Dresdner Bank AG v. M/V Olympia Voyager

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 05-12220 September 27, 2006
________________________ THOMAS K. KAHN
CLERK
D. C. Docket No. 03-62225-CV-JIC
DRESDNER BANK AG,
Dresdner Bank AG in Hamburg,
NORDDEUTSCHE LANDESBANK-GIROZENTRALE,
KREDITANSTALT FUR,
Plaintiffs-Appellees.
BLOHM AND VOSS GMBH et al.,
Intervenors-Plaintiffs,
STEAMSHIP MUTUAL UNDERWRITING ASSOCIATION
(BERMUDA) LTD.,
Intervenor-Plaintiff
Appellant,
versus
M/V OLYMPIA VOYAGER, a 157.90 meter Blohm Voss
GmbH motor vessel, Hull No. 961,
Greek official number 10750, her engines tackle
equipment, rigging, dinghies, furniture,
appurtenances, etc., in rem, and Olympic World
Cruises, Inc. her owner, in personam,
Defendant.
________________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(September 27. 2006)
Before DUBINA, MARCUS and COX, Circuit Judges.
MARCUS, Circuit Judge:
Steamship Mutual Underwriting Association ("Steamship") appeals from a
district court's final judgment awarding Steamship the principal sum of $61,186.15
and prejudgment interest in the amount of $3,661.72 to satisfy a maritime lien it held
against the M/V Olympic Voyager (the "Voyager" or "vessel"), a cruise ship.
Steamship claims that the district court made two basic errors in calculating the
quantum of its lien: first, the court improperly held that the vessel's arrest cut short
the accrual of Steamship's maritime lien for unpaid insurance premiums; and then, it
improperly calculated the amount of Steamship's lien by considering only the value
2
of insurance invoiced, rather than the insurance provided, before the vessel's arrest.
Steamship also says that the district court erred by denying, as untimely, its Rule 59
motion to alter or amend judgment. Because the district court clearly erred in
calculating the quantum of Steamship's lien, we vacate the district court's judgment
and remand for further proceedings consistent with this opinion.
I.
Olympic World Cruises ("OWC") owned the Voyager and operated it as a
cruise ship in the Mediterranean and the Carribean. Dresdner Bank AG in Hamburg,
Norddeutsche Landesbank-Girozentrale, and Kreditanstalt FÜR Wiederaufbau (the
"Plaintiff Banks") held a First Preferred Ship's Mortgage on the vessel. In 2003,
OWC defaulted on its obligation to the Plaintiff Banks, and on December 16, 2003
the Plaintiff Banks commenced this action to foreclose their mortgage.1 The Plaintiff
Banks had the Voyager arrested and obtained a default judgment against the vessel,
whereupon the district court ordered the vessel's sale at auction. The Plaintiff Banks
then purchased the vessel at auction, and, as a condition of the sale, the district court
1
Also on December 16, 2003, OWC filed a voluntary petition for bankruptcy under
Chapter 11 in the United States Bankruptcy Court, District of Hawaii. The bankruptcy court
issued an automatic stay that prevented the immediate arrest of the Voyager. Then in January,
2004, pursuant to an agreement between OWC and the Plaintiff Banks, the bankruptcy court
entered an order modifying the automatic stay to allow the commencement and prosecution of
actions in rem and in personam by any and all creditors asserting maritime liens against the
Voyager, which allowed this action to proceed.
3
ordered them to defend any claims against the vessel, in rem.
Steamship is a mutual insurance association that provided protection and
indemnity ("P&I") insurance to vessels owned by OWC, including the Voyager.
Under the terms of the Voyager's insurance policy, the vessel's yearly premium was
assessed in six installments, four of which were invoiced during the policy year and
two of which were invoiced in years thereafter. But if the vessel did not renew its
insurance with Steamship, all obligations for previously provided insurance came
due. This acceleration of payments upon cancellation was known as a "release call."
When the vessel was arrested on January 19, 2004, Steamship had invoiced
premiums for the Voyager equaling $61,186.15. In addition, OWC owed further
premium amounts for pre-arrest insurance that had not yet been invoiced. According
to Steamship, the entire amount of P&I insurance premiums OWC owed for insurance
provided to the Voyager during policy years 2001, 2002, and 2003, exclusive of
premiums for insurance provided after the vessel's arrest, totaled $274,770.11.
