ING Bank N v. v. M/V TEMARA, 892 F.3d 511

Background

Copenship (charterer) contracted in 2014 with O.W. Bunker Denmark (contract supplier) to supply bunkers to the M/V TEMARA; O.W. Denmark subcontracted to O.W. USA, which subcontracted to CEPSA (physical supplier), and CEPSA delivered the bunkers and obtained a signed bunker receipt.
No party was paid before O.W. Bunker entities (including O.W. Denmark and O.W. USA) became insolvent; ING Bank, as assignee of O.W. Denmark’s receivables, sued in rem asserting a maritime lien; CEPSA intervened asserting a competing maritime lien and in personam claims.
The District Court granted summary judgment to ING on CEPSA’s lien, denied ING’s lien claim (finding O.W. Denmark too remote and not at financial risk), denied CEPSA a lien as a subcontractor, and then sua sponte entered summary judgment for the Vessel without notice to ING.
On appeal the Second Circuit affirmed that CEPSA (the physical subcontractor) was not entitled to a maritime lien but reversed the denial of O.W. Denmark’s (and thus ING’s) lien, holding a contractor can ‘‘provide’’ necessaries via subcontractors when contracted with an authorized person and performance occurs.
The court also held the district court erred in granting sua sponte summary judgment for the Vessel without providing notice and an opportunity to respond under Fed. R. Civ. P. 56(f).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a contract supplier (O.W. Denmark / ING as assignee) may assert a maritime lien when it subcontracted performance	O.W. Denmark contracted with an authorized person (charterer) to supply bunkers and thus provided necessaries even though delivery was performed by subcontractors	Vessel argued O.W. Denmark did not "provide" necessaries because it never physically supplied fuel or incurred direct financial risk down the chain	Held: Yes. A contractor who contracts with an authorized person for necessaries and whose subcontractor performs may assert a maritime lien; district court erred in requiring additional proof of financial risk
Whether the physical supplier (CEPSA) as a subcontractor may assert a maritime lien	CEPSA argued it delivered bunkers to the Vessel and its contract terms passed up the chain to make its supply "on the order of" an authorized person	Vessel and O.W. parties argued CEPSA supplied at the direction of O.W. USA (a subcontractor), not at the order of owner/authorized person	Held: No. Subcontractor supplied at direction of intermediary and is not entitled to a maritime lien; equitable theories cannot convert the claim into an in rem lien
Whether the district court properly entered sua sponte summary judgment for the Vessel without prior notice	ING argued district court lacked basis to enter sua sponte judgment and that it had evidence (and could supply more) to establish the contractual chain	Vessel implicitly relied on district court’s view that record lacked traceable contractual links	Held: Error. Court must give notice, identify undisputed material facts, and allow reasonable time to respond under Rule 56(f); failure to do so was reversible error

Key Cases Cited

Itel Containers Int’l Corp. v. Atlanttrafik Express Serv. Ltd., 982 F.2d 765 (2d Cir. 1992) (maritime lien arises by operation of law and is construed stricti juris)
Barcliff LLC v. M/V DEEP BLUE, 876 F.3d 1063 (11th Cir. 2017) (contract supplier can provide bunkers within meaning of § 31341 when acting as contractor)
Galehead, Inc. v. M/V ANGLIA, 183 F.3d 1242 (11th Cir. 1999) (performance by subcontractor may be attributed to contractor)
Cianbro Corp. v. George H. Dean, Inc., 596 F.3d 10 (1st Cir. 2010) (subcontractors generally do not have maritime liens)
Lake Charles Stevedores, Inc. v. PROFESSOR VLADIMIR POPOV MV, 199 F.3d 220 (5th Cir. 1999) (subcontracting suppliers are generally not entitled to liens absent control or direction by authorized person)
Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (notice requirement when a court contemplates sua sponte summary judgment)
Osaka Shosen Kaisha v. Pacific Export Lumber Co., 260 U.S. 490 (U.S. 1923) (maritime liens cannot be extended by analogy or inference)