     Case: 17-20246   Document: 00514794666     Page: 1   Date Filed: 01/14/2019




          IN THE UNITED STATES COURT OF APPEALS
                  FOR THE FIFTH CIRCUIT

                                                              United States Court of Appeals

                                 No. 17-20246
                                                                       Fifth Circuit

                                                                     FILED
                                                              January 14, 2019

NUSTAR ENERGY SERVICES, INCORPORATED,                           Lyle W. Cayce
                                                                     Clerk
             Plaintiff - Appellant

v.

M/V COSCO AUCKLAND, IMO NO. 9484261, et al.

             Defendants - Third Party Plaintiffs

COSCO Haifa Maritime Ltd., COSCO Auckland Maritime Ltd., COSCON,
COSCO Venice Maritime Ltd.,

              Third Party Plaintiffs - Appellees

v.

ING BANK N.V.,

             Third Party Defendant - Appellee



                Appeal from the United States District Court
                     for the Southern District of Texas
                          USDC No. 4:14-CV-3648
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                                      No. 17-20246
Before WIENER, SOUTHWICK, and COSTA, Circuit Judges.
GREGG COSTA, Circuit Judge:*
       This lawsuit is the latest round in the maritime litigation spawned by
the collapse of OW Bunker, formerly the world’s largest supplier of fuel for
ships. In federal courts across the country, OW’s subcontractors have asserted
maritime liens on the ships to which they physically delivered fuel.                      If
successful, these claims would allow them a full recovery rather than the
pennies on the dollar they would likely receive in bankruptcy court. But the
subcontractors are not alone in their pursuit of maritime liens—OW’s largest
secured creditor has also staked a claim. Our ruling in an earlier OW Bunker
case means that the subcontractor here does not possess liens on the vessels it
supplied because it was not acting on the orders of the vessels or their agents.
And because it does not have liens, we conclude that it is not able to appeal a
ruling that the secured creditor does hold liens.
                                             I.
           The secured creditor, ING Bank, asserts maritime liens based on a $700
million revolving credit facility that a group of lenders provided OW Bunker
and its affiliates almost a year before they went under. ING served as the
syndicate’s security agent.        To secure the credit facility, each OW entity
assigned ING “all of its rights, title and interest in respect of the Supply
Receivables.”      “Supply Receivables” are amounts owed for the sale of oil
products.
       Four such sales gave rise to this case. Each sale involved the same series
of transactions. COSCO ships ordered fuel bunkers from COSCO Petroleum,



       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.

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which then contracted through Chimbusco Americas, a COSCO agent with
authority to bind the vessels. Chimbusco contracted with OW Far East to
supply the bunkers. OW Far East subcontracted to its United States affiliate,
OW USA. And OW USA subcontracted to NuStar, which physically supplied
the fuel bunkers to the ships. NuStar is the other party that asserts maritime
liens on the COSCO vessels that received the bunkers.
      This chart showing the layers of intermediaries helps:




      NuStar’s invoices to OW USA went unpaid as the OW Bunker network
collapsed. Two weeks after the last delivery, OW USA filed for Chapter 11
bankruptcy in Connecticut. Back in Houston, NuStar quickly sued the COSCO
vessels in rem, asserting maritime liens. To avoid arrest of the vessels, COSCO
agreed to deposit the $2.69 million owed to NuStar into an escrow account to
serve as a substitute res.
      COSCO then filed a third-party claim interpleading NuStar, OW Far
East, OW USA, and ING. OW Far East never appeared in the litigation. OW
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USA disclaimed its interest in “any claims arising from the bunker supply
transaction” at issue, as required by its liquidation plan approved by the
bankruptcy court. ING, though, claimed an interest and brought maritime lien
and contract counterclaims of its own, asserting the rights assigned it in the
security agreement. 1
       On competing motions for summary judgment, the district court first
ruled that NuStar did not hold liens under the Commercial Instruments and
Maritime Liens Act because it had delivered the bunkers on the order of OW
USA, not “on the order of the [vessel] owner or a person authorized by the
owner.” See 46 U.S.C. § 31342(a). On the other hand, OW Far East was
entitled to maritime liens because it was obligated—by a contract with one
authorized to bind the vessels (Chimbusco)—to deliver the bunkers. And OW
Far East had, the district court concluded, validly assigned those maritime
liens to ING. As a result, the district court awarded ING a judgment against
the COSCO vessels for the $2.99 million owed OW Far East for the fuel.
NuStar appeals both the ruling that it does not hold maritime liens and the
ruling that OW Far East validly assigned its maritime liens to ING.
                                              II.
       As NuStar’s counsel acknowledged at oral argument, our recent decision
in another OW Bunker case controls the first half of this one. Under the
Commercial Instruments and Maritime Liens Act, “a person providing
necessaries to a vessel on the order of the owner or a person authorized by the
owner . . . has a maritime lien on the vessel.” 46 U.S.C. § 31342(a)(1). Trying
to meet that requirement, NuStar relied largely on Chimbusco’s being aware


