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World Fuel Services Trading v. Hebei Prince Shipping Co., Ltd.

United States Court of Appeals, Fourth Circuit

April 17, 2015

WORLD FUEL SERVICES TRADING, DMCC, d/b/a Bunkerfuels, Plaintiff -- Appellee,
v.
HEBEI PRINCE SHIPPING COMPANY, LTD., Claimant -- Appellant, and M/V HEBEI SHIJIAZHUANG, her engines, tackle, equipment, appurtenances, etc., in rem, Defendant, T. PARKER HOST, INC., Claimant

Argued: January 28, 2015.

Page 508

Appeal from the United States District Court for the Eastern District of Virginia, at Norfolk. (2:13-cv-00173-MSD-DEM). Mark S. Davis, District Judge.

ARGUED:

Steven Michael Stancliff, CRENSHAW, WARE & MARTIN, P.L.C., Norfolk, Virginia, for Appellant.

Mark T. Coberly, VANDEVENTER BLACK, LLP, Norfolk, Virginia, for Appellee.

ON BRIEF:

James L. Chapman, IV, CRENSHAW, WARE & MARTIN, P.L.C., Norfolk, Virginia, for Appellant.

Dustin M. Paul, VANDEVENTER BLACK, LLP, Norfolk, Virginia, for Appellee.

Before WILKINSON, AGEE, and HARRIS, Circuit Judges. Judge Agee wrote the opinion, in which Judge Wilkinson and Judge Harris concurred.

OPINION

Page 509

AGEE, Circuit Judge:

World Fuel Services Trading, DMCC, (" DMCC" ) brought this in rem action against the M/V HEBEI SHIJIAZHUANG (" the Vessel" ) seeking to enforce a maritime lien for the supply of necessaries under the Federal Maritime Lien Act (" FMLA" ), 46 U.S.C. § 31342(a). The district court held that DMCC was entitled to a maritime lien for the amount due for marine fuel (referred to as " bunkers" ) provided to the Vessel, and granted DMCC's motion for summary judgment. Hebei Prince Shipping Company, Limited, (" Hebei Prince" ), the owner of the Vessel, appeals. For the reasons that follow, we affirm the judgment of the district court in favor of DMCC.

I.

A.

To provide context for the underlying dispute, we begin with a brief review of maritime lien law. A maritime lien is " [a] lien on a vessel, given to secure the claim of a creditor who provided maritime services to the vessel[.]" Black's Law Dictionary 1065 (10th ed. 2014). " It arises by operation of law and exist[s] as a claim upon the property." Id. (quoting Griffith Price, The Law of Maritime Liens 1 (1940)); see also Triton Marine Fuels Ltd., S.A. v. M/V PAC. CHUKOTKA, 575 F.3d 409, 416 (4th Cir. 2009) (" '[M]aritime liens are stricti juris and cannot be created by agreement between the parties; instead, they arise by operation of law, often depending on the nature and object of the contract.'" (quoting Bominflot, Inc. v. M/V HENRICH S, 465 F.3d 144, 146 (4th Cir. 2006)).

Congress enacted the FMLA in 1910, which altered several then-existing common law principles governing when a maritime

Page 510

lien would arise under United States law. See id. at 417. That initial legislation " provide[d] a single federal statute for the determination of maritime liens, and by providing this uniform scheme, the statute confer[red] domestic suppliers of necessaries with the same lien rights as previously enjoyed only by foreign suppliers under the common law." Id. at 418. The next major change to the FMLA occurred in " 1971, when Congress enacted legislation essentially to void 'no lien' clauses in charters, as long as the supplier did not have actual knowledge of such clause." Id. at 418 n.5. Most recently, the FMLA was recodified as part of the Commercial Instruments and Maritime Liens Act, 46 U.S.C. § § 31301-31343. For ease of reference, however, we will continue to refer to the relevant statutes as the " FMLA." " Despite [these] recodifications, the fundamental purposes underlying the FMLA have remained unchanged." Triton Marine, 575 F.3d at 417-18.

Generally speaking, a maritime lien arises more readily under the FMLA than under the laws of other maritime countries. E.g., Bominflot, 465 F.3d at 147 (" The United States as well as a number of civil law nations . . . allow for broader use and enforcement of maritime liens[.]" ). As a result, which nation's law governs a particular maritime contract may be significant in determining whether, or to what extent, a maritime lien exists.

B.

Hebei Prince, a corporation organized under the laws of China, owns the Vessel, which is registered in Hong Kong. The Vessel was leased to a Greek corporation, Tramp Maritime Enterprises Ltd. (" Tramp Maritime" ) under three consecutive time charters (maritime contracts of ship charter) covering the period from May 23, 2012 to November 28, 2012. The terms of the time charters prohibited Tramp Maritime from incurring " any lien or encumbrance" against the Vessel. (J.A. 86.)

