Opinion
Case No. 6:02-cv-515-Orl-22DAB
April 30, 2003
REPORT AND RECOMMENDATION TO THE UNITED STATES DISTRICT COURT
This cause came on for consideration with oral argument on the following motion filed herein:
MOTION: MOTION FOR SUMMARY JUDGMENT (Doc. No. 40) FILED: November 13, 2002
THEREON it is RECOMMENDED that the motion be DENIED. Plaintiffs seek a summary judgment declaration that Defendant does not have a valid maritime lien on the chartered vessel M/V CYPRIOT WAVE ("the Vessel"). Defendant argues that summary judgment should be denied because Plaintiffs lack standing, Plaintiffs have failed to provide evidence that they will be required to indemnify the owners, and contested issues of fact preclude summary judgment.
STANDARD FOR SUMMARY JUDGMENT
A party is entitled to judgment as a matter of law when the party can show that there is no genuine issue as to any material fact. Fed.R.Civ.Pro. 56(c). The substantive law applicable to the case determines which facts are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986). Summary judgment is mandated "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case and on which that party will bear the burden of proof." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party bears the burden of proving that no genuine issue of material fact exists. Celotex, 477 U.S. at 323.
In determining whether the moving party has satisfied its burden, the court considers all inferences drawn from the underlying facts in a light most favorable to the party opposing the motion and resolves all reasonable doubts against the moving party. Anderson, 477 U.S. at 255. However, when the moving party is also the party with the burden of proof on an issue (as the Plaintiffs are in this case) the non-moving party need not produce its significant, probative evidence until after the movant has satisfied its burden of demonstrating there is no genuine dispute on any material fact. Chanel, Inc. v. Italian Activewear of Florida, Inc., 931 F.2d 1472 (11th Cir. 1991).
Plaintiffs have the burden of proof on the issue of standing and justiciability. They also have the burden to prove their defense that Bunkers had actual knowledge of the existence of any lack of authority to bind the Vessel. See discussion infra.
BACKGROUND FACTS
The facts are either undisputed or read in the light most favorable to Defendant, the non-moving party, as they must be on summary judgment.
Plaintiff Noramco Shipping Corporation chartered the M/V CYPRIOT WAVE ("the Vessel") through its agent, Co-Plaintiff Gulf Chartering, Inc., to carry cargo from Houston, Texas. Doc. No. 41, Plaintiffs' Statement of Uncontested Material Facts ¶ 1. In Houston, Gulf Chartering entered into an agreement with a broker, Moffitt Oil Co. ("Moffitt") for Moffitt to supply bunkers for the Vessel, specifically gas oil and fuel oil. Id. ¶ 2. Moffitt entered into an agreement with a trader, Defendant Bunkers International Corporation ("Bunkers"), for Bunkers to supply the oil to the Vessel. Id. at ¶ 4. Bunkers then contracted with another company for the oil, Houston Marine Services, and Houston Marine delivered the oil to the Vessel. Bunkers held title to the fuel at the time it passed into the Vessel Doc, No. 13, Ex. D (Bunkers International Terms and Conditions of Sale); Ex. E (Bunker Confirmation from Bunkers International to Houston Marine); Ex. F (Bunker Confirmation listing Bunkers International as Buyer).
After the fuel was delivered, Moffitt invoiced Gulf Chartering for $48,853.75, which Gulf Chartering paid on behalf of Noramco. Doc. No. 41, ¶ 7. Houston Marine billed Bunkers for $45,783.78, which Bunkers paid. Id. at ¶ 8. Bunkers then invoiced Moffitt, but Moffitt never paid. Id. at ¶ 19. Although Plaintiffs have consistently represented to the Court that Bunkers has demanded of them $53,765,73, the amount owed by Moffitt, Bunkers contends that it has never made a demand on Plaintiffs to pay the debt owed, although it does contend that it would be entitled to a maritime lien if it chose to file one. Doc. No. 44 at 2,
Plaintiffs filed this action on May 1, 2002, seeking a declaratory judgment that Bunkers does not have a valid maritime lien against the Vessel. Doc. No. 1. On the same date, Plaintiffs also filed a motion asking the Court to preliminarily enjoin Bunkers from arresting the Vessel before the matter is resolved. Doc. No. 2. District Judge Anne C. Conway granted the preliminary injunction on May 31, 2002, restraining Bunkers from arresting the M/V CYPRIOT WAVE until the Court determines whether Bunkers has a valid maritime lien against the vessel. See Doc. No. 24.
