual notice provided after the delivery of necessaries typically does not invalidate a maritime lien, as observed in Ceres Marine Terms v. M/V HARMEN OLDENDORFF and other cited cases. Consequently, the Court found no genuine issue of material fact regarding the existence of a maritime lien and ruled that Plaintiff is entitled to it. Claimant's motion for additional discovery time was dismissed as moot, and their summary judgment motion was denied, while Plaintiff's summary judgment motion was granted. The upcoming trial will focus on the amount owed to Plaintiff under the maritime lien, including issues of prejudgment interest and additional administrative charges. The document also notes that Rule 44.1 allows the court to consider various sources when determining foreign law, including affidavits and authoritative legal writings.
If the Court were to apply the Triton standard instead of the Lauritzen analysis, it would still arrive at the same conclusion regarding contract formation under both the applicable law and the United States choice-of-law provision. The Plaintiff's sworn declaration within the Complaint, based on personal knowledge and available documents, can be utilized for summary judgment, paralleling other sworn declarations. A verified complaint functions equivalently to an affidavit in this context. The Federal Maritime Lien Act of 1910 was amended in 1920 to address prior restrictive interpretations, and American federal maritime lien and mortgage laws are now established within the Commercial Instruments and Maritime Liens Act (CIMLA), codified at 46 U.S.C. §§ 31301-09, 31321-30, and 31341-43.
