Crimson Yachts v. Betty Lyn II Motor Yacht

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
APRIL 12, 2010
No. 09-11288
JOHN LEY
________________________ CLERK
D. C. Docket No. 08-00334-CV-WS
CRIMSON YACHTS,
an unincorporated division of Horizon
Shipbuilding, Inc., an Alabama corporation,
Plaintiff-Appellant,
versus
BETTY LYN II MOTOR YACHT,
Official No. 55036, in rem,
BLYN II HOLDING, LLC,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Southern District of Alabama
_________________________
(April 12, 2010)
Before BLACK, MARCUS and HIGGINBOTHAM,* Circuit Judges.
BLACK, Circuit Judge:
*
Honorable Patrick E. Higginbotham, United States Circuit Judge for the Fifth Circuit,
sitting by designation.
Appellant, shipyard Crimson Yachts, seeks to enforce a maritime lien for
major repairs it performed on a motor yacht, Appellee the Betty Lyn II. Crimson
Yachts claims the yacht’s owner, Appellee BLyn II Holding, LLC (Blyn), failed to
make full payment for the repairs. Crimson Yachts sued the Betty Lyn II in rem,
and sued BLyn in personam, to recover the remainder of the debt. Pursuant to
Appellees’ joint motion, the district court dismissed the in rem claims against the
Betty Lyn II and vacated its arrest. The district court found the Betty Lyn II was
not a “vessel” subject to maritime liens. Because the maritime lien was a
prerequisite to the court’s admiralty jurisdiction, the court concluded it lacked
jurisdiction over the in rem proceeding against the Betty Lyn II. The issue we
resolve on appeal is whether the Betty Lyn II is a vessel and, therefore, subject to
maritime liens and the court’s admiralty jurisdiction. We conclude that she is and
reverse and remand for further proceedings.
I. BACKGROUND
The Betty Lyn II is a 132-foot yacht built in 1974. In 2006, the parties
agreed to have Crimson Yachts perform a major overhaul on the Betty Lyn II to
include, inter alia, extension of its decks and replacement of its engines,
generators, electronics, navigation equipment, plumbing, and wiring. The
original estimated duration of the repair was 15 months. After the parties agreed
2
to the repairs, the Betty Lyn II’s engines, propellers, propeller shafts, generators,
and most of its furniture and equipment were removed, and it was towed to
Crimson Yachts’s shipyard in Alabama. Crimson Yachts began work on the Betty
Lyn II around October 1, 2006. The repairs required Crimson Yachts to remove
the Betty Lyn II from the water with cranes and place her on a cradle in a covered
shed. The work and the corresponding payments continued for a year and a half.
Then, in March 2008, BLyn allegedly ceased payment for the repairs. Crimson
Yachts claims the amount in unpaid invoices currently exceeds $1,200,000.
Crimson Yachts filed suit on June 11, 2008. The Appellees jointly filed a
motion to vacate the arrest of, and to dismiss the in rem claims against, the Betty
Lyn II for lack of admiralty jurisdiction. The district court held a motion hearing
on October 29, 2008 at which the court heard testimony about the overhaul and
condition of the Betty Lyn II.1 On February 26, 2009, the district court issued an
order concluding that a ship must be “in navigation” to be a “vessel,” and finding
the major overhaul of the Betty Lyn II had taken the yacht out of navigation,
1
“[W]hether maritime jurisdiction exists is a question anterior to, although often
coincident with, the question of whether the plaintiff has a maritime lien.” Wilkins v.
Commercial Inv. Trust Corp., 153 F.3d 1273, 1276 (11th Cir. 1998). As in Armour & Co. v.
Fort Morgan S.S. Co., 270 U.S. 253, 46 S. Ct. 212 (1926), this “case is not of that class where
the existence of jurisdiction is conclusively determined by the first pleading of him who institutes
the suit,” but rather requires us to “consider whether the facts developed after the filing
. . . preclude the exercise of admiralty jurisdiction.” Id., 270 U.S. at 258–59, 46 S. Ct. at 214.
3
thereby divesting her of her status as a vessel. The district court dismissed the in
rem claims against the Betty Lyn II and vacated her arrest. This timely
interlocutory appeal followed.
