     16-3944-cv
     ING Bank N.V. v. M/V Maritime King



                                   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   Chemoil Adani Pvt. Ltd.,
12
13                                    Intervenor-Plaintiff-Appellant,
14
15   ING Bank, N.V.,
16
17                                    Plaintiff-Appellant,
18
19                      v.                                                       16-3944
20
21   M/V MARITIME KING,
22
23                           Defendant-Appellee.
24   _____________________________________________________
25
26   Appearing for Chemoil Adani Pvt. Ltd.:                  J. Stephen Simms, Simms Showers LLP,
27                                                           Baltimore, MD.
28
29   Appearing for ING Bank, N.V.:                           Bruce G. Paulsen, Brian P. Maloney,
30                                                           Seward & Kissel, LLP, New York, N.Y.
31
32                                                           James D. Bercaw, Robert J. Stefani, King
33                                                           Krebs & Jurgens, PLLC, New Orleans, LA.
1    Appearing for M/V MARITIME KING:                            James H. Power & Marie E. Larsen, Holland
2                                                                & Knight LLP, New York, N.Y.
3

4              ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED,

5    AND DECREED that the judgment of the District Court is VACATED IN PART,

6    AFFIRMED IN PART, AND REMANDED.

7              ING Bank, N.V. (“ING”) and Chemoil Adani Pvt. Ltd. (“Chemoil”) appeal from a

8    judgment of the United States District Court for the Southern District of New York (Forrest, J.).

9    The District Court granted summary judgment to defendant in rem M/V MARITIME KING (the

10   “Vessel”) on a competing maritime lien claim brought against it by ING and Chemoil under the

11   Commercial Instruments and Maritime Liens Act (“CIMLA”), 46 U.S.C. § 31301 et seq., for the

12   provision of bunkers (marine fuel) to the Vessel. See ING Bank, N.V. v. M/V TEMARA, No. 16-

13   cv-95, 2016 WL 6156320 (S.D.N.Y. Oct. 21, 2016) (“Maritime Lien Order”).1 We assume the

14   parties’ familiarity with the underlying facts, procedural history, and specification of issues for

15   review.

16             Chemoil asserts that as the party that physically supplied the bunkers to the Vessel on the

17   order of someone authorized to bind the Vessel, it is entitled to a maritime lien. Chemoil further

18   argues, in the alternative, that it is entitled to recover on a theory of unjust enrichment. ING

19   asserts that, as the purported assignee of O.W. Bunker’s receivables, it is entitled to a maritime

20   lien against the Vessel because O.W. Bunker (Switzerland) S.A. (“O.W. Switzerland”)

21   “provided” necessaries to the Vessel within the meaning of CIMLA. We disagree with

22   Chemoil’s assertions but agree with ING’s assertion.

23

     1
      Even though Chemoil was not a party in the Maritime Lien Order, it has standing to appeal because it has
     a “real stake in th[e] controversy” and is “aggrieved by a judgment or order of a district court.” St. Paul Fire
     & Marine Ins. Co. v. Universal Builders Supply, 409 F.3d 73, 82-83 (2d Cir. 2005).


                                                            2
1       I.      ING’s Maritime Lien Claim

2            A maritime lien is a “special property right in the vessel, arising in favor of the creditor

3    by operation of law as security for a debt or claim,” which “arises when the debt arises.” Itel

4    Containers Int’l Corp. v. Atlanttrafik Exp. Serv., Ltd., 982 F.2d 765, 766 (2d Cir. 1992) (internal

5    quotation marks and citation omitted). Under CIMLA, a party asserting a maritime lien must

6    show that it (1) provided (2) necessaries to a vessel (3) upon the order of the owner of a vessel or

7    a person authorized by the owner. 46 U.S.C. § 31342(a). “Necessaries” include bunkers. See

8    Hapag-Lloyd Aktiengesellschaft v. U.S. Oil Trading LLC, 814 F.3d 146, 151 n.13 (2d Cir. 2016).

9    As to the third requirement, CIMLA defines persons presumed to have authority to procure

10   necessaries for a vessel as “(1) the owner; (2) the master; (3) a person entrusted with the

11   management of the vessel at the port of supply; or (4) an officer or agent appointed by—(A) the

12   owner; (B) a charterer; (C) an owner pro hac vice; or (D) an agreed buyer in possession of the

13   vessel.” 46 U.S.C. § 31341(a).

14           Whether ING is entitled to assert a maritime lien depends on whether its purported

15   assignor, O.W. Switzerland, is entitled to assert such a lien. The key to this inquiry is whether

16   O.W. Switzerland “provided” necessaries under CIMLA when it agreed to supply necessaries

17   and then contracted with intermediaries to supply them. We held in ING Bank N.V. v. M/V

18   TEMARA, 892 F.3d 511 (2d Cir. 2018), that “the answer, guided by straightforward principles of

19   contract law, is yes. . . . a supplier may provide necessaries to a vessel indirectly through a

20   subcontractor because when a subcontractor does so pursuant to its contract with a contractor,

21   the subcontractor’s performance is attributable to the contractor.” M/V TEMARA, 892 F.3d at

22   519. That is what occurred here. O.W. Switzerland agreed to supply bunkers to the Vessel on the

23   order of CldN Cobelfret S.A. (“Cobelfret”), the charterer of the Vessel. O.W. Switzerland then




