Opinion
Case No. 6:04-cv-770-Orl-19DAB.
March 31, 2005
ORDER
This case comes before the Court on the following:
1. Defendant M/V M Pioneer's Motion to Quash, Motion to Dismiss, Alternative Motion for Summary Judgment, Motion for Fees and Costs, and Incorporated Memorandum of Law (Doc. No. 17, filed June 22, 2004).
2. Plaintiff's Response to Defendant M/V M Pioneer's Motion (Doc. No. 26, filed July 13, 2004).
Background
Plaintiff, a Cyprus corporation with its principal place of business in Greece, supplies bulk marine fuel oil and bunkers to vessels worldwide. (Doc. No. 1, filed May 21, 2004, ¶ 2; Doc. No. 2, filed May 21, 2004; ¶ 2). The "M Pioneer," formerly known as the "S Pioneer," ("the vessel") is a 600 foot bulk cement carrier sailing under the Panamanian flag. (Doc. No. 1, ¶ 3; Doc. No. 2, ¶ 3). At all times material hereto, the vessel was owned by Financial Shipping Enterprise, Ltd., a Malta corporation. (Doc. No. 1, ¶ 4).On December 27, 2002, an agent of Financial Shipping and the vessel contacted Plaintiff and arranged for the purchase of 600 metric tons of grade IFO 180 CST fuel oil and 90 metric tons of grade MGO fuel oil to be delivered to the vessel on January 1, 2003, outside the port limits of Singapore. (Doc. No. 1, Ex. A). Though it is not clear from the Nomination of Marine Fuels ( Id.) or any other document in evidence the location of the vessel's agent who arranged for the purchase, Plaintiff's brief states that the buyer was in Italy and communicated by telephone and facsimile with Plaintiff's office in Greece. (Doc. No. 26, p. 9). The Nomination, faxed to the vessel's agent as confirmation of the agreement, provided that payment would be due within thirty days of delivery and contained the following language:
There is no information in the record indicating whether, at the time of the contract, the vessel was being operated by its owner, Financial Shipping, or was chartered to a third party.
Title to the product(s) in this contract shall remain with the seller until the seller has been paid in full and the seller shall have a lien on the vessel and on any bunkers on board her in respect of this claim for payment for the product(s) the subject hereof. . . . In purchasing these bunkers, the buyer is warranting that they have the authority to bind the vessel with this lien.
(Doc. No. 1, Ex. A). The contract did not include a choice of law provision. ( Id.).
The fuel was supplied as agreed on January 1, 2003. (Doc. No. 1, Ex. B). Plaintiff's invoice for the fuel bunkers, dated January 22, 2003, indicated that payment of $156,039.91 (U.S.) was due on or before February 15, 2003, and was to be remitted to Plaintiff's bank account in Greece. (Doc. No. 1, Ex. C). Such payment was never made. (Doc. No. 2, ¶ 7).
The fuel appears to have been supplied by a subcontractor, Searights Marine Services, located in Singapore. (Doc. No. 1, Ex. B).
On May 21, 2004, while the vessel was calling at Port Canaveral within the jurisdiction of this Court, Plaintiff filed a Verified Complaint for Rule B Maritime Attachment (Doc. No. 1) and a Verified Complaint to Foreclose a Maritime Lien for the Supply of Necessaries (Doc. No. 2). Pursuant to Supplemental Rule C(1) for Certain Admiralty and Maritime Claims, this Court issued a warrant for the arrest of the vessel on the same day. (Doc. No. 7, May 21, 2004). The Court then granted Plaintiff's motion to release the vessel upon the vessel's posting of a Letter of Undertaking as security. (Doc. No. 10, filed May 23, 2004; Doc. No. 11, filed May 23, 2004).
The parties agree that Plaintiff's claim for Rule B attachment cannot stand if, in fact, Financial Shipping is no longer the vessel's owner pursuant to a bona fide, arms-length transaction. ( See supra note 1; Doc. No. 26, p. 5). Accordingly, Plaintiff has indicated its intent to voluntarily dismiss the Rule B action, reserving the right to reassert the claim in the event that discovery reveals that the sale of the vessel to Fairlane Shipping was fraudulent. ( Id.). The Court has already dropped Financial Shipping as an in personam Defendant to this action due to Plaintiff's inability to effect timely service. (Doc. No. 34, filed Mar. 24, 2005).
