186 1345 11 1999 34 34 1345 186 1345 11 1999 Rose v. 34 Gulf Stream Falcon 34 585709

Decision Date31 August 1999
Docket NumberNo. 98-4213,98-4213
Citation186 F.3d 1345
PartiesPage 1345 186 F.3d 1345 (11th Cir. 1999) Captain Mark ROSE, Captain, Plaintiff-Counter-Defendant-Appellant-Cross-Appellee, v. M/V "GULF STREAM FALCON," her engines, tackle, appurtenances, etc., Official Number 585709, in rem, Defendant-Counter-Claimant Appellee-Cross-Appellant, Alden Hanson, her owner, in personam, Claimant-Appellee-Cross-Appellant. United States Court of Appeals, Eleventh Circuit
CourtU.S. Court of Appeals — Eleventh Circuit

Appeals from the United States District Court for the Southern District of Florida. (No. 96-13-Civ-DLG), Donald L. Graham, Judge.

Before BIRCH and CARNES, Circuit Judges, and MILLS*, Senior District Judge.

RICHARD MILLS, Senior District Judge:

In this case, we review the district court's interpretation of a contract entered between the parties in which Captain Rose purportedly waived his maritime lien on the boat, Gulf Stream Falcon.

For the following reasons, we reverse the decision of the district court and remand for further proceedings.

I. Background

In 1989, Alden Hanson purchased a boat named Beau Southern as an investment at the urging of a friend, who wanted to lease the boat from Hanson for a treasure hunting business. That arrangement failed, however, and Hanson sought other investment opportunities with the Beau Southern. A year later, Hanson met Captain Mark Rose at a Diving Equipment Manufacturers' Association Convention ("DEMA"). Rose was engaged in the business of reconditioning and operating off-shore dive and excursion vessels. Rose expressed an interest in purchasing the Beau Southern as a second vessel for his business because the Beau Southern had a similar design to his boat--the Gulf Stream Eagle ("Eagle ").

Rose and Hanson also began discussing the possibility of using the Beau Southern for commercial scuba diving excursions in the same manner as the Eagle. However, Rose expressed concern over that prospect because the Beau Southern was a treasure hunting vessel that was not fitted for commercial scuba diving purposes. Rose informed Hanson that in order for the Beau Southern to be a commercial scuba diving vessel, it needed major renovations.

From January 1990 to March 9, 1992, the parties attempted to negotiate a Joint Venture Agreement whereby Hanson would contribute to the vessel, Rose would renovate and operate the vessel, and both would recoup their investment and profit from the operation of the vessel. In addition, Rose wanted to use the profits from the joint venture to help him eventually to purchase the vessel.

Despite the lengthy negotiation, no written agreement was executed during that time. Nevertheless, in anticipation of an outright purchase of the Beau Southern by Rose, Hanson gave Rose permission to reconfigure the ship to a commercial diving vessel, and Rose began to make renovations to the Beau Southern. During the renovation, the Beau Southern was renamed as the Gulf Stream Falcon ("Falcon ").

On March 10, 1992, the parties entered into the first Purchase and Sale Agreement in which Rose was to purchase the Falcon. Rose, however, was unable to purchase the Falcon due to lack of financing. On June 3, 1992, Rose and Hanson signed a second Purchase and Sales Agreement that expressly superceded the first. On the same day, Rose, Hanson, and a third-party named Buckley executed the "Provincetown Whale-Watching Joint Venture" agreement and the Bareboat Charter.1 To facilitate the whale watching joint venture, Rose converted the Falcon from a scuba diving vessel to a whale watching vessel.

Under the agreements, Rose was to captain the Falcon during the whale watching excursions, and he could not be removed as captain absent gross negligent conduct. However, conflicts developed between the venturers, and Buckley and Hanson decided to remove Rose as captain of the Falcon. Shortly thereafter, the Bareboat Charter and the joint venture agreement were canceled.2

In May of 1993, Rose and Hanson once again decided to do business together3 and decided that the Falcon was to be delivered to Bar Harbor, Maine for another whale watching venture. Rose was once again to captain the vessel. On May 16, 1993, just before Rose left for Maine, he signed an agreement with Hanson called the "Arcadian Operating Agreement" ("Arcadian Agreement"). The Arcadian Agreement included the following provisions:

3. Revenues earned in the operation of the Falcon will be distributed as follows:


b) Payment of outstanding debt incurred by Rose in the conversion of the vessel to a whale watch vessel. Hanson will make the final determination, at his sole discretion, of which bills will be paid.


4. All parties acknowledge that payment of the above amounts impy [sic] no ownership interest or claim in the Gulf Stream Falcon or any claim against Alden Hanson for any reason.