       1 The district court later clarified that ING could not claim against the escrowed funds
because of the terms of NuStar’s escrow agreement. It nevertheless determined that
NuStar’s claim against the fund and ING’s maritime lien claims against the vessels were
sufficiently adverse, and COSCO’s threat of double liability sufficiently high, to justify
COSCO’s use of the interpleader procedure. See FED. R. CIV. P. 22.
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that NuStar would physically supply the fuel bunkers, and the vessels’
employees’ overseeing and accepting the deliveries. The district court held that
those facts did not rise to the level of “authorization” by the vessel owner
(COSCO) or one authorized by the owner (Chimbusco).
       Since then, this court has agreed that “[m]ere awareness does not
constitute authorization under CIMLA.” Valero Mktg. & Supply Co. v. M/V
Almi Sun, 893 F.3d 290, 295 (5th Cir. 2018). In Valero, as here, the vessel’s
agent knew that the OW intermediary had selected Valero as the physical
supplier and did not object. Id. at 294. The vessel’s employees “monitored and
tested Valero’s performance.” Id. But those facts showed no more than that
the vessel’s agents were aware of the physical supplier’s identity—not that the
physical supplier acted “on the order of” the vessel’s agents. Id.; see also Lake
Charles Stevedores, Inc. v. Professor Vladimir Popov MV, 199 F.3d 220, 229
(5th Cir. 1999) (“[S]ubcontractors . . . are generally not entitled to assert a
[maritime] lien on their own behalf, unless it can be shown that an entity
authorized to bind the ship controlled the selection of the subcontractor and/or
its performance.”).
       As we see no daylight between Valero and this case, 2 we agree with the
district court that NuStar does not hold maritime liens.




       2 Valero joined two other circuits that had ruled the same way in OW Bunker cases.
ING Bank N.V. v. M/V TEMARA, 892 F.3d 511, 521–22 (2d Cir. 2018); Barcliff, LLC v. M/V
Deep Blue, 876 F.3d 1063, 1071 (11th Cir. 2017). It now has even more support as the Ninth
Circuit has since agreed with Valero. See Bunker Holdings Ltd. v. Yang Ming Liberia Corp.,
906 F.3d 843, 847 (9th Cir. 2018). The Ninth Circuit’s ruling on this question in an OW
Bunker case is especially noteworthy because it distinguished an earlier Ninth Circuit
decision that is one of the main cases that NuStar relies on. See id. at 846 (concluding that
the case was not controlled by Marine Fuel Supply & Towing, Inc. v. M/V Ken Lucky, 869
F.2d 473 (9th Cir. 1988)).


