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Barcliff, LLC v. M/V Deep Blue

United States Court of Appeals, Eleventh Circuit

November 30, 2017

BARCLIFF, LLC, d.b.a. Radcliff/Economy Marine Services, Plaintiff - Appellant,
M/V DEEP BLUE, IMO NO. 9215359, her engines, apparel, furniture, equipment, appurtenances, tackle, etc., in rem, Defendant-Appellee, ING BANK N.V., P. O. Box 1800 ALP B.02.050 Amsterdam 1000 BV Netherland, Intervenor - Appellee.

         Appeal from the United States District Court for the Southern District of Alabama D.C. Docket No. 1:14-cv-00590-C

          Before ED CARNES, Chief Judge and BLACK, Circuit Judges, and MAY, [*] District Judge.


         The M/V Deep Blue is a pipe-laying vessel deployed in the Gulf of Mexico. In late 2014, the Deep Blue required a routine refueling. Its owner contacted a global marine fuel supplier. The supplier agreed to sell the fuel and deliver it to the Deep Blue at the Port of Mobile, Alabama. Rather than fulfill the order out of its own stocks, the supplier purchased the fuel from an affiliate. The affiliate, in turn, subcontracted with Plaintiff-Appellant Barcliff, LLC, d/b/a Radcliff/Economy Marine Services (Radcliff), a Mobile-based maritime fuel provider, to supply and deliver the fuel. Radcliff rendered performance and fueled the Deep Blue in November 2014.

         This otherwise ordinary transaction ultimately became a problem for Radcliff because, before any money changed hands, the global marine fuel conglomerate collapsed into bankruptcy. Radcliff found itself in the position of having supplied several hundred metric tons of fuel on the credit of a now-insolvent counterparty. Radcliff asserted a maritime lien on the Deep Blue in a bid to recover directly from the ship, giving rise to this litigation.

         After a bench trial, the district court determined Radcliff did not have a lien on the Deep Blue. Instead, a lien had arisen in favor of the global fuel supplier, and was duly assigned to ING Bank N.V. (ING), an intervenor in the suit. Radcliff appeals, and we affirm.

         I. BACKGROUND

         The significance of the contractual structure of the sale outlined above will become clear in the course of our analysis. Accordingly, we begin by introducing the parties to the transaction in relation to their contractual counterparties. A. The Sequence of Contracts

         1. Technip purchases bunkers from O.W. UK

         Technip UK Limited (Technip) is a U.K.-based company and the owner of the Deep Blue. Since 2001, Technip has used the Deep Blue to lay pipe for oil rigs in the Gulf. The Deep Blue requires periodic refueling. Each time, Technip's Scotland-based procurement team solicits bids from a handful of international fuel suppliers. The suppliers respond with price quotes, and Technip selects the most appropriate proposal.

         O.W. Bunkers (UK) Limited (O.W. UK), also a U.K. entity, is a member of the O.W. Bunker Group, a global fuel supply conglomerate. On October 22, 2014, Technip sent out a request for quotations to O.W. UK and two other suppliers, seeking bunker fuel[1] for the Deep Blue in the Port of Mobile, Alabama. After reviewing the bids, Technip awarded the supply contract to O.W. UK, whose offer, at $824 per metric ton, was the least expensive.[2] Payment was to be due within thirty days of delivery.

         2. O.W. UK purchases bunkers from O.W. USA

         Now obligated to supply the Deep Blue in the Gulf of Mexico, O.W. UK entered into a second purchase and sale contract in order to procure the 850 metric tons of bunkers it had agreed to sell to Technip. This time, O.W. UK was the buyer of the fuel and O.W. Bunker USA, Inc. (O.W. USA) was the seller. O.W. USA, a Houston-based sibling company of O.W. UK, agreed to sell 850 metric tons of bunker fuel to O.W. UK for $823.30 per ton, with delivery to be made to the Deep Blue in Mobile.

         3. O.W. USA purchases bunkers from Radcliff

         O.W. USA had agreed to sell O.W. UK 850 tons of fuel, but the fuel would not come from its own stocks. Rather, O.W. USA added a final link to the chain of contracts by retaining Radcliff to supply the bunkers. Radcliff agreed to sell the fuel to O.W. USA and deliver it to the Deep Blue at a price of $823 per ton, payment due within thirty days.