Plaintiffs now seek a summary judgment on the issue of whether Bunkers may have a valid maritime lien. Oral argument on the motion was held on April 16, 2003. Because the Court finds that there are issues as to Plaintiffs' standing as well as genuine issues of material fact as to the merits, summary judgment for Plaintiffs is not warranted.
ANALYSIS
I. PLAINTIFFS' MOTION SHOULD BE DENIED BECAUSE THEY LACK STANDINGThe Court must first address the issue of whether Plaintiffs have standing to seek a declaratory judgment concerning the validity of a maritime lien against the Vessel. If Plaintiffs do not have standing, the Court must dismiss the case "at any stage of the proceedings in which it becomes apparent that jurisdiction is lacking." Fitzgerald v. Seaboard System R.R., Inc., 760 F.2d 1249, 1251 (11th Cir. 1985). The party invoking the jurisdiction of the court has the duty to establish that federal jurisdiction exists. Id. Because the courts of the United States are courts of limited jurisdiction, there is a presumption against its existence and the party invoking the federal court's jurisdiction bears the burden of proof. Id.
Bunkers contends that Plaintiffs do not have standing because they do not own the Vessel, which has apparently been sold to an owner in the United Arab Emirates, and arrest of the Vessel in a foreign port will not cause injury to Plaintiffs. Although it is Plaintiffs' burden to prove that federal jurisdiction exists, Plaintiffs' Complaint vaguely pleads that "this is an admiralty and maritime claim within the meaning of Rule 9(h) of the Federal Rules of Civil Procedure." Doc. No. 1 ¶ IV. Rule 9(h) is a procedural rule and does not confer subject matter jurisdiction. See, e.g., Trinidad Foundry and Fabricating, Ltd. v. M/V K.A.S. Camilla, 966 F.2d 613, 615 n. 4 (11th Cir. 1992) (maritime liens are not created by the admiralty rules; rules are procedural in nature).
As is discussed infra, there is no evidence of this sale or the current ownership in the record.
A. The Declaratory Judgment Act
Plaintiffs seek in the Complaint, pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201(a), a declaration that "Defendant does not possess a valid maritime lien under the Federal Maritime Lien Act, 46 U.S.C § 971." Plaintiff may invoke the Declaratory Judgment Act only if a "case or controversy" exists. As the Eleventh Circuit has explained:
Plaintiffs cite to the repealed Federal Maritime Lien Act, which has been renamed the Maritime Commercial Instruments and Liens Act and recodified at 46 U.S.C. § 31301 et seq.
Whether a case or controversy exists must be determined on a case-by-case basis. This is so because, as the Supreme Court has explained, "The difference between an abstract question and a `controversy' contemplated by the Declaratory Judgment Act is necessarily one of degree, and it would be difficult, if it would be possible, to fashion a precise test for determining in every case whether there is such a controversy. Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Put another way, "[a] controversy, to be justiciable, must be such that it can presently be litigated and decided and not hypothetical, conjectural, conditional or based upon the possibility of a factual situation that may never develop."
Wendy's International, Inc. v. City of Birmingham, 868 F.2d 433, 436 (11th Cir. 1989) (citations omitted). To determine whether Plaintiffs have met this burden, the Court must "look to the state of affairs as of the filing of the complaint; a justiciable controversy must have existed at that time." See Atlanta Gas Light Co. v. Aetna Cos. and Sur. Co., 68 F.3d 409, 414 (11th Cir. 1995).
