Court Opinion

ID: 1009552
Source: CourtListenerOpinion
Date Created: 2013-07-04 19:57:59.58174+00
Date Added: 2024-06-11T12:30:37.126044
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

WAVE MAKER SHIPPING COMPANY,            
LTD,
               Plaintiff-Appellee,
                and
ESTONIAN MARITIME AGENCY, LTD,
               Intervenor-Plaintiff-
                          Appellee,
                and
MORAN TOWING, INCORPORATED;
ALAMCO, A.G.; ALIMAR
CORPORATION; MARAMET AND GAMLA                   No. 02-1016
BROG.; POSEIDON & FRACHTCONTOR
JUNGE LTD,
              Intervenors-Plaintiffs,
                 v.
HAWKSPERE SHIPPING COMPANY,
LIMITED,
                       Defendant,
                and
CLIPPER BULK SHIPPING, LTD,
              Garnishee-Appellant.
                                        
           Appeal from the United States District Court
            for the District of Maryland, at Baltimore.
           Williams M. Nickerson, Senior District Judge.
                       (CA-00-3408-WMN)

                      Argued: October 31, 2002

                      Decided: January 23, 2003
2          WAVE MAKER SHIPPING v. CLIPPER BULK SHIPPING
Before NIEMEYER, WILLIAMS, and MICHAEL, Circuit Judges.

Vacated in part by unpublished per curiam opinion.

                            COUNSEL

ARGUED: Geoffrey S. Tobias, OBER, KALER, GRIMES &
SHRIVER, P.C., Baltimore, Maryland, for Appellant. John Henry
West, III, WEST & MOORE, L.L.C., Baltimore, Maryland, for
Appellees. ON BRIEF: David W. Skeen, WRIGHT, CONSTABLE
& SKEEN, L.L.P., Baltimore, Maryland, for Appellee Estonian.

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                             OPINION

PER CURIAM:

   This appeal of a maritime order of attachment involves a question
of ownership, specifically the ownership of bunker fuel aboard the
M/V NOBILITY. Clipper Bulk Shipping, Ltd. appeals the denial of
its motion to vacate a district court order attaching fuel ("bunkers")
worth $57,163.90 on board the M/V NOBILITY, a ship subchartered
by Clipper to Hawkspere Shipping Company, Ltd. During the period
of Hawkspere’s subcharter, the appellees, who are creditors of Hawk-
spere, attached the NOBILITY’s bunkers. Because we conclude that
the bulk of the bunker fuel aboard the NOBILITY was not the prop-
erty of Hawkspere at the time of attachment, we vacate the attachment
in part and reduce Clipper’s bond liability by $49,225.90.

                                  I.

  The facts in this case are largely undisputed but require rather
detailed recitation. We begin by explaining the relationship between
           WAVE MAKER SHIPPING v. CLIPPER BULK SHIPPING               3
the appellant, Clipper Bulk Shipping, Ltd. ("Clipper"), and Hawk-
spere Shipping Company, Ltd. ("Hawkspere"), the company against
whom attachment was sought. On October 10, 2000, Clipper sub-
chartered the M/V NOBILITY to Hawkspere for one voyage from the
Baltic Sea to the Eastern United States. J.A. 110-29. Hawkspere is not
a party to this case and appears to now be defunct. The charter party
(or contract) between Clipper and Hawkspere provided that Hawk-
spere on delivery, and Clipper on redelivery, would take over and pay
for all bunkers on board the vessel. J.A. 117. When Hawkspere took
delivery of the NOBILITY, it duly paid for the bunkers then aboard.
J.A. 130-32. On October 24, 2000, while the NOBILITY was in St.
Petersburg, Russia, Hawkspere purchased an additional 400 tons of
bunker fuel from Baltic Bunkering Co. ("Baltic"). J.A. 142-43. Baltic
supplied and sold the bunkers to Hawkspere under terms provided in
a Standard Marine Fuel Purchasing Contract ("FUELCON"). J.A.
148-50. Clause 11 of the FUELCON provided that "[t]itle to the
Marine Fuels shall pass to the Buyers upon payment for the value of
the Marine Fuels delivered . . . . Until such payment has been made,
the Sellers shall have a right of lien over the Marine Fuels delivered."
J.A. 150. Hawkspere never paid Baltic for the bunkers. On appeal the
appellees suggest that Hawkspere was not aware that the FUELCON
governed the terms of the sale until after the attachment. The appel-
lees do not offer any evidence, however, as to what terms would have
governed the sale if not the FUELCON’s. The district court assumed
that the FUELCON applied, see J.A. 275, as do we. English law gov-
erns both the charter party and the FUELCON. J.A. 116, 150.

