United States District Court, S.D. New York
ORDER AND OPINION
VALERIE CAPRONI, United States District Judge
the third chapter of the litigation before this Court arising
out of the collapse and bankruptcy in November 2014 of O.W.
Bunker & Trading A/S and its subsidiaries (collectively,
“O.W.”). O.W. was one of the world's largest
suppliers of maritime fuel or “bunkers.” See
Hapag-Lloyd, Dkt. 232 (O.W. Germany Mem.) at
In the months and years following O.W.'s collapse, more
than two dozen interpleader actions were instituted by vessel
owners and charterers (the “Vessel Interests”)
who had purchased fuel from O.W. in the weeks immediately
prior to its collapse but had not yet paid for the fuel. The
purpose of the interpleaders is to resolve competing claims
to payment on O.W.'s invoices from O.W.'s primary
lender, ING Bank, O.W. itself, and O.W.'s physical
January 9, 2017, the Court took a significant step in that
direction. The Court held that O.W., and not its physical
suppliers, held maritime liens for “necessaries”
in respect of the bunker deliveries. See Clearlake
Shipping PTE Ltd. v. O.W. Bunker (Switzerland) SA, No.
14-CV-9287 (VEC) et al., 2017 WL 78514 (S.D.N.Y. Jan. 9,
2017) (“O.W. II”). Because O.W.'s
suppliers did not assert any other claim to the interpleader
stake, the Court's maritime liens decision largely
resolves which party is entitled to payment.
was initially a three- or four-sided dispute is now primarily
bilateral: remaining for decision are the Vessel
Interests' motions to be discharged from liability; and
in personam claims and counterclaims asserted by
ING, O.W. Germany, and O.W. USA against the Vessel Interests.
ING and the O.W. entities asserted contractual, in
personam claims to the interpleader stake and
counterclaims for breach of contract against the Vessel
Interests for their failure to pay for the bunkers. They
moved for summary judgment on their in personam
claims in three test cases: Case Nos. 14-CV-9287, 14-CV-9949,
and 14-CV-10091. For the reasons that follow, the Court
GRANTS ING's and the O.W. entities' motions for
Vessel Interests contend that they are entitled to be
discharged from further liability in each of the test cases
before the Court because the Court has already found that
subject matter jurisdiction is proper and accepted the
interpleader stake as an adequate substitute res.
Subject to the conditions described further in this Opinion
and Order, the Court agrees. Accordingly, the Court GRANTS
Clearlake's motion for discharge in Case No. 14-CV-9287
and CONDITIONALLY GRANTS Nippon Yusen's motion for
discharge in Case No. 14-CV-10091. The Court DENIES WITHOUT
PREJUDICE Hapag-Lloyd's motion for discharge in Case No.
Institution of the Interpleaders
history of these cases is described at length in the
Court's opinion on subject matter jurisdiction, UPT
Pool Ltd. v. Dynamic Oil Trading (Singapore) PTE. Ltd.,
No. 14-CV-9262 (VEC) et al., 2015 WL 4005527 (S.D.N.Y. July
1, 2015) (“O.W. I”), and its opinion on
maritime liens, O.W. II, 2017 WL 78514. In brief,
following O.W.'s collapse, the Vessel Interests were
subject to competing demands for payment from various O.W.
entities, ING, and the Physical Suppliers. O.W. I,
2015 WL 4005527, at *2. In several instances, the Physical
Suppliers attempted (or threatened) to arrest the vessels in
order to get paid and, in at least one instance, a vessel was
actually arrested. Id.; see Chemoil Latin Am.
Inc. v. M/V Birch 6, 15-CV-880 (VEC) (S.D.N.Y.). Faced
with the risk of multiple liability on the same debt and
seriatim vessel arrests, the Vessel Interests
instituted interpleader actions pursuant to 28 U.S.C. §
1335(a) and sought injunctive protection from further
attempts to arrest the vessels pursuant to 28 U.S.C. §
2361. See, e.g., Clearlake, Dkt. 1 (Compl.)
¶¶ 8-11. In most cases the Vessel Interests
deposited into the Court's registry a bond or cash
deposit equal to what was alleged to be the full amount owed
on the O.W. invoices, plus 6% interest for the first
year. O.W. I, 2015 WL 4005527, at *2;
see also Fed. R. Civ. P. Supp. Rule E(5)(a).