B. The Maritime Commercial Instruments and Lien Act
The Plaintiffs challenge a potential maritime lien under the MCILA. The primary concern of Congress in creating statutory maritime liens was that American suppliers of good, services, or necessaries to a foreign vessel would be protected when the necessaries were supplied in the United States. Tramp Oil and Marine, Ltd. v. M/V Mermaid I, 805 F.2d 42, 45 (1st Circuit 1986) (quoting Gulf Trading Transportation Co. v. The Vessel Hoegh Shield, 658 F.2d 363, 367 (5th Cir. 1981). The Fifth Circuit has described the maritime lien as a "unique security device, "
[S]erving the dual purpose of keeping ships moving in commerce while not allowing them to escape their debts by sailing away. The lien is a special property right in the vessel, arising in favor of the creditor by operation of law as security for a debt or claim. The lien arises when the debt arises, and grants the creditor the right to appropriate the vessel, have it sold, and be repaid the debt from the proceeds. Thus the maritime lien may be defined as a property right that adheres to the vessel wherever it may go. Such a lien has been held to follow the vessel even after it is sold to an innocent purchaser. The maritime lien is a lien on the vessel, and only indirectly, inasmuch as it conflicts with the owner's rights in the vessel, it is connected with the owner. The maritime lien concept thus somewhat personifies a vessel as an entity with potential liabilities independent and apart from the personal liability of its owner.Equilease Corp. v. M/V Sampson, 793 F.2d 598, 602 (5th Cir. 1986) (citations and quotation omitted, emphasis added). The owner of the Vessel would have standing to challenge a maritime lien, as would a charterer in possession of the Vessel. See, e.g., North End Oil Ltd. v. M/V Ocean Confidence, 111 F. Supp. 12 (C.D.Cal. 1991) (charterer could, on behalf of vessel, contest validity of maritime lien claimed by seller of bunkers even though sub-charterer had contracted for bunkers). Bunkers argues that this case is not justiciable because there is no controversy of "sufficient immediacy" to warrant a declaratory judgment. Bunkers contends that it has never threatened Plaintiffs with a maritime lien, and has only sought payment from the ship's new owner who is located in the United Arab Emirates. Bunkers denies that it has demanded payment of Plaintiffs or intends to invoke the protections of the MCILA. Doc. No. 44 at 2, 4. Bunkers points out that no documents in the record support the ownership or time-charter relationship of Plaintiffs to the ship's current or former owner. The contract between the former owner, a Greek company, and the new owner of the vessel, from the United Arab Emirates, was purportedly signed in Germany, and it is unclear which country's laws would apply to interpret or enforce the contract, including any potential indemnification provisions.
Bunkers entered into a Forbearance Agreement with Moffitt in which it agreed not to pursue a maritime lien unless Moffitt defaulted under the Agreement. See Doc. No. 13, Ex. B ¶ 4. According to Bunkers' counsel's representations at oral argument, Moffitt has since become insolvent.
Generally, a maritime lien remains with the ship even when ownership is transferred; thus, if Bunkers has a maritime lien arising from sale of the bunkers to the former owner before the Vessel was sold, that lien arose at the time the debt arose and will also bind the new owners. See Liverpool and London S.S. Protection and Indem. Ass'n Ltd. v. QUEEN OF LEMAN MV, 296 F.3d 350 (5th Cir. 2002) (lien on vessel attached to ship and bound subsequent owners; purchaser was bound by terms of contract giving rise to lien, even though purchaser had no knowledge of lien). However, under this record Plaintiffs have failed to show that they have any responsibility for Bunkers' debt to either the former or current owner, much less under which country's laws indemnification might be required.
Plaintiffs' Complaint contains no specific reference to the sale of the Vessel, current ownership of the Vessel, or even chartering of the Vessel. In Plaintiffs' Memorandum supporting their Preliminary Injunction Motion, they explain that Noramco time chartered the Vessel, and "[a]s set forth in the Affidavit of Jason Hall, attached hereto, Plaintiffs, pursuant to the charter agreement between Plaintiffs and the prior owners of the Vessel, are responsible to the new owners of the [Vessel] for any damages resulting from the arrest or seizure of the Vessel as a result of a bunkers claim. Essentially, Plaintiffs are the indemnitor to the prior owners of the Vessel, as well as the new owners of the Vessel, for such a claim." Doc. No. 3 at 3, 5.
However, as Bunkers points out, Plaintiffs have failed to produce any evidence whatsoever of the charter agreement or any other agreement requiring them to indemnify the former or new owners of the Vessel. The Affidavit of Jason Hall, referred to as the source of evidence that Plaintiffs are indemnitors in Plaintiffs' Motion, is devoid of any mention of the charter agreement or any other agreement requiring indemnification. Doc. No. 2, Att., Hall Affidavit, ¶ 11. He says only, "A foreign vessel arrest would force [Plaintiffs] to incur substantial legal fees and would certainly result in consequential economic losses arising from claims from various parties not related to this dispute." Hall's affidavit statements about the Plaintiffs' liability for a potential vessel arrest are conclusory at best, and do not point to any evidence of an indemnity agreement. Plaintiffs contend that they provided documents evincing the time-charter containing an indemnification provision in their Reply Brief (Doc. No. 48). Their Reply Brief was stricken for failure to comply with Local Rule 3.01(b), which does not allow reply briefs to be filed without leave of Court. After their Reply Brief was stricken, Plaintiffs did not seek to refile the Brief or other papers with leave of Court.