II. STANDARD OF REVIEW
The Constitution empowers the federal judiciary to hear “all Cases of
admiralty and maritime Jurisdiction.” U.S. Const. art. III § 2, cl. 2. Congress, in
accordance with Article III, vested in federal district courts “original and exclusive
jurisdiction over ‘any case of admiralty or maritime jurisdiction.’” Sea Vessel, Inc.
v. Reyes, 23 F.3d 345, 348 (11th Cir. 1994) (quoting 28 U.S.C. § 1333(1)). This
Court reviews de novo the district court’s dismissal for lack of admiralty
jurisdiction. Bd. Of Comm’rs of the Orleans Levee Dist. v. M/V Belle of Orleans,
535 F.3d 1299, 1305 (11th Cir. 2008).
III. DISCUSSION
An in rem admiralty proceeding requires as its basis a maritime lien. The
Rock Island Bridge, 73 U.S. (6 Wall.) 213, 215 (1867). “A maritime lien is a
special property right in a ship given to a creditor by law as security for a debt or
claim,” and it attaches “the moment the debt arises.” Dresdner Bank AG v. M/V
Olympia Voyager, 465 F.3d 1267, 1272 (11th Cir. 2006) (citing Galehead, Inc. v.
M/V Anglia, 183 F.3d 1242, 1247 (11th Cir. 1999) (quotations omitted).
4
Maritime liens differ from other common law liens in that a maritime lien is “not
simply a security device to be foreclosed if the owner defaults”; rather, a maritime
lien converts the vessel itself into the obligor and allows injured parties to proceed
against it directly. Amstar Corp. v. S/S Alexandros T., 664 F.2d 904, 908–09 (4th
Cir. 1981). This is called an in rem proceeding. “An in rem suit against a vessel
is . . . distinctively an admiralty proceeding, and is hence within the exclusive
province of the federal courts.” Belle of Orleans, 535 F.3d at 1314 (quoting Am.
Dredging Co. v. Miller, 510 U.S. 443, 446–47, 114 S. Ct. 981, 985 (1994)).
Federal district courts obtain in rem jurisdiction over a vessel when a
maritime lien attaches to it. Industria Nacional Del Papel, CA. v. M/V Albert F,
730 F.2d 622, 625 (11th Cir. 1984). Upon filing an in rem complaint, the clerk of
court issues a warrant for the arrest of the res. See Merchs. Nat’l Bank v. Dredge
Gen. G.L. Gillespie, 663 F.2d 1338, 1340 n.1 (5th Cir. 1981) (quoting Fed. R. Civ.
P., Supplemental Rules for Certain Admiralty and Maritime Claims (Rule C)).
The res remains in the court’s custody during the proceeding as serves as both the
respondent and the subject matter. See 2 Benedict on Admiralty § 21 at 2-6 to 2-8
(7th ed. rev. 1998).
The Federal Maritime Lien Act, 46 U.S.C. §§ 31341–31343, grants
maritime liens to particular persons based on their relationship to, or service of, a
5
vessel. For example, the Act grants a maritime lien to “a person providing
necessaries to a vessel.” See id. § 31342(a). The Act then grants maritime
lienholders the right to “bring a civil action in rem to enforce the lien.” Id. In
other words, “[a] maritime lien gives to its holder a property right in a vessel, and
the proceeding in rem is . . . a means of enforcing the property right.” See Merchs.
Nat’l Bank, 663 F.2d at 1346. A maritime lien cannot be executed or divested
outside of an in rem proceeding. Vandewater v. Mills, 60 U.S. 82, 89 (1856).
Crimson Yachts claims that its repair work on the Betty Lyn II entitles it to
a maritime lien. Crimson Yachts sought to enforce this lien by filing in rem claims
against the Betty Lyn II and causing the court to effect her arrest. Appellees claim
Crimson Yachts’s work on the Betty Lyn II did not result in a maritime lien,
because the yacht is not a “vessel” according to maritime law, and thus is not
subject to maritime liens. The issue, then, is whether the Betty Lyn II is a “vessel”
subject to maritime liens and the court’s jurisdiction, or whether the extensive and
time-consuming nature of the repairs divested the Betty Lyn II of her vessel status,
thereby making her ineligible for a maritime lien and depriving the district court of
admiralty jurisdiction over the in rem claims in this case.