On March 8, 2004, Steamship intervened in this action and filed a verified
complaint in rem against the Voyager asserting a maritime lien for unpaid insurance
premiums or, in the alternative, an administrative claim and right of priority payment
under the doctrine of custodia legis. The Plaintiff Banks, pursuant to the district
court's order requiring them to defend the Voyager, answered Steamship’s complaint
4
on the vessel's behalf. Thereafter, in October 2004, the district court conducted a
bench trial to adjudicate the claims of all the intervening plaintiffs against the
Voyager.
At trial, Steamship presented the testimony of a fact witness, Jonathan
Andrews, Steamship's underwriter for the Voyager account, and an English law
expert, Charles Brown. The Plaintiff Banks presented no rebuttal witnesses and
submitted no evidence. On November 29, 2004, the district court entered extensive
Findings of Fact and Conclusions of Law, including these:
(1) Steamship’s provision of P&I insurance to the Voyager gave rise
to a maritime lien under the Federal Maritime Lien Act, because
such insurance is a “necessary.”
(2) Steamship's maritime lien takes priority over the Preferred Ship
Mortgage held by Plaintiff Banks.
(3) Steamship's provision of insurance to the vessel after the marshals
arrested it does not give rise to a maritime lien because no new
maritime liens may arise after the vessel is actually arrested. Nor
is Steamship entitled to recover for its provision of post-arrest
insurance under the doctrine of in custodia legis, because the
vessel’s arrest was actual, notice of arrest was published, and
Steamship did not obtain permission from the court to provide the
Voyager with insurance.
(4) Steamship's witness Jonathan Andrews testified that $61,186.15
is the correct amount owed by the Vessel at the time of arrest.
Since no further lien accrued after the arrest, the total amount of
Steamship’s preferred maritime lien equals $61,186.15.
5
Following entry of final judgment, on January 20, 2005, Steamship timely filed
a motion to alter or amend the judgment or to correct a clerical error in the judgment,
pursuant to Federal Rules of Civil Procedure 59(e) and 60(a).2 The motion contained
a typographical error in one of its tables, causing Steamship to file an amended
motion on February 9, 2005. The district court denied Steamship’s motion as being
untimely because the amended motion “rendered Steamship’s original motion of no
legal effect” and the amended motion was filed outside Rule 59(e)'s ten day window.
Accordingly, the district court converted Steamship’s Rule 59(e) motion into
a Rule 60(b) motion for relief from judgment and considered it along with
2
Rule 59(e) provides: "Any motion to alter or amend a judgment shall be filed no later
than 10 days after entry of the judgment." Fed. R. Civ. P. 59(e). Rule 60, in turn, provides:
(a) Clerical Mistakes. Clerical mistakes in judgments, orders or other parts of the
record and errors therein arising from oversight or omission may be corrected . . . on
the motion of any party . . . .
(b) Mistakes; Inadvertence; Excusable Neglect; Newly Discovered Evidence; Fraud,
Etc. On motion and upon such terms as are just, the court may relieve a party or a
party's legal representative from a final judgment, order, or proceeding for the
following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2)
newly discovered evidence which by due diligence could not have been discovered
in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore
denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an
adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released,
or discharged, or a prior judgment upon which it is based has been reversed or
otherwise vacated, or it is no longer equitable that the judgment should have
prospective application; or (6) any other reason justifying relief from the operation
of the judgment.
Fed. R. Civ. P. 60.
6
Steamship's Rule 60(a) motion to correct a clerical error in the judgment. In its
March 16, 2005 order, the district court denied Steamship’s motions. Steamship then
appealed to this Court on April 12, 2005.
II.