Unfortunately, the Arcadian Whale Watching Joint Venture did not produce any profits that could be distributed to the joint venturers. As a result, Rose filed this action seeking, inter alia, to foreclose on the maritime lien in the amount of $334,476.17 for work done on the Falcon. Hanson counterclaimed for, inter alia, breach of contract and wrongful arrest of a vessel.

After holding several hearings and a bench trial, the district court dismissed all claims and counter-claims except Count I of the Second Amended Complaint, which related to Rose's foreclosure of maritime lien. With respect to that count, the district court found that WW 3 and 4 of the Arcadian Agreement constituted an "explicit waiver" by Rose of his maritime lien that attached prior to May 16, 1993. The district court did, however, award Rose $15,955.81 for work done after May 16, 1993.

II. Issues

In essence, there are three issues on this appeal and cross-appeal:

(1) whether the district court erred in finding that Rose waived his maritime liens that accrued prior to May 16, 1993 ("waiver issue");

(2) whether Hanson is entitled to the first $375,000.00 from the sale of the Falcon pursuant to the June 3, 1992 purchase agreement ("sale issue"); and,

(3) whether the district court erred in awarding $15,955.81 for a maritime lien that arose after May 16, 1993 ("damages issue").

III. Discussion

Under the Federal Maritime Lien Act, a person providing "necessaries" to a vessel has a maritime lien on the vessel. See 46 U.S.C. 31342(a). "Necessaries" include, inter alia, repairs, supplies, and towage of the vessel. See 46 U.S.C. 31301(4). In this case, Rose seeks to recover costs he incurred converting the Falcon from a treasure hunting vessel to a commercial diving vessel.

Before we address the issues raised by Rose, we must first address Hanson's argument that Rose was never entitled to a maritime lien because he was a joint venturer and not a "stranger to the vessel." See Hanson Brief, P.18. It is true that joint venturers generally are not entitled to a lien for "necessaries" provided because they occupy a position akin to an owner. See, e.g., Sasportes v. M/V SOL DE COPACABANA, 581 F.2d 1204, 1208 (5th Cir.1978). Conversely, a "stranger" to the vessel is entitled to a maritime lien for "necessaries" provided to a vessel because a "stranger" relies on the credit of the vessel, and not on the credit of the co-venturer. See Fulcher's Point Pride Seafood v. M/V THEODORA MARIA, 935 F.2d 208, 211 (11th Cir.1991).

Below, the district court rejected Hanson's argument because it found that there was no joint venture between the parties except during the brief period of time from June 3 to August 21, 1992. Although Hanson does not seek a review of this ruling, he revives the argument in an attempt to bolster his argument that the district court correctly found waiver. Nevertheless, since the existence of a maritime lien is a prerequisite to a waiver thereof, we will treat Hanson's argument as an appeal of the district court's ruling.

Initially, we note that the district court's finding with respect to the existence of (or lack thereof) a joint venture is a factual determination that is reviewed under the clearly erroneous standard. See Fulcher's Point Pride Seafood, 935 F.2d at 211 (citing Crustacean Transp. Corp. v. Atalanta Trading Corp., 369 F.2d 656, 660 (5th Cir.1966)). Applying that standard to the district court's finding, we reject Hanson's argument that Rose was never entitled to a maritime lien.

First, Hanson does not explain why the district court's finding as to the nonexistence of a joint venture is clearly erroneous. To the contrary, we find that the record sufficiently supports the district court's finding. According to Rose's testimony at trial, Rose and Hanson attempted to negotiate but failed to reach a written joint venture agreement prior to June 3, 1992--the time Rose was converting the Falcon from a treasure hunting vessel to a commercial diving vessel. We find that this fact alone is sufficient to support the district court's finding that no joint venture existed prior to June 3, 1992. Consequently, we also find that, notwithstanding a waiver, Rose was entitled to a maritime lien for work he performed on the Falcon prior to that date because he was not a joint venturer, but a "stranger to the vessel."

Having so decided, we now proceed to the issues raised by Rose.

A. Waiver issue

In finding waiver of Rose's lien, the district court relied solely on the language in paragraphs 3 and 4 of the Arcadian Agreement. In its Findings of Fact and Conclusions of law, the district court stated:

Under paragraph 4 of the [Arcadian] agreement, Rose explicitly waived all claims against the Gulf Stream Falcon and Hanson. In addition, in paragraph 3(b) of the Arcadian Agreement Rose agreed that any payments for work performed on the Gulf Stream Falcon would be paid from the profits of the Arcadian Whale Watching Venture and that Hanson had the sole discretion for determining which of these costs would be paid. No payment is due under this paragraph because the Arcadian Whale Watching Venture did not produce any...

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