6
A. The Purpose of Maritime Liens
In resolving whether the district court’s admiralty jurisdiction encompasses
the claims against the Betty Lyn II, we review the purpose, origin, and
development of maritime liens. “The maritime lien developed as a necessary
incident of the operation of vessels.” Piedmont & George’s Creek Coal Co. v.
Seaboard Fisheries Co., 254 U.S. 1, 8, 41 S. Ct. 1, 3 (1920) (elaborating on the
intent behind § 31342(a)’s predecessor statute, the Act of June 23). Maritime liens
have special features designed to protect persons who own, sail, and service ships
from the unique risks associated with the shipping industry.
Maritime liens originated, in part, “in a desire to protect the ship,” which is
“peculiarly subject to vicssitudes which would compel abandonment . . . unless
repairs and supplies were promptly furnished.” Id. at 9, 41 S. Ct. at 3. Ships
braved the danger of the seas dependent on a solid construction and a skillful
crew. Should structure or seaman fail, ships had little to compensate for the loss
and, at times, had to seek the help of strangers. Ships, however, often lacked items
of sufficient value to offer in exchange for the help they needed.
Because a ship was often in need of repairs and necessaries while it was
away from its home port and without large sums of money on board, maritime
liens enabled persons in charge of the ship to use the value of the vessel itself as a
7
pledge of credit in order to secure the work and parts it needed during the voyage.
Id.; see also Veverica v. Drill Barge Buccaneer No. 7, 488 F.2d 880, 883 (5th Cir.
1974) (“The very purpose of maritime liens is to encourage necessary services to
ships whose owners are unable to make contemporaneous payment.”);2 The
Alligator, 161 F. 37, 40 (3d Cir. 1908) (explaining maritime liens facilitate
commerce by encouraging merchants to furnish ships with supplies and repairs); 2
Benedict on Admiralty § 21 at 2-1 (7th ed. rev. 1998). “Moneys are not usually
loaned to strangers, residents of distant and foreign countries, without security,
and it would be a violent presumption to suppose that any such course was
adopted when ample security in the vessel was lying before the parties.” Wilkins
v. Commercial Inv. Trust Corp., 153 F.3d 1273, 1276 (11th Cir. 1998) (citing The
Emily Souder, 84 U.S. (17 Wall.) 666, 671 (1873)).
Maritime liens could attach “even if the vessel owner ha[d] not personally
contracted” for the services performed. S.E.L. Maduro (Fla.), Inc. v. M/V Antonio
de Gastaneta, 833 F.2d 1477, 1482 (11th Cir. 1987); see also 46 U.S.C.
§ 31341(a). This feature, too, addressed the unique needs of ships sailing far away
from their home ports.
2
The Eleventh Circuit, in the en banc decision Bonner v. City of Prichard, 661 F.2d 1206,
1207, 1209 (11th Cir.1981), adopted as precedent decisions of the former Fifth Circuit rendered
prior to October 1, 1981.
8
In addition to the unique nature of maritime liens, the maritime-lien priority
system facilitated a ship’s ability to offer something of value in exchange for what
it needed. Maritime liens have priority over non-maritime liens and priority over
other maritime liens in reverse chronological order: that is, the most recent lien
possesses the superior claim. The Emily Souder, 84 U.S. at 672; The St. Jago de
Cuba, 22 U.S. (9 Wheat.) 409, 416 (1824); see also 2 Benedict on Admiralty § 51
at 4-1 to 4-4 (7th ed. rev. 1998). This is because “[i]f liens created by the
necessities of vessels in a foreign port could be subordinated to or displaced by
mortgages to prior creditors at home, such liens would soon cease to be regarded
as . . . affording any reliable security.” The Emily Souder, 84 U.S. at 672. This
reverse-chronology priority system does no disservice to earlier claimants because,
as with funds, when services are “[a]dvanced for the security and protection of the
vessel, they . . . benefit . . . the mortgagees as well as . . . the owners.” See id.
