John W. Stone Oil Distributor, Inc. v. M/V MISS BERN

• Decision Date: 25 June 1987
• Docket Number: Civ. A. No. 85-0984-T-C.
• Citation: 663 F. Supp. 773,1988 AMC 28
• Parties: JOHN W. STONE OIL DISTRIBUTOR, INC., Plaintiff, v. The M/V MISS BERN, Defendant.
• Court: U.S. District Court — Southern District of Alabama

663 F. Supp. 773

1988 AMC 28

JOHN W. STONE OIL DISTRIBUTOR, INC., Plaintiff, v. The M/V MISS BERN, Defendant.

Civ. A. No. 85-0984-T-C.

United States District Court, S.D. Alabama.

June 25, 1987.

M. Kathleen Miller, Armbrecht, Jackson, DeMouy, Crowe, Holmes and Reeves, Mobile, Ala., for plaintiff.

George L. Simons, Mobile, Ala., for defendant.

DANIEL HOLCOMBE THOMAS, District Judge.

This non-jury admiralty case was heard on June 8, 1987. The Court, after careful review of all the evidence and documents which were submitted by each side, makes the following findings of fact and conclusions of law:

FINDINGS OF FACT

1. The counterclaim plaintiff, Glenn Towing, Inc. (Glenn Towing) is a corporation organized under the laws of the State of Alabama having its principal place of business in Mobile, Alabama.

2. The counterclaim defendant, John W. Stone Oil Distributor, Inc. (John W. Stone) is a corporation organized under the laws of the State of Louisiana having its principal place of business in Gretna, Louisiana.

3. The owner of the M/V MISS BERN on January 23, 1985, was Miss Bern, Inc. Kenneth A. Pizani, President of Miss Bern, Inc., was also a principal of Kenny Marine.

4. There is no dispute that, on January 23, 1985, Stone furnished fuel and oil to the M/V MISS BERN at the request of Kenny Marine. As reflected by Stone's invoices dated January 30, 1985, and January 31, 1985, respectively, the amount due Stone for the fuel and oil totaled $9,688.63.

5. In late March 1985, approximately 50 to 60 days after Stone's invoices were rendered, John W. Stone, President of Stone, contacted Kenneth Pizani, President of Miss Bern, Inc., about payment of Stone's invoices. Mr. Pizani told Mr. Stone that payment would be forthcoming in two weeks or better.

6. After two to three weeks passed, Mr. Stone again contacted Mr. Pizani about payment of the invoices. During this second conversation, which occurred in April 1985, Mr. Pizani advised Mr. Stone that Equilease Corporation (Equilease), who held a First Preferred Ship Mortgage on the vessel, had taken the vessel back and that defendant and counter-plaintiff Glenn Towing, Inc. had the vessel. Mr. Pizani advised Mr. Stone that Equilease would take care of the vessel's obligations to Stone.

7. Between Mr. Stone's two telephone conversations with Mr. Pizani, Glenn Towing had purchased the vessel from Miss Bern, Inc. The bill of sale was executed on April 8, 1985, approximately ten weeks after Stone furnished the fuel and oil to the MISS BERN and six weeks after Stone's invoices became due. On the same day, Glenn Towing assumed a First Preferred Ship Mortgage on the vessel which was held by Equilease and which had been recorded prior to the time Stone furnished the fuel and oil to the MISS BERN on January 23, 1985. On April 8, 1985, the records of the U.S. Coast Guard in New Orleans showed only two liens against the M/V MISS BERN, the first being the Equilease mortgage and the second a $28,396.52 lien claimed by George Engine Company, Inc. Pizani stated that there were no other liens against the vessel and the Bill of Sale warranted that there were no liens and covenanted to hold harmless and indemnify Glenn Towing on any undisclosed liens. Thereafter Glenn Towing employed the vessel in its general maritime towing business.

8. After learning from Mr. Pizani that Miss Bern, Inc. no longer had the vessel, Mr. Stone contacted Gerry Heap of Equilease Corporation about payment of Stone's invoices. Mr. Heap told Mr. Stone that Equilease would resolve the matter and that Mr. Heap would check with Equilease's New York office about payment of the invoices. Mr. Heap advised Mr. Stone that Glenn Towing had the MISS BERN and gave Mr. Stone Glenn Towing's address.

9. Mr. Stone tried to reach Mr. Heap several times during the next several weeks but was unable to do so. Mr. Stone then contacted the attorney in New Orleans who represents Equilease. The attorney would not answer Mr. Stone's questions about payment of the invoices. Several weeks later, Mr. Stone was able to reach Mr. Heap. Mr. Heap told Mr. Stone that Equilease's New York office had determined that Equilease would not pay the amounts owed by the MISS BERN to Stone. Although Stone testified that his company always looked to the credit of the vessel when selling fuel on account, John W. Stone did not file a notice of claim of lien against the M/V MISS BERN. John W. Stone also made no subsequent efforts to collect the amounts due from Kenny Pizani or Kenny Marine.