The Defendant vessel, making a restricted appearance under Supplemental Rule E(8) solely for the purpose of defending the in rem action commenced by Plaintiff, now moves the Court to dismiss the action and quash the arrest of the vessel on the ground that Plaintiff does not have a valid maritime lien. (Doc. No. 17).
Analysis
Supplemental Rule C(1)(a) permits a plaintiff to initiate an in rem action against a vessel to enforce any maritime lien. "The maritime lien is a unique security device which serves the dual purpose of keeping ships moving in commerce while not allowing them to escape their debts by sailing away." Electra Intermodal Servs., Inc. v. M/V Nan Kou, 1993 WL 379583, *2 (S.D. Fla. 1993). Rule C does not create a maritime lien, which is a creature of substantive, not procedural, maritime law. Trinidad Foundry and Fabricating, Ltd. v. M/V K.A.S. Camilla, 966 F.2d 613, 615 (11th Cir. 1992).
Where the law allows a maritime lien,
[t]he vessel itself is viewed as the obligor whether or not the owner is also obligated. Substantive maritime law confers on the holder of a maritime lien a sufficient interest in the vessel to detain it for security and ultimately to subject it to condemnation and sale for satisfaction of the lien.Amstar Corp. v. S/S Alexandros T., 664 F.2d 904, 908 — 09 (4th Cir. 1981). Furthermore, a maritime lien "passes with the ship when it is sold, even if the new owner is unaware of the existence of the lien." Marine Oil Trading Ltd. v. Motor Tanker Paros, 287 F. Supp. 2d 638, 640 (E.D. Va. 2003). Because of its strength, the maritime lien is construed narrowly by the law of most nations. See id. In most nations, including the United Kingdom, the provision of "necessaries," repairs and supplies such as the fuel bunkers at issue in the instant case, does not convey to the provider a maritime lien on the vessel. See id.; Trinidad, 966 F.2d at 616, 617. In contrast, American law does create such a right through the Federal Maritime Lien Act ("FMLA"). 46 U.S.C. § 31342(a).
Defendant argues that the law of Singapore, identical in relevant part to English law, applies to the contract in the instant case, thereby extinguishing Plaintiff's claim to a maritime lien on the vessel. (Doc. No. 17). On the other hand, Plaintiff contends that the facts do not mandate the application of Singaporean law, but even if that law governs, Plaintiff argues that the lien provision in its contract for fuel bunkers is sufficient to trump the normal operation of that law and to establish its right to a maritime lien in this case. (Doc. No. 26). Despite Plaintiff's conclusory assertion that the lien provision is valid, the Court must first decide which law is most appropriately applied to the interpretation of the contract. A. Choice of Law
In Lauritzen v. Larsen, the Supreme Court set forth several factors to be considered in determining what law should apply in an admiralty case: (1) the place of the wrongful act; (2) the law of the flag; (3) the allegiance or domicile of the injured party; (4) the allegiance of the defendant shipowner; (5) the place of the contract; (6) the inaccessibility of a foreign forum; and (7) the law of the forum. 345 U.S. 571, 928 — 33 (1953). This list is not exhaustive, however, and courts are urged to "view the case as a whole in order to determine which law can most fairly be applied to govern the contractual relationship." Sigalas v. Lido Maritime, Inc., 776 F.2d 1512, 1517 (11th Cir. 1985). Therefore, where the maritime claim being asserted arises from a contractual dispute rather than a tortious act and where the parties have failed to indicate their intent through a choice of law provision, courts have devised a modified set of factors to be weighed in their choice of law analysis: "(a) the place of contracting, (b) the place of negotiation of the contract, c) the place of performance, (d) the location of the subject matter of the contract, and (e) the domicile, residence, nationality, place of incorporation and place of business of the parties." Metron Comm., Inc. v. M/V Tropicana, 1992 U.S. Dist. LEXIS 22613 *12 (S.D. Fla. 1992) (citing Gulf Trading Transp. Co. v. Vessel Hoegh Shield, 658 F.2d 363, 366 (5th Cir. 1981); Restatement (Second) of Conflict of Law § 188 (1971)).
