Court Opinion

ID: 4292764
Source: CourtListenerOpinion
Date Created: 2018-07-10 15:00:29.713259+00
Date Added: 2024-06-11T14:38:10.106796
License: Public Domain

16-4032-cv
     ING Bank N.V. v. JAWOR M/V

                                  UNITED STATES COURT OF APPEALS
                                      FOR THE SECOND CIRCUIT

                                           SUMMARY ORDER

     RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
     SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
     BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
     WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
     MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
     NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY
     OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1           At a stated Term of the United States Court of Appeals for the Second Circuit, held at the
 2   Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York on the
 3   10th day of July, two thousand eighteen.
 4
 5   Present:    BARRINGTON D. PARKER,
 6               RICHARD C. WESLEY,
 7               DEBRA ANN LIVINGSTON,
 8                           Circuit Judges.
 9   _____________________________________________________
10
11   ING Bank N.V.,
12
13                                  Plaintiff-Appellant,
14
15
16                                  v.                                                 16-4032-cv
17
18
19   JAWOR M/V, IMO No. 9452608, her engines, tackle, equipment, furniture, appurtenances, etc.,
20   in rem,
21
22                                  Defendant in rem-Appellee.
23
24
25
26   _____________________________________________________
27
28   Appearing for ING Bank N.V.:                                Bruce G. Paulsen, Brian P. Maloney,
29                                                               Seward & Kissel, LLP, New York,
30 N.Y.
31
32                                                               James D. Bercaw, King, Krebs &
33                                                               Jurgens, PLLC, New Orleans, LA.
34
1
2    Appearing for JAWOR M/V, IMO No. 9452608:                    Michael James Dehart, Michael E.
3                                                                 Unger, Freehill Hogan & Mahar
4                                                                 LLP, New York, N.Y.
5
6
7
8

9              UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND

10   DECREED that the judgment of the District Court is VACATED IN PART, AFFIRMED IN

11   PART, AND REMANDED.

12             Appellant ING Bank N.V. (“ING”) appeals from a judgment of the United States District

13   Court for the Southern District of New York (Forrest, J.). The District Court entered summary

14   judgment to defendant in rem JAWOR M/V (the “Vessel”) on ING’s maritime lien claim against

15   it for the provision of bunkers to the Vessel. The claim was brought under the Commercial

16   Instruments and Maritime Liens Act (“CIMLA”), 46 U.S.C. § 31301 et seq. In addition, the

17   Court reduced the amount of security posted to permit the Vessel’s release from arrest. We

18   assume the parties’ familiarity with the underlying facts, procedural history, and issues for

19   review.

20             As relevant to this appeal, ING is the purported assignee of the O.W. Bunker Group, a

21   global collection of entities and subsidiaries that was engaged in the business of supplying

22   bunkers to ships in maritime commerce. In 2014, the charterer of the Vessel, a Chinese entity

23   called Able Glory Maritime Co., Ltd. (“Able Glory”), ordered bunkers from O.W. Bunker

24   Middle East DMCC (“O.W. Bunker Middle East”) to fuel the Vessel in Singapore in preparation

25   for the Vessel’s voyage to Australia. O.W. Bunker Middle East then used the services of a

26   subcontractor, O.W. Bunker Far East (S) Pte Ltd. (“O.W. Bunker Far East”) to supply the

27   bunkers to the Vessel. O.W. Bunker Far East then subcontracted with Coastal Energy Pte Ltd.

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1    (“Coastal”) for the supply of the bunkers, who, in turn, subcontracted the actual supply of the

2    physical bunkers to a local physical supplier, Triton Bunkering Services Pte Ltd. (“Triton”). On

3    October 30, 2014, Triton delivered the bunkers to the Vessel in Singapore. The O.W. Bunker

4    Group then entered bankruptcy, and the bunkers were never paid for.

5            In June 2016, ING, acting as assignee of the O.W. Bunker Group, filed a complaint in

6    rem in the United States District Court for the Eastern District of Louisiana, asserting a maritime

7    lien against the Vessel for the unpaid bunkers. The Vessel was then arrested in New Orleans but

8    was released shortly after the Louisiana District Court approved the deposit of $926,053.93, with

9    an interest rate of 6%, into the registry of the court to serve as security.

