United States District Court, Southern District of New York
December 18, 1991
EXXON CORPORATION, PLAINTIFF,
CENTRAL GULF LINES, INC., IN PERSONAM AND THE M/V GREEN HARBOUR (EX WILLIAM HOOPER) IN REM, HER ENGINES, BOILERS, TACKLE, ETC. AND A CERTAIN LETTER OF CREDIT NO. P 621208 DATED DECEMBER 26, 1984 ISSUED BY THE CHASE MANHATTAN BANK, N.A., IN REM, DEFENDANTS.
The opinion of the court was delivered by: William C. Conner, District Judge.
OPINION AND ORDER
After a lengthy voyage to the highest court, plaintiff returns
to this Court bringing this in rem action to enforce a
maritime lien under the Federal Maritime Lien Act (the "Lien
Act"), 46 U.S.C. § 971 (1982 Ed.)*fn1. Plaintiff alleges
that it has not been paid for bunker fuel supplied to
defendant's vessel in Saudi Arabia and moves for summary
judgment pursuant to Rule 56, Fed.R.Civ.P.
Familiarity with the facts of this case as presented in this
Court's previous two opinions is presumed. Only a brief
recitation of the facts is thus presented.
Defendant Central Gulf Lines, Inc. ("Central Gulf") is the
owner of a vessel, the Green Harbour ex William Hooper (the
"Hooper"). The Hooper was chartered by a bareboat charter
party to the Waterman Steamship Corporation ("Waterman").
For forty years, plaintiff Exxon Corporation ("Exxon") was
Waterman's exclusive worldwide supplier of gasoline and bunker
fuel oil. Under annually negotiated fuel oil supply contracts
between Exxon and Waterman, Exxon provided marine fuel to all
Waterman ships worldwide, either itself or, in locations where
Exxon did not have its own bunker stations, through local
supplying companies. These fuel supply contracts provided that
Exxon would have a lien on the receiving ship for fuel
Whenever Exxon procured bunker fuel for Waterman vessels at
port in Jeddah, Saudi Arabia, it used a local supplier, Arabian
Marine Operating Co. Ltd. ("Arabian Marine"). Exxon's
relationship with Arabian Marine was governed by the terms and
conditions of a brokerage agreement which provided that "Exxon
shall solicit and arrange for the sale of marine fuels to
international customers having bunkering requirements at the
port of Jeddah. Arabian Marine shall supply marine fuels to
those customers nominated by Exxon." In return for Exxon's
services, including the administrative task of invoicing and
collecting from Waterman, Arabian Marine paid Exxon a
From January 1982 until the fall of 1983, the Jeddah brokering
agreement was suspended to allow Waterman to take advantage of
"bargain" prices offered by Arabian Marine. The October 26,
1983 bunkering, for which Exxon now asserts a maritime lien,
took place in a transitional period during which Waterman,
Exxon and Arabian Marine were reverting back to the arrangement
under the Exxon-Waterman bunkering agreement. In early October
1983, Arabian Marine informed Exxon that it refused to supply
bunkers directly to Waterman due to Waterman's financial
condition and suggested that the previous arrangement be
restored. Exxon consented, guaranteeing payment on Waterman's
then current order. Subsequent to the supply, Exxon was
invoiced by Arabian Marine for the Jeddah delivery and Exxon
paid the invoice. Exxon then invoiced Waterman in the amount of
$763,644.60 but was not paid.
On December 1, 1983, Waterman sought reorganization under
Chapter 11 of the Bankruptcy Laws in which proceeding Exxon has
filed a claim for the full value. To date, Exxon has received
certain cash and stock dividends in partial payment of
Waterman's obligations, through the Waterman bankruptcy
Exxon commenced this action against Central Gulf in personam
and against the Hooper in rem. Exxon claimed to have a
maritime lien on the Hooper under the Lien Act for amounts
claimed due by Waterman
for fuel supplied at Jeddah and at New York. Upon Exxon's
motion for summary judgment and Central Gulf's cross-motion to
dismiss, this Court, in an opinion dated March 3, 1989, granted
a lien for the New York delivery but dismissed the claim for
the Jeddah delivery for lack of maritime jurisdiction,
reasoning that while jurisdiction existed over the New York
delivery because Exxon itself made the physical transfer,
jurisdiction was lacking with respect to the Jeddah delivery
because Exxon had acted as an agent and allowed Arabian marine
to make the physical transfer. See Exxon Corp. v. Central Gulf
Lines, Inc., 707 F. Supp. 155 (1989). Under the applicable law,
a claim under an agency contract was outside admiralty
jurisdiction. See Minturn v. Maynard, 58 U.S. (17 How.) 477,
15 L.Ed. 235 (1855); Peralta Shipping Corp. v. Smith & Johnson
(Shipping) Corp., 739 F.2d 798 (2d Cir. 1984).