In the instant case, the application of these factors yields a vast array of possibilities. First, the contract was negotiated by telephone between Plaintiff's office in Greece and Defendant's agent in Italy, and confirmation of the agreement was faxed from Greece to Italy. The contract was performed on Plaintiff's part outside the port limits of Singapore by a Singaporean subcontractor, while Defendant was obliged to remit payment directly to Plaintiff's bank account in Greece. The subject matter of the contract, the vessel and the fuel bunkers, were located at the time of performance outside the port limits of Singapore. Finally, the contract was entered between Plaintiff, a Cypriot corporation doing business in Greece, and the agent for a Maltese-owned vessel sailing under the Panamanian flag.
Defendant urges that the law of Singapore should apply because it is the location where the bunkering occurred, with which position Plaintiff disagrees while failing to support the application of any other particular nation's law. Plaintiff argues instead that the inclusion of the lien provision in the contract, in contravention of prevailing law, is a clear indication that the parties intended that Singaporean law specifically, or any other unfavorable law generally, would not apply. However, the Court cannot assess the content of a contract in a vacuum; it must decide which nation's law governs the agreement.
To the extent that Plaintiff's argument can be construed to urge the application of the law of the United States, the Court disagrees. Because maritime liens for necessaries have been disavowed by the "overwhelming majority of countries, . . . it is reasonable to conclude that most parties contracting for necessaries would not expect a lien to arise where the contract does not invoke American law or involve an American shipper. . . ." Motor Tanker Paros, 287 F. Supp. 2d at 645. "[T]he congressional intent of the FMLA is that `an American supplier of goods, services or necessaries to a foreign vessel obtains a maritime lien in the vessel when the goods or services are supplied or performed in the United States.'" Metron Comm., 1992 U.S. Dist. LEXIS 22613 *13 (quoting Gulf Trading, 658 F.2d at 367) (emphasis added). Such is not the case with the contract in question, and the Court finds that American law should not govern.
The Court also is unpersuaded by Defendant's argument that application of the law of Singapore is appropriate. That the vessel took on fuel outside the port limits of that nation as it made its way from the Middle East to the Far East is no less fortuitous than its being located upon the jurisdictional waters of this Court at the time Plaintiff commenced this action. It appears that Singapore would have no more interest in the application of its law to the facts of this case than the United States has in applying its own.
Although Searights, which supplied the fuel bunkers to the vessel, was located in Singapore, Plaintiff does not allege and no evidence indicates that the subcontractor was injured by the alleged breach, and it is not a party to this action.
On the other hand, the contracting parties reasonably could have expected that the law of Greece would apply. Plaintiff had located its principal place of business in that country, and it was from that location that Plaintiff negotiated the contract via telephone. Although Defendant's agent negotiated from Italy, Greece clearly has a greater interest in protecting a supplier which has chosen to operate its business principally from within its borders, albeit not incorporated there. Accordingly, the Court finds the law of Greece governs this dispute. B. Existence of a Maritime Lien
The determination that Greek law applies over the law of Singapore is in some way an academic one, as the laws of the two nations are similar with regard to the question of maritime liens.
Like English law, the law of Greece does not create a maritime lien for the provision of necessaries, including fuel bunkers. See Lion de Mer S.A. v. M/V Loretta D, 1998 U.S. Dist. LEXIS 10182 *6 — 7 (D. Md. 1998); Metron Comm., 1992 U.S. Dist. LEXIS 22613 *10. Plaintiff contends that its bunkering contract contained language creating such a lien by agreement, thereby rendering immaterial the default operation of national law. However, the cases cited by Plaintiff in support of its position that a contractual provision mutually agreed to by the parties should be given effect are inapposite. See Sembawang Shipyard Ltd. v. Charger, Inc., 955 F.2d 983, 986 (5th Cir. 1992) (holding that a freely negotiated choice of law clause was enforceable); Trinidad, 966 F.2d at 615 (indicating that the procedural requirements of Rule C might be negotiable between parties).