10           In August 2016, the case was transferred to the Southern District of New York, where

11   ING moved for summary judgment on its maritime lien claim. The District Court denied ING’s

12   motion and instead sua sponte entered summary judgment in favor of the Vessel. The District

13   Court also entered an order reducing the security to $457,305.99 and reducing the interest rate to

14   3.5%. This appeal followed.

15           On appeal, ING argues that the District Court erred in granting summary judgment sua

16   sponte to the Vessel on ING’s maritime lien claim, and that the District Court erred in reducing

17   the security and the interest rate. We agree with the first contention and disagree with the

18   second. We therefore vacate the entry of summary judgment in the Vessel’s favor and affirm the

19   reduction in security.

20           The District Court denied ING’s application for a maritime lien on the ground that its

21   assignor, O.W. Bunker Middle East, had not “provid[ed]” bunkers to the Vessel, as required by

22   CIMLA, because it hired subcontractors to undertake the actual supply of the bunkers and

23   because, in the District Court’s view, the record did not establish that O.W. Bunker Middle East

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1    faced any financial risk in its contractual obligations with its subcontractors. This rationale is

2    inconsistent with CIMLA. Instead, “[t]o assert a maritime lien, all a bunker contractor must

3    establish is that it contracted with a statutorily-authorized person for the delivery of bunkers and

4    that the bunkers were delivered pursuant to that contractual arrangement.” ING Bank N.V. v.

5    M/V TEMARA, 892 F.3d 511, 520 (2d Cir. 2018). And, “a supplier may provide necessaries to a

6    vessel indirectly through a subcontractor because when a subcontractor does so pursuant to its

7    contract with a contractor, the subcontractor’s performance is attributable to the contractor.” Id.

8    at 519. There is no dispute that O.W. Bunker Middle East was hired to supply bunkers by the

9    Vessel’s charterer (Able Glory), and there is no dispute that the bunkers were delivered to the

10   Vessel under that arrangement. Consequently, O.W. Middle East (or ING, as its purported

11   assignee) may assert a maritime lien against the Vessel for the unpaid bunkers. The District

12   Court’s risk analysis was an incorrect application of CIMLA. We therefore vacate the District

13   Court’s grant of summary judgment to the Vessel, and remand for further proceedings.

14          Moreover, the manner in which the District Court granted summary judgment to the

15   Vessel—sua sponte and without notice or an opportunity to be heard—was inconsistent with

16   Federal Rule of Civil Procedure 56(f) and was thus improper. For the reasons we explained in

17   M/V TEMARA, 892 F.3d at 523-25, ING was prejudiced by the sua sponte entry of summary

18   judgment.

19          As to the District Court’s order reducing security, there was no abuse of discretion. The

20   District Court reduced the security in this case pursuant to Supplemental Admiralty Rule E(6) of

21   the Federal Rules of Civil Procedure, which provides, in relevant part, that “[w]henever security

22   is taken the court may, on motion and hearing, for good cause shown, reduce the amount of

23   security given[.]” Supp. Adm. Rule E(6). ING argues this reduction was erroneous as a matter

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1    of law because Supplemental Admiralty Rule E(5)(a) requires that the interest be set at 6% and

2    fixing it at any other rate was an error of law and an abuse of discretion. But, we held in

3    Chemoil Adani Pvt. Ltd. v. M/V MARITIME KING, No. 16-3944, 2018 WL 3339788 (2d Cir.

4    July 9, 2018) (per curiam), that Supplemental Admiralty Rule E(6) broadly permits the District

5    Court, in its discretion, to reduce a security interest rate, including one imposed under

6    Supplemental Admiralty Rule E(5)(a). Chemoil Adani, 2018 WL 3339788, at *2-3.

7    Accordingly, the District Court did not abuse its discretion in reducing the interest rate from 6%

8    to 3.5%.

9           We have considered ING’s other arguments and find them to be without merit.

10   Accordingly, the judgment of the District Court is VACATED IN PART, AFFIRMED IN

11   PART, and REMANDED FOR FURTHER PROCEEDINGS.

12
13                                                 FOR THE COURT:
14                                                 CATHERINE O’HAGAN WOLFE, CLERK
15
16

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