Cianbro Corp. v. George H. Dean, Inc.

• Decision Date: 22 February 2010
• Docket Number: No. 09-1574.,09-1574.
• Citation: 596 F.3d 10
• Parties: CIANBRO CORPORATION; Hornbeck Offshore Services, LLC; and Hornbeck Offshore Transportation, LLC, Plaintiffs, Appellees, v. GEORGE H. DEAN, INC., d/b/a Dean Steel, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

596 F.3d 10

CIANBRO CORPORATION; Hornbeck Offshore Services, LLC; and Hornbeck Offshore Transportation, LLC, Plaintiffs, Appellees, v. GEORGE H. DEAN, INC., d/b/a Dean Steel, Defendant, Appellant.

No. 09-1574.

United States Court of Appeals, First Circuit.

Heard January 5, 2010.

Decided February 22, 2010.

Stephen P. Griffin, with whom Griffin Law LLC, was on brief for appellant.

John R. Bass, II, with whom Bradford R. Bowman and Thompson, Bull, Furey, Bass & MacColl, LLC, P.A., were on brief for appellee Cianbro Corporation.

Leonard W. Langer, with whom Marshall J. Tinkle and Tompkins, Clough, Hirshon & Langer, P.C., were on brief for appellees Hornbeck Offshore Services, LLC and Hornbeck Offshore Transportation, LLC.

Before TORRUELLA, Circuit Judge, SOUTER,^* Associate Justice, and STAHL, Circuit Judge.

TORRUELLA, Circuit Judge.

We are called upon to determine whether an in rem maritime lien should be allowed against the vessels BENNO C. SCHMIDT and ENERGY SERVICE 9001 ("the Vessels") in favor of Defendant-Appellant George H. Dean, Inc., d/b/a Dean Steel ("Dean Steel"). This claim is challenged by Plaintiff-Appellee Cianbro Corporation ("Cianbro"), and Plaintiff-Intervenors Hornbeck Offshore Services and Hornbeck Offshore Transportation, LLC, ("the Hornbeck entities"). The Hornbeck entities are the owners of the Vessels and had entered into a contract for the repair and conversion of the Vessels with Cianbro as general contractor for this work. Because of the admiralty and maritime nature of this dispute,¹ and because we are required to interpret the Maritime Lien Act² to resolve the issues presented,³ this controversy is deemed properly before us.

The district court granted a motion for summary judgment⁴ in favor of Cianbro and thereafter issued a declaratory judgment to the effect that the Vessels were not subject to a maritime lien in favor of Dean Steel. Dean Steel filed a timely appeal to this decision.

Upon due consideration of the record and the arguments of all parties, we affirm the decision of the district court in all respects.

I. Background

A. Facts not in issue

In 2006 the Hornbeck entities⁵ entered into a Vessel Conversion Contract ("the Contract") with Cianbro for the conversion of the Vessels from sulfur tankers into multi-purpose supply vessels. Section 6.1 of the Contract provided that:

All portions of the Work that [Cianbro] does not perform shall be performed under subcontracts or by other appropriate agreement between [Cianbro] and the entity performing the work. Nothing contained in the Contract ... shall create any contractual relationship between [the Hornbeck entities] and any subcontractor of [Cianbro]. Notwithstanding the foregoing, for informational purposes only, [Cianbro] shall furnish to [the Hornbeck entities] at its request a copy of each Subcontract it enters into in connection with the Work. At the request of [the Hornbeck entities], [they] shall be included in all negotiations with the subcontractor and/or shall be provided pertaining thereto [sic]. Upon [the Hornbeck entities'] request, [Cianbro] will provide [the Hornbeck entities] with copies of all work papers and correspondence relating or pertaining to a subcontractor.

In Section 6.2 of the Contract it is further established that:

[The Hornbeck entities] may designate specific persons or entities from whom [Cianbro] shall obtain bids. [Cianbro] shall obtain bids from prospective Subcontractors and from suppliers of Materials or equipment fabricated especially for the Work and shall deliver such bids to [the Hornbeck entities] prior to the award in sufficient time for [the Hornbeck entities] to evaluate the bids without compromising the Project Schedule. [The Hornbeck entities] shall then determine, with the advice of [Cianbro,] which bids will be accepted. [Cianbro] will not be required to contract with anyone to whom [Cianbro] has reasonable objection.