                                                      3
1    subcontracted its obligations to O.W. Middle East DMCC (“O.W. Middle East”), which, in turn,

2    subcontracted with a local supplier, Chemoil, for the actual delivery of the bunkers. The bunkers

3    were delivered. Accordingly, we hold that O.W. Switzerland provided necessaries under CIMLA

4    and is therefore entitled to assert a maritime lien, and that the District Court erred in dismissing

5    ING’s maritime lien claim against the Vessel.

6       II.      Chemoil’s Maritime Lien Claim

7             In contrast, Chemoil, as subcontractor, is not entitled to assert a maritime lien. There is

8    no dispute that Chemoil physically provided bunkers to the Vessel; thus, Chemoil’s entitlement

9    to a maritime lien under CIMLA turns on whether it provided the bunkers “on the order of the

10   owner or a person authorized by the owner.” See 46 U.S.C. § 31342(a). Chemoil provided the

11   bunkers at the direction of O.W. Middle East, Chemoil’s counterparty, and not the owner or the

12   charterer of the Vessel, or any other statutorily-authorized person. Consequently, Chemoil was

13   acting as a subcontractor when it delivered the bunkers to the Vessel and subcontractors

14   typically cannot assert maritime liens against a vessel. See M/V TEMARA, 892 F.3d at 521.

15   Chemoil does not dispute this contractual chain. It does not adduce any evidence that would tend

16   to establish that the subcontractor and its contractor were in agency relationships with a

17   statutorily authorized person such that it could have been construed as being hired directly by

18   them, see Marine Fuel Supply & Towing, Inc. v. M/V KEN LUCKY, 869 F.2d 473, 477-78 (9th

19   Cir. 1988), nor did it adduce evidence that a statutorily authorized person controlled the selection

20   of Chemoil as the physical supplier, see Lake Charles Stevedores, Inc. v. PROFESSOR

21   VLADIMIR POPOV MV, 199 F.3d 220, 229 (5th Cir. 1999).

22            Instead, Chemoil argues about the effect of clause L.4(a) of the O.W. contractual terms.

23   That clause purports to make the buyer of the bunkers (here, the Vessel’s agent) bound by the




                                                       4
1    physical supplier’s terms when the physical supplier “insists” that the buyer be bound. Chemoil

2    argues that clause means the Vessel should be deemed to have agreed to Chemoil’s own terms of

3    sale, which state that Chemoil has a lien over the Vessel for the value of the bunkers delivered.

4    This argument fails because maritime liens are solely creatures of statute, not contract, and are

5    construed strictly under the principle of stricti juris. Chemoil’s terms of sale cannot fill the

6    absence of one of the statutory requirements for a maritime lien under CIMLA, namely that

7    Chemoil had been hired by a statutorily authorized person to supply the bunkers, which, in this

8    case, it was not. See M/V TEMARA, 892 F.3d at 522.

9              Finally, Chemoil argues that it should prevail on a theory of unjust enrichment. We

10   disagree because “[a]lthough unjust enrichment claims are available under maritime law as in

11   personam claims . . . in rem maritime liens ‘cannot be conferred on the theory of unjust

12   enrichment or subrogation.’” Id. Claims for unjust enrichment must be brought in personam and

13   Chemoil has asserted only in rem claims in this action. See Gulf Oil Trading Co. v. Creole

14   Supply, 596 F.2d 515, 519 (2d Cir. 1979). Accordingly, Chemoil’s unjust enrichment claim fails.

15      III.       Sua Sponte Judgment in Favor of the Vessel

16               We also conclude that the District Court erred when it, sua sponte, granted summary

17   judgment to the Vessel. See Maritime Lien Order, 2016 WL 6156320, at *9. Federal Rule of

18   Civil Procedure 56(f) requires “that a court may grant summary judgment sua sponte only

19   ‘[a]fter giving notice and a reasonable time to respond’ and ‘after identifying for the parties

20   material facts that may not be genuinely in dispute.’” In re 650 Fifth Ave. and Related Prop., 830

21   F.3d 66, 96 (2d Cir. 2016) (quoting Fed. R. Civ. P. 56(f)). “A district court’s failure to provide

22   adequate notice is almost always reversible error.” M/V TEMARA, 892 F.3d at 524.




                                                     5
1             The District Court’s notice-free sua sponte grant of summary judgment was improper.

2    It concluded that the record before it did not contain documentation regarding the arrangement

3    between O.W. Switzerland and the other entities down the contractual chain to Chemoil. It then

4    concluded that this lack of documentation was fatal to ING’s assertion of a maritime lien by

5    failing to establish a “traceable and intact” contractual chain that would ultimately place O.W.

6    Switzerland, ING’s purported assignor, at financial risk for the bunkers. See Maritime Lien

7    Order, 2016 WL 6156320, at *6. The record before the District Court cast doubt on these

8    conclusions. See M/V TEMARA, 892 F.3d at 524. Rather than basing its decision to grant

9    summary judgment to the Vessel on a record that may have been incomplete, the District Court

10   should have provided notice and an opportunity for ING to be heard. See id. By granting

11   summary judgment, sua sponte, the District Court denied ING the procedures to which it was

12   entitled under Rule 56.

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

14   IN PART, and REMANDED FOR FURTHER PROCEEDINGS.

15
16
17                                                   FOR THE COURT:
18                                                   Catherine O’Hagan Wolfe, Clerk
19




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