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Martin Energy Services, LLC v. M/V Bourbon Petrel

United States District Court, E.D. Louisiana

November 20, 2018

M/V BOURBON PETREL, her engines, tackle, bunkers, Etc., in rem, and BOURBON PETREL SNC AND BOURBON OFFSHORE GREENMAR, S.A., in personam

         SECTION "L" (4)


         Before the Court is a motion for summary judgment filed by CGG Services (U.S.), Inc., CGG Services S.A., SNC Bourbon CE Petrel, Sea Support Ventures, LLC, and Rederij Groen BV. R. Doc. 130. Plaintiff opposes. R. Doc. 133. Having considered the parties briefs, oral argument, and applicable law, the Court now issues this Order and Reasons.

         I. BACKGROUND

         These consolidated cases arise out of three instances in which Plaintiff Martin Energy supplied fuel and water to a fleet of vessels chartered by CGG U.S. and/or CGG S.A. In the fall of 2014, CGG U.S., the United States subsidiary of CGG S.A., was conducting seismic operations off the coast of Louisiana with the GEO CELTIC, OCEANIC SIRIUS, and OCEANIC VEGA (collectively, the “Seismic Vessels”). CGG was responsible for ensuring that the Seismic Vessels were supplied with fuel and water. Before the three fuel deliveries at issue in this case, CGG U.S. purchased it directly from suppliers like Martin Energy.

         In October 2014 CGG reached its credit limit with Martin Energy and began purchasing fuel for the Seismic Vessels from O.W. Bunker USA Inc. (“O.W. Bunker”). CGG would notify O.W. Bunker of its anticipated fuel needs, and O.W. Bunker would contact Port Fourchon suppliers like Martin Energy and Stone Oil to determine fuel availability and the sales price, which it would then communicate to CGG. CGG directed O.W. Bunker to select Martin Energy as supplier of the fuel at issue because it provided the lowest sales price.

         The fuel at issue here was delivered to the Seismic Vessels by three supply vessels – the M/V BOURBON PETREL, owned by SNC Bourbon CE Petrel, the M/V OMS RESOLUTION, owned by Rederij Groen BV, and the M/V MISS LILLY, owned by Sea Support Ventures, LLC (collectively, the “Supply Vessels”). For the three fuel transactions, (1) CGG issued purchase orders to O.W. Bunker; (2) O.W. Bunker issued purchase order confirmations to Martin Energy; (3) Martin Energy issued invoices to O.W. Bunker; and (4) O.W. Bunker issued invoices to CGG. Each document referred to an individual Supply Vessel as the receiving vessel.

         Martin Energy delivered 450 cubic meters of fuel to the M/V MISS LILLY, 800 cubic meters to the OMS RESOLUTION, and 500 cubic meters to the M/V BOURBON PETREL. The fuel deliveries were placed in the cargo tanks of the Supply Vessels. The M/V BOURBON PETREL and the M/V OMS RESOLUTION have fuel cargo tanks that are physically separate from the vessels’ “day tanks” that supply fuel to the vessel’s engines. Fuel placed in their cargo tanks cannot be consumed by the vessels themselves. The M/V BOURBON PETREL transferred its 750 cubic meters of fuel (including the 500 cubic meters supplied by Martin Energy) to the GEO CELTIC, and the M/V OMS RESOLUTION transferred its 800 cubic meters of Martin Energy fuel to the OCEANIC VEGA.

         The M/V MISS LILLY fuel consumption and transfers are more complicated. The vessel has piping that connects its cargo tanks to its day tanks, and it is capable of – and did – transfer some fuel from its cargo tanks to its day tanks during the relevant time period. Before the M/V MISS LILLY was loaded with any Martin Energy fuel, the vessel already had approximately 13,895 gallons of diesel onboard (“Onboard Diesel”). R. Doc. 130-3 at 3. When the vessel was loaded with 118,800 gallons (450 cubic meters) of Martin Energy diesel fuel, that diesel and the Onboard Diesel were commingled in the vessel’s cargo tanks. From October 27, 2014 (when the Martin Energy gallons were placed in the MISS LILLY’s cargo tanks) to November 15, 2014 (when the last gallon of Martin Energy fuel was transferred to the Seismic Vessels), the MISS LILLY transferred 12,788 gallons of fuel into its day tanks.