The Court can only assume that Hall means the "foreign" port to be a port in the United States, which is "foreign" for an Arabian-owned ship because Plaintiffs' counsel at oral argument represented that Plaintiffs do not seek in this suit to bar Bunkers from proceeding against the vessel in a port outside the United States.
Why Plaintiffs waited to support this element of their case instead of including supporting material in their motion papers is unexplained. The issue of standing was raised in response to the preliminary injunction motion and has remained an issue as to which Plaintiffs bear the burden of proof.
Moreover, Bunkers further contends, a maritime lien is highly unlikely to be filed in the United States under the MCILA, because the vessel has not reentered the United States, and most likely will not enter the United States waters for the foreseeable future. Bunkers contends that it will avail itself of the law of foreign nations, not the MCILA, to arrest the vessel in a foreign port. At oral argument on April 16, 2003, Bunkers stated that it would pursue arrest of the Vessel according to foreign legal process, such as the International Convention Relating to the Arrest of Seagoing Vessels.
Plaintiffs' counsel represented that Plaintiffs had never sought, and were not currently seeking, an order to preclude Bunkers from pursuing arrest of the vessel in a foreign jurisdiction. The parties do not dispute that it is unlikely the Vessel with return to port in the United States where a MCILA maritime lien would be enforceable; thus, the practicalities of the Vessel' s location for the foreseeable future weigh against justiciability.
In addition, in cases involving indemnity provisions, courts have been particularly wary of invoking their jurisdiction where no judgment has been entered or litigation initiated against the indemnifying party. See, e.g., In re American Commercial Lines, Inc., 781 F.2d 114, 116 (8th Cir. 1985) (district court lacked jurisdiction over declaratory judgment action brought by cargo owner seeking to require barge owner to indemnify it for any expenses incurred in defending claims of third parties after barge expelled its cargo of liquid styrene into river; only claim made on cargo owner was dismissed, and cargo owner did not present any evidence to indicate that other claims were likely to arise); Ingersoll-Rand Co. v. Textron Inc., No. 96-Civ-2582, 1996 WL 680266, *3 (S.D.N.Y. Nov. 25, 1996) (dismissing declaratory judgment action brought by ball bearing manufacturer seeking declaration it was not obligated to indemnify helicopter manufacturer after helicopter crashed; there was no action pending in any court that might result in an indemnification claim).
The court in Ingersoll-Rand Co. v. Textron Inc. summarized the state of the law in declaratory judgment actions involving indemnity issues:
Courts have addressed the specific issue of when an actual controversy exists if one party seeks a declaration of its right to indemnification from, or its obligation to indemnify, another party for a liability that has been or will be incurred in a claim brought by a third party. Some courts have held that no actual controversy exists until the judgment in the third party action has been entered and the liability for which indemnification is sought has arisen. See Argento v. Village of Melrose Park, 838 F.2d 1483, 1492 (7th Cir. 1988); see also U.S. Healthcare, Inc. v. O'Brien, 868 F. Supp. 607, 615 (S.D.N.Y. 1994). Other courts have ruled that such claims are justiciable before a judgment is entered where a third party suit has been filed and there is a "real and substantial" possibility that an indemnification claim may arise. See, e.g., National R.R. Passenger Corp. v. Consolidated Rail Corp., 670 F. Supp. 424, 428 (D.D.C. 1987).
1996 WL 680266, *3 (redundant citations and parentheticals omitted).
In this case, Plaintiffs are seeking a declaration of their obligation to indemnify the former or current owners (even though the record is unclear which owner must be indemnified) before a judgment has been entered, before a lawsuit has been filed, and, according to the evidence of record, before a claim has even been asserted against them. Clearly, the parties disagree over whether Bunkers would be entitled to a maritime lien if Bunkers chose to seek one under the MCILA; however, such a disagreement without an actual case, claim, or even the likelihood of such a claim pending against Plaintiffs (which apparently could be brought by the current or former owners in a German, Greek, or United Arab Emirates' court) is not justiciable. It is RECOMMENDED that Plaintiffs' Motion for Summary Judgment be DENIED, the case DISMISSED, and the Preliminary Injunction DISSOLVED for lack of justiciability.