   When the NOBILITY docked in Baltimore Harbor in November
2000, nearly all of the original bunker on board had been consumed.
It is uncontested that of the $57,163.90 worth of fuel then aboard the
NOBILITY, all but $7,938.00 (which represents the fuel remaining
from what was on board when Hawkspere took delivery of the
NOBILITY from Clipper) was from the Russian bunkers. J.A. 274.
On November 16, 2000, Wave Maker Shipping Company, Ltd.
("Wave Maker"), a creditor of Hawkspere, filed suit in the District of
Maryland to attach Hawkspere property, specifically the bunkers on
the NOBILITY, in order to satisfy an arbitration award Wave Maker
received against Hawkspere in an unrelated matter. J.A. 264-65. The
bunkers were attached pursuant to a district court order issued on
November 16, 2000. J.A. 265. On November 21, 2000, Clipper
4          WAVE MAKER SHIPPING v. CLIPPER BULK SHIPPING
moved to dissolve the attachment, arguing that Hawkspere had sold
the attached bunkers to Clipper pursuant to a mid-charter "sale," and
thus Clipper, not Hawkspere, owned the bunkers at the time of attach-
ment. The district court denied the motion. J.A. 265-66. Shortly there-
after, Estonian Maritime Agency, Inc. ("Estonian") and Poseidon &
Frachtcontor Junge, Ltd. ("Poseidon") intervened in the attachment
suit seeking damages for unpaid services provided to Hawkspere.
Poseidon has withdrawn from this appeal. The remaining appellees,
Wave Maker and Estonian, are referred to collectively as Wave
Maker.

   On November 30, 2000, Clipper posted a general bond to release
the NOBILITY and her bunkers. J.A. 266. The bond promised to pay
any final judgment that might be rendered in favor of Wave Maker
against Hawkspere, in amounts not to exceed $57,163.90. Id. Clipper
then took possession of the vessel and her bunkers, which have since
been consumed. On May 16, 2001, Clipper moved to vacate the
attachment of the bunkers by seeking to vacate the bond or, in the
alternative, to reduce its amount. Clipper presented two arguments.
First, Clipper again argued the mid-charter "sale" theory. The district
court again rejected this argument, and Clipper does not pursue it on
appeal. J.A. 268-73. Clipper’s second, and only current, argument
was that Baltic, not Hawkspere, owned the bunkers at the time of the
attachment because Hawkspere never paid for the bunkers and thus
Baltic retained ownership under the terms of the FUELCON. If Baltic
owned the bunkers at the time of attachment, Clipper argued, Hawk-
spere’s creditors could not attach them. The district court disagreed
and denied Clipper’s motion to vacate the attachment order. J.A. 273-
77. Clipper now appeals.

                                  II.

   The essential facts of this case are not in dispute. We review the
district court’s conclusions of law de novo. S. C. State Ports Auth. v.
M/V Tyson Lykes, 67 F.3d 59, 61 (4th Cir. 1995). Supplemental Rule
B of the Federal Rules of Civil Procedure authorizes the attachment
of property in certain maritime actions. When the validity of an
attachment is challenged, the burden is on the plaintiff to show why
the attachment should not be vacated. See Fed. R. Civ. P. Supp. R.
E(4)(f). Thus, Wave Maker bears the burden of proving that the bun-
           WAVE MAKER SHIPPING v. CLIPPER BULK SHIPPING                5
kers in question were the property of Hawkspere at the time of attach-
ment. Swift & Co. Packers v. Compania Colombiana Del Caribe,
S.A., 339 U.S. 684, 693 (1950). In its decision below, the district court
concluded that the bunkers purchased from Baltic were Hawkspere
property and thus properly subject to attachment. In reaching its deci-
sion, the district court relied heavily on precedent from the United
Kingdom’s House of Lords, The Span Terza, [1984] 1 Lloyd’s Rep.
119 (1983), for the proposition that charterers hold all rights to bun-
kers during the term of the charter. We conclude, however, that the
district court’s reliance on The Span Terza is misplaced. Rather, for
the reasons that follow, we conclude that under English law the bun-
kers belonged to Baltic, not Hawkspere, at the time of attachment and
thus were not properly subject to attachment by the district court.