O.W. I, the Court concluded that subject-matter
jurisdiction over these interpleaders was proper under the
interpleader statute, 28 U.S.C. § 1335, and the
Court's admiralty and maritime jurisdiction, 28 U.S.C.
§ 1333. The Court held that the claimants'-O.W., the
Physical Suppliers, and ING-in personam claims
against the Vessel Interests and their statutory in
rem claims to a lien are two sides of the same coin.
See O.W. I, 2015 WL 4005527, at *6 (“Both the
[Physical Suppliers'] in rem claims against the
[v]essels as well as any in personam claims that
they . . . may ultimately choose to assert against the
[Vessel Interests] spring from a single event: the [Physical
Suppliers'] provision of fuel to the Vessels.”).
Because “there is only one underlying debt, ”
arising out of “a single obligation for the purchase of
fuel, ” the Court concluded that the in rem
rights of the claimants and their in personam rights
against the Vessel Interests are “inextricably
interrelated” and properly the subject of the
The Test Cases
Court's direction, the parties identified three cases
that would serve as “test cases” to litigate the
parties' competing claims to the interpleader stakes.
See O.W. II, 2017 WL 78514, at *2. The Physical
Suppliers and, in certain cases, the O.W. entities and ING,
asserted in rem rights to the interpleader funds
under the Commercial Instruments & Maritime Liens Act
(CIMLA), 46 U.S.C. § 31342. O.W. Germany, ING, and O.W.
USA also moved for summary judgment on their in
personam claims, each in a different test
case. At the same time, the Vessel Interests
moved for a discharge from further liability for the bunker
O.W. II, the Court held that O.W., and not the
Physical Suppliers, held maritime liens on the interpleader
funds. Under CIMLA, a party that provides
“necessaries” to a vessel “on the order of
the owner of such vessel or a person authorized by the
owner” is entitled to a lien for the value of the
necessaries. O.W. II, 2017 WL 78514, at *6 (quoting
Integral Control Sys. Corp. v. Consol. Edison Co. of
N.Y., 990 F.Supp. 295, 298 (S.D.N.Y. 1998)). The
Physical Suppliers, which contracted with O.W. but which had
no contractual relationship to the Vessel Interests, did not
provide necessaries “on the order” of the Vessel
Interests. Id. at *10. O.W., on the other hand,
contracted directly with the Vessel Interests and
“provided” necessaries to the vessels- albeit by
subcontracting for delivery by the Physical Suppliers.
Id. at *12.
before the Court are the Vessel Interests' motions to be
discharged from further liability and ING and the O.W.
entities' motions for summary judgment on their in
personam claims. These issues are related: ING and the O.W.
entities oppose discharging the Vessel Interests on the
grounds that the stake in each of the test cases is
insufficient to cover the interest and fees to which they
assert they are entitled on their in personam
claims. The Vessel Interests oppose ING's and
the O.W. entities' motions for summary judgment on their
in personam claims to the extent they seek to
recover for interest and fees in excess of the value of the
stake.Despite the significant overlap in legal
issues, each of the test cases presents these arguments in a
slightly different posture and on slightly different facts.
The Hapag-Lloyd Test Case
Hapag-Lloyd test case arises out of bunker deliveries to four
vessels at the Port of Tacoma in mid- and late-October 2014.
Hapag-Lloyd instituted interpleaders in respect of three of
the vessels, the M/V Santa Roberta, M/V Seaspan
Hamburg, and the M/V Sofia Express. In
accordance with the Court's order, Hapag-Lloyd posted a
bond “reflecting the full invoiced amount for the
applicable fuel bunkers plus interest.”
Hapag-Lloyd, Dkt. 217 (May 6, 2016 Order) at 2. The
Hapag-Lloyd case was joined with a related arrest action that
was transferred to this Court from the Western District of
Washington involving the M/V Vienna Express, No.