In an opinion and order dated July 21, 1989, this Court denied
Exxon's motion for reconsideration. See 717 F. Supp. 1029
In a Summary Order dated April 5, 1990, the Court of Appeals
affirmed the judgment of this Court. See 904 F.2d 33 (2d Cir.
The Supreme Court granted certiorari on January 14, 1991, and
heard oral argument on April 15, 1991. By opinion announced on
June 3, 1991, the Supreme Court overruled Minturn v. Maynard
and held that admiralty jurisdiction did exist over Exxon's
claim for the Jeddah delivery. See Exxon Corp. v. Central Gulf
Lines, Inc., ___ U.S. ___, 111 S.Ct. 2071, 114 L.Ed.2d 649
Upon remand, the only remaining issue in the instant case is
whether Exxon is entitled to a lien on the Hooper for amounts
I. The Standard for Summary Judgment
A party seeking summary judgment must demonstrate that "there
is no genuine issue as to any material fact." Fed. R.Civ.P.
56(c); Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir.
1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d
762 (1987); see Celotex Corp. v. Catrett, 477 U.S. 317, 106
S.Ct. 2548, 91 L.Ed.2d 265 (1986). "When the moving party has
carried its burden under Rule 56(c), its opponent must do more
than simply show that there is some metaphysical doubt as to
the material facts." Matsushita Electrical Industrial Co. v.
Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1355,
89 L.Ed.2d 538 (1986). It must establish that there is a
"genuine issue for trial." Id. at 587, 106 S.Ct. at 1356. "In
considering the motion, the court's responsibility is not to
resolve disputed issues of fact but to assess whether there are
any factual issues to be tried, while resolving ambiguities and
drawing reasonable inferences against the moving party."
Knight, 804 F.2d at 11. The inquiry under a motion for
summary judgment is thus the same as that under a motion for a
directed verdict: "whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is
so one-sided that one party must prevail as a matter of law."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106
S.Ct. 2505, 2511-10, 91 L.Ed.2d 202 (1986).
II. Did Exxon Furnish Fuel?
Both parties agree that plaintiff's right to an in rem lien
against the Hooper should be determined in accordance with §
971 of the Lien Act in effect on October 26, 1983 when the
bunkers were supplied to the vessel. This section provided:
Any person furnishing repairs, supplies, towage, use of dry
dock or marine railway, or other necessaries, to any vessel,
whether foreign or domestic, upon the order of the owner of
such vessel, or of a person authorized by the owner, shall have
a maritime lien on the vessel, which may be enforced by suit in
rem, and it shall not be necessary to allege or prove that
credit was given to the vessel. [46 U.S.C. § 971 (1982 ed.)].
Defendant correctly notes that the Lien Act only protects those
who "furnish" supplies, repairs or other "necessaries."
Exxon's involvement as indirect and administrative, defendant
argues that no such furnishing occurred here. However,
plaintiff contends that even if Exxon's involvement here was
indirect, it still constituted a furnishing under the
applicable caselaw. In support, plaintiff cites two cases where
plaintiffs prevailed under the Lien Act for oil delivered to a
vessel, notwithstanding the fact that in each case plaintiff
did not itself make the physical supply but arranged for it to
be made by an unrelated local supplier. See The Golden Gate,
52 F.2d 397 (9th Cir. 1931), cert. denied sub nom., Knutsen v.
Associated Oil Co., 284 U.S. 682
, 52 S.Ct. 199
, 76 L.Ed.576
(1932); Gulf Trading & Transport Co. v. M/V Tento,
694 F.2d 1191
(9th Cir. 1982), cert. denied, 461 U.S. 929
, 103 S.Ct.
2091, 77 L.Ed.2d 301 (1983). Plaintiff maintains that in each
case, the Ninth Circuit found that such indirect involvement
constituted a furnishing under the Lien Act and notes further
that in its Opinion on the instant case, the Supreme Court
cited with approval The Golden Gate, describing that case as
one "entertaining an action in admiralty for the value of fuel
oil furnished to a vessel." 111 S.Ct. at 2077.