Most importantly, the priority system encourages repairmen to service the ships of
strangers without knowing anything of the ship’s prior credit history. These
special features facilitate ships’ ability to contract with persons able to supply and
repair them, wherever ships might find themselves.3
3
Also influencing the development of maritime liens may have been the historical concept
of a vessel as a person with independent liability. See Detroit Trust Co. v. Barlum S.S. Co., 293
U.S. 21, 48, 55 S. Ct. 31, 40 (1934) (“The ship from the moment her keel touches the water . . .
acquires personality; she becomes competent to contract, is individually liable for her
9
Maritime liens have additional qualities specially designed to protect those
furnishing ships with repairs and supplies. For instance, maritime liens protect
repairmen and suppliers from clients who might be tempted to sail their vessels
away after services are rendered. See Equilease Corp. v. M/V Sampson, 793 F.2d
598, 602 (5th Cir.1986) (en banc) (“The federal maritime lien is a unique security
device, serving the dual purpose of keeping ships moving in commerce while not
allowing them to escape their debts by sailing away.”); see also Ventura Packers,
Inc. v. F/V Jeanine Kathleen, 305 F.3d 913, 919 (9th Cir. 2002). Maritime liens
allow injured parties, such as unpaid repairers or suppliers, to “obtain redress . . .
without seeking compensation abroad from the vessel’s owner,” enabling them to
proceed directly against the vessel in rem. See Amstar Corp. v. S/S Alexandros T.,
664 F.2d 904, 909 (4th Cir. 1981). The liens vest in “creditors who provide
supplies which are necessary to keep the ship going. . . . the right to appropriate
the vessel, have it sold, and be repaid the debt from the proceeds.” Silver Star
Enters., Inc. v. Saramacca MV, 82 F.3d 666, 668 (5th Cir. 1996) (quoting
obligations, and is responsible for her torts.”) (quotations omitted); see also Equilease Corp. v.
M/V Sampson, 793 F.2d 598, 602 (5th Cir. 1986) (en banc), cert. denied, 479 U.S. 984, 107 S.
Ct. 570 (1986) (“The maritime lien concept thus somewhat personifies a vessel as an entity with
potential liabilities independent and apart from the personal liability of its owner.”); Merchs.
Nat’l Bank, 663 F.2d at 1345 (“The maritime lien has at its basis, to a substantial extent, the
historical and theoretical concept of personification . . . .”); 2 Benedict on Admiralty § 21 at 2-2
(7th ed. Rev. 1998).
10
Dampskibsselskabet Dannebrog v. Signal Oil & Gas Co., 310 U.S. 268, 280, 60 S.
Ct. 937, 943 (1940) and Equilease, 793 F.2d at 602).
The adhesive nature of maritime liens provides additional protection to
repairmen and suppliers. Unlike mechanics’ and materialmen’s liens, maritime
liens do not depend on the injured party’s possession of the vessel; a maritime lien
travels with the vessel wherever it goes, regardless of into whose hands it may
pass, whether or not the lien is recorded. Vandewater, 60 U.S. at 89 (1856)
(describing a maritime lien as a “secret” right of the lienholder in the property
even when he is “without actual possession or any right of possession,” and
acknowledging the lien remains with the vessel, even surviving its purchase by a
bona fide buyer); Equilease, 793 F.2d at 602.
Thus, maritime liens benefit those who own, lend to, and repair vessels,
such that persons able to provide for ships’ immediate needs are assured a
significant, clear, and predictable security device that is tailored to the unique
features of maritime commerce.
B. A Brief History of Maritime Lien Legislation
It is not surprising that, given the historical nature and special needs of the
shipping industry, maritime lien laws are no recent development. Maritime liens
existed in Continental Europe and first emerged in the United States through state
11
and common law. See 2 Benedict on Admiralty §§ 36–37 at 3-21 to 3-22; § 41, at
3-44 (7th ed. rev. 1998). This decentralized development of the lien laws resulted
in a “confusing collection of individual statutes enacted over . . . centuries—each
enacted to solve some particular problem of the day.” See H. R. REP. NO. 100-
918, at 11 (1988). The statutes were “poorly organized, duplicative, often
obsolete, and difficult to understand and apply.” Id.
The competing legal regimes governing maritime liens were further
complicated by geographical variance. Different locations had different rules
governing whether liens could attach, depending on, for example, a ship’s origin
and port of service. See H. R. REP. NO. 46-1698 at 1–3 (1880). The laws also
differed as to when during the repair process a lien could attach. Id. Congress
recognized the need to unify and simplify the law. See The Gertrude v. Coward,
38 F.2d 946, 948 (5th Cir. 1930) (noting one of the purposes of the Act of June 23,
1910 was to replace state maritime-lien statutes with a single, national law).
