Racal Survey U.S.A. v. M/V Count Fleet

• Decision Date: 24 October 2000
• Docket Number: N,No. 98-31382,98-31382
• Citation: 231 F.3d 183
• Parties: (5th Cir. 2000) RACAL SURVEY U.S.A., INC.; NCS INTERNATIONAL, INC., Plaintiffs - Counter Defendants - Appellees, v. M/V COUNT FLEET, her engines, tackle, furniture & appurtenances in rem; ET AL., Defendants TIDEWATER MARINE INTERNATIONAL, INC., Counter Claimant - Appellant. RACAL SURVEY U.S.A., INC.; NCS INTERNATIONAL, INC., Plaintiffs, v. M/V COUNT FLEET, her engines, tackle, furniture & appurtenances in rem, ET AL., Defendants, TIDEWATER MARINE INTERNATIONAL, INC., Intervenor Defendant-Appellant-Cross-Appellee, v. INPUT/OUTPUT, INC., Intervenor Plaintiff - Appellee - Cross-Appellant. o. 98-31383
• Court: U.S. Court of Appeals — Fifth Circuit

Page 183

231 F.3d 183 (5th Cir. 2000)

RACAL SURVEY U.S.A., INC.; NCS INTERNATIONAL, INC., Plaintiffs - Counter Defendants - Appellees, v. M/V COUNT FLEET, her engines, tackle, furniture & appurtenances in rem; ET AL., Defendants

TIDEWATER MARINE INTERNATIONAL, INC., Counter Claimant - Appellant.

RACAL SURVEY U.S.A., INC.; NCS INTERNATIONAL, INC., Plaintiffs, v. M/V COUNT FLEET, her engines, tackle, furniture & appurtenances in rem, ET AL., Defendants, TIDEWATER MARINE INTERNATIONAL, INC., Intervenor Defendant-Appellant-Cross-Appellee, v. INPUT/OUTPUT, INC., Intervenor Plaintiff - Appellee - Cross-Appellant.

No. 98-31382, No. 98-31383

UNITED STATES COURT OF APPEALS For the Fifth Circuit

October 24, 2000

[Copyrighted Material Omitted] Appeals from the United States District Court For the Western District of Louisiana

Before EMILIO M. GARZA, DeMOSS, and STEWART, Circuit Judges.

DeMOSS, Circuit Judge:

In these consolidated appeals, Tidewater Marine International, Inc., ("TMI") primarily challenges two of the district court's rulings arising out of an admiralty dispute. First, TMI argues that the district court erred in finding a maritime lien in favor of Racal Survey U.S.A., Inc., and NCS International, Inc., (collectively "Racal") over various vessels chartered by Coastline Geophysical, Inc., ("Coastline") from TMI. Second, TMI maintains that the district court improperly denied TMI a maritime lien over certain seismic equipment sold by Input/Output, Inc., ("Input") to Coastline.

Because Racal did not rely on the credit of the arrested vessels or provide any necessaries to those boats, we reverse the district court's judgment granting a maritime lien in favor of Racal. We, however, conclude that the district court did not err with respect to its ruling denying TMI a maritime lien over the seismic equipment sold by Input and, therefore, affirm the district court's ruling on that issue.

I. BACKGROUND

On February 16, 1996, Coastline entered into a Blanket Time Charter Agreement ("First Charter") with Tidewater Marine, Inc., ("Tidewater Marine")¹. According to that charter, Tidewater Marine was to provide vessels suited for offshore activities in the mineral and oil industry. Those vessels were to embark on a seismic expedition in the Gulf of Mexico in search of oil and gas. In conformance with the First Charter, on March 11, 1996, the two parties executed separate letter agreements for four vessels: 1) the M/V CAMERON SEAHORSE, 2) the M/V WHITTIE TIDE, 3) the M/V TAYLOR TIDE, and 4) the M/V TOUPS TIDE.

To do its seismic operations, Coastline required certain technical equipment. As a result, it made various inquiries to Racal, who submitted a proposal to Coastline on February 12, 1996. That proposal outlined the equipment to be leased and the services to be rendered to Coastline for its operations. Furthermore, Racal submitted another proposal on March 25, 1996, which pertained to the sale of certain other equipment to Coastline. On March 27, 1996, Racal shipped all of the required equipment to the shipyard for installation. The equipment would allow the four vessels to coordinate information among themselves to better facilitate the search for oil and gas. Two of the vessels would lay cable upon the ocean floor while a third, the source vessel, would send information along the cable via airgun shots from caterpillar machinery located on the vessel. A fourth vessel would record the data generated from these airgun shots. In addition to Racal's equipment, other equipment provided by Input was installed on the chartered vessels.

After the First Charter terminated, Coastline executed a second Blanket Time Charter ("Second Charter") on August 13, 1996. Although similar in nature to the earlier charter agreement, the Second Charter differed in three respects: 1) TMI, not Tidewater Marine, was the vessel owner; 2) four different vessels would be used; and 3) the seismic operations would be conducted off the coast of Africa, not in the Gulf of Mexico. On August 19, 1996, Coastline again agreed to separate letter agreements for four vessels: 1) the M/V SECRETARIAT, 2) the M/V COUNT FLEET, 3) the M/V COUNT TURF, and 4) the M/V MILTON TIDE. Between August 28, 1996, and September 2, 1996, the equipment that had been placed onto the First Charter vessels was transferred to the four new vessels at Quality Shipyards, a subsidiary owned by Tidewater.

