Opinion
Civil Action No: 01-0038, Section: "D"(4)
January 28, 2002
The non-jury Trial in this matter was held on Monday, January 14, 2002, and post-trial briefing was completed on Tuesday, January 22, 2002. Now, after considering the testimony and evidence offered at Trial, and considering the parties' post-trial memoranda and the applicable law, the court issues the following Findings of Fact and Conclusions of Law.
Findings of Fact
Plaintiff, Maritrend, Inc., a Louisiana corporation, performs cargo stevedoring services at the Port of New Orleans. On or about July 18, 2000, Maritrend contracted with Serac Company, a foreign corporation based in London, England, to provide stevedoring services to the M/V SEVILLA WAVE at the Port of New Orleans.
Maritrend actually discharged cargo from M/V SEVILLA WAVE, at the Port of New Orleans, from July 27 to August 12, 2000. Maritrend invoiced Serac for this service in the amount of $73,104.80, but Serac has never paid Maritrend. At the time stevedoring services were rendered by Maritrend, Hawkspere Shipping Co., Ltd. was the charterer of the M/V SEVILLA WAVE, but Maritrend was unaware of any agency relationship between Serac and Hawkspere.
Maritrend ultimately seized the M/V SEVILLA WAVE claiming a maritime lien against the vessel in rem for non-payment of the stevedoring services. Pimpernel Shipping Company, Ltd. appears in this matter as the claimant and owner of the M/V SEVILLA WAVE.
At all times pertinent hereto, Maritrend never had any contract with the vessel, its owners or managers, and Maritrend never invoiced the M/V SEVILLA WAVE, its owners or managers for the subject stevedoring services. The only invoice Maritrend sent to the M/V SEVILLA WAVE (via the vessel's agent) was for standby time due to crane malfunction.
Conclusions of Law
1. Maritrend's in personam claim against Serac
Serac provided no defense to Maritrend's in personan claim for unpaid stevedoring services provided to the M/V SEVILLA WAVE in the amount of $73,104.80. Accordingly; based upon the unrefuted evidence produced at Trial, Judgment will be entered in favor of Maritrend and against Serac in the principal amount of $73,104.80, plus prejudgment interest at the rate of 12% per annum (pursuant to the subject Tariff) from the dates of the pertinent invoices to entry date of Judgment, and post-judgment interest at the legal rate.
Serac was initially represented by counsel in this mailer, but that counsel was allowed to withdraw because Serac failed to communicate with counsel despite counsel's repeated attempts to do so. (Doc. No. 33).
2. Maritrend's in rem claim against the K/V SEVILLA WAVE
The stevedoring services which Maritrend provided to the M/V SEVILLA WAVE are "necessaries" under the Commercial Instruments and Maritime Liens Act, 46 U.S.C. § 31301 et seq. Maritrend is presumed to have relied on the credit of the vessel, and Maritrend is thus entitled to a federal maritime lien for its unpaid stevedoring services rendered to the M/V SEVILLA WAVE, unless it is shown that Maritrend relied solely on the credit of one other than the vessel at the time services were provided, thereby negating the lien. Equilease Corp. v. M/V SAMPSON, 793 F.2d 598, 605 (5th Cir. 1986) ( en banc); Racal Survey U.S.A., Inc. v. N/V COUNT FLEET, 231 F.3d 183, 189 (5th Cir. 2000).
The prior version of this act is known as the Federal Maritime Lien Act, 46 U.S.C. § 971-975. Racal Survey U.S.A., Inc v. M/V COUNT FLEET, 231 F.3d 183, 187 n. 3 (5th Cir. 2000).
Section 31342(a)(3) of the Commercial Instruments and Maritime Liens Act provides that a person providing necessaries to a vessel "is not required to allege or prove . . . that credit was given to the vessel."
Because of the strong presumption in favor of a maritime lien, the party opposing the lien (here, Pimpernel), must prove that the creditor (here, Maritrend) deliberately intended to look solely to the personal credit of someone other than the vessel and to forego the valuable privilege afforded to it by law. Id. Thus, the question before this court is "what credit did Maritrend rely upon when providing the subject stevedoring services?"
In Equilease, the question was "what credit did the purported lien holder rely upon when advancing payment for insurance premiums?" Equilease, 793 F.2d at 606.
The Trial testimony established that, in July-August 2000, at the time Maritrend provided the subject stevedoring services to the M/V SEVILLA WAVE, Maritrend relied solely on the credit of Serac, its customer, for payment of those services. There was no evidence that Maritrend conducted its business with Serac in such a way as to preserve a federal maritime lien against the M/V SEVILLA WAVE. It was not until several months after Maritrend performed the stevedoring services, when it became clear that payment would not be forthcoming from Serac, that Maritrend sought payment from the vessel.
