Hornbeck Offshore Operators v. Ocean Line
| Decision Date | 06 April 1994 |
| Docket Number | No. 2:93cv145.,2:93cv145. |
| Citation | 849 F. Supp. 434 |
| Parties | HORNBECK OFFSHORE OPERATORS, INC., Plaintiff, v. OCEAN LINE OF BERMUDA, INC. and The United States of America, Defendants. |
| Court | U.S. District Court — Eastern District of Virginia |
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James Long Chapman, IV and Guilford D. Ware, Crenshaw, Ware & Martin, Norfolk, VA, for plaintiff.
Anita Kay Henry, U.S. Attorney's Office, Norfolk, VA, and David V. Hutchinson and Mee Lon Lam, U.S. Dept. of Justice, Torts Branch, Civ. Div., Washington, DC, for defendants.
OPINION AND FINAL ORDER
This suit was brought by Hornbeck Offshore Operators, Inc., ("Hornbeck") against Ocean Line of Bermuda, Inc. ("OLB") in connection with charter hire owed by OLB to Hornbeck pursuant to a charter party for the M/V H.O.S. BOLD VENTURE (the "BOLD VENURE"). Hornbeck sought an in rem claim against the United States in the amount of $115,6831 together with interest, costs and attorney's fees pursuant to a maritime lien on subfreights created by the charter party and owed by the United States to OLB.
The United States was not a party to the charter. OLB used the vessel to perform a government contract with the United States. Hornbeck was not a party to the government contract. Eventually, OLB defaulted under both the government contract and the charter party. Hornbeck claims a maritime lien against moneys owed to Hornbeck by the United States for unpaid freight carried aboard the BOLD VENTURE.
The United States denies liability to Hornbeck and alternatively claims a setoff for moneys which it alleges that OLB owed to the United States. Because the United States' purported setoff is of an amount greater than that which Hornbeck alleges the United States owes to OLB, the United States contends that Hornbeck cannot recover anything from the United States in this action. Alternatively, the Government contends that Hornbeck's lien is barred by the Anti-Assignments Act.
OLB is in default. The United States and Hornbeck have entered a stipulation to all of the facts, submitted memoranda and fully argued the matter. This Court concludes for the reasons set forth herein that the United States is not liable to Hornbeck and judgment is therefore entered for the defendant United States of America.
On September 9, 1991, the Department of the Navy Military Sealift Command ("MSC") awarded a requirements contract to OLB for ocean transportation services for the carriage of less-than-shipload lots of Department of Defense cargo between Norfolk, Virginia, and the Naval Air Station, Bermuda ("NAS Bermuda"). The contract was for services from October 1, 1991, through September 30, 1993. For the two year period prior to this contract, OLB had performed the same services pursuant to the same terms and conditions.
Under the contract, the United States regularly shipped containerized and breakbulk cargo between Norfolk and NAS Bermuda. The contract was on "liner terms" and OLB was responsible for all costs and services from the time the cargo was receipted for by OLB at the port of loading to the time the cargo was made available to the consignee at the port of discharge, including costs of loading and unloading. Under the contract, OLB had the option of utilizing any berthing facility in Hampton Roads; it used facilities operated by MSC.
The parties agree that during the contract period, the standard course of dealing between OLB and MSC regarding dockage, wharfage, and stevedoring services performed was for the Government to invoice OLB for reimbursement of the costs of these services in accordance with the tariff rates provided to OLB by letter. These services were never requested or authorized by plaintiff Hornbeck.
The Government invoiced OLB for dockage, wharfage and stevedoring charges incurred during the period from October 1, 1989 through February 6, 1993. Beginning in October, 1990, OLB started making only sporadic payments and by February, 1991, quit paying these charges altogether. At the end of OLB's 1989-1991 contract, unpaid invoices for stevedoring, dockage and wharfage totalled $113,937.25. From October 1990 through February 6, 1993, the unpaid stevedoring, dockage and wharfage charges totalled $416,954.56. The Government did not pursue these delinquencies until after it terminated OLB's contract for default on February 6, 1993, and Hornbeck had no notice of the delinquencies at anytime before the termination.2 OLB has never paid the MSC invoices.