         B. The Fueling

         After the contractual arrangements were worked out, O.W. USA emailed Radcliff and put Radcliff in touch with the Chief Engineer of the Deep Blue, Ian Ladyka, to coordinate delivery. Radcliff communicated with Ladyka, rather than O.W. USA, from that point on with respect to the logistics of the fueling.

         Radcliff fueled the Deep Blue outside the Port of Mobile on November 1, 2014. When the fueling was complete, Ladyka signed a bunker delivery certificate acknowledging that the 850 tons of fuel had been conveyed. Each seller sent an invoice to its respective buyer at their agreed prices: Radcliff to O.W. USA for the fuel sold to it and delivered to the Deep Blue; O.W. USA to O.W. UK; and O.W. UK to Technip.

         C. ING Bank and the Collapse of the O.W. Bunker Group

         The ship now fueled and having recommenced its operations, all that remained was settlement. Had everything gone according to plan, Technip would have paid O.W. UK $700, 400 for 850 tons of fuel at $824 per ton; O.W. UK would have paid O.W. USA $699, 805; and O.W. USA would have paid Radcliff $699, 550. But none of these sums was remitted because the O.W. Bunker Group, the global marine fuel conglomerate of which O.W. UK and O.W. USA were members, imploded. The Group's parent company filed for bankruptcy in its native Denmark on November 7, 2014, one week after the Deep Blue was fueled, and concurrent bankruptcy cases were opened for its subsidiaries, including O.W. UK and O.W. USA, in jurisdictions around the world. Relevant here, O.W. USA's proceeding commenced on November 13, 2014, in the District of Connecticut. See Chapter 11 Voluntary Petition, In re O.W. Bunker USA Inc., No. 14-51722 (Bankr. D. Conn. Nov. 13, 2014). Thus, Radcliff remained unpaid.

         An overview of the O.W. Bunker Group explains the involvement of ING in this case. The O.W. Bunker Group was founded in Denmark in 1980 and grew to be one of the world's largest maritime fuel providers. The Group's operations consisted of a physical supply division, which provided bunkers directly from the Group's onshore stocks using its own fleet of ships, and a trading and reselling division, which bought fuel from third parties and sold it at a markup.

         In December 2013, eleven months before the transaction at issue in this case, members of the O.W. Bunker Group, including O.W. UK and O.W. USA, entered into a $700 million revolving credit agreement with ING and a syndicate of other lenders to supply working capital. The credit was secured by O.W. Bunker Group's receivables due from customers around the world pursuant to a security agreement governed by English law (the Security Agreement).

         Over the course of 2014, the Group drew down nearly the entire facility, which empowered ING to take its security, namely, payments that third parties owed to members of the Group. ING began to do so pursuant to a cooperation agreement between ING and the bankruptcy estate of O.W. UK, by which ING became entitled to collect on O.W. UK's outstanding receivables, with all recoveries to be paid into ING accounts. Among them was Technip's unpaid invoice for the fuel supplied to the Deep Blue.

         D. This Suit

         Having received no payment, and with its contractual counterparty, O.W. USA, in bankruptcy, Radcliff filed this suit in the Southern District of Alabama on December 19, 2014, seeking a lien on the Deep Blue so that it could collect from the ship. Notwithstanding the fact that its contractual obligation to supply the ship had been owed to O.W. USA, not to Technip, Radcliff contended that it had supplied the vessel and not been paid, so it was entitled to a lien. Technip made a restricted appearance for the purpose of defending the claim against the vessel. Technip was willing to pay for the fuel supplied to its ship, but wanted to be sure it only paid once, since its contractual debt was to O.W. UK, not to Radcliff, with whom it had no contractual relationship at all. Consequently, Technip deposited $705, 529.50 into the registry of the court, equal to the value of the invoice from O.W. UK for the fuel plus interest, to be distributed according to the court's ultimate determination.

         In April 2015, ING intervened in the suit. ING alleged that O.W. UK supplied the fuel to the ship, albeit using subcontractors, and Technip had not yet paid O.W. UK, so O.W. UK, not Radcliff, had a lien on the Deep Blue. In addition, ING had taken title to O.W. UK's accounts receivable as a result of the credit arrangements. Thus, ING asserted that it, not Radcliff, was entitled to the money Technip paid into the court.

         The parties consented to try the case before a magistrate judge.[3] Following a two-day bench trial, the court entered an order concluding that Radcliff did not possess a lien on the ship. O.W. UK, on the other hand, did have a lien, and had duly assigned it to ING. The court entered judgment against Radcliff and in favor of ING and ...

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