                                   A.

   Wave Maker argues on appeal, and the district court below con-
cluded, that The Span Terza applies to this case. The Span Terza
involved a dispute between a shipowner and a charterer over owner-
ship of bunkers aboard a vessel. The charter party contained a clause
almost identical to that in the charter party between Clipper and
Hawkspere, under which the owners at the port of redelivery were to
take over and pay for all fuel remaining on board the vessel. In The
Span Terza the charter was rightfully cancelled by the charterer after
the vessel was unavailable for hire for twenty-five days. The Span
Terza, 1 Lloyd’s Rep. at 120. The House of Lords concluded that
"[u]nder the terms of the charter-party, the bunkers while aboard Span
Terza were at all material times the property of the charterers." Id. at
122-23. The district court used this language to conclude that the bun-
kers aboard the NOBILITY "were at all times the property of" Hawk-
spere. But such a conclusion does not follow in this case. Unlike the
situation in the case before us, in The Span Terza the charterer clearly
had paid for the bunkers on board the vessel. Id. at 120. The court’s
task there simply was to determine the effect of the cancellation of the
charter party on the ownership of the bunkers.

   Here, however, we do not confront a dispute of ownership between
a shipowner and charterer but rather between a charterer and a fuel
supplier. That is, in the case before us, Clipper claims that Hawkspere
never gained title to the bunkers because Hawkspere never paid Baltic
6          WAVE MAKER SHIPPING v. CLIPPER BULK SHIPPING
for them. Under the FUELCON Baltic retained title to the bunkers
pending full payment by Hawkspere. The district court, however, did
not address the "retention of title" provision in the FUELCON,
despite the court’s acknowledgment that Hawkspere never paid Baltic
for the bunkers. Instead, the district court found as follows:

    In the present case, as of the time of attachment, Hawkspere
    had purchased the Russian bunkers . . . ; Hawkspere had not
    yet redelivered the ship to Clipper Bulk and was still operat-
    ing under the charter; and the due date for payment on the
    Russian bunkers had not yet arrived. Under the principles of
    the SPAN TERZA case and according to the terms of the
    charter, the Court finds that the Russian bunkers were prop-
    erty of Hawkspere when attached.

Wave Maker Shipping Co., Ltd. v. Hawkspere Shipping Co., Ltd.,
Civil Action WMN-00-3408, Mem. at 14 (D.Md. Dec. 3, 2001). Thus,
the district concluded that the relationship between the charterer and
shipowner controls this case. The critical question, however, is the
relationship between Baltic and Hawkspere, namely, whether Hawk-
spere ever acquired title to the bunkers.

   Forsythe Int’l (UK) Ltd. v. Silver, [1993] 2 Lloyd’s Rep. 268, an
English admiralty case, decided after The Span Terza, explains the
effect, under English law, of the retention of title provision on owner-
ship of the bunker as among the fuel supplier, charterer, and ship-
owner. In Forsythe a British admiralty court found that where a
charterer acquired bunkers from a fuel supplier under a contract that
contained a retention of title provision, the supplier, not the charterer
or shipowner, retained title to the bunkers pending payment. Id. at
272. In Forsythe a bunker oil trader sued both the charterer and owner
of a vessel. The trader’s contract with the charterer contained a reten-
tion of title provision that provided that "Marine Fuels shall remain
the sole and absolute property of the Seller as legal and equitable
Owner until such time as the Buyer shall have paid to the Seller the
agreed price." Id. at 270. In Forsythe after the owners withdrew the
vessel under the charter-party, the fuel traders, who had not yet been
paid for the bunkers by the charterers, arrested the vessel. The fuel
traders sought to recover the price of the fuel from the charterers
based on contract and from the owners based on a theory of conver-
           WAVE MAKER SHIPPING v. CLIPPER BULK SHIPPING                7
sion (that the owners misappropriated the fuel when they took redeliv-
ery of the vessel after cancellation of the charter party). The admiralty
court found for the plaintiff fuel trader on both claims, determining
that the plaintiff retained title to the bunkers regardless of who had
possession of them (the charterer or owner). Id. at 280.