II. PLAINTIFFS' MOTION SHOULD BE DENIED ON THE MERITS
Plaintiffs seek a summary judgment declaration that Bunkers is not entitled to a maritime lien. Even assuming arguendo that Plaintiffs have standing to challenge the validity any potential maritime lien on the Vessel, the Court finds material issues of fact remain which preclude summary judgment to Plaintiffs. The primary concern of the Federal Maritime Lien Act (precursor of the MCILA) is the protection of American suppliers of goods and services. See H.R. Rep. No. 92-340 (1971), reprinted in 1971 U.S.C.C.A.N. 1363-65. Under the Maritime Commercial Instruments and Lien Act, 46 U.S.C. § 31301 et seq., any person furnishing necessaries such as fuel to a vessel shall have a maritime lien on the vessel Under Eleventh Circuit law applying the former version of the MCILA, in order to obtain a maritime lien, a corporation must: "(1) provide necessaries; (2) to a vessel; (3) on the order of the owner or agent." Galehead, Inc. v. M/V Anglia, 183 F.3d 1242, 1244 (11th Cir. 1999) (citing 46 U.S.C. § 31342).
A person providing necessaries to a vessel on the order of the owner or a person authorized by the owner — (1) has a maritime lien on the vessel; (2) may bring a civil action in rem to enforce the lien; and (3) is not required to allege or prove in the action that credit was given to the vessel. 46 U.S.C. § 31342.
Plaintiffs contend that the uncontested facts demonstrate that Bunkers never directly supplied any fuel oil to the Vessel, but "acted merely as a broker." Plaintiffs' position is contradicted by their own Statement of Uncontested Material Facts, which refers to Bunkers as a "trader" of fuel. Doc. No. 41 ¶ 4. Based on a survey of the maritime lien caselaw, a "trader" is generally a purveyor of goods, and not a mere broker. Bunkers contends that it was the buyer of the fuel, holding title to it, and that Houston Marine was only the supplier of the fuel who delivered it to the Vessel upon the instructions of Bunkers.
Bunkers points to several items of proof that it was the owner of the fuel supplied to the Vessel. Bunkers' President, John Canal, personally involved in the transaction, states that Bunkers International had title to the fuel and was reselling it. Doc. No. 13, Ex. ¶ 14. Bunkers International Terms and Conditions of sale in effect at the time of the transaction defines Bunkers International as the "seller" and Houston Marine as the "supplier" of the fuel. Id., Ex. D at 1. A second document, the "Confirmation of Bunker Stem," lists Bunkers International as "Buyer" and Houston Marine as "Supplier" of the fuel to be delivered to the M/V CYPRIOT WAVE and Plaintiff "Gulf Ship" as the agent. Id., Ex. E, The Bunker Confirmation from Houston Marine to Bunkers International also lists Bunkers International as Buyer. Id., Ex. F. Bunkers' evidence of ownership presents a genuine issue of material fact whether it was the owner of the fuel supplied to the Vessel.
Additionally, as Judge Conway has already determined, it is undisputed that Bunkers, utilizing the services of Houston Marine, "provided necessaries" to the Vessel. See M/VAnglia, 183 F.3d at 1245 ("a party need not be the physical supplier or deliverer to have "provided" necessaries under the statute.") Therefore, the only remaining disputed issue is whether the fuel was supplied on the order of the charterer, Noramco or its agent, Gulf Chartering. A. Authority to purchase necessaries
The ship's owner, master, or a charterer, to whom the vessel is entrusted, or their agent, is presumed to have authority to purchase necessaries on the credit of the vessel. 46 U.S.C. § 31341 (a). The materialman who furnishes necessaries in response to a request from a master, charterer or other person in custody of the vessel has no duty to inquire about that person's authority to bind the vessel. Ferromet Resources, Inc. v. Chemoil Corp., 5 F.3d 902, 904 (5th Cir. 1993) (applying provision of former version of Act). Only actual knowledge of the ordering party's lack of authority to bind the vessel will defeat the lien claim. Belcher Oil Co. v. M/V Gardenia, 766 F.2d 1508, 1512 (11th Cir. 1985); Galehead, Inc. v. M/V Fratzis M., 1994 WL 251192, 3 (S.D.Fla. 1994), "[T]he burden is upon the owner to show that the supplier of necessaries had actual knowledge of the existence of any lack of authority relied upon as a defense." Belcher, 766 F.2d at 1512 (applying pertinent section of former version of MCILA). Where the party moving for summary judgment is also the party with the ultimate burden of proof on the issue at trial, the nonmoving party need not produce its probative evidence until after the moving party has satisfied its burden of demonstrating there is no genuine dispute on any material fact such that "a reasonable jury could not return a verdict for the non-moving party." See Chanel, Inc. v. Italian Activewear of Florida, Inc., 931 F.2d 1472 (11th Cir. 1991). It is Plaintiffs' ultimate burden of proof to show that Bunkers had actual knowledge that the entities obtaining the fuel or ratifying acceptance of the fuel from Bunkers lacked the authority to bind the Vessel Plaintiffs can only prevail on summary judgment if their evidence affirmatively shows that no reasonable finder of fact could find for Bunkers on all essential elements of Plaintiffs' case.
