996 F.2d 47 (4th Cir. 1993), 92-2545, Redcliffe Americas Ltd. v. M/V Tyson Lykes

Docket Nº:92-2545.
Citation:996 F.2d 47
Party Name:REDCLIFFE AMERICAS LIMITED, Plaintiff-Appellee, v. M/V TYSON LYKES, ex-M/V Delaware Bay, its tackle, apparel, etc. in rem; M/V TILLIE LYKES, ex-M/V Chesapeake Bay, its tackle, apparel, etc. in rem, Defendants-Appellants, First American Bulk Carrier Corporation, Claimant-Appellant.
Case Date:June 10, 1993
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

Page 47

996 F.2d 47 (4th Cir. 1993)

REDCLIFFE AMERICAS LIMITED, Plaintiff-Appellee,

v.

M/V TYSON LYKES, ex-M/V Delaware Bay, its tackle, apparel,

etc. in rem; M/V TILLIE LYKES, ex-M/V Chesapeake

Bay, its tackle, apparel, etc. in rem,

Defendants-Appellants,

First American Bulk Carrier Corporation, Claimant-Appellant.

No. 92-2545.

United States Court of Appeals, Fourth Circuit

June 10, 1993

Argued May 3, 1993.

Page 48

Gordon D. Schreck, Buist, Moore, Smythe & McGee, P.A., Charleston, SC, argued (Christopher H. Dillon, Burke & Parsons, New York City, on brief), for appellants.

Marvin DeWitt Infinger, Sinkler & Boyd, P.A., Charleston, SC, argued (S. Marshall Huey, Jr., on brief), for appellee.

Before WILKINS and LUTTIG, Circuit Judges, and WILLIAMS, Senior United States District Judge for the Eastern District of Virginia, sitting by designation.

OPINION

LUTTIG, Circuit Judge:

Defendants in rem, the container vessels M/V Tyson Lykes and M/V Tillie Lykes, and their claimant, First American Bulk Carrier Corporation, appeal from an order of the district court granting partial summary judgment to appellee Redcliffe Americas and sustaining Redcliffe's claims for maritime liens against the vessels. We hold that because Redcliffe provided containers to the vessels' charterer rather than to the vessels themselves, maritime liens did not arise in favor of appellee. We therefore reverse.

I.

This case arises out of two contracts entered into by Topgallant Group, Inc., an intermodal carrier that transported containerized goods by truck, rail and ship between depots in the United States and in Europe. 1 On April 21, 1987, Topgallant Group chartered the container vessels M/V Delaware Bay (since renamed M/V Tyson Lykes) and M/V Chesapeake Bay (since renamed M/V Tillie Lykes) (hereinafter collectively referred to as the "Vessels") from their owner, appellant First American Bulk Carrier Corporation (FABC). A year later, Topgallant Group leased in bulk, pursuant to a three-year equipment rental agreement (the "Agreement"), 245 refrigerated containers from appellee Redcliffe for the purpose of hauling shipments of hard frozen foods from Virginia to American military bases in Europe. The Agreement provided that these containers were "for use in particular on [Topgallant Group's] vessels 'Chesapeake [Bay]' and 'Delaware [Bay]' or such other vessels as agreed between the parties in writing." J.A. at 33.

Page 49

Consistent with industry practice, Redcliffe provided the containers in bulk to Topgallant Group; it did not deliver the containers directly to the vessels or earmark specific containers for use on a particular vessel. Topgallant Group in turn distributed the containers to shippers, who loaded them, and then transported the containers to various ports in the United States and Europe. From these ports, the containers were assigned for carriage to either vessel as Topgallant Group found commercially convenient. After the cargoes reached their final destination, the process repeated itself. The containers thus were apportioned and reapportioned between the two Vessels at the discretion of Topgallant Group.

In April 1989, Topgallant Group transferred its business to an affiliated concern, Topgallant Lines, Inc., and, with FABC's consent, assigned the sub-bareboat charters covering the Vessels to Topgallant Lines. The latter firm began operating the Vessels in July of that year, frequently using the containers leased from Redcliffe. On December 13, 1989, the Topgallant companies filed for bankruptcy. FABC thereafter terminated the charters and retook possession of the Vessels.

Redcliffe brought this in rem action against the Vessels in district court for $432,196 in unpaid container rental charges that had accrued between September 1 and December 31, 1989. Redcliffe asserted that, pursuant to the Federal Maritime Lien Act (FMLA), it was entitled to claim the unpaid charges as maritime liens against the M/V Tyson Lykes and the M/V Tillie Lykes. FABC appeared in the action as the Vessels' claimant and denied that Redcliffe was entitled to liens.

The district court ultimately granted Redcliffe's motion for partial summary judgment on the issue of liability. Redcliffe Americas Ltd. v. M/V Tyson Lykes, 806 F.Supp. 69 (D.S.C.1992). Rejecting the reasoning of the Ninth Circuit in Foss Launch & Tug Co. v. Char Ching Shipping U.S.A., Ltd., 808 F.2d 697 (9th Cir.), cert. denied, 484 U.S. 828, 108 S.Ct. 96, 98 L.Ed.2d 57 (1987), and adopting instead the contrary view expressed in Itel Containers Int'l Corp. v. Atlanttrafik Express Serv. Ltd. (Itel II), 781 F.Supp. 975 (S.D.N.Y.1991), 2 the district court concluded that FMLA's requirement that necessaries be provided "to a vessel" in order for a maritime lien to arise had been satisfied, even though Redcliffe provided containers to Topgallant Group, "not based on the needs of a specific vessel, but indiscriminately in bulk." 806 F.Supp. at 72-73. The court accordingly held that Redcliffe was entitled to maritime liens against the Vessels, leaving for a later date a determination of the proper amount of damages. Id. at 74.

FABC and the defendant Vessels thereafter brought this interlocutory appeal pursuant to 28 U.S.C. § 1292(a)(3), advancing numerous grounds for reversal, only the first of which we need address.

II.

A.

The maritime lien "had its origin in desire to protect the ship," 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 primary impetus for recognition of the lien was concern for the ship and its needs, not the needs of suppliers or even the ship's owners:

Since [a ship] is usually absent from the home port, remote from the residence of her owners and without any large amount of money, it is essential that she should be self-reliant--that she should be able to obtain upon her own account needed repairs and supplies.... Because the ship's need was the source of the maritime lien it could arise only if the repairs or supplies were necessary; if the pledge of her credit was necessary to the obtaining of them; if they were actually obtained; and if they were furnished upon her credit.

Id. These general principles of the law of maritime liens were undisturbed by passage of the FMLA in 1910. In particular, as is clear from the Court's decision in Piedmont,

Page 50

that Act did not expand the traditionally limited availability of the maritime lien.

In Piedmont, a coal dealer had contracted with a fish oil company to deliver coal for use on the oil company's fleet of steamers and in its factories. The coal was sold to the oil company, placed in its bins, and distributed by the oil company as needed to its ships and factories. When the oil company went into receivership, the coal dealer libeled twelve of the steamers, seeking maritime liens under FMLA for the unpaid price of five loads of coal.

The Supreme Court affirmed the dismissal of the libels, refusing "[t]o hold that a [maritime] lien for the unpaid purchase price of supplies arises in favor of the seller merely because the purchaser, who is the owner of a vessel, subsequently appropriates the supplies to...

To continue reading

FREE SIGN UP