Martin Energy Services, L.L.C. v. Bourbon Petrel M ( 2020 )

Case: 19-30612 Document: 00515455591 Page: 1 Date Filed: 06/17/2020
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 19-30612 June 17, 2020
Lyle W. Cayce
MARTIN ENERGY SERVICES, L.L.C., Clerk
Plaintiff - Cross-Claimant - Appellee
v.
BOURBON PETREL M/V, etc., et al,
Defendant
CGG SERVICES US, INCORPORATED,
Intervenor Defendant - Cross-Defendant - Appellant
SNC BOURBON CE PATEL; CGG SERVICES, S.A.;
Movants - Appellants
--------------------------------------------------
MARTIN ENERGY SERVICES, L.L.C.,
Plaintiff - Appellee
v.
MISS LILLY M/V, etc.,
Defendant
SEA SUPPORT VENTURES, L.L.C., IN PERSONAM,
Defendant - Appellant
CGG SERVICES, S.A.; CGG SERVICES US, INCORPORATED,
Appellants
Case: 19-30612 Document: 00515455591 Page: 2 Date Filed: 06/17/2020
No. 19-30612
----------------------------------------------------
MARTIN ENERGY SERVICES, L.L.C.,
Plaintiff - Appellee
v.
OMS RESOLUTION M/V, etc.,
Defendant
v.
REDERIJ GROEN BV, IN PERSONAM,
Defendant - Appellant
CGG SERVICES, S.A.; CGG SERVICES US, INCORPORATED,
Appellants
Appeal from the United States District Court
for the Eastern District of Louisiana
Before BARKSDALE, HIGGINSON, and DUNCAN, Circuit Judges.
STUART KYLE DUNCAN, Circuit Judge:
Under the Commercial Instruments and Maritime Liens Act (“CIMLA”),
46 U.S.C. §§ 31301–31343, a person may obtain a maritime lien against a
vessel by providing it with “necessaries.” Here, plaintiff Martin Energy
Services (“Martin”) delivered fuel to three support vessels owned by C.G.G.
Services, U.S., Inc. (“CGG”). The support vessels carried the fuel in their cargo
tanks to refuel three other vessels performing seismic surveys off Louisiana’s
coast. When CGG failed to pay for the fuel, Martin sued, and the district court
2
Case: 19-30612 Document: 00515455591 Page: 3 Date Filed: 06/17/2020
No. 19-30612
concluded Martin had a maritime lien on the support vessels. That result
unduly expands our maritime lien precedents. Fuel may be “necessary” to a
vessel if it fuels the vessel. But the fuel transported by the support vessels was
for refueling other vessels. That fuel was not “necessary” to the support vessels.
We therefore reverse and render judgment for CGG.
I.
In 2014, CGG was conducting seismic surveying operations off the coast
of Louisiana with three vessels, the Geo Celtic, Oceanic Sirius, and Oceanic
Vega (the “Seismic Vessels”). CGG was responsible for ensuring the Seismic
Vessels were supplied with fuel, supplies, and equipment. To do so, CGG used
three other vessels, the Bourbon Petrel, OMS Resolution, and Miss Lilly (the
“Support Vessels”), which made deliveries to the Seismic Vessels from Port
Fourchon, Louisiana. At first, CGG purchased fuel directly from Martin, but
credit problems eventually led it to buy through a trader, O.W. Bunker USA,
Inc. (“O.W. Bunker”). For the purchases at issue in this case, O.W. Bunker
arranged for fuel deliveries through Martin.
Those fuel deliveries occurred in October and November 2014. Pursuant
to purchase orders from O.W. Bunker, Martin delivered fuel to each of the
three Support Vessels. Each vessel had a cargo tank for carrying fuel to the
Seismic Vessels, as distinct from a “day tank” holding fuel for the Support
Vessels themselves. On three separate occasions during this time, the Support
Vessels transported thousands of gallons of fuel in their cargo tanks to refuel
the Seismic Vessels.
Shortly after, O.W. Bunker filed for bankruptcy. 1 CGG had not yet paid
O.W. Bunker’s invoices for the Martin fuel. CGG eventually settled with O.W.
This case is yet another “round in the maritime litigation spawned by the collapse of
1
OW Bunker, formerly the world’s largest supplier of fuel for ships.” ING Bank N.V. v. Bomin
3
Case: 19-30612 Document: 00515455591 Page: 4 Date Filed: 06/17/2020
No. 19-30612
Bunker, but O.W. Bunker never forwarded payment to Martin. Martin then
sued CGG in federal district court, asserting in rem claims against the Support
Vessels and in personam claims against the vessels’ owners. The in personam
claims were disposed of on summary judgment, and the in rem claims were
tried to the court.
