First Bank & Trust v. Knachel

United States Court of Appeals,
Fifth Circuit.
No. 92-2690
Summary Calendar.
FIRST BANK & TRUST, Plaintiff-Appellant, Cross-Appellee,
v.
Allen B. KNACHEL, et al., Intervenors-Plaintiffs, Appellees, Cross-Appellants,
v.
M/V FOUR POINT X, Defendant.
Aug. 26, 1993.
Appeals from the United States District Court for the Southern District of Texas.
Before REYNALDO G. GARZA, DUHÉ and EMILIO M. GARZA, Circuit Judges.
REYNALDO G. GARZA, Circuit Judge:
The appellant, First Bank, appeals from the judgment granting the appellees, the crew, status
as seamen on an "in navigation" vessel and t herefore entitled to a preferred maritime lien for their
wages. Upon review, we find no clear error in the court's finding of fact that the vessel was in
navigation. We find that the crew was also entitled to prejudgment interest. We therefore affirm in
part, and remand in part.
FACTS
On July 2, 1986, the owners of M/V Four Point X ("Four Point"), Hau and Richard Meeks,
executed a promissory note to First Bank for $70,000. They executed another note to First Bank on
April 20, 1987, for $42,454.08. The Meeks defaulted on their payments and the debt was
accelerated. First Bank foreclosed on its mortgages against the vessel and at the time of trial claimed
a debt owed of $150,058.59.
In August of 1990, Allen Knachel and William Slott were hired as the ship's captain and chief
engineer by Meeks to prepare the ship for a voyage to Haiti. Within one week, the men had both
main engines and one generator working. Meeks and his agent, Wilson, were constantly supervising.
First Bank's surveyor, Underhill, surveyed the vessel at the dock in Sabine Pass.
On September 5, 1990, Knachel, Slott, Meeks, Wilson and two or three others sailed the
vessel from Sabine Pass to Bolivar, Texas. The repairs continued in Texas. In September, 1990,
Meeks filed for bankruptcy. In early November, the vessel was towed to a dock at Milt's Seafood.
The vessel was towed, even though it was able to navigate, because of inclement weather. In
December, 1990, Knachel, following Meek's instructions, hired more crew members in order to assist
in the repairs in anticipation for the trip to Haiti. The nine man crew, the appellees, consisted of
Captain Knachel, chief engineer Slott, engineers Gleason and Paquio, wheelmen/able-bodied seaman
Horton and Force, cook Ewart, and ordinary seamen McDowell and Marvin.
Around January 6, 1991, the crew sailed the vessel to Swift Ships shipyard in Freeport, Texas
for final repairs. The crew was removed t he next day and never paid. The appellees claimed a
preferred maritime lien for seamen's wages. After a t wo day bench trial, the men were granted
preferred maritime lien status as seamen on a vessel in navigation. First Bank timely appeals this
judgment and the appellees cross-appeal requesting prejudgment interest.
ANALYSIS
The appellant argues that the court used the wrong legal standard in making its fact finding
on whether the Four Point was in navigation. They further argue that since the ship was not in
navigation the appellees are not entitled to a preferred maritime lien as crew members. We disagree.
Whether a ship is in navigation is a factual issue. Fredieu v. Rowan Companies, Inc., 738
F.2d 651, 654 (5th Cir.1984). Factual findings will be affirmed unless clearly erroneous. Chavez v.
Housing Authority of El Paso, 973 F.2d 1245, 1247 (5th Cir.1992). The court correctly used the "in
navigation" standard set forth in New England Fish Co. v. Barge Sonya, 332 F. Supp. 463 (D.Alaska
1971). A ship is considered in navigation when there is an intention to put out to sea and it is being
repaired for the voyage. Id. 332 F.Supp. at 467-68. The appellant had invited the court to use this
standard. The Four Point was being prepared for voyage and the ship did navigate several voyages
under its own power. The vessel had working engines and a running propeller and her equipment was
never removed to take her out of potential service. There was testimony given that the hull was intact
and that the intention was to sufficiently repair the vessel for a voyage to Haiti.
The legal standard used by the court was proper. There is no clear error in its fact finding that
the ship was in navigation. Therefore the appellees are correctly entitled to a preferred maritime lien
for wages as crew members.
The appellees request prejudgment interest in a cross-appeal. The appellants concede that
the appellees are entitled to interest to the extent they are entitled to the preferred maritime lien. The
court should have granted prejudgment interest for the preferred maritime lien. Notwithstanding
peculiar circumstances creating an inequity, absent in this case, the court should grant interest in
admiralty cases. Platoro LTD. v. Unidentified Remains, Etc., 695 F.2d 893, 906 (5th Cir.), cert.
denied, 464 U.S. 818, 104 S. Ct. 77, 78 L. Ed. 2d 89 (1983).
CONCLUSION
We find no clear error in the court's fact finding t hat the vessel was in navigation. We
AFFIRM the designation of the claims of the appellees as a preferred maritime lien for wages for the
crew. We further find that the crew was entitled to prejudgment interest. We therefore REMAND
this case to the district court to calculate the amount of interest to be awarded.