Before reaching the merits of Steamship's appeal, we are obliged to address the
Plaintiff Banks' argument that Steamship's untimely notice of appeal deprived us of
appellate jurisdiction. "[N]otice of appeal in a civil case must be filed within 30 days
from the entry of judgment," and a timely filed notice of appeal is prerequisite to this
Court's jurisdiction. See Wright v. Preferred Research, Inc., 891 F.2d 886, 888 (11th
Cir. 1990); accord Fed. R. App. P. 4(a)(1)(A). But
[i]f a party timely files in the district court any of the following motions
. . . the time to file an appeal runs for all parties from the entry of the
order disposing of the last such remaining motion: . . . (iv) to alter or
amend the judgment under Rule 59 . . . or (vi) for relief under Rule 60
if the motion is filed no later than 10 days after the judgment is entered.
Fed. R. App. P. 4(a)(4)(A).
The Plaintiff Banks assert Steamship filed its notice of appeal later than 30
days after entry of judgment. Although they concede that Steamship's original Rule
59 and 60 motions were filed within ten days of the final judgment, which tolled the
period for filing a notice of appeal, see id., they contend that Steamship's amended
Rule 59 and 60 motions -- filed later than ten days after the district court's judgment --
7
completely supersede the original motions. Thus, they say, filing the amended
motions nullified the tolling effect of the original motions, rendering untimely
Steamship’s notice of appeal, which was filed less than thirty days after the district
court’s decision on the amended motions, but more than thirty days after final
judgment.
Plaintiff Banks thus posit that an amended motion supersedes the original
entirely, even as to timeliness and tolling, and cite two cases for that proposition:
Pinion v. Dow Chem. U.S.A., 928 F.2d 1522 (11th Cir. 1991), and Young v. City of
Mount Ranier, 238 F.3d 567 (4th Cir. 2001). Both are inapposite. In Pinion, a panel
of this Court considered whether the district court could extend the deadline for filing
original post-trial motions. 928 F.2d at 1532-34. And in Young, the Fourth Circuit
considered whether a litigant could challenge the dismissal of claims asserted in the
original complaint but not re-alleged in an amended complaint. 238 F.3d at 572.
Neither case decided whether an amended Rule 59 or 60 motion destroys the original
motion’s tolling effect. Instead, this question is controlled by Pate v. Seaboard R.R.,
Inc., 819 F.2d 1074 (11th Cir. 1987). In Pate, following an adverse judgment,
appellants timely filed a Rule 59 motion for new trial, then, seven months later,
amended their motion, asserting new grounds. The district court denied the motion.
Appellee challenged this Court's jurisdiction and the district court's power to grant
8
a new trial on grounds raised only in the amended Rule 59 motion filed outside the
"mandatory and jurisdictional time constraints of Fed. R. Civ. P. 59(b)." Id. at 1083-
84. We squarely rejected that argument, reasoning that "[o]nce an effective new
trial motion has been made, and the finality of the judgment for purposes of appeal
has been thereby suspended, there is no reason for foreclosing amendment of the
motion when this would be justified according to the usual standards for permitting
amendments." Id. at 1085. Thus, we concluded that "a district court may, in its
discretion, allow an amendment to a timely motion for a new trial prior to its decision
on the merits of the motion and that the court may consider new grounds raised in the
amended motion." Id. at 1084.
Because the ten day period for filing a Rule 59 motion is jurisdictional and
cannot be extended, and Pate grants district courts the discretion to consider
amendments to timely filed Rule 59 motions, it follows that an amended post-trial
motion does not supersede the original for purposes of timeliness or, by extension,
tolling. Simply put, Steamship's amended Rule 59 and 60 motions did not affect the
tolling of the original, timely-filed motions and thus Steamship’s notice of appeal was
timely filed. Plainly, we have jurisdiction over the appeal.
III.
Steamship argues that two substantive errors require us to reverse the district
9
court's order. First, the district court erred in denying it recovery for insurance
provided to the Voyager after the vessel's arrest. And second, the district court
miscalculated the amount of Steamship's lien for insurance provided before the
vessel's arrest.