The district court ruled for Martin. The court concluded that Martin’s
delivery of fuel gave rise to a maritime lien against the Support Vessels. It
reasoned that the Martin fuel qualified as “necessaries” to those vessels under
CIMLA. See 46 U.S.C. § 31342(a). The court also concluded the fuel was
provided “on the order” of CGG or its authorized agent, as CIMLA requires.
See id. Finally, the court awarded Martin pre-judgment interest dating from
each fuel purchase. CGG timely appealed.
II.
On appeal from a bench trial, we review fact findings for clear error and
legal conclusions de novo. Maritrend, Inc. v. Serac & Co. (Shipping) Ltd., 348
F.3d 469, 470 (5th Cir. 2003) (citation omitted). “Whether a maritime lien
exists is a question of law, reviewed de novo.” Comar Marine, Corp. v. Raider
Marine Logistics, LLC, 792 F.3d 564, 575 (5th Cir. 2015).
III.
CIMLA 2 governs entitlement to maritime liens. ING Bank N.V. v. Bomin
Bunker Oil Corp., 953 F.3d 390, 393 (5th Cir. 2020) (quoting Valero Mktg. &
Supply Co. v. M/V Almi Sun, IMO No. 9579535, 893 F.3d 290, 292 (5th Cir.
2018)). It states, in relevant part, that “a person providing necessaries to a
Bunker Oil Corp., 953 F.3d 390, 391 (5th Cir. 2020) (quoting NuStar Energy Servs., Inc. v.
M/V COSCO Auckland, 760 F. App’x 245, 246 (5th Cir.), cert. dismissed, --- U.S. ---,140 S.
Ct. 339 (2019)).
2 In 1988, CIMLA recodified the 1910 Federal Maritime Lien Act (“FMLA”), 46 U.S.C.
§§ 971–975, without changing its substance. See Maritrend, 348 F.3d at 470–71.
4
Case: 19-30612 Document: 00515455591 Page: 5 Date Filed: 06/17/2020
No. 19-30612
vessel on the order of the owner or a person authorized by the owner . . . has a
maritime lien on the vessel [and] may bring a civil action in rem to enforce the
lien.” 46 U.S.C. § 31342(a)(1), (2) (emphasis added). The lien “is a special
property right in the vessel,” which “grants the creditor the right to appropriate
the vessel, have it sold, and be repaid the debt from the proceeds.” Equilease
Corp. v. M/V Sampson, 793 F.2d 598, 602 (5th Cir. 1986) (en banc) (citation
omitted). 3 “We apply the provisions of CIMLA stricti juris to ensure that
maritime liens are not ‘lightly extended by construction, analogy, or
inference.’” Valero, 893 F.3d at 292 (quoting Atl. & Gulf Stevedores, Inc. v. M.V.
Grand Loyalty, 608 F.2d 197, 200–01 (5th Cir. 1979)).
While not defining “necessaries,” CIMLA furnishes an illustrative list:
“repairs, supplies, towage, and the use of a dry dock or marine railway.” 46
U.S.C. § 31301(4). In that regard, “[n]ecessaries are the things that a prudent
owner would provide to enable a ship to perform well the functions for which
she has been engaged.” Equilease, 793 F.2d at 603 (citing 2 Benedict on
Admiralty § 34 (7th ed. 1984)). The term, which has a “broad meaning,” 4
includes “most goods or services that are useful to the vessel, keep her out of
danger, and enable her to perform her particular function.” Id. These are items
useful “to vessel operations” 5 and “necessary to keep the ship going.” 6
See also Racal Survey, U.S.A., Inc. v. M/V Count Fleet, 231 F.3d 183, 191 (5th Cir.
3
2000) (necessaries are “designated for specific vessels”).
4 J. Ray McDermott & Co. v. Off-Shore Menhaden Co., 262 F.2d 523, 525 (5th Cir.
1959).
