Board of Com'Rs of Orleans v. M/V Belle of Orleans

• Decision Date: 25 July 2008
• Docket Number: No. 06-13614.,06-13614.
• Citation: 535 F.3d 1299
• Parties: BOARD OF COMMISSIONERS OF THE ORLEANS LEVEE DISTRICT, Plaintiff-Counter-Defendant-Appellant, v. M/V BELLE OF ORLEANS, Defendant-Counter-Claimant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

535 F.3d 1299

BOARD OF COMMISSIONERS OF THE ORLEANS LEVEE DISTRICT, Plaintiff-Counter-Defendant-Appellant, v. M/V BELLE OF ORLEANS, Defendant-Counter-Claimant-Appellee.

No. 06-13614.

United States Court of Appeals, Eleventh Circuit.

July 25, 2008.

Frank Anthony Milanese, New Orleans, LA, Blane Horton Crutchfield, Norman M. Stockman, Hand Arendall, LLC, Mobile, AL, for Plaintiff.

Glenn G. Goodier, J Kelly Duncan, Richard David Bertram, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, LLP, New Orleans, LA, for Defendant.

Appeal from the United States District Court for the Southern District of Alabama.

Before EDMONDSON, Chief Judge, HULL, Circuit Judge, and FORRESTER,^* District Judge.

FORRESTER, District Judge:

Appellant, the Board of Commissioners of the Orleans Levee District ("the Board"), appeals from the district court's order granting Appellee, M/V BELLE OF ORLEANS', motion to dismiss for lack of admiralty jurisdiction and from the district court's order denying Appellee's Rule 59(e) motion to alter, amend or vacate the order to dismiss.¹ The Board sought (1) a maritime lien against the BELLE OF ORLEANS to secure payment for dockage, wharfage, utilities, and other charges pursuant to a lease between the Board and the BELLE OF ORLEANS' owners, Belle of Orleans, L.L.C., and (2) damages resulting from the BELLE OF ORLEANS' collision with the piers, docks, and other structures of South Shore Harbor Marina ("the Marina") during Hurricane Katrina's landfall. The district court found that the BELLE OF ORLEANS was not a vessel, that the lease between the Board and Belle of Orleans, L.L.C., was not a maritime contract, and therefore, it had admiralty jurisdiction over neither the Board's tort claim nor its contract claim. The district court denied the Board relief under Rule 59(e).

For the reasons set forth below, we AFFIRM IN PART AND REVERSE IN PART the district court's order and hold that (1) the BELLE OF ORLEANS is a "vessel" for purposes of establishing admiralty jurisdiction; (2) the district court improperly determined that it lacked admiralty jurisdiction over the Board's tort claim; (3) the district court improperly refused to issue a writ of attachment under Rule B of the Supplemental Rules; and (4) the district court properly dismissed the Board's contract claim for lack of admiralty jurisdiction because the lease between the Board and Belle of Orleans, L.L.C., while partially maritime in nature, is not a maritime contract for purposes of creating a maritime lien.

I. Background

A. Facts

In 1995, Belle of Orleans, L.L.C. ("the Owner"), purchased the BELLE OF ORLEANS, a fully operational, steel-hulled paddlewheeler vessel, from Avondale Shipyard to conduct gaming cruises on Lake Pontchartrain. The BELLE OF ORLEANS is a "riverboat," which Louisiana law defines as a paddlewheel-driven "vessel," of at least 150 feet, that carries a valid certificate of inspection from the Coast Guard for the carriage of a minimum of 600 passengers, and "is of such type and design so as to replicate as nearly as practicable historic Louisiana river borne steamboat passenger vessels of the nineteenth century era." La. R.S. § 27:44(23).

The Board is the governing authority of the Orleans Levee District, a political subdivision of the State of Louisiana, which in addition to monitoring the district's levee system, owns and administers the South Shore Harbor Marina ("the Marina"). The Owner entered into a Lease Agreement ("the Agreement") with the Board for the use of "certain portions of land, wharf and water bottom in the Marina located on the South Shore of Lake Pontchartrain."²

The original term of the Agreement was to run until 2003, and the parties had four ten-year options to renew. The Agreement stated that "the leased premises [was] to be used solely and exclusively for the operation of a riverboat gaming facility, a passenger terminal, related services and attendant parking facilities." The leased premises included five parcels of land: (1) 0.854 acres, described as "[t]he proposed mooring berth for the riverboat casino and the right of exclusive use of the adjacent wharf area"; (2) 0.418 acres, described as "the small parking area adjacent to the mooring berth"; (3) 2.087 acres, described as "[t]he site of the proposed passenger terminal building"; (4) "approximately 6.2 acre[s][of] undeveloped land area"; and (5) 4.68 acres out of parcel 6E.³ The Agreement called for a quarterly rent, with an additional payment of five percent of the monthly gross gaming revenues and with a minimum monthly percentage rental. The Agreement also required the lessee to pay for utilities provided to the property.⁴ The Agreement provided for penalties if the lessee failed to pay rent or discontinued the use of the premises.⁵ The Agreement also specified how the parties would handle any damage to property.⁶