We reject the first argument for two reasons: (1) Steamship is not entitled,
under the doctrine of custodia legis, to equitable prioritization of its claim for the
value of insurance it provided to the vessel after its arrest because it did not first seek
or receive the district court's permission to provide such insurance; and (2) the mere
fact that Steamship provided post-arrest insurance pursuant to an ongoing contract
does not mean Steamship possessed a unitary lien for the value of pre- and post-arrest
insurance, because the vessel's arrest stopped the lien's accrual. We accept
Steamship's second argument, however, because it is clear the district court
improperly calculated the amount of Steamship's lien by including only the value of
insurance Steamship invoiced to OWC before the vessel's arrest. The proper
calculation should have included the value of all insurance Steamship provided to the
vessel before its arrest, regardless of whether it had yet been invoiced.
A.
As for the first argument, Steamship claims that "the obligation for the entire
2003 P&I Insurance premium arose at the inception of the 2003 policy year, as did
10
the priority FMLA lien, [therefore] the custodia legis doctrine was invalidly invoked
to 'cut off' Steamship's lien for the insurance provided for the 34 days after the arrest."
We disagree.
A maritime lien is "[a] special property right in a ship given to a creditor by law
as security for a debt or claim subsisting from the moment the debt arises[.]"
Galehead, Inc. v. M/V Anglia, 183 F.3d 1242, 1247 (11th Cir. 1999) (alterations in
original) (quoting Black's Law Dictionary 969 (6th ed.1990)). The Maritime
Commercial Instruments and Liens Vessel Identification Act ("Federal Maritime
Liens Act" or "FMLA") provides that "a person providing necessaries to a vessel on
the order of the owner or a person authorized by the owner . . . has a maritime lien on
the vessel." 46 U.S.C. § 31342.3 Yet, the long established rule in admiralty law is that
"no lien can attach to a vessel while she is in judicial custody." Donald D. Forsht
Assocs., Inc. v. Transamerica ICS, Inc., 821 F.2d 1556, 1561 (11th Cir. 1987); accord
Oil Shipping (Bunkering) B.V. v. Sonmez Denizcilik Ve Ticaret A.S., 10 F.3d 176,
178-79 (3d Cir. 1993) ("Since the seizure revokes all authority to incur liabilities on
behalf of the ship, one who renders services without first requiring the Court's
permission, does so at his risk." (emphasis added)). Instead, claims for necessaries
3
In 1989, 46 U.S.C. § 31342 superseded 46 U.S.C. § 971 without working any significant
change. Section 971 had used the verb “furnishing” rather than “providing.” Neither party has
suggested that this change could affect our analysis in any way.
11
provided to a ship after its arrest "are paid as 'expenses of justice' in priority to all lien
claims when the dictates of 'equity and good conscious' so require." Donald D. Forsht
Assocs., 821 F.2d at 1561; accord New York Dock Co. v. The Poznan, 274 U.S. 117,
120-21 (1927); Kingstate Oil v. M/V Green Star, 815 F.2d 918, 922 (3d Cir. 1987)
("A person furnishing goods or services to a vessel after its arrest . . . does not acquire
a maritime lien against the vessel for the value of those goods or services."); General
Elec. Credit & Leasing Corp. v. Drill Ship Mission Exploration, 668 F.2d 811, 815-
16 (5th Cir. 1982); Bassis v. Universal Line, S. A., 484 F.2d 1065, 1068 (2d Cir.
1973) ("[T]hose furnishing custodial services to a ship in custodia legis are gambling
on a wholly unpredictable result unless they take the precaution of having their
services authorized in advance by an order of the custodial court." (internal quotation
marks omitted)); Payne v. S.S. Tropic Breeze, 423 F.2d 236, 239 (1st Cir. 1970)
("Expenditures while a ship is in custodia legis do not give rise to maritime liens. .
. . [But] a district court, sitting in admiralty, has the equitable power to give priority
to [such] claims.").
We review for abuse of discretion a district court's exercise of its equitable
power. SEC v. Ginsburg, 362 F.3d 1292, 1297 (11th Cir. 2004) (citing Preferred
Sites, LLC v. Troup County, 296 F.3d 1210, 1220 (11th Cir. 2002)); see also
Associated Metals and Minerals Corp. v. ALEXANDER'S UNITY MV, 41 F.3d
121007, 1018 (5th Cir. 1995) (reviewing for abuse of discretion a district court's
decision to award priority for expenses incurred in custodia legis); Oil Shipping, 10
F.3d at 181-82 (same).