Under Eleventh Circuit jurisprudence, the right of a subcontractor to assert a maritime lien against a vessel for necessaries is not restricted by a rigid rule but instead depends on the degree of involvement between the owner and the subcontractor. See Galehead, Inc. v. M/VAnglia, 183 F, 3d 1242, 1246 (11th Cir. 1999). Assuming in the light most favorable to Bunkers for summary judgment purposes that Bunkers International was the owner of the fuel at the time it was supplied to the Vessel, Bunkers International may be entitled to a maritime lien if it can show that it provided the fuel on the order of the someone "presumed to have authority to procure necessaries," such as the charterer, or if the work was authorized by the charterer; i.e., if Plaintiffs were sufficiently aware of Bunkers International's provision of fuel, it could be argued that Bunkers provided the fuel on the order of Plaintiffs. See 46 U.S.C. § 31341(a).
A subcontractor or third-party can assert a maritime lien against the owner for necessaries provided to the vessel if the subcontractor meets the Eleventh Circuit requirements explained in Marine Coatings or if a person authorized to procure necessaries for a vessel approves the subcontractor's services. See Marine Coatings of Alabama, Inc. v. United States, 792 F.2d 1565 (1986). "Where the level of involvement between the owner and the third-party provider was significant and ongoing during the pertinent transaction, the courts have found a triable issue of fact about whether the third-party deserved a lien." M/VAnglia, 183 F.3d at 1245. Relevant to whether the level of involvement was significant is whether the owner was aware of the third-party's performance during the performance, whether the owner inspected the subcontractor's work; whether the owner accepted the work; and whether the work was fully accepted and compensated. Id. at 1245-46 (applying Marine Coatings criteria); see also Stevens Technical v. United States, 913 F.2d 1521, 1534-35 (11 * Cir. 1990) (subcontractor entitled to maritime lien where owner knew of subcontractor' s performance, the contract identified subcontractor as an entity having 15% of the contract, the government knew that the contractor lacked the facilities and equipment to complete the project without the subcontractor, and the government dealt with subcontractor's representatives for testing and inspection of the subcontractor's work).
Plaintiffs point to the Affidavit of Jason Hall as evidence that Plaintiffs were unaware that the broker, Moffitt, entered into a contract with Bunkers to supply the fuel at issue. Doc. No. 40, Ex. 1 ¶ 5. The conclusory statement in the Hall Affidavit is unsupported by any evidence, such as the contract between Plaintiffs and Moffitt for the purchase of the fuel. Notwithstanding Plaintiffs' contentions about its lack of awareness that Moffitt intended to hire Bunkers, Bunkers argues that the Vessel's Chief Engineering Officer's authority in inspecting and approving the fuel binds the Vessel. Because there is a material issue of fact as to whether the fuel was ordered or accepted on behalf of the charterer or the Vessel, and because Plaintiffs have failed to meet their burden of proof on Bunkers' knowledge of any lack of authority, summary judgment for Plaintiffs is not warranted.