In response, defendant attempts to distinguish these cases,
arguing that in each, the fuel supplied was owned by the
libelant whereas here Exxon never actually held title to the
bunkers supplied to the Hooper. Defendant also contends that
in The Golden Gate, the lienor was effectively the seller
pursuant to a sales contract with the charterer, see 52 F.2d
at 400, whereas here Exxon was not a seller in the same sense.
These distinctions, however, are more technical than
substantive. As the Supreme Court noted in its Opinion, "the
only difference between the New York Delivery . . . and the
Jeddah delivery was that, in Jeddah, Exxon bought the fuels
from a third party and had the third party deliver them to the
Hooper." 111 S.Ct. at 2077. While the Supreme Court's
discussion was focussed on the question of jurisdiction, it has
relevance in the present context. The Supreme Court noted that
the New York and Jeddah transactions had the same effect on
maritime commerce. Because, as the Supreme Court has noted,
even these two superficially dissimilar transactions are
essentially analogous in the instant case, this Court is
unconvinced by defendant's attempts to draw even narrower
distinctions between the present case and those cases cited by
plaintiff based on whether Exxon actually held title to the
fuel or was technically a seller. The Court thus finds that
Exxon did furnish bunkers to the Hooper within the meaning of
the Lien Act.
III. Did Exxon Furnish Credit?
Plaintiff asserts that the Court need not rest its decision
solely Exxon's furnishing of fuel to defendant. Plaintiff
argues that in addition to furnishing fuel, Exxon also
"furnished" credit to enable the fuel supply to be made to the
vessel. The furnishing of credit constitutes the furnishing of
a necessary under the Lien Act. See Universal Shipping, Inc.
v. Panamanian Flag Barge, 563 F.2d 483 (1st Cir. 1976).
Nonetheless Central Gulf insists that despite Exxon's advancing
of credit in the instant case, Exxon is not entitled to the
relief it seeks because no lien may attach when the
relationship between the one making the advance and the owner
or charterer qualifies as a joint venture. See Sasportes v.
M/V Sol de Copacabana, 581 F.2d 1204 (5th Cir. 1978).
Defendant insists that the relationship between Exxon and
Waterman was a joint venture because: (1) The continuation of
Waterman's business was essential if it was to repay the monies
due to Exxon; (2) the advancement of additional credit by Exxon
was an attempt to ensure Waterman's continued trading and (3)
Exxon therefore had a stake in Waterman's business which it
tried to protect. Central Gulf's reasoning is flawed, however.
In the instant case there was no agreement between Exxon and
Waterman to share in profits or losses nor was there any
provision for joint control or joint right of control. Under
such circumstances, no joint venture existed. See ITEL
Containers Int'l Corp. v. Atlanttrafik Express Service Ltd.,
909 F.2d 698, 701 (2d Cir. 1990).
Central Gulf also argues that Exxon is not entitled to a lien
because of its status as a general agent. However, as plaintiff
notes, agents, including general agents, have long been held
entitled to liens when they procure and pay for necessaries and
their contract specifically reserves the right to a
lien.*fn2 See, e.g., The Kalorama, 77 U.S. 204, 217, 19
L.Ed. 941 (1869); P.T. Perusahaan Pelayaran Samudera Trikora
Lloyd v. T.S. Salzachtal, 373 F. Supp. 267, 276 (E.D.N Y
1974). In the instant case, there is an express clause in the
contract granting Exxon a lien. Agency status is therefore not
a bar to a lien.*fn3
IV. Did Exxon Rely on the Credit of the Vessel?
Central Gulf acknowledges that the Lien Act presumes that the
person furnishing supplies and necessaries to a vessel relies
on the credit of the vessel. Central Gulf also concedes that it
bears the burden of overcoming this presumption. In order to
overcome this presumption, Central Gulf must establish that
Exxon relied solely on the personal credit of Waterman or some
other third party and not on the credit of vessel. See, e.g.,
Gulf Oil Trading v. M/V Caribe Mar, 757 F.2d 743 (5th Cir.
1985). While noting that its burden is a difficult one. Central
Gulf insists that it has met this burden. Central Gulf urges
the Court to focus on several factors that it finds
demonstrative of Exxon's intent to rely solely on the
Waterman's personal credit: (1) Exxon's long relationship with
Waterman; (2) Exxon's extension of additional credit to
Waterman; (3) Exxon's inquiries concerning the possibility of
obtaining additional security; and (4) Exxon's filing of a
claim in bankruptcy.