Here, the district court determined that equity and good conscience counseled
against giving priority to Steamship's claims for insurance provided post-arrest. The
district court acknowledged the general rule against accrual of liens after arrest and
the equitable principle of awarding priority for certain claimants who provide services
to a vessel after its arrest. The trial court noted that the Voyager's arrest was actual,
rather than nominal, and notice of the arrest was published in various newspapers.
Moreover, the Voyager ceased normal operations during its arrest. The district court
also found that "Steamship did not apply for, and did not obtain, permission from
either this Court or the Bankruptcy court to render insurance services in custodia
legis." And, as the district court noted, "it was the responsibility of [the vessel's court
appointed custodian] to obtain insurance for the vessel during the period following
arrest." Accordingly, the district court declined to exercise its equitable power to
grant a priority to Steamship's claims for insurance provided post-arrest.
Steamship argues, however, it possesses a maritime lien for post-arrest
insurance because it provided the insurance pursuant to an ongoing contract that
began pre-arrest. In such a case, Steamship contends, the vessel's arrest cannot stop
13
the lien's accrual.
Steamship is right that some courts have held that all performance under an
ongoing contract acquires a single attachment date for purposes of according priority
among competing liens. But it does not follow that a maritime lien continues to
accrue after the vessel's arrest. For example, Steamship cites to Bank One La. N.A.
v. Mr. Dean MV, 293 F.3d 830, 832-38 (5th Cir. 2002). There, BargeCarib sued the
Mr. Dean asserting a lien for breach of a charter party. Bank One acquired a
mortgage against the vessel after BargeCarib's charter began, but before breach of the
charter party occurred. Bank One's mortgage claim took priority over all other claims
against the vessel except for preferred maritime liens, and BargeCarib's lien for
breach of a charter party was preferred only if it arose before the mortgage was filed.
The case presented a question of priority among competing liens: whether the lien
attached when the charterer took control of the vessel, or whether the lien attached
only at the moment of breach. Id. The court held that "[a] maritime lien for breach
of a charter . . . attaches when the owner places the vessel at the charterer's disposal
and remains inchoate until perfected by a breach or discharged by the undisturbed end
of the charter." Id. at 838.
Bank One is uninstructive for several reasons. First, it involved a maritime lien
for breach of a charter party, not provision of necessaries, so its discussion of whether
14
the lien arose at the start of performance or at breach is wholly inapposite. A lien for
necessaries arises, pursuant to clear statutory language, when the claimant provides
necessaries to the vessel. See 46 U.S.C. § 31342. Second, Bank One merely
established the date of first performance as the attachment date for a lien arising from
breach of an ongoing contract; it said nothing about whether such a lien continues to
accrue after a vessel's arrest.
Steamship also relies on Caterpillar Financial Services Inc. v. Aleutian Chalice,
1994 WL 468187, 2-4 (W.D. Wash. Feb. 14, 1994), which is likewise unavailing.
There, an insurer contracted with the vessel to provide necessaries (insurance) for one
year. Nine days after the policy year began, a financial firm acquired a mortgage
against the vessel that took priority over all subsequent maritime liens. The
mortgagor argued that the FMLA creates a lien only for necessaries that are actually
provided to a vessel, and a year's insurance is provided incrementally rather than in
a lump sum. Since the vessel was insured for only nine days before the mortgage
attached, the mortgagor contended that the insurer possessed a preferred maritime lien
for only nine days' premium; the remainder of the unpaid premium would give rise
to a maritime lien, but without priority over the mortgage lien. The district court
rejected this argument, holding that insurance is "provided on a continual basis"
rather than episodically, and therefore the year-long insurance contract gave rise to
15
a single lien for unpaid premiums with an attachment date of the first day of
performance. Id. at 4-6. Thus, the entire lien acquired priority over the mortgage
because performance began before the mortgage attached. Id.
Caterpillar Financial, Bank One, and the other cases Steamship cites, however,
stand merely for a rule of priority ranking: ongoing performance under a single
contract gives rise to a single lien, and the first day of performance establishes the
lien's attachment date for priority ranking purposes. Those cases have nothing to say
about whether the quantum of a maritime lien for unpaid insurance, having attached
at the outset of the policy period, continues to accrue after the vessel's arrest.