         Martin Energy has not been paid. The non-payment was at least initially due to the global collapse of O.W. Bunker and related bankruptcy proceeding. Martin Energy sued each of the Supply Vessels in rem and their owners in personam, and the suits were consolidated. The vessel owners made a Rule E(8) appearance and posted a bond to stand in place of the vessels. CGG S.A. and CGG U.S. joined these restricted appearances. O.W. Bunker intervened, asserting rights of its own as the contract intermediary between Martin Energy and CGG. O.W. Bunker and Martin Energy asserted crossclaims against CGG U.S.


         CGG U.S., CGG S.A.[1], SNC Bourbon CE Petrel, Sea Support Ventures, LLC, and Rederij Groen BV (collectively, “Defendants”) move for summary judgment seeking dismissal of the in rem and in personam claims asserted by Martin Energy in this case. Martin Energy opposes.

         a. Defendants’ Motion for Summary Judgment

         Defendants argue that Martin Energy did not provide “necessaries” to any of the Supply Vessels because the M/V BOURBON PETREL and the M/V OMS RESOLUTION did not consume the Martin Energy fuel and the M/V MISS LILLY already had sufficient fuel onboard to accomplish the transfer of Martin Energy bunkers to the Seismic Vessels.

         Even if the Martin Energy fuel constituted “necessaries” for the Supply Vessels, Defendants contend that Martin Energy waived its lien by refusing to extend credit to CGG and instead contracting with O.W. Bunker. According to Defendants, when a supplier rejects the credit of a party authorized to act on behalf of a vessel (i.e., when Martin Energy refused to sell directly to CGG due to credit concerns), it explicitly does not rely on the credit of the vessel and foregoes all lien rights.

         Assuming (a) the fuel was necessary, and (b) Martin Energy did not waive its lien by rejecting the credit of CGG, Defendants argue that Martin Energy’s fuel was provided on the order of O.W. Bunker – not on the order of the owner or a person authorized by the owner – and Valero Marketing & Supply Co. v. M/V Almi Sun, 893 F.3d 290 (5th Cir. 2018) affirms that Martin Energy does not have a lien.

         Turning to Martin Energy’s in personam claims, Defendants contend that Martin Energy’s breach of contract claims against SNC Bourbon CE Petrel, Rederij Groen BV, and Sea Support Ventures, LLC (collectively, “Vessel Owners”) must be dismissed because they had no contract with Martin Energy and were not involved in these transactions. The Vessel Owners also argue that Martin Energy’s unjust enrichment claims asserted against them must be dismissed, because (1) they were not enriched, since the fuel was consumed by the Seismic Vessels, which they do not own, (2) O.W. Bunker’s bankruptcy and Martin Energy’s refusal to extend credit to CGG serves as justification or cause for any impoverishment, and (3) there is a remedy available at law, which Martin Energy has pursued by filing a Notice of Appearance and Proof of Claim in the O.W. Bunker Bankruptcy proceeding. Likewise, CGG avers that Martin Energy’s unjust enrichment claim against it is unfounded because it paid O.W. Bunker for the fuel at issue after O.W. Bunker seized one of the Seismic Vessels last year.

         b. Martin Energy’s Opposition

         In opposition, Martin Energy argues that (1) its fuel constituted “necessaries” for the Supply Vessels because they were functioning as “floating gas stations,” (2) it has maintained, rather than waived its lien rights, and (3) Valero Marketing is inapplicable because CGG ordered the Martin Energy fuel. The only in personam claim Martin Energy addresses in opposition is for unjust enrichment against CGG. Martin Energy contends that CGG “should not be allowed to defeat this claim based on an alleged settlement with some O.W. Bunker entity three years after the fuel was supplied.” R. Doc. 141 at 5. Because CGG did not pay anyone for the fuel for nearly three years, Martin Energy asserts that CGG was at least unjustly enriched for that period of time.

         II. ...

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