Gulf Marine & Indus. Supplies, Inc. v. Golden Prince M/V, 230 F.3d 178, 180 (5th
5
Cir. 2000) (discussing Equilease); see also Silver Star Enterprises, Inc. v. Saramacca M/V, 82
F.3d 666, 668 (5th Cir. 1996) (maritime liens “developed as a necessary incident of the
operation of vessels”) (quoting Piedmont & George’s Creek Coal Co. v. Seaboard Fisheries Co.,
245 U.S. 1, 9 (1920)).
Silver Star, 82 F.3d at 668 (quoting Dampskibsselskabet Dannebrog v. Signal Oil &
6
Gas Co., 310 U.S. 268, 280 (1940)).
5
Case: 19-30612 Document: 00515455591 Page: 6 Date Filed: 06/17/2020
No. 19-30612
A.
It is undisputed that the Martin fuel was put into the cargo tanks of the
Support Vessels, each of which transported it to refuel the Seismic Vessels.
The issue is whether, as the district court concluded, that fuel constituted
“necessaries” to the Support Vessels, giving rise to a maritime lien under
CIMLA. The court reasoned that two of the Support Vessels, the Bourbon
Petrel and the OMS Resolution, served as “floating gas stations” for the Seismic
Vessels and that the fuel was “necessary” for the Support Vessels to perform
this function. Similarly, the court reasoned the fuel was “necessary” for the
third Support Vessel, the Miss Lilly, to function as an “offshore supply vessel,”
transporting fuel, equipment, and personnel to the Seismic Vessels. On appeal,
CGG argues this was error. It contends the Martin fuel supported operation of
the Seismic Vessels, not the Support Vessels. The fuel was merely cargo carried
by the Support Vessels, and no authority supports deeming cargo “necessaries”
for purposes of a maritime lien. We agree.
Fuel may qualify as a “necessary” to a vessel under CIMLA when it is
supplied to refuel that vessel. See, e.g., Valero, 893 F.3d at 291, 294 (there was
“no dispute that [fuel] bunkers qualify as necessaries . . . to the Vessel” when
plaintiff supplied fuel to a vessel that “needed refueling”). In such a case, fuel
could be akin to “repairs, supplies, [or] towage,” 46 U.S.C. § 31301(4): like those
things, the fuel would be “necessary to keep the ship going.” Silver Star
Enterprises, Inc. v. Saramacca M/V, 82 F.3d 666, 668 (5th Cir. 1996) (quoting
Dampskibsselskabet Dannebrog v. Signal Oil & Gas Co., 310 U.S. 268, 280
(1940)). Therefore, the Martin fuel may have qualified as a “necessary” vis-à-
6
Case: 19-30612 Document: 00515455591 Page: 7 Date Filed: 06/17/2020
No. 19-30612
vis the Seismic Vessels. 7 We need not decide that question, however, because
the Seismic Vessels are not parties here.
The Support Vessels present a different scenario. As the district court
found, CGG utilized the Support Vessels “for ensuring that the Seismic Vessels
were supplied with fuel and water.” To that end, the fuel deliveries at issue
“were put in the cargo tanks of the [Support Vessels],” and the entire amount
was transported to the Seismic Vessels for their refueling. The district court
did not find that any part of the Martin fuel was used to fuel the Support
Vessels. 8
Given those undisputed facts, there is no basis for concluding that the
Martin fuel was a “necessary” as to the Support Vessels. To do so would, as
CGG persuasively argues, “represent an unprecedented expansion of the
CIMLA” by extending the concept of “necessaries” to cargo transported by a
vessel. The parties cite no precedent—nor can we find any—supporting that
expansion. 9 Based on that absence alone, we would reject the proposition. “The
7See, e.g., Belcher Co. of Ala. v. M/V Maratha Mariner, 724 F.2d 1161, 1163 (5th Cir.
1984) (stating in dicta that, “when Belcher supplied fuel to the M/V Marantha Mariner, a
maritime lien [under the FMLA] may have arisen by operation of law”).
8 As to the Bourbon Petrel and OMS Resolution, the district court found the Martin
fuel could not have been used to refuel those vessels because their cargo tanks were
“physically separated” from the “day tanks” used for their own fuel. The situation was more
complex as to the Miss Lilly, because her cargo and day tanks were connected by piping and,
during the period at issue, some fuel was transferred from her cargo to day tanks. The district
court found this immaterial, however, because the amount of fuel transferred was less than
the amount already aboard before the Martin deliveries. Consequently, the district court
found the Miss Lilly “had sufficient fuel onboard to reach the Seismic Vessels prior to being
loaded with the Martin Energy fuel.” Martin does not argue that this finding is clearly
erroneous. In any event, the district court did not base its conclusion on the Miss Lilly’s
putative consumption of any of the Martin fuel.
