Navieros Inter-Americanos, S.A. v. M/V Vasilia Exp.

• Decision Date: 11 April 1997
• Docket Number: 96-1851,S,96-2174 and 96-2175,Nos. 96-1850,INTER-AMERICANO,s. 96-1850
• Parties: , 38 Fed.R.Serv.3d 440 NAVIEROSA., Plaintiff, Appellee, v. M/V VASILIA EXPRESS et al., Defendants, Appellants, Dusan Jeftimiades, Petitioner, Intervenor-Appellant. NAVIEROSA., Plaintiff, Appellee, v. M/V VASILIA EXPRESS et al., Defendants, Appellants, Coastal Ship Repair, Inc., Petitioner, Intervenor-Appellant. NAVIEROSA., Plaintiff, Appellee, v. M/V VASILIA EXPRESS et al., Defendants, Appellants, Motor-Services Hugo Stamp, Inc., Petitioner, Intervenor-Appellant. NAVIEROSA., Plaintiff, Appellee, v. M/V VASILIA EXPRESS et al., Defendants, Appellants. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 304

120 F.3d 304

1997 A.M.C. 2845, 38 Fed.R.Serv.3d 440

NAVIEROS INTER-AMERICANOS, S.A., Plaintiff, Appellee, v. M/V VASILIA EXPRESS et al., Defendants, Appellants, Dusan Jeftimiades, Petitioner, Intervenor-Appellant.

NAVIEROS INTER-AMERICANOS, S.A., Plaintiff, Appellee, v. M/V VASILIA EXPRESS et al., Defendants, Appellants, Coastal Ship Repair, Inc., Petitioner, Intervenor-Appellant.

NAVIEROS INTER-AMERICANOS, S.A., Plaintiff, Appellee, v. M/V VASILIA EXPRESS et al., Defendants, Appellants, Motor-Services Hugo Stamp, Inc., Petitioner, Intervenor-Appellant.

NAVIEROS INTER-AMERICANOS, S.A., Plaintiff, Appellee, v. M/V VASILIA EXPRESS et al., Defendants, Appellants.

Nos. 96-1850, 96-1851, 96-2174 and 96-2175.

United States Court of Appeals First Circuit.

Heard April 11, 1997.

Decided July 28, 1997.

Harry A. Ezratty, San Juan, PR, for intervenor-appellant Dusan Jeftimiades.

Francisco G. Bruno, San Juan, PR, and Lilia R. Rodriguez Ruiz, Hato Rey, PR, with whom McConnell Valdes was on brief, for intervenor-appellant Coastal Ship Repair, Inc.

Antonio M. Bird, Jr., with whom Bird Bird and Hestres, San Juan, PR, was on brief, for intervenor-appellant Motor-Services Hugo Stamp, Inc.

Stephen T. Perkins, Richmond, VA, for defendant-appellants M/V VASILIA EXPRESS et al.

Mark C. Landry, Metairie, LA, with whom Carlos J. Quilichini, San Juan, PR, Robert A. Mathis, Metairie, LA, and Newman, Mathis, Brady, Wakefield & Spedale were on brief, for appellee Gulf Coast Bank & Trust Co.

Before SELYA, Circuit Judge, ALDRICH, Senior Circuit Judge, and LYNCH, Circuit Judge.

LYNCH, Circuit Judge.

This admiralty case features seven competing claimants, each trying to take from the proceeds of the sale of a seized vessel, the M/V VASILIA EXPRESS. Three claimants, in addition to the original charterer plaintiff, were allowed to intervene; all four won judgments after a three-day, expedited bench trial. Suit was originally brought in rem against the vessel. The vessel's corporate owner and its shipping agent both appeared, however, in personam to defend the action, and were also held liable on two of the judgments (for the original charterer and another intervening charterer). The proceeds of the sale are insufficient to satisfy even these four successful claims. Various other claimants, whose claims would further tax the available funds, were not allowed to intervene. Three of these, the ship's captain and two repair companies, appeal. The owner of the vessel, the shipping agent, and the vessel itself also appeal together, arguing that the district court's entry of judgment against them is in error, and hence that there should be no division of proceeds at all. Alternatively, they argue that the two charterers were awarded excessive damages. These four appeals were consolidated.

We affirm the judgment against the vessel and the two in personam defendants, but we vacate the damages awards to both charterers and remand for a reassessment of damages. We also affirm the denial of intervention to the captain, but we reverse the denials of the two repair companies' motions to intervene and remand to the district court to entertain those companies' proof, to calculate damages due them, if any, and to determine how the proceeds from the sale of the vessel should be allocated among the various judgment winners.

I.