Steamship has failed to cite any authority (and we can find none) establishing
that ongoing contracts present an exception to the general rule that providing post-
arrest necessaries creates no lien. In other contexts, such as the collection of
seamen's wages, we have applied the custodia legis doctrine to cut short the accrual
of a maritime lien. See, e.g., The Astoria v. Anglo-American S.S. Agencies, Inc., 281
F. 618, 622 (5th Cir. 1922).4 Moreover, the exception Steamship advocates would
be contrary to the doctrine's underlying policy: controlling custodial expenses and
preserving the res for valid lienholders. See The Poznan, 274 U.S. at 122 (priority
4
The Eleventh Circuit has adopted as precedent the decisions of the former Fifth Circuit
rendered before October 1, 1981. Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.
1981) (en banc).
16
should be accorded to claims for post-arrest expenses only where the expense is "for
the common benefit and which, in equity and good conscience, should be satisfied
before the libelants may enjoy the fruits of their liens"); Pyne v. Oil Screw Fishing
Vessel Chrisway, 298 F. Supp. 1160, 1162 (D. Ga. 1969) ("Admiralty courts must
maintain some sort of control over custodial expenses . . . which are incurred in the
protection of property while in the Marshal's custody. They cannot be determined or
measured by the voluntary action of parties at interest and the latter act at their risk
in the absence of express authorization.").
Thus, we hold that Steamship's continued provision of insurance after the
Voyager's arrest did not give rise to a lien. Moreover, since Steamship concedes that
it provided post-arrest insurance without seeking the court's imprimatur and no other
piece of evidence establishes that the equities somehow favor Steamship, we are fully
satisfied that the district court acted well within its discretion by declining to award
Steamship a priority claim for provision of post-arrest insurance.
B.
As for the amount of its lien for insurance provided pre-arrest, Steamship
argues that the district court erred by calculating the quantum of its maritime lien as
the sum of premiums invoiced pre-arrest, rather than the total amount of insurance
provided pre-arrest. We agree.
17
In its Findings of Fact and Conclusions of Law, the district court held that
"[b]ecause insurance is essential to keep a vessel in commerce, insurance is a
'necessary' and unpaid premiums give rise to a maritime lien under the FMLA. . . .
[A]ll elements of the FMLA are satisfied and Steamship holds a maritime lien." The
district court noted that "Steamship witness Jonathan Andrews testified that
$61,186.15 is the correct amount owed by the Vessel at the time of arrest," and
without further explanation concluded that "Steamship's total preferred maritime lien
is $61,186.15."
We review a district court's factual findings for clear error, and the application
of law to those facts de novo. Lykes Bros., Inc. v. U.S. Army Corps of Engineers, 64
F.3d 630, 634 (11th Cir. 1995); United States v. Harrell, 926 F.2d 1036, 1039 (11th
Cir. 1991). "For a factual finding to be clearly erroneous, this court, after reviewing
all of the evidence, must be 'left with the definite and firm conviction that a mistake
has been committed.'" Lykes Bros., 64 F.3d at 634 (quoting United States v. United
States Gypsum Co., 333 U.S. 364, 395 (1948)).
The evidence at trial clearly established that the Voyager owed Steamship
unpaid premiums for pre-arrest insurance. Steamship presented a corporate
representative, Mr. Andrews, who testified as to the billing arrangement by which
member ships' yearly premiums came due:
18
Q: And are you familiar with how the premiums were assessed or
debited for this ROC fleet entries for 2003/2004 year?
A: Yes, they were debited in six installments, four of which were
debited within the policy year, two of which were debited in the
subsequent two years. So there is a very long lead time into the payment
of the full hundred percent premium.
Q: Given that it is -- that there are two debited premiums outside the
policy year, what occurs if a member decides not to renew the policy for
the following year?
A: Well, they are brought forward so as to insurer [sic] that the owner
that is leaving the club doesn't leave an outstanding debt that would
have to be made up by the members of the club that remain.
Steamship followed the same pattern of billing in the preceding years as well.