Plaintiff attributes a lengthy quotation in its brief to Justice Brandeis' opinion in Piedmont George's Creek Coal Co. v. Seaboard Fisheries Co., 254 U.S. 1, 4 (1920). The passage states, "[i]t is settled that an owner may by agreement, express or implied, create a maritime lien on his vessel for supplies furnished. . . ." Id. It appears that counsel mistakenly quoted the reporter's summary of the petitioner's position in that case, not the opinion of the Court. Regardless, the statement is taken out of context and in fact relates to the authority of a shipowner or master to order supplies while in foreign ports which would, by operation of law, give rise to a maritime lien. The statement does not support Plaintiff's assertion that a maritime lien may be created by contract where it would not arise under the law. See, e.g., The Kalorama, 77 U.S. 204 (1870).
On the contrary, a maritime lien is "stricti juris and will not be extended by construction, analogy or inference." Piedmont George's Creek Coal Co., 254 U.S. at 4. "While a maritime lien does arise by operation of law rather than by agreement between the parties, there are a number of reasons for including contractual language alerting the parties to the existence of a lien on the ship. This language does not, however, actually give rise to the lien." Motor Tanker Paros, 287 F. Supp. 2d at 644 (emphasis added). Thus, where the governing law does not provide for a maritime lien, no agreement of the parties will suffice to create it. Compare Liverpool London Steamship Protection Indem. v. Queen of Leman MV, 296 F.3d 350, 353 (5th Cir. 2002) (applying local (American) law to determine whether lien existed by operation of law where contract language explicitly carved out exception to English choice of law provision for that purpose), with Motor Tanker Paros, 287 F. Supp. 2d at 645 (lien provision in contract not enforced where there was no "language signaling [the plaintiff's] intent to invoke the specific maritime lien law of a particular forum if the opportunity arose . . ."); North End Oil, Ltd. v. M/V Ocean Confidence, 777 F. Supp. 12, 14 (C.D. Cal. 1991) (interpreting clause providing for maritime lien to create right only to the extent allowed by governing English law).
Plaintiff cannot rely on contractual language to create a maritime lien where such lien does not arise by operation of law. Having determined that the law of Greece governs the contract at issue in the instant case and that Greek law does not recognize a lien for the provision of necessaries, the Court finds that Plaintiff does not have a maritime lien on the Defendant vessel. In the absence of a valid maritime lien, Plaintiff was not entitled to proceed against the vessel in rem and to arrest the vessel under the provisions of Supplemental Rule C(1). Accordingly, Defendant's motion to dismiss and motion to quash will be granted.
C. Attorneys' Fees
Maritime law provides that Court may, in its discretion, award attorneys' fees to the prevailing party in the case of wrongful seizure if it can be proved that the party seizing or arresting the vessel "acted in bad faith, with malice, or with wanton disregard for the rights of his opponent." Cardinal Shipping Corp. v. M/S Seisho Maru, 744 F.2d 461, 474 (5th Cir. 1984); see also Ocean Ship Supply, Ltd. v. MV Leah, 729 F.2d 971, 974 (4th Cir. 1984). There being no evidence in the instant case that Plaintiff acted in bad faith, with malicious purpose or with gross negligence in pursuing the arrest of the vessel in this district, the Court will deny Defendant's motion for fees and costs.
Conclusion
Based on the foregoing, Defendant M/V M Pioneer's Motion to Quash and Motion to Dismiss (Doc. No. 17) are GRANTED. Plaintiff's Verified Complaint for Rule B Maritime Attachment (Doc. No. 1) is DISMISSED without prejudice. Plaintiff's Verified Complaint to Foreclose a Maritime Lien (Doc. No. 2) is DISMISSED with prejudice for lack of jurisdiction, and the warrant of arrest against the M Pioneer is quashed. Defendant's Motion for Attorneys' Fees and Costs is DENIED. The Clerk is directed to close this case.DONE and ORDERED in Chambers in Orlando, Florida this 31st day of March, 2005.