The vessel utilized by OLB for performance under the contract was the BOLD VENTURE, pursuant to the charter party entered into between Hornbeck and OLB. On November 30, 1992, OLB also stopped paying Hornbeck charterhire. Total out-standing unpaid charterhire for the period December 1, 1992 through February 5, 1993, is $158,955.00, plus interest at 18% annum. Hornbeck's agent, John Meyer, notified Laura Quarles of MSC on February 5, 1993 of Hornbeck's claim of lien on subfreights under the terms of paragraph sixteen of the charter.3 Meyer requested that the United States pay all outstanding freight moneys owed to OLB directly to Hornbeck.
Under OLB's contract with the United States, freight was earned by OLB for each individual shipment upon delivery of the cargo to the ultimate destination. Freight was then paid by the United States upon receipt of a properly certified invoice that such services were performed. As of February 5, 1993, when it was placed on notice of Hornbeck's claim of maritime lien on subfreights, the United States owed $117,438.24 to OLB for unpaid freight for the last four voyages completed by OLB. The Government still retains the unpaid freight.
On February 6, 1993, MSC issued written notice to OLB of termination for default. Under the default clause of the contract, MSC then immediately chartered the BOLD VENTURE directly from Hornbeck. Under the terms of MSC's second contract with OLB, the Government asserted a claim against OLB for damage to reefer cargo on a March 1990 voyage which has been settled for $11,524.39 but which remains unpaid. In addition, during a January 1992 voyage two empty containers went overboard, in the process damaging a third container of solar panels. Under the provisions of the Carriage of Goods by Sea Act clause under the contract, the loss of the panels is valued at $34,259.00.
Hornbeck contends that OLB is indebted to Hornbeck for breach of the charter in the amount of $158,955.00, plus interest, costs and attorney's fees. It claims that under the charter party it may assert and has asserted a maritime lien on all cargoes and all subfreights for any amounts due under the charter. It thereby claims a maritime lien on the $117,438.24 in subfreights which the United States owes to OLB, and asserts the claim against the United States pursuant to 46 U.S.C.App. § 742. The setoffs claimed by the United States through MSC far exceed this amount.
Hornbeck contends that its maritime lien against unpaid subfreights can not be set-off by claims held by MSC against OLB. Alternatively, Hornbeck contends that even if set-off does apply against Hornbeck's maritime lien on subfreights, none of the cargo damage claims for which the United States seeks a setoff arise out of or are in any way related to the voyages for which the United States has withheld freight payments to OLB, and therefore can not set-off Hornbeck's maritime lien. With some exceptions from January and February 1993, amounting to approximately $14,400, Hornbeck also contends that none of the services for which OLB has not paid and for which the United States seeks a setoff arise out of or are in any way related to the four voyages for which the United States has withheld freight payments. Finally, Hornbeck contends it had no notice of OLB's failure to pay for dockside services, and it claims that the United States is barred by laches from setting-off its charges as well as its damage claims and excess reprocurement costs.
The Government acknowledges that it has withheld payment in the amount of $117,438.24 in unpaid freight charges for services performed by OLB on voyages between December 24, 1992 and January 26, 1993. However, it claims that Hornbeck's rights against it are by nature an assignment which, like any rights which OLB would have against the Government, is subject to setoff by all claims of the Government against OLB. Specifically, the Government claims it is entitled to set-off OLB's unpaid charges owed to MSC for pay port services in the amount of $416,954.56. The United States also asserts a claim for damage to reefer cargo on a March 1990 voyage which has been settled for $11,524.39 but which remains unpaid, and $34,259.00 in damages to cargo under the Carriage of Goods by Seas Act rules incorporated into the contract. The United States also asserts that it is entitled to reprocurement costs in the amount of $3,226.82 as a result of the default of OLB. In sum, the United States claims a setoff greater than any amount alleged due to Hornbeck, and therefore contends Hornbeck is not entitled to recover anything from the United States.
OLB did not respond to the complaint. Hornbeck requested that a default be noted on April 28, 1993.
The parties thus presented three triable issues for final arguments. First, whether Hornbeck has a perfected maritime lien against the subfreights which remain unpaid by the United States to OLB. Second, if Hornbeck has a perfected maritime lien, whether the lien should be set-off by the amounts OLB owes the United States under the contract for port services, cargo damage, and reprocurement costs. And third, if the perfected maritime lien exists and is not subject to a setoff, whether the lien is void as an assignment of a claim against the United States in violation of the Anti-Assignments Act.4
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