15-CV-6718. Hapag-Lloyd has provided a LOU to cover the cost
of the bunkers provided to the M/V Vienna Express
and offered to post substitute security. No. 15-CV-6718, Dkt.
23 (Hapag-Lloyd Answer) ¶ 33; see also
Hapag-Lloyd, Dkt 285 (Hapag-Lloyd Reply Mem.) at 10.
Germany moved for summary judgment on its in
personam claims and counterclaims in respect of three of
the vessels. Hapag-Lloyd, Dkt. 232 (O.W. Germany
Mem.) at 1-2, 22. O.W. Germany argues that, in addition to
the principal amount due under the relevant bunker supply
contracts, it is entitled to recover fees and interest at the
contract-rate of 12% per annum. See Id. at 22.
Hapag-Lloyd opposes O.W. Germany's claims to the extent
that it seeks fees and interest in excess of the value of the
bonds and LOU. Hapag-Lloyd, Dkt. 249 (Hapag-Lloyd
Opp.) at 6; Hapag-Lloyd, Dkt. 285 (Hapag-Lloyd Reply
Mem.) at 8. Both O.W. Germany and ING oppose
Hapag-Lloyd's motion for discharge. Hapag-Lloyd,
Dkts. 259 (ING Opp.), 269 (O.W. Germany Opp.). ING argues
that Hapag-Lloyd should not be discharged unless and until
the Court rules on the in personam claims of the
parties. Hapag-Lloyd, Dkt. 259 (ING Opp.) at 10-12.
O.W. opposes discharge on the grounds that the bond and LOU
are inadequate and that Hapag-Lloyd has not satisfied the
statutory requirements to be discharged.
Hapag-Lloyd, Dkt. 269 (O.W. Germany Opp.) at 2-6.
The Nippon Test Case
Nippon test case arises out of a delivery of bunkers to the
M/V Riegel Leader at the Port of Houston on October
16, 2016. O.W. II, 2017 WL 78514 at *3. The
Riegel Leader was chartered by Nippon Yusen
Kabushiki Kaisha (“Nippon Yusen”). The bunkers
were ordered by an affiliated company, Nippon Yusen Kaisha
Trading Corporation (“NYKTC”), which acted as
Nippon Yusen's agent. See id., 2017 WL 78514 at
*11 n.16. Nippon Yusen instituted this interpleader on behalf
of itself and NYKTC. Nippon, Dkt. 164 (Nippon Yusen
Reply Mem.) at 2-3. Unlike in the Hapag-Lloyd test case,
Nippon Yusen deposited into the Court's registry cash in
the amount of the disputed invoice plus 6% interest. O.W. USA
answered asserting an in rem right to the stake and
asserted an in personam breach-of-contract claim
against both Nippon Yusen and NYKTC. See Nippon,
Dkt. 98 (O.W. USA Am. Answer) at 9-13.
USA moved for summary judgment on its in rem and
in personam counterclaims. Nippon, Dkt. 143
(O.W. USA Mem.) at 5. O.W. USA contends that it is entitled
to recover interest at the contract rate and fees on its
in personam claim, in addition to the principal
amount of the invoice. Id. at 15. On the same basis,
O.W. USA opposes Nippon Yusen's motion to be discharged.
Nippon, Dkt. 157 (O.W. USA Opp.) at 3-4. Nippon
Yusen opposes O.W. USA's motion to the extent O.W. USA
claims an entitlement to fees and interest in excess of the
interpleader stake. Nippon, Dkt. 156 (Nippon Yusen
Opp.) at 4.
The Clearlake Test Case
third test case relates to bunkers delivered on O.W.'s
behalf to the M/V Hellas Glory and M/V Venus
Glory at the Port of Houston. O.W. II, 2017 WL
78514 at *3. The vessels' charterer, plaintiff Clearlake
Shipping PTE Ltd., instituted the interpleader. Id.