B. Authorization or ratification of order
Bunkers contends that there is a genuine issue regarding the extent of Plaintiffs' awareness that a subcontractor would provide the fuel, that Bunkers was the supplying subcontractor, and the level of involvement of the charterer's agent — its Chief Engineering Officer — in inspecting and accepting Bunkers' oil. See M/VAnglia, 183 F.3d at 1245-46 (third-party subcontractor can assert a lien when the person or entity authorized to procure necessaries for a vessel is either aware of and involved with subcontractor's work or authorizes subcontractor's work).
Based on the evidence presented by Bunkers, there is a factual issue as to the charterer's inspection, acceptance, and ratification of the provision of Bunkers International's oil. The Vessel's Chief Engineering Officer signed immediately below Bunkers' name on the fuel gauge report, accepting the fuel, making him aware that Bunkers International was the owner/provider of the fuel to the Vessel Doc. No. 13, Ex. H; Ex. G, Hall Aff. ¶ H. More importantly, the Chief Engineering Officer also twice signed the fuel delivery receipt, during and after the loading of the fuel. Id., Ex, A. The Chief Engineering Officer is a position that has been deemed to be "entrusted with the management of the vessell and presumed to have authority to procure necessaries pursuant to 46 U.S.C. § 31341. Benedict on Admiralty, § 40, Presumptive Authority To Create Liens Under Chapter 313,
That fuel delivery receipt states, `The purchaser is presumed to have the authority to encumber the service vessel pursuant to 46 U.S.C. § 971 through 976 and the General Maritime Law [precursor of MCILA]. . . . In all sales, the vessel is deemed responsible for satisfaction of the purchase price."
When the vessel's owner or charterer's personnel "presumed to have authority to procure necessaries" approves the receipt of the necessaries, accepts the necessaries at delivery, and compensation is paid for the necessaries, a factual issue exists as to whether such necessaries were authorized by the owner/charterer. Marine Coatings, Inc. of Alabama v. United States, 932 F.2d 1370, 1376 n. 9 (11th Cir. 1991) ("[A]uthorization, either actual or fairly presumed, given prior to or during performance of the services, or ratified subsequent to performance will suffice.").
In Thorn's Diesel Service, Inc. v. Houston Ship Repair, Inc., the district court held that summary judgment was precluded where the reasonable trier of fact could determine that the owner's port engineer (who was "entrusted with management of vessel at port of supply" pursuant to 46 U.S.C. § 31341) was either aware of or involved in the subcontractor's actions in supplying necessary repairs, or had authorized the subcontractor to supply the repairs. 233 F. Supp.2d 1332, 1352-1353 (M.D. Ala. 2002). The court found that there was a factual issue as to whether the port engineer was aware of the role that subcontractor was performing on the vessel, where the port engineer had inspected the subcontractor's work and had accepted the subcontractor's work while overseeing the repair work. Id. Also, the general contractor had compensated the subcontractor for its work from funds supplied by the owner. Id.
In the similar case of Marine Fuel Supply Towing, Inc. v. M/V Ken Lucky, the Ninth Circuit held that the fuel seller had a maritime lien where the vessel's chief engineering officer accepted the fuel, the fuel was delivered to the vessel, and "the vessel certainly benefited from the bunker supply." 869 F.2d 473, 477-78 (9th Cir. 1989) (concluding that the "sequence of events is sufficient to establish implied authority to incur a lien against the vessel for fuel"); see also Tramp Oil Marine, Ltd. v. M/V Mermaid 1, 805 F.2d 42, 44 (1st Cir. 1986) ("No one disputes that Exxon [supplier] and Colonial [physically deliverer], as direct suppliers of the fuel to the Mermaid, would be entitled to a maritime lien"); Belcher Co. of Alabama, Inc. v. M/V Maratha Mariner, 724 F.2d 1161, 1162 (5th Cir. 1984) (reversing dismissal in favor of bunker supplier who supplied fuel to vessel on order of charterer's broker and sought maritime Hen after broker went out of business without paying for fuel, holding that supplier would have lien on vessel); cf. Bonnani Ship Supply, Inc. v. United States, 959 F.2d 1558, 1559 (11th Cir. 1992) (summary judgment to vessel owner where it had not inspected the subcontractor's work nor knew that the subcontractor was performing the work, and none of the government's contracting officers directed the subcontractor to perform any work on the vessel).
In this case, reading the facts in the light most favorable to Bunkers as the Court must at the summary judgment stage, a reasonable trier of fact could find that Plaintiffs, the charterer of the Vessel and its agent, were aware of Bunkers International's delivery of fuel and ratified the delivery through the involvement of the Vessel's Chief Engineering Officer. Prior authorization by the charterer to the party procuring the necessaries is not an essential requisite to preserving a lien position. See Marine Coatings, 932 F.2d at 1376.