In 1910, Congress passed the first version of the Federal Maritime Lien Act,
establishing a uniform national maritime lien system. See id; Act of June 23,
1910, ch. 373 § 1, 36 Stat. 604 (current version at 46 U.S.C. § 31342(a)). The Act
of June 23, 1910 stated:
Any person furnishing repairs, supplies, or other necessaries, including
the use of dry dock or marine railway, to a vessel, whether foreign or
12
domestic, upon the order of the owner or owners of such vessel, or of a
person by him or them authorized, shall have a maritime lien on the
vessel which may be enforced by a proceeding in rem, and it shall not
be necessary to allege or prove that credit was given to the vessel.
In enacting the statute, Congress did not intend to “change the general
principles of the law of maritime liens”; instead, Congress meant “to simplify and
clarify the rules [governing] maritime liens as to which there had been much
confusion,” to eliminate “artificial distinction[s],” and to “substitute[] a federal
statute for numerous state statutes.” Dampskibsselskabet Dannebrog, 310 U.S. at271–72, 60 S. Ct. at 939–40; Equilease, 793 F.2d at 602–03 (noting prior to the
Act there was “a discrepancy . . . as to when and under what circumstances” a
maritime lien would apply and noting that with the enactment of the law, “a single
federal statute is substituted for the state statutes . . . and the old geographical
distinctions are gone”).
The first national law laid a solid foundation for creating a comprehensible
and user-friendly lien system, but it did not totally eliminate the confusion
surrounding maritime liens. As a result, the Act was amended over time for the
purpose of further simplifying and clarifying the lien system. See, e.g., H. R. REP.
NO. 100-918, at 11 (1988). The most recent version of the law was enacted in
1989, when 46 U.S.C. § 31342 superseded an amended version of the original Act
13
“without significant change.” In re Container Applications Int’l, Inc., 233 F.3d
1361, 1363 n.2 (11th Cir. 2000).
Like its predecessors, Congress passed the current version of the Federal
Maritime Lien Act to resolve misunderstandings that had developed about the
meaning of the Act; Congress did not intend to effect any dramatic substantive
change. Dresdner Bank, 465 F.3d at 1272 n.3; Silver Star Enters., 82 F.3d at 668
n.2; H. R. REP. NO. 100-918, at 15 (1988). In enacting the current statute,
Congress sought to eliminate any confusion surrounding the meaning of the law
and intended that “the literal language of the statute [w]ould control the
disposition of the cases” interpreting it. H. R. REP. NO. 100-918, at 16 (1988).
C. “Vessel” Status as a Prerequisite to Attaching a Maritime Lien
Notably, in each iteration of the Federal Maritime Lien Act, the statutory
language specifies that only repairs performed on a “vessel” generate a maritime
lien. Thus, a ship’s characterization as a “vessel” is a mandatory prerequisite to
the attachment of a maritime lien. Because a district court’s authority to arrest a
ship and to adjudicate an in rem proceeding against it requires the attachment of a
maritime lien, both the lien and the district court’s jurisdiction depend on a ship’s
status as a “vessel.”
14
Title 1 U.S.C. § 3 provides the default definition of “vessel” for the entire
United States Code. Stewart v. Dutra Constr. Co., 543 U.S. 481, 490, 125 S. Ct.
1118, 1124 (2005). “The word ‘vessel’ includes every description of watercraft or
other artificial contrivance used, or capable of being used, as a means of
transportation on water.” 1 U.S.C. § 3. This case hinges on whether the Betty Lyn
II falls within that description. If the Betty Lyn II is not capable of being used for
water transportation, Crimson Yachts cannot possibly have a maritime lien for the
repairs it performed on her, and the district court would, therefore, have no
admiralty jurisdiction to adjudicate the in rem claims.
In deciding whether a watercraft is a vessel, “the focus . . . is the craft’s
capability, not its present use or station.” Bd. of Comm'rs of the Orleans Levee
Dist. v. M/V Belle of Orleans, 535 F.3d 1299, 1310 (11th Cir. 2008). The
dispositive question is “whether the watercraft’s use as a means of transportation
on water is a practical possibility or merely a theoretical one.” Id. (quoting
Stewart, 543 U.S. at 496, 125 S. Ct. at 1118) (quotation marks omitted); Cain v.