Louisiana law permits "riverboat" gaming on certain navigable waters. La. R.S. 27:65. The Owner had a valid Louisiana gaming license to operate the BELLE OF ORLEANS as a riverboat casino and gaming establishment. At the time the parties entered into the Agreement in 1995, the law required riverboat casinos, including the BELLE OF ORLEANS, to be cruising navigable waters when engaged in gaming operations. In 2001, the Louisiana legislature abolished the cruising requirements and stated that gaming could only occur when a riverboat was dockside. La. R.S. 27:65(B)(1)(b). In compliance with the law, the BELLE OF ORLEANS conducted gaming cruises on Lake Pontchartrain from 1995 to 2001 and conducted all gaming dockside from 2001 until the occurrence of Hurricane Katrina in 2005.

The BELLE OF ORLEANS was subject to Coast Guard certification and inspection.⁷ In 2001, the Owner sent a letter to the Coast Guard indicating that the BELLE OF ORLEANS would no longer be conducting cruises and would be remaining dockside at all times. The Coast Guard reduced the BELLE OF ORLEANS' manning requirements based upon her owner's "stated intent to operate in a continuously moored status." The Coast Guard limited the BELLE OF ORLEANS to "permanently moored operations" but did not prohibit the BELLE OF ORLEANS from navigating in the future. The Coast Guard's letter stated that "should the vessel return to underway passenger service, [it would] be required to show compliance with all applicable regulations for operation on a specific route intended and comply with standard manning requirements." The BELLE OF ORLEANS maintained a captain and a crew abroad and maintained her engines, generators, and equipment in working order at all times prior to the landfall of Hurricane Katrina in 2005.

When the BELLE OF ORLEANS began operating dockside in 2001, her owners added steel cables to her mooring system and attached electrical, computer, and phone cables from a shore-side source. The BELLE OF ORLEANS began receiving water in bulk from a shore-side source and began pumping her sewage to shore. The affidavit of the BELLE OF ORLEANS' chief engineer, Mr. Franklin, characterized the BELLE OF ORLEANS at this time as "permanently moored" and "out of operation." By contrast, the affidavit of Mr. Maureau, the Harbormaster of the Marina, characterized the BELLE OF ORLEANS as "moored with ropes and cables customary to a fully operational vessel of her size, and ... not permanently affixed to the dock or restricted in any way from being capable of navigation."

On August 29, 2005, Hurricane Katrina made its landfall in New Orleans, Louisiana. South Shore Harbor is located below the Industrial Canal in New Orleans East in an area that was heavily flooded and damaged during Katrina. During the hurricane, the BELLE OF ORLEANS broke loose from her moorings, and the Board claims she caused damage to the Marina dock and facilities. The BELLE OF ORLEANS also sustained serious damages herself, rendering her incapable of continuing operations without significant repairs. There were no repair facilities available in New Orleans to do the work. The closest shipyard with the necessary capabilities was Bender Shipyard in Mobile, Alabama. On December 30, 2005, the Owner engaged two tugboats to tow the BELLE OF ORLEANS from Southshore Harbor to Bender Shipyard. As a result of Katrina, the Owner also stopped paying rent to the Board. The BELLE OF ORLEANS remains in Mobile. When her repairs are complete, the Owner plans to tow the BELLE OF ORLEANS back to Amelia, Louisiana and continue to use her as a dockside riverboat casino.

B. Procedural History

On January 13, 2006, the Board instituted an action in the Southern District of Alabama against the BELLE OF ORLEANS, in rem, to enforce a maritime lien.⁸ Count One sought payment of dockage, wharfage, utilities and other charges incurred by the Owner pursuant to the Agreement between the parties, and Count Two sought damages caused when the BELLE OF ORLEANS collided with structures at the Marina during Hurricane Katrina's landfall. Pursuant to an order of arrest, a United States Marshal arrested the BELLE OF ORLEANS on January 23, 2006. Belle of Orleans, L.L.C., filed a claim as the BELLE OF ORLEANS' owner on January 30, 2006, and requested a post-arrest hearing under supplemental admiralty rule E(4)(f) in order to have the court fix the amount of security necessary to gain release of the BELLE OF ORLEANS. The court held a hearing on February 7, 2006, by telephone and entered an order temporarily setting security in the amount of $1.3 million to ensure that the Owner did not default on its ship mortgage. The Marshal received a writ of discharge for the release of the BELLE OF ORLEANS the same day.

The Board filed an amended complaint on March 23, 2006, which included in rem claims against the BELLE OF ORLEANS and in personam claims against the Owner, and sought a writ of foreign attachment pursuant to Admiralty Supplemental Rule B against property of Belle of Orleans, L.L.C., located in the district, including the...