   While the retention of title provision in Forsythe is more detailed
and explicit than that in the instant case, the admiralty court in Forsy-
the did not rest its decision on the specific language of the contract.
Rather, the court acknowledged the common understanding regarding
the effect of the retention of title provision as between the fuel sup-
plier and the charterer: "[P]roperty in the bunkers did not pass until
they were paid for and . . . since the bunkers were not paid for, the
property in them never passed to the charterers." Id. at 272. Thus,
under the reasoning of Forsythe, property in the NOBILITY bunkers
purchased in Russia clearly remained with Baltic pending payment by
Hawkspere, and thus Baltic, not Hawkspere, owned the bunkers at the
time of attachment because payment had not yet been made.

   Such a result comports with the British Sale of Goods Act. The
Sale of Goods Act specifically provides that parties may negotiate for
retention of title provisions in sales contracts. Sale of Goods Act,
1979, c. 54, Pt III, §§ 17-20 (U.K.); see also, e.g., Armour v. Thyssen
Edelstahlwerke A.G., [1991] 1 Lloyd’s Rep. 95 (1990). While the
Sale of Goods Act also provides protection for third parties who
acquire goods without notice of another’s lien or right in the goods,
this protection does not extend to Wave Maker’s attachment of the
bunkers. Even assuming that Wave Maker had no notice of Baltic’s
right in the bunkers and that Wave Maker acted in good faith in
attaching the bunkers, the Act does not protect Wave Maker because
Hawkspere did not "deliver" the bunkers to Wave Maker within the
meaning of the statute. See Sale of Goods Act, 1979, c. 54, Pt III, § 25
(U.K.). "Delivery" means a voluntary transfer of possession from one
person to another, which attachment is not. Cf. Forsythe, 2 Lloyd’s
Rep. at 278-79 (concluding that where owners cancelled the charter-
party, it would be "an abuse of language to say" that the charterers
"voluntar[ily] deliver[ed]" the bunkers to the owners so as to give the
owners title to the bunkers). Here, where Wave Maker attached the
NOBILITY’s bunkers through judicial action, it cannot be said that
Hawkspere voluntarily transferred possession of the bunkers to its
8          WAVE MAKER SHIPPING v. CLIPPER BULK SHIPPING
creditors. Accordingly, Wave Maker is not entitled to third-party pro-
tection under the Sale of Goods Act.

                                   B.

   Wave Maker points out that Baltic never acted on its rights and
failed to make a claim of ownership in the attached bunkers. But that
does not bear on the actual question of ownership; the relevant time
is the time of attachment. At that point Hawkspere had not paid Baltic
for the bunkers, and Baltic retained title to the bunkers under the
FUELCON. Thus, the fact that Baltic did not object to attachment is
legally irrelevant, and the fact that Baltic has not acted since does not
bear on whether attachment was proper in the first place.

   Wave Maker also appears to argue that to return the bond to Clip-
per somehow unjustly enriches Clipper. That is, Wave Maker claims
that by dissolving the bond, Clipper will have received the benefit of
the bunkers, which it has consumed, without paying for them. Under
the circumstances, Wave Maker’s argument is unpersuasive. After the
arrest of the vessel and attachment of the bunkers aboard the NOBIL-
ITY, Clipper had no choice but to post a bond in order to release its
vessel so that it could discharge the cargo remaining on board in con-
nection with Hawkspere’s time charter, thereby freeing the NOBIL-
ITY for future charters. At that time Hawkspere was in default on its
payments to Clipper, forcing Clipper to bear all costs associated with
the return of the NOBILITY. Clipper thus gains no unfair windfall by
recouping that part of the posted bond that represents the value of the
Russian bunkers. To the extent that Clipper’s consumption of the
Russian bunkers may have amounted to conversion of Baltic’s prop-
erty, Baltic remains free to assert its rights against Clipper. See Forsy-
the, 2 Lloyd’s Rep. at 280.

   In sum, we conclude that under English law the bunkers remained
the property of Baltic, not Hawkspere, at the time of attachment and
thus were not properly subject to attachment by the district court. We
therefore vacate the attachment in part and reduce Clipper’s bond lia-
bility by $49,225.90, an amount equal to the value of the Russian
bunkers.

                                                   VACATED IN PART