Transocean Offshore USA, Inc., 518 F.3d 295, 300 (5th Cir. 2008); see also
Holmes v. Atlanta Sounding Co., 437 F.3d 441, 448 (5th Cir. 2006) (“Under § 3, a
‘vessel’ is any watercraft practically capable of maritime transportation,
15
regardless of its primary purpose or state of transit at a particular moment.”
(quotations omitted)).
Shortly after the passage of the original federal maritime lien statute, the
Supreme Court expounded on which ships qualify as vessels for the purpose of
admiralty jurisdiction. See N. Pac. S.S. Co. v. Hall Bros. Marine Ry. &
Shipbuilding Co., 249 U.S. 119, 29 S. Ct. 221 (1919). The Supreme Court made
clear that a ship towed into port for extensive repairs may remain a vessel subject
to admiralty jurisdiction during the overhaul. The steamship in question in Hall
Brothers “had been wrecked, and had remained submerged for a long time; ice
floes had torn away the upper decks, and some of her bottom plates also needed to
be replaced.” Id. at 123, 29 S. Ct. at 222. Like the Betty Lyn II, the ship in Hall
Brothers was towed to a ship yard and then placed in drydock to undergo
extensive repairs—in that case, to ready the ship for an Alaskan voyage. Id. The
Supreme Court held that the steamship, despite its dilapidated state and extensive
overhaul, remained subject to admiralty jurisdiction during the repair period. Id.
at 129, 29 S. Ct. at 224.
The former Fifth Circuit, too, provided early guidance as to which ships
were vessels subject to maritime liens. See Pleason v. Gulfport Shipbuilding
Corp., 221 F.2d 621 (5th Cir. 1955). In Pleason, the plaintiffs sought to enforce a
16
maritime lien on the steamship the Carol Ann for work done converting the ship
into a shrimp processing, freezing, and storage plant. Id. at 622–23. The
defendants argued the Carol Ann was not a “vessel” under maritime law. Id. at
622. When the Carol Ann was brought in for repairs, she had been gutted and had
to be towed, much like the Betty Lyn II in this case. Id. at 622–23. The Carol
Ann had no propellers, propeller shafts, crew, working machinery, light, heat,
power, engines, or steering apparatuses when she was brought in for repairs. Id.Although she regained her own power system, the repairs left the Carol Ann
without motive or steering power and moored to a dock by steel cables with her
telephone and electric lines connected to the land. Id. at 623.
The Carol Ann was afloat, had a superstructure, masts, decks, and cabins
and was capable of being towed both before and after the repairs. Id. Thus, the
Pleason Court held that the steamship was a vessel, emphasizing she was “capable
of being used as a means of water transportation.” Id. Pleason, like Hall
Brothers, suggests the Betty Lyn II is a vessel despite undergoing a massive
overhaul, because she maintained her structure and was capable of being towed
both prior and subsequent to the repairs at issue.
In Belle of Orleans, this Circuit, guided in part by Pleason, held that a
gambling boat that broke free during Hurricane Katrina, severely damaging itself
17
and a marina, was a vessel for purposes of admiralty jurisdiction, even though it
had steel cables mooring her to the shore and her electric, computer, sewage, and
phone systems were linked to land. 535 F.3d at 1307, 1316. As the Belle of
Orleans maintained a captain, a crew, a deck, a superstructure, cabins, engines,
and generators, and was afloat and capable of being towed in for repairs, this
Circuit held it satisfied the requirements of 1 U.S.C. § 3. Id. at 1312.
The Belle of Orleans Court distinguished between vessels that are
“temporarily stationed in a particular location” and non-vessels “permanently
affixed to shore or resting on the ocean floor.” Id. at 1310 (quoting Stewart, 543
U.S. at 493–94, 125 S. Ct. At 1127) (emphasis added).4 This dichotomy is useful
in examining the Betty Lyn II. Despite her “state of transit at [the] particular
moment,” see Stewart, 543 U.S. at 427, 125 S. Ct. at 1129, the Betty Lyn II had
been towed in for repairs, maintained her structure during the overhaul, and could
have been put in the water and towed within 24 hours. She was not permanently
affixed to land or to the bottom of the ocean in a manner that sapped her practical
4
Ships rendered permanently incapable of maritime transportation are “dead ships”
ineligible for maritime liens. See Amoco Oil v. M/V Montclair, 766 F.2d 473, 477 (11th Cir.