In support of its contention that these factors are relevant,
Central Gulf relies heavily on Port of Portland v. M/V
Paralla, 703 F. Supp. 1446 (D.Or. 1988), aff'd, 892 F.2d 825
(9th Cir. 1989). In that case, the district court denied a lien
for vessel repairs claimed by the operator of the Portland Ship
Repair Yard. In determining that the plaintiff had waived its
lien, the district court considered a number of factors
including the long, close and mutually beneficial relationship
between the Port and the vessel's agent; the Port's knowledge
of the agent's deteriorating financial condition; and the
Port's filing of a claim in bankruptcy and acceptance of a plan
Defendant's reliance on The Paralla is, however, misplaced.
Central Gulf quotes extensively from the district court's
opinion in that case but fails to mention that the district
court's rationale was not adopted by the Ninth Circuit upon
appeal. In The Paralla, the lien-claimant, the Port of
Portland, had no contract with vessel interests and thus with
any party authorized under the Lien Act to confer a lien
against a vessel. The contract in question merely allowed
shipyard contractors to use the Port's facilities. Thus, in
reaching its holding that the Port "did not acquire a lien upon
the vessel," the Ninth Circuit found that it "need not consider
whether [the Port] waived a lien." Port of Portland v. M/V
Paralla, 892 F.2d 825, 829 (9th Cir. 1989).
In the instant case, Exxon's contract was with the bareboat
which, unlike the plaintiff in The Paralla, was authorized to
confer a lien on the vessel under 46 U.S.C. § 971 and 972. The
Exxon/Waterman contract, moreover, specifically grants Exxon a
lien on the vessel for fuel supplied. The agreement at issue in
the present matter is thus clearly distinguishable from the
agreement in The Paralla.
More apposite here is Gulf Oil Trading v. M/V Caribe Mar,
757 F.2d 743 (5th Cir. 1985). In that case, plaintiff Gulf Oil
Trading supplied bunkers through a third party to a charterer
of a ship owned by defendant. Defendant did not contest that
plaintiff had furnished the oil but argued that plaintiff was
relying solely on the personal credit of the charterer. In
support of its position, defendant argued that plaintiff had a
longstanding relationship and a substantial line of credit with
the charterer. The Ninth Circuit was unpersuaded, holding that:
the district court was fully justified in concluding that
[defendant] failed to shoulder the heavy burden of proving a
waiver through reliance on the personal credit of someone other
than the vessel owner. The simple existence of a business
relationship and credit arrangements could hardly be
realistically construed as an intent or purpose by [plaintiff]
to waive its lien on the vessel.
The Court finds that this reasoning is equally applicable to
the instant case. Exxon's longstanding relationship with and
willingness to extend additional credit to Waterman simply does
not suffice to meet defendant's burden here.
Nor is this Court persuaded by Central Gulf's attempt to use
Exxon's claim in bankruptcy as evidence of an intent to waive
its lien.*fn4 Defendant neglects to mention that Waterman
filed for bankruptcy within five weeks of the Jeddah supply; by
reason of the Bankruptcy Code's automatic stay provision,
11 U.S.C. § 362, this filing prevented Exxon from liening the
vessel. Defendant also omits mention of the fact that Exxon
quickly moved in the bankruptcy proceedings to lift the
automatic stay so it could lien the vessel. Taken together,
these facts establish that Exxon's actions in the bankruptcy
proceedings are inconsistent with defendant's claim that Exxon
waived its right to a lien, especially in light of the
presumption favoring Exxon on this issue.
The Court notes lastly that even apart from the presumption in
favor of Exxon contained in the Lien Act, there is affirmative
evidence in the record tending to show that Exxon relied on the
credit of the vessel. For example, James Sharkey, the Exxon
bunker salesman in charge of the Waterman account, testified
"as it is in our contract, it says that the sale is to the
vessel and, yes, if push came to shove at the end of the day,
Exxon could always go and lien the vessel." Sharkey Dep. at
In light of the foregoing, plaintiff's motion for summary
judgment is granted insofar as it seeks impression of a lien
against the vessel for monies advanced on Waterman's behalf and
not yet recovered in the bankruptcy proceedings.