Cantieri Navali Riuniti v. M/V Skyptron
| Decision Date | 14 October 1986 |
| Docket Number | No. 85-4809,85-4809 |
| Citation | 802 F.2d 160 |
| Parties | CANTIERI NAVALI RIUNITI, Plaintiff-Appellee-Appellant, v. M/V SKYPTRON, et al., Defendants, LUCIFER (PANAMA) S.A., Intervenor-Appellant-Appellee, v. TRAMP OIL & MARINE, LTD. and Redwood Bunkering, Ltd., et al., Intervenors- Appellees-Appellants, and Societe Des Lubrifiants Elf Aquitaine (SLEA), Intervenor-Appellee. LAKE CITY STEVEDORES, INC., Plaintiff-Appellee, v. M/V SKYPTRON, Her Engines, Tackle, Apparel, etc., et al., Defendants, Lucifer (Panama) S.A., Intervenor-Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
James O.M. Womack, Burke & Mayer, New Orleans, La., for Lucifer (panama) S.A.
Scofield, Bergstedt, Gerard, Mount & Veron, Scott J. Scofield, Benjamin W. Mount, Lake Charles, La., for Riuniti & Savoy Marine.
Phelps, Dunbar, Marks, Claverie & Sims, George R. Wentz, Jr., George J. Fowler, III, New Orleans, La., for Lake City Stevedores.
Jones, Tete, Nolen, Hanchey, Swift & Spears, Hunter W. Lundy, Lake Charles, La., for Tramp Oil & Marine & Redwood.
Appeals from the United States District Court for the Western District of Louisiana.
Before THORNBERRY, JOHNSON, and WILLIAMS, Circuit Judges.
A complete recitation of the rather complex facts and procedural background of this case is set out in the district court's scholarly opinion, 621 F.Supp. 171 at 175-78. We will note salient facts as they become important.
This case is essentially a priority dispute between various lien claimants asserting rights in the proceeds resulting from the court ordered sale of the Greek-flag bulk carrier M/V SKYPTRON. An Italian ship repairer, Cantieri Navali Riuniti, invoked an in rem admiralty proceeding by arresting the SKYPTRON at Lake Charles, Louisiana. The ship was later sold under a writ of Venditioni Exponas for $3,000,000. After the sale, various creditors intervened asserting claims of over $9,000,000. The crux of the dispute between the parties is whether the appellant Lucifer (Panama) S.A. ("Lucifer"), the holder of a preferred mortgage on the SKYPTRON, waived its preferred status as against certain liens arising under the International Convention for the Unification of Certain Rules Relating to Maritime Liens and Mortgages, L.N.T.S. 2765, signed in Brussels in 1926 ("Brussels Convention").
United States law, which the district court found applicable to this dispute, specifically provides for the creation of a preferred ship mortgage. 46 U.S.C. Sec. 951. The law provides that such a mortgage "shall have priority over all claims against the vessel, except (1) preferred maritime liens, and (2) expenses and fees allowed and costs taxed, by the court." 46 U.S.C. Sec. 953(b). No party disputes that Lucifer has a preferred mortgage under United States law and no creditor has argued that its claim falls within one of the two exceptions in Section 953(b). Rather, the creditors argue that Lucifer waived its preferred status under the terms of the mortgage. 1
In determining that Lucifer had waived its preferred status as against certain claims, the district court focused on the language of paragraph four of the mortgage which reads in part as follows:
AS security for the payment by the Owner [ULTRAMAR] to the Mortgagee [LUCIFER] of the Outstanding Indebtedness ... THE OWNER as BENEFICIAL OWNER HEREBY GRANTS unto the Mortgagee a First Preferred Mortgage over the Vessel AS WELL AS the right to register same in the appropriate Greek Maritime Mortgages register without the Owner taking part therein AND HEREBY ASSIGNS to the Mortgagee all the Owner's rights deriving from [Article 13 of Greek] legislative decree 2687/1953 as authentically interpreted by legislative decree 2928/1954 and from Ministerial Decision Number 54259/80.... (Emphasis in original.)
On its face, this paragraph seemingly does nothing to diminish Lucifer's preferred status. However, the district court found that the reference to Greek Ministerial Decision 54259/80 created a partial waiver of preferred status. The decision concerned the Greek government's official approval of the renaming of M/V DOLORES DE PANDOLIT as M/V SKYPTRON and its approval of the mortgage to Lucifer. 2 Paragraph 19 of that decision provides:
The mortgage will precede all the maritime and other liens contrary for the provisions of Article 205 of the Civil Code of Greek Maritime Law, and of any other provisions of the Greek law, except only of the liens stated in Article 2 of the Brussels Convention.