1985) (“A‘vessel’ is subject to a maritime lien. A ‘dead ship’ is not.”); see also Colonna's
Shipyard, Inc. v. U.S.A.F. Gen. Hoyt S. Vandenberg, 584 F. Supp. 2d 862, 867 (E.D. Va. 2008)
(“A key element in determining whether a watercraft that was indisputably a vessel at some point
in the past is now a ‘dead ship’ is whether such watercraft is permanently withdrawn from
navigation.”) (citing Hercules Co. v. The Brigadier Gen. Absolom Baird, 214 F.2d 66, 68 (3d
Cir. 1954)).
18
capacity to serve as a mode of transportation on water. Belle of Orleans, therefore,
suggests the Betty Lyn II retained her vessel status during the repair period.
Belle of Orleans also relied, in part, on the Supreme Court decision in
Stewart v. Dutra Construction Co. See Belle of Orleans, 535 F.3d at 1306,
1309–12. In Stewart, the Supreme Court decided whether a person injured while
working on a dredge called the Super Scoop could recover worker’s compensation
under the Jones Act, an act that protects only seamen.5 543 U.S. at 485–86, 125 S.
Ct. at 1122–23. The Stewart Court analyzed the term “vessel in navigation,”
because “the key to seaman status is employment-related connection to a vessel in
navigation,” Chandris, Inc. v. Latsis, 515 U.S. 347, 357, 115 S. Ct. 2172, 2184
(1995) (quotations omitted). The Stewart Court held that, although it was idle,
with one scow at sea and the other without a working engine, the Super Scoop was
a vessel in navigation because it “had not been taken out of service, permanently
anchored, or otherwise rendered practically incapable of maritime transport.” 543
U.S. at 496, 125 S. Ct. at 1128. The Court stated that in determining whether a
5
The Jones Act was born from Congress’ recognition of the greater perils of a life at sea
and provides more extensive worker’s compensation recovery for seamen than that available to
land-based workers under the Longshore and Harbor Workers’ Compensation Act (LHWCA).
Chandris, Inc. v. Latsis, 515 U.S. 347, 354–56, 368, 370, 115 S. Ct. 2172, 2183–84, 2190
(1995); see Bainbridge v. Merchants’. & Miners’ Transp. Co., 287 U.S. 278, 282, 53 S. Ct. 159,
160 (1932) (“Seamen have always been regarded as wards of the admiralty, and their rights,
wrongs, and injuries a special subject of the admiralty jurisdiction. The policy of Congress, as
evidenced by its legislation, has been to deal with them as a favored class.” (citations omitted)).
19
watercraft constitutes a “vessel” under § 3, “[t]he question remains in all cases
whether the watercraft’s use ‘as a means of transportation on water’ is a practical
possibility or merely a theoretical one.” Id. (citation omitted).
The district court relied on Stewart for the proposition that a watercraft taken
out of navigation is no longer a vessel. Stewart does mention that a ship’s
navigational status is “relevant” to whether it is practically capable of
transportation on water. 543 U.S. at 496, 125 S. Ct. at 1128. The Court does not,
however, require that a ship be “in navigation” to be considered a “vessel” for
purposes of 1 U.S.C. § 3.6As we have discussed, Stewart decided whether a worker on a floating
dredge was a seaman. Stewart did not decide whether a ship taken out of the water
for extensive repairs was a vessel. Stewart’s holding, thus, does not decide the
issue before us. Rather, we must decide this case by looking at its distinct factual
circumstances and their legal implications. Nehring v. S.S. M/V Point Vail, 901
F.2d 1044, 1050 (11th Cir. 1990). Stewart simply reinforces our precedent,
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Benedict on Admiralty succinctly states the conclusion compelled by precedent and a
review of the intent behind the maritime lien system: “[T]here is no reason why a vessel which
has been withdrawn from navigation but which is still technically capable of being used in
navigation should escape the provisions of the [Federal Maritime Lien Act]. 2 Benedict on
Admiralty §§ 38 at 3-26 (7th ed. rev. 1998).
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directing our focus to the Betty Lyn II’s practical capability to serve as a means of
maritime transportation.
