Motor-Services Hugo Stamp, Inc. v. M/V Regal Empress

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
_______________________________ COURT OF APPEALS
U.S.
ELEVENTH CIRCUIT
No. 04-14179 February 7, 2006
_______________________________ THOMAS K. KAHN
CLERK
D.C. Docket No. 03-00703-T-27-MSS
MOTOR-SERVICES HUGO STAMP, INC.,
Plaintiff-
Third-Party-Plaintiff-
Appellee,
ASAMAR, INC., et al.,
Plaintiffs-Intervenors,
MARITIME TELECOMMUNICATIONS NETWORK, INC.,
Plaintiff-Intervenor-
Appellant,
versus
M/V REGAL EMPRESS, her tackle, equipment, boats,
engines and appurtenances, in rem,
REGAL CRUISES, LTD.,
Defendants-Appellees,
versus
MARINE INVESTMENTS, LTD., et al.,
Third-Party-Defendants.
_______________________________
Appeal from the United States District Court for the
Middle District of Florida
________________________________
(February 7, 2006)
Before EDMONDSON, Chief Judge, BARKETT, Circuit Judge, and HUNT*, District
Judge.
PER CURIAM:
Maritime Telecommunications Network (“MTN”) appeals the lower court’s
ruling that MTN’s equipment was appurtenant to the Regal Empress cruise ship and
therefore, was subject to maritime liens asserted against the vessel. MTN seeks a
ruling from this Court that, as a matter of law, it is entitled to recover the value of its
equipment from the proceeds of the sale of the Regal Empress. For the reasons that
follow, we affirm.
BACKGROUND
This case began when Plaintiff Motor-Services Hugo Stamp, Inc. filed a
Verified Complaint asserting a maritime lien claim against the Regal Empress,
alleging that it had not been paid for work performed in its shipyard. The matter was
assigned to a Magistrate Judge who ordered the United States Marshal to arrest the
*
Honorable Willis B. Hunt, Jr., United States District Judge for the Northern District of
Georgia, sitting by designation.
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ship.
Appellant MTN was a provider of telecommunication and internet services for
the passengers and crew of the Regal Empress. In order to provide these services,
MTN placed certain equipment on board the ship. It is undisputed that the equipment
belonged to MTN, and that MTN alone operated, controlled, serviced, and maintained
the equipment. MTN intervened in the case and filed an emergency motion asking
that it be allowed to remove its equipment from the ship before the judicial sale took
place.
In an Order dated May 20, 2003 (“the May Order”), the Magistrate Judge
denied the request, concluding that MTN’s equipment was appurtenant to the vessel
because it was essential to the ship’s mission. At the conclusion of that Order, the
Magistrate Judge stated:
After the sale of the vessel is confirmed, the following sums shall be
segregated and placed in the Court’s registry to permit the affected parties to
file any objections to or appeals of this order: . . .(e) $178,964.00 reserved for
M.T.N. . . . If any objection or protest is successful and a fair value is finally
determined for the specific property being claimed, those amounts, if any, will
be paid in accordance with that finding or judgment. However, in the event
that no such protests are made or such protests are unsuccessful, the sums
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withheld shall be added to the corpus available to pay all lien holders and
creditors in the priority established by maritime law.
R6-188 at 20. No “objection or protest” was immediately mounted by MTN. The ship
was sold three days later for $1.75 million, and the proceeds were placed in the
registry of the district court.
Nearly three months later, on August 12, 2003, MTN filed a motion which it
titled Motion for Summary Judgment, but which essentially was a motion for
reconsideration of the May Order. In the motion, MTN asked the Court to reconsider
its previous ruling that MTN’s equipment was appurtenant to the ship, pointing to
undisputed evidence that MTN had retained ownership and control over the
equipment. In its prayer for relief, MTN asked the Court to release a portion of the
sale proceeds to compensate it for the value of the equipment.
On March 29, 2004, the Magistrate Judge entered an Order (later construed as
a Report and Recommendation)1 denying the motion. In the Order, the Magistrate
Judge stated that MTN was barred from asserting its claim against the sale proceeds
1
Apparently there was some confusion about whether, at the time that the Magistrate
Judge issued the March 29, 2004 Order, all parties had consented to the referral. On April 16,
2004, the District Judge sua sponte withdrew the reference and construed the March 29, 2004
Order as a Report and Recommendation.
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because MTN did not timely object to the May 20, 2003 Order.2 Alternatively, the
Magistrate Judge ruled on the merits of MTN’s claim, stating:
Even assuming, arguendo that the motion was not procedurally barred, it would
nonetheless fail. Incorporating by reference the undisputed facts recited in the
Court’s May 20, 2003, Order, the same result would obtain in this motion.