While the facts and circumstances of this case, analyzed under Equilease and Racal, mandate a holding that Maritrend did not rely on the credit of the vessel at the time the subject stevedoring services were provided, the court nevertheless finds that Maritrend's forbearance or delay in going after the secondary creditor (here, the vessel), until after the primary creditor (here, Serac) defaulted payment, is typical of what is done in the normal course of business.
While the President and Senior Officer of Maritrend, William T. Bergeron, testified that if payment was not received from Serac, Maritrend always relied on its in rem right against the vessel as a "fall-back position", the court was not convinced by any of the witnesses' testimony that Maritrend was relying on the M/V SEVILLA WAVE's credit in July-August 2000, when Maritrend actually provided the stevedoring services. Indeed, Petra Smith, the Vice President of The Bergeron Group and Corporate Secretary of Maritrend, testified that she collected delinquent and overdue invoices for stevedoring services, but that in this matter, she never contacted the owner, manager, or master of M/V SEVILLA WAVE for payment. Instead, Maritrend's counsel was instructed to file this lawsuit in February 2001.
In Equilease, a representative for the creditor testified that "There is no intent for us to give up anything," and the creditor alleged on appeal that Equilease had not adduced enough evidence of the creditor's reliance on someone or something other than the vessels to show that the creditor waived its lien. Equilease, 793 F.2d at 606. However, in light of uncontradicted testimony at Trial that the creditor had totally relied on the credit of entities other than the vessel, coupled with a similar concession made by the creditor in its original appellate brief, the court found that the presumption of reliance on the credit of the vessel was overcome. Id. The court noted:
The dissent argues that the question is not whether [the creditor] consciously relied on the credit of the vessel. Rather, the dissent insists that "the question which should be asked is whether the record compels the inference that [the creditor] deliberately or purposefully intended to forego its right to a lien." The answer to the question is, yes. First, in the absence of reliance — intention, by presumption, or otherwise — there is no right to claim a lien; in different words, if one purposefully foregoes reliance on the credit of the vessel, it is tantamount to purposefully foregoing the right to claim a lien against the vessel. Thus, when [the creditor] deliberately chose not to rely on the credit of the vessel, as a mailer of law it purposefully intended to forego its right to claim the lien.Id. at n. 9.
In Racal, the President of the supplier testified as follows:
Q: So you weren't relying on the credit of Tidewater or any of its vessel when you were entering into this contract with Coastline?
A: Yeah, I mean, our contract was with Coastline. That was our customer.
Q: At the time of contracting with Coastline, you weren't looking to Tidewater or any of its vessels for payment of Coastline's contract with [Racal]?
A: I had no contract with Tidewater.
Q: You had no dealings with Tidewater whatsoever?
A: No. I had no-no.
Racal, 231 F.3d at 189 (emphasis added).
Based on this explicit testimony, the Racal court found that Racal deliberately chose not to rely on the credit of the . . . chartered vessels, and thus, Racal purposefully intended to forego its maritime lien. Id. The court did not require testimony that Racal looked solely to Coastline or some other entity other than the vessels to rebut the presumption that Racal relied on the credit of the vessels. Id. at 189-90.
Other witnesses called to testify at Trial included both past and present employees of Maritrend: Donald Broussard (sales); Tyronne Jennings (a former logistics manager for Maritrend); and James Stillwell (Vice President and General Manager of Maritrend). They consistently testified that when Maritrend provided stevedoring services, Maritrend expected its customer to pay the related invoices. In this matter, Serac was Maritrend's customer.
Because this court does not write with a clean slate, the Equilease and Racal cases dictate that Maritrend's reliance on the credit of the vessel, months after services were provided, does not entitle Maritrend to a maritime lien on the M/V SEVILLA WAVE. As a matter of law, Maritrend waived its right to a maritime lien against the M/V SEVILLA WAVE, because when Maritrend provided the subject stevedoring services to the M/V SEVILLA WAVE, "the credit of the vessel was not considered in the slightest, and not having been considered, there plainly could have been no reliance." Equilease, 793 F.2d 606, n. 8.
The dissent in Equilease points out that the majority's conclusion that the creditor did not rely on the credit of the vessel is "bottomed on a finding that [the creditor] relied on the credit of the vessel owner and others without consciously considering whether he would lien the vessel if the owner defaulted." Equliease, 793 F.2d at 607. The dissent further states that: "In holding that this is sufficient to rebut the presumption of reliance by a supplier on the credit of the vessel, the court . . . creates serious practical problems in the enforcement of maritime liens." Id.
