Oceanografia operated the vessel M/V Kestrel under a bareboat charter agreement. Cal Dive Offshore Contractors, Inc was the registered owner of the vessel. Malin International Ship Repair & Drydocks, Inc performed work for Oceanografia at its Galveston shipyard, for which the balance on its unpaid invoices was outstanding. Malin thus attached the 'fuel bunkers' – the admiralty term for the fuel used by a vessel, not including fuel loaded on board the vessel as cargo(1) – on board the vessel. Oceanografia and Cal Dive sought to vacate the attachment.(2)
The ability to make such an attachment was confirmed by the court under Rule B(1)(a) of the Federal Rules of Civil Procedure Supplemental Rules, which provides that:
"If a defendant is not found within the district when a verified complaint praying for attachment and the affidavit required by Rule B(1)(b) are filed, a verified complaint may contain a prayer for process to attach the defendant's tangible or intangible personal property – up to the amount sued for – in the hands of garnishees named in the process."
The court stated that "Rule B allows a district court to take jurisdiction over a defendant in an admiralty or maritime action by attaching property of the defendant. The rule has two purposes: to secure a respondent's appearance and to assure satisfaction in case the suit is successful".
The bareboat charter agreement stipulated that Oceanografia "shall purchase the bunkers… in the said vessel at the then current market price". Malin attached the fuel bunkers two weeks after Oceanografia had taken delivery of the vessel. Thus, Oceanografia and Cal Dive sought to vacate the attachment on the grounds that Oceanografia did not own the fuel bunkers, as it had not paid for or received an invoice for them.
In effect, Oceanografia and Cal Dive argued that Oceanografia did not own the fuel bunkers because the purchase price had not been paid. However, the court determined that the agreement to purchase the fuel, together with possession, was sufficient to allow for attachment under Texas law. The court had deliberated on whether to apply Mexican or Texas law, but had chosen to apply Texas law and thus determined that the title had passed with the physical delivery of the bunker fuels, even though the price had not yet been paid.
For further information please contact please contact Wade Webster at Fowler Rodriguez by telephone (+1 786 364 8400) or email ([email protected]). The Fowler Rodriguez website can be accessed at www.frfirm.com.
(1) See Glossary of Marine Insurance and Shipping Terms, 14 USF MAR LJ, 305, 325 (2001-2002).
(2) Marin International Ship Repair & Drydocks, Inc v Oceanografia, 2016 WL 1161215, 2016 US App, LEXIS 5387 (5th Cir 3/23/2016).
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