Even if the Court were permitted to revisit the substantive issue of law raised
in MTN’s Motion for Summary Judgment, whether MTN’s equipment was
appurtenant to the ship, MTN has presented no new evidence and no new
binding authority that would alter the Court’s initial decision set forth in the
May 20, 2003, Order that the equipment was appurtenant to the vessel.
R10-421 at 6. The Magistrate Judge concluded that the equipment was properly sold
with the vessel at the interlocutory sale, and that the proceeds of the sale were subject
to distribution in accordance with the priority established by maritime law. On July
16, 2005, the Magistrate Judge re-issued the March 29, 2004 Order as a final,
dispositive Order.3
DISCUSSION
We review de novo a lower court’s application of law to undisputed facts. See
Itel Container Corp. v. M/V Titan Scan, 139 F.3d 1450, 1453 (11th Cir. 1998).
2
At oral argument, MTN argued that it filed no objection to the May Order because it
agreed with the order. MTN implied that the Magistrate Judge actually ruled in MTN’s favor
when she segregated the funds. Such argument clearly mischaracterizes the May Order and is
belied by the fact that MTN’s Motion for Summary Judgment was, in essence, a motion for
reconsideration of the May Order.
3
On June 17, 2004, with the consent of all parties, the District Judge referred all aspects
of the litigation to the Magistrate Judge for final determination and for the entry of judgment.
5
In its enumeration of errors, MTN first makes a procedural argument. MTN
claims that the Magistrate Judge impermissibly refused to entertain the merits of its
motion for summary judgment. The Court disagrees. It is evident from the above-
quoted language from the March 29, 2004, Order that in ruling on the summary
judgment motion, the Magistrate Judge re-examined the merits of MTN’s claim and
reached the same conclusion that she previously had reached in her May Order.
Because it is undisputed that the Magistrate Judge ultimately was vested with the
authority to issue a final, dispositive ruling on MTN’s claim, the Court finds no error
in the procedures employed by the trial court in resolving that claim.
Thus, the Court turns to the heart of this appeal, which is MTN’s contention
that its equipment was improperly characterized as being appurtenant to the ship.
MTN argues that because it owned the equipment outright, it is entitled to recover the
full value of its equipment, without regard to the rights of the various lien claimants.
While at first blush this argument is appealing, it simply is not the law.
A fundamental principle of the maritime lien system is that the vessel itself,
along with all equipment aboard it that is essential to the ship’s navigation and
operation, is subject to maritime liens. See SS Tropic Breeze v. Tropical Commerce
Corp., 456 F.2d 137, 141 (1st Cir. 1972) (holding that cement loading, bagging, and
unloading equipment was essential to the ship’s ability to function as a bulk cement
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carrier, and therefore the equipment was subject to maritime liens). This is true,
regardless of who the actual owner of the equipment may be. See id.; see also The
Augusta, 15 F.2d 727, 727 (E.D. La. 1920) (concluding that a wireless telegraph was
appurtenant to the vessel even though the equipment’s owner had merely licensed its
use aboard the ship). This rule balances the interests of keeping ships active and
protecting maritime businesses who provide goods and services on credit by making
the entire vessel, including all of the equipment essential to the completion of the
voyage upon which it is embarked, stand as security for the debt. See Tramp Oil &
Marine, Ltd. v. M/V Mermaid I, 630 F. Supp. 630, 635 (D.P.R. 1986). Throughout
the years, courts have ruled that radio equipment, uninstalled replacement engines,
and even fishing permits were essential to their vessels’ purposes and, therefore were
appurtenances subject to maritime liens. See The Augusta, 15 F.2d at 727-28 (radio
equipment); Gonzalez v. M/V Destiny Panama, 102 F. Supp. 2d 1352, 1354-1357
(S.D. Fla. 2000) (uninstalled engines); Gowen, Inc. v. F/V Quality One, 244 F.3d 64,
67-70 (1st Cir. 2001) (fishing permits).
The question raised by this case is whether equipment necessary for the
provision of telecommunications and internet services aboard a luxury cruise ship is
essential to the vessel’s mission. There can be no doubt that it is. As the Magistrate
Judge noted in her May Order, it is unimaginable in today’s world that a luxury cruise
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ship could be successful without a fully functioning telecommunications system.
Because such a system is vital to the mission of the Regal Empress, the Magistrate
Judge correctly concluded that MTN’s equipment was appurtenant to the ship.
AFFIRMED.
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