As in the Nippon case, Clearlake deposited into the
Court's registry cash in the amount of the bunker
invoices and interest at 6% per annum. Id. at *2.
filed an in rem claim to the stake and an in
personam counterclaim against Clearlake for breach of
contract. Clearlake, Dkt. 125 (ING Am. Answer)
¶¶ 10, 13, 25-26. ING moved for summary judgment on
its entitlement to the stake without specifying whether it
was moving on both or just its in rem claims; its
memorandum of law asserts a right to recover under both
theories. Compare Clearlake, Dkt. 171 (ING Mot.) at
1 and Clearlake, Dkt. 173 (ING Mem.) at 19-21. ING
also opposes Clearlake's motion for discharge on the
grounds that Clearlake might be independently liable in
excess of the stake on an in personam basis.
Clearlake, Dkt. 195 (ING Opp.) at 10-12.
judgment is appropriate when “the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a); see also Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986). “‘Where
the record taken as a whole could not lead a rational trier
of fact to find for the nonmoving party, there is no genuine
issue for trial.'” Scott v. Harris, 550
U.S. 372, 380 (2007) (quoting Matsushita Elec. Indus. Co.
v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)
(internal quotation marks omitted)). Courts
“‘construe the facts in the light most favorable
to the non-moving party and resolve all ambiguities and draw
all reasonable inferences against the movant.'”
Delaney v. Bank of Am. Corp., 766 F.3d 163, 167 (2d
Cir. 2014) (per curiam) (quoting Aulicino v.
N.Y.C. Dep't of Homeless Servs., 580 F.3d 73, 79-80
(2d Cir. 2009) (alteration omitted)).
Discharge of the Vessel Interests
2361 authorizes the Court to discharge the Vessel Interests
from further liability. An interpleader plaintiff may be
discharged if the Court concludes that the jurisdictional
requirements of Section 1335 are satisfied and that the
plaintiff is “disinterested”-meaning it has
renounced any claim to the stake. See Mendez v. Teachers
Ins. & Annuity Assurance Ass'n & College
Retirement Equities Fund, 982 F.2d 783, 787 (2d Cir.
1992). Ordinarily, a disinterested plaintiff is discharged
early in the litigation. See Citigroup Glob. Mkts., Inc.
v. KLCC Invs., LLC, No. 06-CV-5466 (LBS), 2007 WL
102128, at *8 (S.D.N.Y. Jan. 11, 2007). Whether to discharge
the plaintiff before resolving the competing claims to the
stake is within the discretion of the Court, however.
Id.; see also Royal School Labs., Inc. v. Town
of Watertown, 358 F.2d 813, 817 (2d Cir. 1966). When an
interpleader plaintiff disputes the extent of its liability,
the Court may determine the rights of the parties before
addressing discharge. See Bankers Trust Co. of W. N.Y. v.
Crawford, 559 F.Supp. 1359, 1364-65 (W.D.N.Y. 1983);
John Hancock Mut. Life Ins. Co. v. Yarrow, 95
F.Supp. 185, 187 (E.D. Pa. 1951); 7 Charles Alan Wright &
Arthur R. Miller, Federal Practice & Procedure §
1714 (3d ed. 2016).
the Vessel Interests have maintained throughout the
proceedings that they cannot be held liable both to the O.W.
entities (or ING as their assignee) and to the
Physical Suppliers, and they dispute the O.W. entities'
and ING's claims that they are entitled to interest at
the contract rate and fees. The Court's opinion in
O.W. II resolves the risk that the Vessel Interests
will be liable to both O.W. or ING and the Physical Suppliers
on the same debt. Because the Physical Suppliers do not claim
a contractual entitlement to the stake and do not have a
maritime lien, there is no potential for double-liability in
opinion resolves the remaining points of contention between
the Vessel Interests and O.W. USA and ING in the Clearlake
and Nippon test cases. Because the Vessel Interests are
clearly no longer “interested” in those two test
cases, and because the Court has already concluded that the
jurisdictional requirements of Section 1335 are met in those
cases, see O.W. I, 2015 WL 4005527, at *9, there is
no reason to delay further the discharge of Nippon Yusen and
Clearlake. The Hapag-Lloyd test case, however, requires
further proceedings in order to determine whether the stake
is adequate in that case. Accordingly, the Court GRANTS
Clearlake's and Nippon Yusen's motions for
discharge and DENIES WITHOUT PREJUDICE
Hapag-Lloyd's motion for discharge.