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                                 No. 17-20246
                                      III.
      Now to the question not at issue in Valero. NuStar does not challenge
the district court’s ruling that OW Far East satisfied the statutory requirement
for maritime liens. Unlike NuStar, OW Far East did receive the vessel owner’s
authorization to provide the fuel.
      But NuStar does challenge the ruling that OW Far East validly assigned
its maritime liens to ING as part of the security agreement for the $700 million
credit facility. It contends that OW Far East’s assignment of “all of its rights,
title and interest in respect of the Supply Receivables” does not include the
maritime liens securing the fuel contracts. And even if it does, NuStar argues
that such an assignment would be unenforceable. Complicating the latter
issue is the English choice-of-law clause that governs the security agreement,
and thus the assignment.      NuStar points to authority stating that under
English law “it appears that the maritime lien is not transferable,” NIGEL
MEESON & JOHN A. KIMBELL, ADMIRALTY JURISDICTION AND PRACTICE ¶ 1.53,
at 21 (4th ed. 2011), and both sides submitted expert reports on this question.
      But before we address the scope of the assignment, or the assignability
of maritime liens, we must assure ourselves that NuStar still has a cognizable
interest in the answer to these questions about ING’s liens in light of our
holding that NuStar does not have liens on the vessels. The concern is that
the district court’s ruling that OW Far East assigned its liens to ING no longer
affects NuStar in a concrete way. This requirement of a live controversy, which
stems from Article III limitations on our jurisdiction, is better known as part
of the standing inquiry conducted at the beginning of a lawsuit. But a party’s
need to show that connection to a dispute is no less true for parties invoking
the power of an appellate court than for parties filing suits in district courts.
Hollingsworth v. Perry, 570 U.S. 693, 704 (2013); see also Rohm & Hass Tex.,
Inc. v. Ortiz Bros. Insulation, Inc., 32 F.3d 205, 208 (5th Cir. 1994) (“Merely
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                                     No. 17-20246
because a party appears in the district court proceedings does not mean that
the party automatically has standing to appeal the judgment rendered by that
court.”). When “standing to appeal is at issue, appellants must demonstrate
some injury from the judgment below.” Sierra Club v. Babbitt, 995 F.2d 571,
575 (5th Cir. 1993) (emphasis in original).
       To appeal the assignment ruling, NuStar thus must show that it would
be better off if the district court had not ruled that the assignment was valid.
The standing label for this need to show that a “favorable ruling” will benefit
a party is redressability. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561
(1992). The most direct route to that is not available: NuStar would not receive
an immediate benefit from a reversal on the ING issue. That is, an appellate
ruling that ING was not assigned the liens would not result in judgment being
entered in NuStar’s favor for the $2.99 million or any other sum. 3 Of course,
if we had reversed and ruled that NuStar held maritime liens on the vessels,
then it would have standing to challenge the ruling that ING holds a lien. But
we have just held that NuStar does not hold liens. So our ruling against
NuStar’s maritime lien claims moots NuStar’s interest in challenging the
assignment as a competing lienholder. See Texas Oil & Gas Ass’n v. EPA, 161
F.3d 923, 940 (5th Cir. 1998) (holding that second issue the appellant raised
was moot because resolution of the first issue meant that a win on the second
would not benefit the appellant).
      NuStar proposes an alternative theory of standing not dependent on its
being a lienholder. NuStar is a creditor in OW USA’s bankruptcy, and it
argues that the ruling in favor of ING deprived OW USA’s bankruptcy estate
of $2.99 million. The idea is that if no claimant holds a lien on the vessels,



      3 OW Far East could have appealed the ruling that it assigned its rights, but it has
never appeared in this case.
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                                       No. 17-20246
then COSCO’s payment for the fuel would end up in the bankruptcy. Even
assuming that NuStar would have standing to fight this battle that affects all
creditors, 4 and for which as an unsecured creditor it likely would receive a tiny
fraction of COSCO’s fuel payment, the idea that any of this money would end
up in NuStar’s pockets rests on too “speculative [a] chain of possibilities.”
Clapper v. Amnesty Intern. USA, 568 U.S. 398, 414 (2013).
       The first bit of uncertainty is whether an appellate ruling rejecting ING’s
maritime liens would change the outcome of this case. On remand, ING would
still pursue its as-yet-undecided contract claims asserting a security interest
in OW Far East’s supply receivables—which payment COSCO admits it owes.
With neither COSCO nor OW Far East contesting this contract claim, there is
a good chance ING would recover the $2.99 million in contract. And if ING can
claim the money in contract, reversing on ING’s maritime lien claims would
leave the OW USA bankruptcy estate and its creditors in the same position
they are in now.
       More importantly, even if ING lost not only on its maritime lien claims
but also on its contract claims, NuStar has not demonstrated a meaningful
probability that the $2.99 million would find its way to the OW USA
bankruptcy estate. In a world in which COSCO did not have to pay OW Far
East’s assignee (ING), it would still have to pay OW Far East. So NuStar’s
theory depends on inferring that some or all of the $2.99 million, if paid to OW
Far East, would reach the OW USA bankruptcy estate.
       Given the intricacies of international bankruptcy law, we cannot speak
with certainty about whether NuStar’s theory could work. But NuStar has not