When the Africa survey concluded, the four vessels chartered for that trip sailed to Trinidad and Tobago for another job. During that voyage, the charter between Coastline and TMI terminated due to non-payment of charter hire, but Coastline's equipment remained on board. Besides failing to pay TMI, Coastline became insolvent and defaulted on its payments to Racal and Input.² Upon the return of the Second Charter vessels to the United States, Racal arrested three of them. TMI secured the release of the vessels and removed and stored Coastline's equipment. Shortly thereafter, TMI arrested Coastline's equipment, in some of which Input claimed a UCC security interest, because of Coastline's non-payment of charter hire.

In district court, Racal filed a motion for partial summary judgment requesting determination of the validity of its lien under the Federal Maritime Lien Act ("FMLA"), 46 U.S.C. § 31342. TMI opposed that motion and filed a cross-motion for summary judgment. After taking the motions under advisement, the district court ruled in favor of Racal. Moreover, the district court granted Input's "Application for Petitioner to Show Cause Instanter or, Alternatively, Motion for Summary Judgment" and denied TMI's motion for summary judgment seeking recognition of its claimed maritime lien in the Coastline equipment.

TMI now appeals both of those rulings.

II. STANDARD OF REVIEW

We review a grant or denial of summary judgment de novo. See Webb v. Cardiothoracic Surgery Assocs., P.A., 139 F.3d 532, 536 (5th Cir. 1998). Summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits filed in support of the motion, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c). The summary judgment evidence is reviewed in the light most favorable to the nonmovant. See Melton v. Teachers Ins. & Annuity Ass'n, 114 F.3d 557, 559 (5th Cir. 1997). If the moving party meets its initial burden of showing that there is no genuine issue, then the burden shifts to the nonmovant to set forth specific facts showing the existence of a genuine issue. See Fed. R. Civ. P. 56(e). The nonmovant cannot satisfy his summary judgment burden with conclusional allegations, unsubstantiated assertions, or only a scintilla of evidence. See Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc). If the nonmovant fails to respond, then summary judgment, if appropriate, shall be entered against that party. See Fed. R. Civ. P. 56(e).

III. DISCUSSION

Both of TMI's appeals involve the concept of a maritime lien, a device developed as a necessary incident to the operation of vessels. Piedmont & George's Creek Coal Co. v. Seaboard Fisheries Co., 41 S. Ct. 1, 3 (1920). Because a ship moves from place to place, it is peculiarly subject to vicissitudes that would compel abandonment of vessel or voyage, unless repairs and supplies are promptly furnished. Id. Moreover, a ship is often absent from her home port without access to funds and, as a result, must be able to obtain upon her own account needed repairs and supplies. Id. That and the resulting need to ensure that a ship did not sail away from its debts contributed to the creation of the maritime lien. See Equilease Corp. v. M/V SAMPSON, 793 F.2d 598, 602 (5th Cir. 1986) (en banc).

Prior to 1910, however, a maritime lien was hardly a certainty for the supplier of necessaries because the law was full of exceptions. Gulf Oil Trading Co. v. M/V CARIBE MAR, 757 F.2d 743, 747 (5th Cir. 1985). To remedy that situation, Congress in 1910 enacted the Federal Maritime Lien Act ("FMLA"), 46 U.S.C. §§ 971-975,³ to bring a degree of uniformity to the area of maritime liens. Id. The FMLA essentially preempted the various state statutes with respect to the conferral of maritime liens for repairs, supplies, and other necessaries. Equilease, 793 F.2d at 602-03. And it eliminated the distinction that had been drawn between a vessel in her home port and a vessel in a foreign port. Id. Before the FMLA, a lien could be given for necessaries furnished to a vessel in a port of a foreign state if the necessaries were furnished upon the credit of the vessel, but no such lien could be given for necessaries furnished in a vessel's home port or state. Id.

Section 971 of the FMLA provided a maritime lien to "any person furnishing repairs, supplies, towage, use of dry dock or marine railway, or other necessaries, to any vessel, whether foreign or domestic, upon the order of the owner of such vessel, or of a person authorized by the owner," and it further stated that the furnishing person need not "allege or prove that credit was given to the vessel." 46 U.S.C. § 971 (superseded 1988). Section 972 created a presumption that the managing owner, ship's husband, master, or any person to whom the management of the vessel at the port of supply was intrusted had authority to procure necessaries. Section 973 added to the individuals presumed to have authority to procure necessaries under § 972, including those officers and agents appointed by a charterer, by an owner pro hac vice, or by an agreed purchaser in possession of the vessel. Although that section broadened the group of individuals presumed to have authority to procure necessaries, it also placed a significant limitation and duty upon the supplier of necessaries. Under § 973, if the furnisher knew, or by exercise of reasonable diligence could...