In October 2012, Tramp Maritime emailed Aristades P. Vogas of Bunkerfuels Hellas in Athens, Greece, to arrange for the purchase of bunkers to be delivered to the Vessel while it was docked at a port in the United Arab Emirates. The email reply from Vogas confirming the transaction (" the Bunker Confirmation" ) identifies the " seller" as " BUNKERFUELS A DBA/DIVISION OF WFS Trading DMCC" and the " buyer" as " MV HEBEI SHIJIAZHUANG AND HER OWNERS/OPERATORS AND TRAMP MARITIME ENTERPRISES LTD." (J.A. 21.) It also identifies APSCO JEDDAH as the " physical supplier" of the bunkers. (J.A. 21.) The Bunker Confirmation further states:

ALL SALES ARE ON THE CREDIT OF THE VSL. BUYER IS PRESUMED TO HAVE AUTHORITY TO BIND THE VSL WITH A MARITIME LIEN. DISCLAIMER STAMPS PLACED BY VSL ON THE BUNKER RECEIPT WILL HAVE NO EFFECT AND DO NOT WAIVE THE SELLER'S LIEN. THIS CONFIRMATION IS GOVERNED BY AND INCORPORATES BY REFERENCE SELLER'S GENERAL TERMS AND CONDITIONS IN EFFECT AS OF THE DATE THAT THIS CONFIRMATION IS ISSUED. THESE INCORPORATED AND REFERENCED TERMS CAN BE FOUND AT WWW.WFSCORP.COM. ALTERNATIVELY, YOU MAY INFORM U.S. IF YOU REQUIRE A COPY AND SAME WILL BE PROVIDED TO YOU.

( J.A. 21.)

APSCO JEDDAH delivered the bunkers to the Vessel according to the terms of the Bunker Confirmation. The Vessel's chief

Page 511

engineer signed the delivery notices and attached a " no lien" stamp, which stated " Bunkering Services and the bunkers are ordered solely for the account of Charterers and not for owners. Accordingly no lien or other claims whatsoever against the Vessel or her owners can arise." (J.A. 19, 20.)

Tramp Maritime subsequently received an invoice for the bunkers purporting to be from " BUNKERFUELS A Division of World Fuel Services Trading, DMCC" requesting payment. (J.A. 22.) The invoice stated that the amount due could be wire-transferred to a Bank of America account for " World Fuel Services Europe, Ltd." (J.A. 22.) Neither Tramp Maritime nor any other party paid the invoice.

DMCC then filed this in rem action in the United States District Court for the Eastern District of Virginia asserting it was owed $809,420.50 for the unpaid bunkers,[1] and that it was entitled to enforce a maritime lien on the Vessel under the FMLA. It also moved for the court to issue a maritime warrant for the arrest of the Vessel, which was expected to port in Norfolk, Virginia, within fourteen days. The district court issued an order for the maritime arrest warrant, which was executed on the Vessel when it docked in Norfolk. Hebei Prince later posted a cash bond so that the Vessel could be released before resolution of the underlying complaint.

DMCC moved for summary judgment, which Hebei Prince opposed. Hebei Prince then filed a cross-motion for summary judgment, relying on the same grounds raised in its opposition to DMCC's motion. Challenging nearly every aspect of DMCC's claim, Hebei Prince argued: (1) DMCC was not a party in privity to the Bunker Confirmation and thus could not assert a maritime lien; (2) Greek law should apply to every aspect of the contractual dispute; (3) the Bunker Confirmation did not successfully incorporate the General Terms & Conditions on which DMCC relied; (4) the General Terms & Conditions could not apply to DMCC even if DMCC sought to incorporate them; (5) the General Terms & Conditions' choice-of-law provision did not " choose" United States statutory maritime law such as the FMLA; (6) DMCC had actual knowledge of the prohibition of liens in Tramp Maritime's time charter and thus could not rely on the FMLA's presumption to bind the Vessel; and (7) principles of comity require rejecting the application of United States law to this transaction.

In a thorough opinion, the district court rejected all but one of Hebei Prince's arguments, and, in any event, that one area of agreement did not alter the court's ultimate holding. See World Fuel Servs. Trading, DMCC v. M/V HEBEI SHIJIAZHUANG, 12 F.Supp.3d 792 (E.D. Va. 2014). In sum, the district court concluded that the Bunker Confirmation successfully incorporated the General Terms & Conditions DMCC relied upon to establish that United States law, including the FMLA, governed the existence and enforcement of a maritime lien. The district court also held that " no genuine issue of material fact regarding the existence of a maritime lien in this matter [exists and that], as a matter of law, [DMCC was] entitled to a maritime lien against the [V]essel." Id. at 810.

Following briefing and a hearing on the amount of damages to be awarded, the district court entered final judgment

Page 512

awarding DMCC $813,740.10. Hebei Prince noted a timely appeal. Jurisdiction exists for the reasons ...


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