9 As CGG points out, some precedent supports the idea that the physical “containers”
that enable cargo ships to transport cargo may qualify as “necessaries” for the cargo ship. See
Foss Launch & Tug Co. v. Char Ching Shipping U.S.A., Ltd., 808 F.2d 697, 700 (9th Cir.
1996). But, as CGG correctly argues, that precedent does not support the quite different idea
that the cargo itself is a “necessary” as to the cargo ship.
7
Case: 19-30612 Document: 00515455591 Page: 8 Date Filed: 06/17/2020
No. 19-30612
absence of precedent signifies the weakness of [Martin’s] position, since
admiralty enjoys an unusually rich legal tradition and, more than nearly any
other contemporary area of federal law, relies on venerable precedents where
they exist.” Gulf Marine & Indus. Supplies, Inc. v. Golden Prince M/V, 230
F.3d 178, 180 (5th Cir. 2000).
B.
We are unpersuaded by the district court’s reasoning and by Martin’s
arguments on appeal. The court reasoned the Martin fuel was necessary for
the Support Vessels to perform their “particular function”—that is, as “floating
gas stations” (the Bourbon Petrel and OMS Resolution), or an “offshore supply
vessel” (the Miss Lilly). The court relied on decisions concluding maritime liens
existed where goods and services (e.g., liquor, linens, cigarettes, or advertising)
were provided to assist vessels in their “particular functions” (e.g., as a
pleasure yacht, floating hotel, shrimper, or cruise ship). 10 On appeal, Martin
continues to rely on these decisions. They are off point. In each, the good or
service was provided for use by the vessel itself, and the resulting lien ran
against that vessel. Here, by contrast, the Martin fuel was provided for use by
the Seismic Vessels, not the Support Vessels. Any lien based on the fuel as a
“necessary” would presumably run against the Seismic Vessels (something,
again, we do not decide). See Trico Marine Operators, Inc. v. Falcon Drilling
Co., 116 F.3d 159, 161–62 (5th Cir. 1997) (supply boat services ferrying
provisions to drilling rig were “necessaries” as to rig). The cases cited by the
10See, e.g., Portland Pilots, Inc. v. Nova Star M/V, 875 F.3d 38, 41, 45 (1st Cir. 2017)
(recognizing maritime lien for providing linens to a “floating hotel”); Stern, Hays, & Lang,
Inc. v. M/V Nili, 407 F.2d 549, 551 (5th Cir. 1969) (recognizing maritime lien for providing
advertising services to a cruise ship) (citing Colonial Press of Miami, Inc. v. The Allen’s Cay,
277 F.2d 540 (5th Cir. 1960)); Allen v. The M/V Contessa, 196 F. Supp. 649, 651 (S.D. Tex.
1961) (recognizing maritime lien for cigarettes provided as part of crew provisions on
shrimper); Walker-Skageth Food Stores v. The Bavois, 43 F. Supp. 109, 111 (S.D.N.Y. 1942)
(recognizing maritime lien for providing liquor to a pleasure yacht).
8
Case: 19-30612 Document: 00515455591 Page: 9 Date Filed: 06/17/2020
No. 19-30612
district court (and Martin) fail to support the different proposition that the lien
would run against the Support Vessels, which were merely carrying the fuel
for other vessels’ consumption.
Finally, claiming we must view the situation “from the vendor’s
perspective,” Martin argues it had no way of knowing the fuel it delivered was
destined for refueling the Seismic Vessels, not the Support Vessels. The district
court did not rely on this proposition. To support it, Martin cites only our
statement in Equilease that a “necessary” turns on the “present, apparent want
of the vessel, not the character of the thing supplied.” 793 F.2d at 603 (quoting
2 Benedict on Admiralty § 34). Martin misreads the quote. It means only that
a “necessary” is determined by the need of the vessel; it says nothing about the
“perspective of the vendor.” Martin cites no other authority for introducing this
element of subjectivity into the maritime lien analysis, because there is none.
In sum, we conclude that, contrary to the district court’s conclusion, the
fuel supplied for refueling the Seismic Vessels did not qualify as a “necessary”
with respect to the Support Vessels and so did not create a maritime lien under
CIMLA as to the Support Vessels. 11
CONCLUSION
The district court’s judgment is REVERSED and judgment is
RENDERED in favor of CGG.
11 Given our resolution of the appeal, we do not reach CGG’s argument that the fuel
was not provided “on its order,” nor its argument concerning pre-judgment interest.
9