       4 There may be third party standing problems that limit NuStar’s ability to litigate on
behalf of the estate. For example, although a question of standing under the bankruptcy
statutes as opposed to constitutional standing, a trustee has exclusive standing to recover
property that belongs to the estate. See In re Seven Seas Petroleum, Inc., 522 F.3d 575, 584
(5th Cir. 2008).
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shown a substantial likelihood that the money would end up in Connecticut
bankruptcy court. Lujan, 504 U.S. at at 561 (explaining that a party must
show that a favorable ruling will “likely” benefit it); Rohm & Hass, 32 F.3d at
208 (noting appellant has burden to show standing to appeal). It relies on
ING’s agreement in OW USA’s now-effective liquidation plan to transfer its
interest in OW USA’s receivables to OW USA’s liquidating trust. See Debtors’
First Modified Liquidation Plans at 8, 28, In re O.W. Bunker Holding N. Am.
Inc., No. 14-51720 (Bankr. D. Conn. Dec. 15, 2015) (Doc. 1279-1). But the $2.99
million is an OW Far East receivable, not an OW USA receivable. ING’s giving
up its right to OW USA’s receivables thus appears to have no bearing on what
would happen to the money if COSCO paid ING directly, or if ING claimed the
funds after COSCO paid them to OW Far East. To the contrary, OW USA’s
liquidation plan does not appear to envision recoveries from foreign affiliates
(like OW Far East) that acted as contract suppliers. On transactions like those
at issue here, in which OW USA acted as an intermediary between the contract
supplier (OW Far East) and the physical supplier (NuStar), the plan tells the
OW USA liquidating trust to instruct customers like COSCO to pay invoices
sent by the contract supplier. See id. at 29. The plan is silent on whether OW
USA’s liquidating trust should expect to see any of the money paid to the
contract supplier under those invoices. And given what NuStar describes as
the “collapse of the international O.W. Bunker (‘OW’) group of companies,” as
well as our having no reason to think ING or some other entity would not have
a claim superior to the OW USA liquidating trust’s, prospects for payment from
OW Far East appear remote at best based on what NuStar has presented to
us.
       NuStar has not shown that it is “likely, as opposed to merely speculative”
that the nonpayment of the fuel “will be ‘redressed by a favorable decision’” on
ING’s liens. Lujan, 504 U.S. at 561 (quoting Simon v. Eastern Ky. Welfare
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                                      No. 17-20246
Rights Organization, 426 U.S. 26, 38 (1976)). We thus lack jurisdiction to
review the district court’s ruling that OW Far East assigned its maritime liens
to ING, and we must dismiss NuStar’s appeal of that ruling.                             See
Hollingsworth, 570 U.S. at 715. 5
                                           ***
       The district court’s judgment rejecting NuStar’s maritime liens is
AFFIRMED. NuStar’s appeal of the district court’s judgment awarding ING
Bank judgment against the vessels is DISMISSED.




       5 NuStar suggests that if it lacks standing to appeal the district court’s assignment
ruling, we should vacate it. But we would vacate only if the district court also lacked
jurisdiction, which it did not. ING’s claim against COSCO alleged that COSCO owed ING
$2.99 million. That is a classic, justiciable dispute over money. Of course, our inability to
review the district court judgment as to ING means that this case is not resulting in circuit
precedent on the question whether the liens are assignable to ING. So to the extent this
issue arises in other OW Bunker cases in this circuit, it remains an open question.
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