In the following section, 6.3, the parties stipulated that "any subcontracts of any tier with affiliates of [Cianbro] or entities owned in whole or in part by shareholders of [Cianbro] ... are to be awarded only with the written approval of [the Hornbeck entities]." The Contract further provided that Cianbro warranted to the Hornbeck entities that it would complete the work free and clear of any liens, a provision which fueled Cianbro's filing of the present action seeking a declaration that such liens had not been established, and an action in which the Hornbeck entities have intervened as interested parties.⁶

Thereafter, on or about November 1, 2006, Cianbro, as general contractor,⁷ by means of a purchase order so dated contracted with Hub Technologies, Inc. ("Hub"),⁸ a business entity engaged in the manufacture, design, engineering and fabrication of structures used in various industrial applications, to fabricate for Cianbro certain steel components to be used in the conversion work of the Vessels. As required by Section 6.2 of the Contract, prior to awarding the bid to Hub, Cianbro identified the bid to the Hornbeck entities and delivered Hub's bid to them. There is no evidence in the record that the Hornbeck entities had any other involvement in this relationship or in the performance by Hub of its contract with Cianbro.

Cianbro agreed that it would supply some of the necessary steel to Hub from its stores since it was aware that Hub itself did not supply or warehouse structural steel, and that Hub would need to acquire the steel from other suppliers. Cianbro never informed Hub that Hub was not authorized to incur liens on the Vessels or to extend credit on the Vessels to its subcontractors. Nor did Cianbro instruct Hub to inform its subcontractors that the subcontractors would not be allowed to place liens on the Vessels or to rely on the credit of the Vessels.

In December of 2006, Dean Steel⁹ became involved in the project as a subcontractor to Hub. Dean was to perform some of the initial cutting work on the steel as part of Hub's project to fabricate the steel into components for the Vessels. Both Hub and Dean Steel were provided with the plans, drawings, and specifications for the conversion project ("the specifications") by Cianbro, so that the finished components to be delivered to Cianbro by Hub would meet the specifications. In the meantime, Cianbro shipped approximately 230,000 pounds of raw structural steel directly to Dean Steel at Hub's request, and as a result, together with the steel supplied by Dean Steel itself, between November, 2006 and October, 2007 Dean Steel supplied Hub with substantial quantities of structural steel which had been cut in accordance with the specifications. Thereafter, Hub used the steel delivered by Dean Steel to Hub's facilities to fabricate the components that Hub had contracted for with Cianbro for installation in the Vessels.¹⁰ Most importantly, it is undisputed that Dean Steel never delivered any components directly to Cianbro nor to the Vessels.

These components were later installed in the Vessels by Cianbro, which paid Hub in full for the work and materials that it had provided in manufacturing these components. Unfortunately, Hub had failed to pay Dean Steel for all of the work and materials that Dean Steel had invested in the steel used in these components. When Hub filed for bankruptcy in November 6, 2007, Hub owed Dean Steel the sum of $249,910.52 for the materials and labor that Dean Steel had provided to Hub. Nevertheless, Dean Steel proceeded to file notices of maritime liens against the Vessels for said amount, claiming that it had provided necessaries to the Vessels between November 15, 2006 and September 18, 2007 but had not been paid for the same. In response, Cianbro filed an action for declaratory judgment under 46 U.S.C. § 31343(c)(2). The Hornbeck entities intervened as a plaintiff, and Cianbro and the Hornbeck entities moved for summary judgment on their claim.

B. The decision of the District Court

In adopting the Recommended Decision of the Magistrate Judge, the district court granted summary judgment against Dean Steel on two alternate grounds which succinctly encapsulate the medulla of the question to be decided by us: first the district court concluded that Dean Steel failed to raise a genuine issue that it acted at the direction of the Vessels' owners or the Vessels' designee; and second that Dean Steel failed to raise a genuine issue of material fact regarding whether it provided necessaries to the Vessels.

II. Discussion

A. Rules of engagement

We review a district court's grant of summary judgment de novo. Bukuras v. Mueller Group, LLC, 592 F.3d 255, 261 (1st Cir. 2010). Summary judgment is appropriate if, viewing all factual disputes in the light most favorable to the non-moving party, there is no genuine issue of material fact that would prevent judgment for the moving party as a matter of law. Meuser v. Federal Express Corp., 564 F.3d 507, 515 (1st Cir.2009). A fact is material if its resolution would "affect the outcome of the suit under the governing law," and the issue is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

B. The law and the conclusions that follow

To establish a maritime lien on a vessel, the lien claimant must prove, inter alia, that it provided necessaries to the vessel "on the order of the owner or a person authorized by the owner." 46 U.S.C. § 31342(a); Sweet Pea Marine, Ltd. v. APJ Marine, Inc., 411 F.3d 1242, 1249 (11th Cir.2005). Under 46 U.S.C. § 31341, there are certain persons who are presumed to have authority to procure "necessaries" to a vessel. These include the owner, the master, "a person entrusted with the management of the vessel at the port of supply," or an officer or agent appointed by the owner or "a charterer" of the vessel. 46 U.S.C. § 31341.

At the very outset, Dean Steel is...