This court agrees with the dissent, and finds that in this case "the record evidence does not suggest any reason [Maritrend] would relinquish (its] right to a lien and [Mr. Bergeron's] testimony that [Maritrend] did not intend to give up this right is completely credible." Id. at 609. However, the court is bound by the majority's holding to rule against Maritrend.
Further, documentary evidence presented at Trial (while alone insufficient to demonstrate that Maritrend solely relied on Serac's credit) dovetails the testimony of Maritrend's employees that Maritrend intended to look solely to Serac for payment of the subject stevedoring services. The Maritrend tariff (on file with the Board of Commissioners of the Port of New Orleans and part of the contract for stevedoring services) specifically provides for charges (such as wharfage and dumurrage) that are expressly for the vessel's account. ( See Joint Exhibit 7, Tariff, Items 401, 412, 416 420). However, the tariff does not state that the vessel is responsible for charges related to loading and unloading the vessel. ( See Joint Exhibit 7, Tariff, § VI). Such charges for loading and unloading are expected to be paid for by the customer, here, Serac.
In Racal, the court found that some record evidence suggested that Racal (the supplier/creditor) intended solely to look towards Coastline or some other party other than the vessel for payment.
For example, Racal forwarded a promissory note to Coastline to finance the purchase of a computer system. in addition, Racal's lease proposal to Coastline states that Racal would submit itemized bills to Coastline and that Coastline had to make payment within 30 days. of course, neither piece of evidence [was] sufficient to demonstrate that Racal solely relied on Coastlines's credit. . . .Racal, 231 F.3d at 190 n. 6.
The court recognizes that Item 200 of the Tariff provides:
CONSENT TO THE TARIFF
Use of the wharves, other facilities or property under the jurisdiction of Maritrend, Inc. (then hereafter referred to as Maritrend) shall constitute a consent to the terms and conditions of this tariff and evidences an agreement on the part of all vessels, their owners, charters, and agents, or other users to pay all applicable charges and abide by all rules and regulations of Maritrend, and abide by the rules and regulations of this tariff.
(Joint Exhibit, Tariff § 11, Item 200, emphasis added).
However, such general language does not show that Maritrend relied on the credit of vessels for stevedoring work, when other more specific provisions of the Tariff expressly state which charges (such as wharfage and demurrage) are the vessel's responsibility, and § VI of the Tariff dealing with "Loading Loading" is silent as to the vessel's responsibility. ( See Joint Exhibit 7, Tariff, Items 401, 412, 420). To interpret the language in Item 200 otherwise would make the more specific provisions superfluous.
After the stevedoring services were provided to the M/V SEVILLA WAVE, Maritrend addressed its invoices seeking payment totaling $73,104.80 for this work to Serac. ( See, Joint Exhibit 2, Maritrend Invoices 0001123-IN 0001124-IN, referencing "FOR THE ACCOUNT OF THE OWNER (S) /AGENT (S) AND/OR CHARTERER (S) OF THE MV SEVILLA WAVE"). These invoices did not contain language that negated any intent to waive a maritime lien against the vessel.
These invoices do not state that they are for the account of the vessel.
The dissent in Equilease voiced its concern that:
the rule adopted by the majority "will have untoward consequences in maritime litigation. First, an untoward amount of unproductive trial time will be expended trying to divine the subjective thoughts of the supplier as to whether he considered at the time of the sale whether he would lien the vessel if his bill was not paid. If the supplier is a large concern with distinct sales and credit departments the subjective intent of several persons may be relevant. The small unsophisticated supplier uninformed about liens and unaware that his services or supplies give rise to a maritime lien will face a serious problem. According to the majority, such a supplier who has no knowledge that the vessel is liable for the debt and thus does not rely on the credit of the vessel waives his lien. Many of the larger firms will incorporate language in their invoices that will negate any intent to waive the lien. But the less sophisticated individuals and small suppliers — who need lien protection the most — will frequently lose their lien.Equilease. 793 F.2d at 610.
Finally, while the court concludes that Maritrend is not entitled to a maritime lien for the subject stevedoring services because Maritrend totally relied on the credit of Serac when it provided these stevedoring services, the court does find that the M/V SEVILLA WAVE is liable for the $1,912.50 for standby time incurred as a result of crane malfunction, as reflected in Invoice No. 0001126-IN, addressed to Navios Ship Agencies, Inc. (the vessel's agent). ( See Joint Exhibit 2, Maritrend Invoice 0001126-IN).
Accordingly, Judgment will be entered in favor of Maritrend and against Pimpernel in the principal amount of $1,912.50, plus prejudgment interest at the rate of 7% per annum from the date of the pertinent invoice to entry date of Judgment and post-judgment interest at the legal rate.