This meant that at the end of a policy year, the vessel would still owe two of six
premium payments. As Mr. Andrews testified: "because of the installment program
that the club operates, there will be premiums debited for payments in relation to [the
2002 and 2003] policy years, as I described earlier, that would fall due for payment
in the next two calendar years." Indeed, after the end of the 2003 policy year, when
OWC did not renew insurance on the Voyager, Steamship brought forward all
premium payments owing for policy years 2001-2003.
The evidence adduced at trial is clear and uncontradicted that on the date of the
vessel's arrest, Steamship had provided insurance coverage to the vessel for which
Steamship received no payment. The evidence also clearly established that, while
19
$61,186.15 was the amount currently due when the vessel was arrested, Steamship
had provided insurance to the vessel that had not come due before the vessel's arrest.
Thus, OWC actually owed a larger sum in unpaid premiums.5
Nevertheless, the district court held that Steamship's lien equaled only
$61,186.15. In reaching this conclusion, the district court apparently made the legal
determination that Steamship's maritime lien was limited to premiums invoiced before
the Voyager's arrest. This was error. The FMLA provides that "a person providing
necessaries to a vessel on the order of the owner or a person authorized by the owner
. . . has a maritime lien on the vessel." 46 U.S.C. § 31342. The statute's language
states clearly that one acquires a maritime lien by "providing necessaries to a vessel,"
id. (emphasis added), not by issuing an invoice. Thus, the federal courts have
consistently held that a maritime lien arises when the necessary is provided to the
5
Mr. Andrews' testimony on cross-examination, on which the district court relied in
calculating the quantum of Steamship's lien, established that $61,186.15 was the amount of
premiums due or past due when the Voyager was arrested. Moreover, Mr. Andrews' testified this
way regarding a letter from Steamship to OWC, dated December 23, 2003:
Q: If you look at the last sentence of the first paragraph [of the December 23,
2003 letter], quote, "The present P&I Mutual Premium due on the . . .
Voyager is dollar six one comma one eight six point one five with further
amounts likely to be debited in course," end quote. Do you know if that was
an accurate statement at the time this document was sent?
A: I believe it is accurate, yes.
(emphasis added).
20
vessel. See, e.g., Piedmont & George's Creek Coal Co. v. Seaboard Fisheries Co., 254
U.S. 1, 12-13 (1920) (explaining that a maritime lien arises immediately and secretly
when necessaries are provided to the vessel); Container Applications Int'l, Inc. v.
Lykes Bros. Steamship Co., (In Re Container Applications Int'l., Inc.), 233 F.3d 1361,
1362, 1366 (11th Cir. 2000) (explaining that a maritime lien claimant must have: (1)
provided (2) necessaries (3) to a vessel, (4) by order of the owner or an authorized
agent); Foss Launch & Tug Co. v. Char Ching Shipping U.S.A., Ltd., 808 F.2d 697,
699 (9th Cir. 1987) (same); Riffe Petroleum Co. v. Cibro Sales Corp., 601 F.2d 1385,
1389 (10th Cir. 1979) (Under the FMLA, a "lien arises automatically upon the
furnishing of necessaries"); P.R. Ports Auth. v. BARGE KATY-B, 427 F.3d 93, 103
(1st Cir. 2005) (same); Thomas J. Schoenbaum, 1 Admiralty and Maritime Law 525
(4th ed. 2004) (same).
In view of this well-established principle of law, the district court's judgment
to the contrary is plainly wrong. Steamship possessed a maritime lien for the
insurance it provided before the vessel's arrest, the timing of invoices
notwithstanding. The amount of Steamship's lien should equal the total value of
insurance Steamship provided to the vessel before its arrest. Accordingly, we are
required to vacate the district court's judgment as to Steamship, and remand for
further proceedings to re-calculate the amount of Steamship's lien in light of the
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principles set forth herein.6
VACATED AND REMANDED.
6
Steamship also argues that the district court erred by denying as untimely Steamship's
Rule 59 motion to amend the judgment. But since we have vacated the district court’s judgment,
Steamship's appeal from denial of its Rule 59 motion is moot. See, e.g., Urfirer v. Cornfeld, 408
F.3d 710, 712 (11th Cir. 2005).
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