82 F.3d 666 (5th Cir. 1996), 94-30747, Silver Star Enterprises, Inc. v. Saramacca MV

Docket Nº:94-30747.
Citation:82 F.3d 666
Party Name:SILVER STAR ENTERPRISES, INC., et al., Plaintiffs, v. SARAMACCA MV, her engines, tackle, apparel, etc., in rem, Defendants. TRANS OCEAN LTD., Plaintiff-Appellee, v. SCHEEPVAART MAATSCHAPPIJ SURINAME N.V., et al., Defendants, v. SILVER STAR ENTERPRISES, INC., Appellant.
Case Date:May 14, 1996
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 666

82 F.3d 666 (5th Cir. 1996)

SILVER STAR ENTERPRISES, INC., et al., Plaintiffs,

v.

SARAMACCA MV, her engines, tackle, apparel, etc., in rem,

Defendants.

TRANS OCEAN LTD., Plaintiff-Appellee,

v.

SCHEEPVAART MAATSCHAPPIJ SURINAME N.V., et al., Defendants,

v.

SILVER STAR ENTERPRISES, INC., Appellant.

No. 94-30747.

United States Court of Appeals, Fifth Circuit

May 14, 1996

Page 667

Patrick J. McShane, T.A. and Andrew S. deKlerk, Frilot, Partridge, Kohnke & Clements, L.C., New Orleans, LA, for appellant.

Nathan P. Horner and Charles E. Lugenbuhl, Lugenbuhl, Burke, Wheaton, Peck & Rankin, New Orleans, LA, for appellee.

Timothy K. Borchers, and Ann E. Webb, Vinson & Elkins, Houston, TX, for amicus-Institute of Int'l Container Lessors.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before WISDOM, GARWOOD and JONES, Circuit Judges.

EDITH H. JONES, Circuit Judge:

Plaintiff Silver Star Enterprises, Inc. (Silver Star), appeals the judgment of the district court granting Trans Ocean Ltd. (Trans Ocean), a lessor of cargo containers to a shipping company, a maritime lien in the vessel M/V SARAMACCA. Like three other circuit courts, we decline to extend coverage of the Federal Maritime Lien Act to bulk cargo container leases to entities other than "a vessel." Accordingly, we reverse. 1995 WL 16773.

I. FACTS AND PROCEEDINGS BELOW

Scheepvaart Maatschappij Suriname N.V. (SMS), a corporate entity wholly owned by the Republic of Suriname, operated a shipping container service from Suriname to the United States, particularly Houston and New Orleans, and Rotterdam. SMS owned or chartered eight different vessels, including the M/V SARAMACCA, on which appellant Silver Star held two preferred ship mortgages.

Beginning in May 1991, Appellee Trans Ocean began furnishing up to one hundred twenty-two cargo containers to the SMS fleet pursuant to a Master Container Lease. The lease set a per diem rental rate for each container and obliged SMS to pay repair costs and depreciated replacement values for damaged or lost containers. The lease did not "earmark" particular containers for service on particular SMS vessels and indeed left needed flexibility with SMS to deploy the containers. The lease did not prevent intermodal use of the containers in land or even air transport.

Barely a year later, Silver Star commenced an in rem action in Houston, Texas, to enforce its preferred ship mortgages against the M/V SARAMACCA. Trans Ocean then sued and claimed maritime lien rights arising from the lease of containers, including those used aboard the M/V SARAMACCA. 1 Ultimately,

Page 668

the M/V SARAMACCA was seized and sold at auction; her proceeds were deposited in the registry of the district court awaiting division among SMS, Trans-Ocean and other claimants.

Trans Ocean moved for summary judgment after conducting discovery of cargo manifests and other documents to determine what portion of its leased containers had actually been used aboard the M/V SARAMACCA. Only in this way could Trans Ocean demonstrate that sixty-four containers were used at least once aboard the M/V SARAMACCA on voyages between the United States and Suriname, and ten of those had been used exclusively aboard the seized vessel.

The district court granted partial summary judgment in favor of Trans Ocean, acknowledging a maritime lien for past due rentals, repair costs, and depreciated replacement values for the ten containers used exclusively aboard the M/V SARAMACCA, and for prorated rentals, repair costs, and depreciated replacement values for the other fifty-four containers. In reaching this conclusion, the court held that for purposes of establishing a maritime lien, it was not necessary that the containers be earmarked for use aboard a particular vessel.

Judgment was entered in favor of Trans Ocean for a maritime lien of $73,352.00. When the court transferred and attached the lien to the proceeds of the vessel's sale, it limited the lien to $36,698.86, representing rentals, costs, and replacement values for containers provided in the United States. Upon ranking the creditors' competing claims, the court ruled that Trans Ocean outranked Silver Star in the amount of $36,698.86. Silver Star timely appealed the Rule 54(b) judgment.

II. DISCUSSION

A maritime lien is a special property right in a vessel that "developed as a necessary incident of the operation of vessels." Piedmont & Georges' Creek Coal Co. v. Seaboard Fisheries Co., 254 U.S. 1, 9, 41 S.Ct. 1, 3, 65 L.Ed. 97 (1920). The lien secures creditors who provide "supplies which are necessary to keep the ship going." Dampskibsselskabet Dannebrog, et al. v. Signal Oil & Gas Co., 310 U.S. 268, 280, 60 S.Ct. 937, 943, 84 L.Ed. 1197 (1940). The lien "arises in favor of the creditor by operation of law ... and grants the creditor the right to appropriate the vessel, have it sold, and be repaid the debt from the proceeds." Equilease Corp. v. M/V SAMPSON, 793 F.2d 598, 602 (5th Cir.) (en banc), cert. denied, 479 U.S. 984, 107 S.Ct. 570, 93 L.Ed.2d 575 (1986).

The Federal Maritime Lien Act, 46 U.S.C.A. §§ 31341-31343 (West Supp.1995) (FMLA) establishes a maritime lien for "providing necessaries to a vessel on the order of the owner or a person authorized by the owner." 46 U.S.C.A. § 31342. 2 "Necessaries" include "repairs, supplies, towage, and the use of a dry dock or marine railway." 46 U.S.C.A. § 31301(4).

Three of our sister circuits have recently held that maritime lien rights do not attach for the benefit of bulk lessors of containers to owners or charterers of multiple vessels. Redcliffe Americas Limited v. M/V TYSON LYKES, 996 F.2d 47 (4th Cir.1993); Itel Containers Int'l Corp. v. Atlanttrafik Express Serv. Ltd., 982 F.2d 765 (2d Cir.1992); Foss...

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