The Fifth Circuit recently issued an unpublished opinion in World Fuel Services v. Magdalena Green MV regarding maritime liens. World Fuel Services provided $167,339.68 in (expectedly) fuel services to the M/V MAGDALENA GREEN, as part of its time charter party with S.E. Shipping Lines.
After World Fuel Services provided the fuel and S.E. Shipping Lines provided payment, World Fuel services confirmed receipt of payment for the M/V MAGDALENA–as S.E. Shipping Lines’ request, World Fuel Services e-mailed “Thanks-confirm all paid.” It may have come as a surprise to S.E. Shipping Lines when sometime later, World Fuel Services seized the M/V MAGDALENA for nonpayment. World Fuel Services alleged that under its time charter with S.E. Shipping, World Fuel Services could allocate any payment as it desired. Typically, a contractor will allocate payment towards older invoices because newer invoices are given preference in a vessel seizure. World Fuel Service claimed it had done exactly that, paying interest, fees, and older invoices, leaving the new M/V MAGDALENA invoice still oustanding.
Judge Duval in the Eastern District disagreed, finding that when World Fuel Services confirmed the invoice for the M/V MAGDALENA was paid, it was paid. Judge Duval also found World Fuel Services did not and could not re-allocate it because the Federal Maritime Lien Act is premised on the idea that vessels are all separate entities, so the M/V MAGDALENA’s invoice for fuel was for the M/V MAGDALENA itself, not for World Fuel Services to distribute among other debts owed by other vessels. The Fifth Circuit affirmed.
The M/V MAGDALENA is asserting a claim against World Fuel Services for wrongful seizure, which is left open.
Author: Harry Morse