D. The Betty Lyn II is a Vessel
A “case-by-case approach” is often necessary to determine whether admiralty
jurisdiction applies to “novel or unusual situations.” Id. This case warrants such
an approach. Our long line of precedent demonstrates that despite her massive
overhaul, the Betty Lyn II maintained her vessel status during the repair period.
Neither the manner of her repair, nor the fact that the needed repairs were so
extensive as to temporarily disable her, divested her of her status as a vessel.
Indeed our review of the history of maritime liens demonstrates they were designed
to encourage repairs on ships in great need. See supra Section III.A.
The Betty Lyn II need merely be capable of transportation on water to be a
vessel. The law does not require that she be able to self-propel. See Belle of
Orleans, 535 F.3d at 1307 (noting the “vessel” had to be towed in for repairs);
Miami River Boat Yard, Inc. v. 60' Houseboat, 390 F.2d 596, 597 (5th Cir. 1968)
(holding that a houseboat is “a vessel capable of being subject to a maritime lien,”
as the fact that “she has no motive power and must . . . be towed does not deprive
her of the status of a vessel”); see also United States v. Templeton, 378 F.3d 845,
850–51 (8th Cir. 2004) (holding that a ship with inoperable engines and no ability
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to self-propel was a “vessel” because it had residual navigational capacity);
Colonna’s Shipyard, 584 F. Supp. 2d at 864, 872–73 (holding that a ship whose
powers of self-navigation were practically irreparable and that was towed to a
repair facility to be converted into an artificial reef was a vessel subject to maritime
liens because it could be towed and carry a crew and cargo). In fact, it is
instructive that, in addition to “repairs,” the “necessaries” for which maritime liens
are authorized under the Federal Maritime Lien Act specifically include towage.
See 46 U.S.C. § 31301(4). Although she could not self-propel, the Betty Lyn II
could be towed upon 24 hours notice.
Nor does the fact that the Betty Lyn II was drydocked for the repairs divest
her of vessel status. See N. Pac. S.S. Co., 249 U.S. at 128, 39 S. Ct. at 224 (holding
that admiralty jurisdiction extended to an action for ship repairs performed in
drydock, because “there is no difference in character as to repairs made upon the
hull of a vessel dependent upon whether they are made while she is afloat, while in
dry dock, or while hauled up by ways upon land. The nature of the service is
identical in the several cases, and the admiralty jurisdiction extends to all.”); Jones
v. One Fifty Foot Gulfstar Motor Sailing Yacht, 625 F.2d 44, 47 n.2. (5th Cir.
1980) (holding that a yacht that had been test-sailed but was placed in drydock
afterward did not lose its status as a vessel merely by being drydocked). In fact,
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“all serious repairs upon the hulls of vessels are made in dry docks,” so the “error”
of exempting ships in drydock from admiralty jurisdiction would “deprive the
admiralty courts of their largest and most important jurisdiction in connection with
repairs.” Simmons v. The S.S. Jefferson, 215 U.S. 130, 143, 30 S. Ct. 54, 58
(1909).
Neither is the extensiveness of the Betty Lyn II’s overhaul so great as to
virtually transform the repair work into new-ship construction, which would not be
subject to admiralty jurisdiction. See New Bedford Dry Dock Co. v. Purdy, 258
U.S. 96, 100, 42 S. Ct. 243, 244 (1922). “[I]f any considerable part of the hull and
skeleton of an old vessel in its intact condition, without being broken up, is built
upon, the law holds that in such a case it is the old vessel rebuilt, and not a new
vessel.” Id.The district court held that, because the repairs Crimson Yachts performed
on the Betty Lyn II were so extensive and time consuming, the Betty Lyn II lost her
status as a vessel during the course of the overhaul and, thus, Crimson Yachts lost
any security for its labor in the form of a maritime lien. That holding is mistaken.
Congress created maritime liens to protect both ships in need of service and
persons willing to provide such services. Congress could not have intended as the
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need for protection increased, the law’s protection would retract. Thus, the
maritime-lien system surely applies in scenarios such as this.
IV. CONCLUSION
Based on the facts before us, we conclude the Betty Lyn II retained a
practical ability to engage in maritime transport and is, therefore, a vessel subject to
maritime liens and the district court’s admiralty jurisdiction. Accordingly, we
reverse the district court’s ruling and remand for further proceedings consistent
with this opinion.
REVERSED and REMANDED.
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