11. In late May 1985, John W. Stone mailed the fuel and oil invoices to Glenn Towing. Upon receipt of the bills Charles Hilburn called Stone and told him that Glenn Towing had a clear Bill of Sale to the vessel, that he knew nothing about fuel bills, and that Glenn Towing was not going to pay the bills. Stone called Glenn Towing again in June and July and was told each time that Glenn Towing was not going to pay the bills.

12. John W. Stone turned the matter over to his attorneys in New Orleans in the summer of 1985. Stone furnished them with copies of the invoices and they checked the Coast Guard records and found that the M/V MISS BERN was owned by Glenn Towing and that it was subject to a First Preferred Ship Mortgage held by Equilease. Stone did not tell the attorneys about Pizani's late payment record on the Kenny Marine account or about how he let time time lapse in his efforts to collect the bills from Pizani.

13. Subsequently, Stone's attorney contacted a firm in Mobile, Alabama, and asked that firm to file an in rem proceeding against the MISS BERN on behalf of Stone.

14. On August 2, 1985, John W. Stone Oil Distributor, Inc. filed a verified complaint in rem against the M/V MISS BERN. The complaint alleged that on or about January 30, 1985, John W. Stone furnished fuel and oil to the vessel at the request of the vessel's owner, that the reasonable value of the fuel and oil was $9,688.63, that the sum claimed was unpaid, and that the unpaid fuel and oil bill constituted a maritime lien against the vessel. John W. Stone prayed that the vessel be arrested, condemned and sold to satisfy the maritime lien. The vessel was arrested in Mobile, Alabama, on August 2, 1985. Stone acknowledged that Glenn Towing did not owe John W. Stone for the fuel and oil and John W. Stone's Louisiana counsel admitted that the vessel was arrested for the purpose of forcing someone to pay this fuel bill.

15. Charles Hilburn was President of Glenn Towing Company, the bona fide purchaser of the M/V MISS BERN and David Hilburn was also an employee. Prior to the arrest on August 2, 1985, a phone conversation took place between Stone and one of the Hilburns. The Hilburns were able to remove their personal possessions from the vessel before she was seized.

16. David Hilburn testified that Charles Hilburn told him of the impending arrest of the vessel and that he called Stone on August 2nd. He testified that he told Stone that Glenn Towing was not going to pay the bill and that Glenn Towing needed the vessel to move a tow of four empty barges to Harriman, Tennessee. Stone said that he didn't give a damn about what kind of contract Glenn Towing had and that if Glenn Towing wanted to work the boat they had to pay the bill. Hilburn also said that Stone acknowledged the superiority of the Equilease mortgage and recognized the fact that he wouldn't get anything out of the vessel's arrest and sale but that he was going to arrest the boat anyway just to show Equilease that he could do it. John W. Stone received nothing from the proceeds of the sale of the vessel. Even assuming that Mr. Stone made such statements, the statements have no bearing upon the validity of Stone's maritime lien. At most, Mr. Stone was advising Glenn Towing of his intent to exercise Stone's legal right to seize the vessel if Stone was not paid and such statements certainly do not constitute bad faith or maliciousness.

17. Turning to Glenn Towing's evidence with respect to its alleged damages, the Court initially finds that Glenn Towing took no action to mitigate any loss it suffered after the MISS BERN was seized. Charles Hilburn admitted that Glenn Towing did not make any effort to post a bond or any other security or to provide a letter of credit so that either the seizure of the vessel could have been avoided or the vessel could have been released after the seizure. There was no evidence that Glenn Towing attempted to negotiate with Equilease to arrange for the vessel's release. Moreover, Glenn Towing made no effort to lease another boat to accomplish any work it claims it lost.

18. Glenn Towing introduced absolutely no evidence to support a finding that Glenn Towing suffered damages for loss of use of the vessel as a result of the seizure. The Hilburns claimed that at the time the vessel was seized, Glenn Towing intended to use the MISS BERN to move a tow of four empty barges to Harriman, Tennessee, where the barges would be loaded with coal, and then to transfer the loaded barges to Leroy, Alabama. The Hilburns admitted, however, that Glenn Towing was able to make this trip by using another vessel owned by Glenn Towing, the CAPTAIN DON.

19. Charles Hilburn claimed that the trip to Harriman made by the CAPTAIN DON was the first trip pursuant to a verbal agreement between Glenn Towing and Warrior River Towing Company, Inc. to perform this run for a six-month period. Mr. Hilburn's testimony about a six-month contract was directly contradicted, however, by that of Ron Brown, Vice President of Warrior River Towing Company. Mr. Brown testified that Glenn Towing had performed work for Warrior River but only on a trip-by-trip basis. According to Mr. Brown, Warrior River never had a contract with Glenn Towing to haul barges loaded with coal from Harriman, Tennessee, to Leroy, Alabama, which was to run for a minimum of six months and, in fact, Warrior River never had any long-term agreement with Glenn Towing....