Plaintiffs' counsel argued several times at oral argument that Judge Conway had "already decided" certain factual issues at the Preliminary Injunction stage. The standard for granting a Motion for Preliminary Injunction is entirely different ("substantial likelihood of success on the merits") than the standard for granting summary judgment (a lack of any "genuine issue of material fact"). A preliminary ruling on a partial record applying a flexible burden of proof does not provide a basis to avoid a trial on the merits.
This case is distinguishable from the facts of M/V Anglia on which the Plaintiffs so heavily rely in their arguments for summary judgment against Bunkers. In M/VAnglia, the charterer of a vessel contacted an energy services company on three occasions to supply fuel. 183 F.3d 1242, 1244 (11th Cir. 1999). On one occasion the energy services company provided the fuel itself as "seller" with others as the "physical suppliers"; on two other occasions the energy services company contacted another company, Asamar, who was the seller of the fuel to the vessel. Id. at 1246 (the energy services company "was seemingly capable of performing its contract with [the charterer] without Asamar's aid").
The Eleventh Circuit held in M/VAnglia that the energy services company had a maritime lien, but that Asamar, a third-party or subcontractor, did not because it provided the fuel on the order of the energy services company; i.e, the charterer was unaware that the energy services company would find it necessary to contract out for the fuel since the energy services company certainly had the capacity (and in one instance did) provide the fuel itself. Id. at 1245.
In this case, the trier of fact could reasonably find that Plaintiffs were aware that Moffitt, a fuel broker, could not possibly supply the fuel itself as a "seller," but would be required to subcontract with a third-party seller of fuel in order to supply the fuel to the Vessel. As in Stevens Technical Services, Inc. v. United States, in which the third-party was entitled to a lien, the owner knew that the contractor was incapable of filling the repair order itself; Plaintiffs in this case knew that fuel broker Moffitt was not going to provide the fuel directly and the fuel would necessarily be provided by another party, 913 F.2d 1521, 1534 (11th Cir. 1990). The maritime lien was also denied to Asamar in part because the charterer did not inspect the third-party's work, and did not otherwise ratify the third-party's role. Id. at 1246. There is a material issue of fact in this case as to whether the Vessel's Chief Engineering Officer ratified Bunkers' supply of fuel.
The Eleventh Circuit also found it significant that the third-party fuel seller directed all complaints and requests for payment to the energy services company, rather than the charterer. Bunkers International dealt directly with Plaintiff Gulf Chartering after Moffitt failed to pay its invoices. See Doc. No. 13, Ex. C.
In addition, the parallel between the bunker confirmations listing the energy services company of M/V Anglia and those in this case listing Bunkers International as owner of the fuel militates against summary judgment because disputed issues of fact remain. In M/V Anglia, the Eleventh Circuit held that the energy services company was entitled to a maritime lien based in part on evidence that the bunker confirmation listed it as "seller" and third-parties as "physical suppliers." 183 F.3d at 1244. In this case, the bunker confirmation prepared by Bunkers lists Bunkers International as the "buyer" and Houston Marine Services as "supplier" of the fuel to be supplied to the Vessel. Doc. No. 13, Ex. E. Additionally, Plaintiff Gulf Chartering is listed on the bunker confirmation as the "agent," arguably the entity who ordered the fuel. Id. Based on a review of the evidence produced by both parties, and considering Plaintiffs' ultimate burden of proof, there are material issues of fact which preclude a summary judgment declaration that Bunkers is not entitled to a maritime lien. It is RECOMMENDED that Plaintiffs' Motion for Summary Judgment be DENIED because disputed issues of material fact remain.
CONCLUSION
Plaintiffs have failed to provide evidence that they have standing to bring a declaratory judgment action disputing Bunkers' potential maritime lien under the MCILA. Even if Plaintiffs had proven that they have standing, they are nevertheless not entitled to summary judgment because genuine issues of material fact remain as to whether they authorized or ratified Bunkers' supply of fuel to the Vessel.Failure to file written objections to the proposed findings and recommendations contained in this report within ten (10) days from the date of its filing shall bar an aggrieved party from attacking the factual findings on appeal.