The underlying facts are not now in dispute. On the morning of March 28, 1996, Navieros Interamericanos S.A., Inc. ("Navieros"), a Florida corporation, entered a fixed time charter party ¹ with the M/V VASILIA EXPRESS on a standard New York Produce Exchange form through a ship's broker, Jan Gisholt Shipping, Inc., also of Florida. According to the charter party, the M/V VASILIA EXPRESS was owned by Royal United Shipping, Inc. ("Royal United"), and was registered in the West Indies. During this litigation it was established that, despite this written representation, the vessel was actually owned by Vasilia, Inc. ("Vasilia"), a corporation with close links to Royal United. ²

Navieros chartered the vessel for two round-trips between Florida and Guatemala, with an option for a third round-trip, for a total engagement of about 27 days, at $2,300 per day. Navieros intended to ship, on behalf of various clients, "general merchandise, freight [of] all kinds, electrical material, toys, hardware, food stuffs, ... heavy equipment, ... road building construction-type machinery, and ... used vehicles." The time charter party stated that delivery of the vessel to Navieros, the charterer, was to occur upon the vessel's arrival at the pilot station in Port Everglades, Florida, where Navieros's cargo was to be loaded. The charter party stated that this would happen "any time, day, night" after the fixing of the charter on March 28.

At approximately 2:00 in the afternoon on March 28, Kenneth Coleman, the President of Navieros, boarded the vessel at dock in Miami, about 30 miles from Port Everglades. Coleman discussed the stowage plan with the captain, Dusan Jeftimiades, and with Michael Psarellis and instructed the captain to berth at Pier 19 when he arrived at Port Everglades, instead of at the pilot station.

The next day, the M/V VASILIA EXPRESS left its berth in Miami, apparently headed for Port Everglades. The only deviation from the written agreement that Coleman had mentioned involved the berthing of the ship at a different point in Port Everglades, but the ship never reached Port Everglades.

The vessel experienced problems with its bridge tachometer and stopped for repairs at Bicentennial Park, still inside the Port of Miami. ³ Kenneth Coleman and his brother William, also a Navieros officer, visited the ship four or five times over the next week. During this time, Navieros also ordered fuel for the vessel, confirmed its reservation of the berth space at Port Everglades, and issued the necessary check in payment of United States customs dues.

During this unexpected delay, Royal United, the putative owner of the vessel, entered into a second time charter party with Comet Lines Agency, Inc. ("Comet"), which was unaware of the charter party with Navieros. Royal United apparently believed at this time that the Navieros charter party had not yet been fixed. The Comet charter party, brokered by Americana Marine Services, began on April 4 and was to last for a period of 30 days. It brought a more lucrative charter rate, $2,630 per day, than did the Navieros charter. Comet intended primarily to carry cargo between San Juan, Puerto Rico and Venezuela. Since the vessel was in Miami at the start of the charter, Comet arranged to have some Venezuela-bound cargo brought down from Jacksonville and loaded there; Comet's intention was to have the vessel proceed to San Juan where more cargo would be loaded, and then to sail to Venezuela.

Upon the vessel's arrival in the port of San Juan on April 13, however, the United States Coast Guard detained the vessel for a litany of safety violations and ordered it not to proceed to sea without Coast Guard approval. ⁴

Navieros subsequently learned that the vessel was being detained in Puerto Rico. On April 18, while the ship was still in detention, Navieros filed a complaint in the federal district court in Puerto Rico, initiating this litigation. Initially, the action was in rem against the vessel to enforce an alleged maritime lien based on the breach of a time charter agreement.

Later that same day, April 18, the district court, in an ex parte proceeding, ordered the arrest of the vessel pursuant to Rule C of the Supplemental Rules for Certain Admiralty and Maritime Claims to the Federal Rules of Civil Procedure. Rule C allows the holder of a maritime lien to proceed in rem against the vessel that is the subject of the lien. In its order, the court stated that Navieros had made a prima facie showing of a maritime lien against the vessel.

Vasilia, as claimant of the in rem defendant M/V VASILIA EXPRESS, filed a motion for a post-arrest hearing on April 23. Vasilia claimed that the arrest of the vessel was improper because Navieros had no maritime lien. The only argument advanced by Vasilia at this point against the existence of a lien was that the charter party between Navieros and Royal United had not been fixed. A charterer's maritime lien, a right derived from a contract, will not arise in the absence of a fixed charter party, that is, in the absence of an enforceable contract. ⁵

In response to Vasilia's motion, Navieros amended its complaint on April 24 and moved alternatively for attachment of the vessel under Supplemental Rule B. Navieros also added Royal United as an in personam defendant. One of the pertinent differences between Rules C and B is that the latter does not require the existence of a maritime lien. Rule B allows an admiralty plaintiff to acquire quasi in rem jurisdiction over a defendant by attaching his property in the district; this approach is available only if the defendant "shall not be found within the district." As required by Rule B, Navieros submitted an affidavit stating that, to the best of its knowledge, after a diligent search, defendant Royal United could not be found within the district.

The court ordered attachment of the vessel pursuant to Rule B on April 29. In its May 1, 1996 answer to Navieros's amended complaint, Vasilia reiterated that Navieros had no maritime lien because there was no fixed charter party. Vasilia also filed a counterclaim against Navieros for wrongful arrest, and asserted that if the court should find that there was a fixed charter party, then the dispute "would be subject to compulsory arbitration." Vasilia did not move to compel arbitration at this time.

The next day, April 30, Vasilia filed a "request for amended process of arrest" in which it asserted that the Rule B attachment was wrongly ordered by the court because Vasilia had designated an agent in the district upon whom process could be served on behalf of Vasilia....