Greek Ministerial Decision 54259/80 (certified translation from the Greek).
Lucifer argues that the language of paragraph four of the mortgage, even with the reference to the Greek Ministerial Decision, cannot be construed as a waiver of preferential status. Lucifer focuses on the use of the words "owner's rights" and argues that the priority given to Brussels Convention liens in the Greek Ministerial Decision is not a "right" of the "owner" that can be "assigned" to Lucifer. Rather, Lucifer argues, the preference given to Brussels Convention liens is a "liability" of the owner not covered by the assignment of the owner's "rights."
The interpretation of an unambiguous written agreement is a question of law that this Court reviews de novo. Chevron U.S.A., Inc. v. Belco Petroleum Corp., 755 F.2d 1151 (5th Cir.1985). We agree with the district court's conclusion that Lucifer has partially waived its preferential status. The Greek Ministerial Decision purported to approve both the renaming of the vessel and the mortgage agreement. Such approval was required under Greek law in order for a foreign corporation like Lucifer to take a mortgage on a Greek vessel. (Deposition of Paul Sarlis attachment number 2.) 3 The decision allowed the owner to rename the vessel and mortgage its interest to Lucifer, subject to the requirement in the decision that Lucifer's mortgage be subordinate to valid Brussels Convention liens. These were the "rights" that the decision created and these rights, with the accompanying limitation on preferred status, were assigned to Lucifer in the mortgage.
This Court's decision in International Paint Co. v. M/V MISSION VIKING, 637 F.2d 382 (5th Cir.1981) is of no help to Lucifer. In that case, we held that a certain provision in a mortgage did not operate to waive the mortgagee's preferred status under United States law. The Court based its holding, however, on the presence of a specific "no waiver" clause contained in the mortgage. Lucifer's mortgage contains no such clause.
The district court thus correctly held that Lucifer had agreed that liens arising under Article 2 of the Brussels Convention would prime its mortgage. The court then went on to analyze whether the various creditors qualified for an Article 2 lien. 4
Under the Brussels Convention of 1926, an Article 2 lien must meet the following five criteria:
1. The claim must result from contracts entered into or acts done
2. By the master
3. Acting within the scope of his authority
4. Away from the vessel's home port
5. Where such contracts or acts are necessary
a. for the preservation of the vessel or
b. for the continuation of the voyage
See International Convention for the Unification of Certain Rules Relating to Maritime Liens and Mortgages, Apr. 10, 1926, art. 2, L.N.T.S. 2765. (Brussels Convention of 1926).
Lucifer attacks all the creditors' claims arguing that they do not fall within the ambit of Article 2. Lucifer's primary and recurring objection is that the contracts in this case were not entered into by the master of the SKYPTRON, but by its owner.
Cantieri Navali Riuniti ("Cantieri") asserts a lien for certain repairs performed on the SKYPTRON in Palermo, Italy. Lucifer argues that there can be no contract between the master of the SKYPTRON and the claimant because the claimant here, Cantieri, never signed a repair contract.
Looking to Louisiana law, the district court found that a contract did exist. 5 The master of the SKYPTRON signed his name and fixed the stamp of the vessel on the repair contract. The district court found that this action by the master was an offer which Cantieri accepted by performing the work. It is well established under Louisiana law that a contract may be accepted by the performance of one of the parties. LSA-C.C.Ann.Art. 1939 (West Supp.1986). Thus, a valid contract existed between the master and Cantieri. Lucifer does not dispute that the remaining requirements of Article 2 are met.
Savoy Marine asserts an Article 2 lien based on supplies of food and other items furnished to the SKYPTRON in Madras, India. The district court found that the master had entered into a contract with Savoy Marine and that all the other elements of Article 2 had been satisfied.
Lucifer urges on appeal the same argument rejected by the district court--that the contract for supplies was not between the master and Savoy but between the SKYPTRON's owner and Savoy.
This argument is not persuasive. The owner of Savoy testified in deposition that the master of the SKYPTRON contacted him to arrange for delivery of the supplies. (Deposition of Mr. Ranakrishnan at 3-4.) The supplies were furnished, consumed, but never paid for. The district court correctly held that an Article 2 lien arose in Savoy's favor.
Societe Des Lubrifiants Elf Aquitaine (SLEA)
SLEA supplied various lubricants to the SKYPTRON on two separate occasions. The transactional chain extended from SLEA through a series of intermediaries and local suppliers. Lucifer argues strenuously on appeal that these transactions cannot qualify as contracts between the master and SLEA.
Lucifer's position is not in conflict with the district court's ruling. The court found that a contract did not exist between SLEA and the master, but only between the master and the immediate...
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