Seaward Serv. v. The United States
| Decision Date | 07 February 2022 |
| Docket Number | Civil Action 2:21CV131 (RCY) |
| Parties | SEAWARD SERVICES, INC. Plaintiff, v. THE UNITED STATES OF AMERICA, Defendant. |
| Court | U.S. District Court — Eastern District of Virginia |
This matter is before the Court on Defendant's Motion to Dismiss (ECF No. 33), filed pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). The motion has been fully briefed, and the Court dispenses with oral argument because the facts and legal contentions are adequately presented in the materials before the Court, and oral argument would not aid in the decisional process. E.D. Va Loc. Civ. R. 7(J). For the reasons stated below, the Court will grant Defendant's Motion to Dismiss (ECF No. 33).
The United States (“Defendant”), acting through the United Naval Supply Systems Command, contracted with Great Eastern Group, Inc. (“GEG”) to provide certain services to four training vessels (“the Vessels”). (Compl. ¶ 8, ECF No. 1.) On April 9, 2018, GEG entered into a subcontracting agreement with Seaward Services, Inc. (“Plaintiff” or “Seaward”) to provide certain crew and services to the Vessels. (Id. ¶ 9.) Defendant approved of the selection of Seaward. (Id. ¶ 11.)
Seaward provided the services due under the subcontracting agreement; however, GEG failed to provide payment to Seaward. (Id. ¶¶ 12-13.) On November 18, 2019, Seaward notified Defendant that Seaward had not been paid for past services and was continuing to provide services for which it was not being paid. (Id. ¶ 14.) Seaward received no payments or assurances of future payment, and, on November 25, 2019, Seaward issued a Notice of Intent to Stop Work due to Nonpayment to Defendant. (Id. ¶¶ 15-16.) Seaward alleges that as a result of nonpayment, it has a maritime lien against the Vessels for the outstanding balance. (Id. ¶ 23.)
Plaintiff filed its Complaint on October 8, 2020, in the United States District Court for the Middle District of Florida. (ECF No. 1.) Defendant filed a Motion to Dismiss, or in the Alternative, Motion to Transfer Venue on December 21, 2020. (ECF No. 10.) The United States District Court for the Middle District of Florida issued an Order on March 11, 2021, denying the Motion to Dismiss and granting the Motion to Transfer. (ECF No. 25.) The action was transferred from the Middle District of Florida to the Eastern District of Virginia and was assigned to the undersigned. (ECF No. 27.)
Defendant filed a Motion to Dismiss and a Memorandum in Support of said motion on March 25, 2021. (ECF Nos. 33-34.) Plaintiff filed a Memorandum in Opposition on April 8, 2021. (ECF No. 38.) Plaintiff filed its Reply on April 14, 2021. (ECF No. 39.)
“When analyzing a motion to dismiss for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1), the court must consider ‘whether plaintiff's allegations, standing alone and taken as true [plead] jurisdiction and a meritorious cause of action.'” Allianz Ins. Co. v. Cho Yang Shipping Co., Ltd., 131 F.Supp.2d 787, 789 (E.D. Va. 2000) (quoting Dickey v. Greene, 729 F.2d 957, 958 (4th Cir. 1984)). The burden of establishing the existence of subject matter jurisdiction rests with the party asserting jurisdiction. See Richmond, Fredericksburg & Potomac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991).
“A motion to dismiss under Rule 12(b)(6) tests the sufficiency of a complaint; importantly, it does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Republican Party of N.C. v. Martin, 980 F.2d 943, 952 (4th Cir. 1992) (citing 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1356 (1990)). Dismissals under Rule 12(b)(6) are generally disfavored by the courts because of their res judicata effect. Fayetteville Invs. v. Com. Builders, Inc., 936 F.2d 1462, 1471 (4th Cir. 1991). Federal Rule of Civil Procedure 8 only requires that a complaint set forth “‘a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). While the complaint's “[f]actual allegations must be enough to raise a right to relief above the speculative level, ” “detailed factual allegations” are not required in order to satisfy the pleading requirement of Federal Rule 8(a)(2). Id. (citations omitted). “[A] motion to dismiss for failure to state a claim should not be granted unless it appears certain that the plaintiff can prove no set of facts which would support its claim and would entitle it to relief.” Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). The plaintiff's well-pleaded allegations are assumed to be true, and the complaint is viewed in the light most favorable to the plaintiff. Id. (citations omitted); see also Martin, 980 F.2d at 952.
The dispute between the parties can be summarized in one question: can maritime liens be fixed on public vessels? (Mem. Supp. at 1, ECF No. 34; Mem. Opp'n at 2, ECF No. 38; Reply at 1, ECF No. 39.) Defendant contends that the Maritime and Commercial Instruments Lien Act (“MCILA”) prohibits fixing maritime liens on public vessels. (Mem. Supp. at 4-6.) Plaintiff argues that the MCILA only prohibits in rem actions on public vessels, while the Suits in Admiralty Act (“SAA”) and Public Vessels Act (“PVA”) permit in personam actions on public vessels. (Mem. Opp'n at 2, 4.) Plaintiff claims that this action is an in personam claim, so it is not barred by the MCILA. (Id. at 3.) Defendant argues that the in personam or in rem distinction is immaterial, since neither the SAA or the PVA create a cause of action. (Reply at 2.) Further, Defendant argues that while the MCILA does create a cause of action, that cause of action is not available for actions against public vessels. (Id.)
The jurisprudential landscape of this issue is unique. Only one circuit court, the Eleventh Circuit, has opined on the issue, finding that the MCILA does not prohibit in personam actions against public vessels. Bonanni Ship Supply, Inc. v. United States, 959 F.2d 1558, 1564 (11th Cir. 1992) (allowing suits “where an admiralty plaintiff sues the United States in personam on principles of in rem liability”). But the overwhelming majority of district courts, including district courts within the Fourth Circuit, have held that the MCILA prohibits any action, in personam or in rem, against public vessels. See Hopeman Bros. v. USNS Concord, 898 F.Supp. 338 (E.D. Va. 1995); Sipco Servs. & Marine v. Bethlehem Steel Corp., 892 F.Supp. 129, 129 (D. Md. 1995) (describing Bonanni as “entirely unsound”).
To fully understand the issue, it is necessary to discuss the framework of maritime law established by the SAA, PVA, and the MCILA. The SAA waives sovereign immunity and allows actions against the United States. It states:
In a case in which, if a vessel were privately owned or operated, or if cargo were privately owned or possessed, or if a private person or property were involved, a civil action in admiralty could be maintained, a civil action in admiralty in personam may be brought against the United States or a federally-owned corporation. In a civil action in admiralty brought by the United States or a federally-owned corporation, an admiralty claim in personam may be filed or a setoff claimed against the United States or corporation.
46 U.S.C. § 30903. The SAA prohibits public vessels from being arrested or seized, which acts as a prohibition on in rem actions against the United States. See 46 U.S.C. § 30908. The PVA also contains a waiver of immunity, stating that “[a] civil action in personam in admiralty may be brought, or an impleader filed, against the United States for - (1) damages caused by a public vessel of the United States; or (2) compensation for towage and salvage services, including contract salvage, rendered to a public vessel of the United States.” 46 U.S.C. § 31102. The SAA and PVA overlap and, when a suit seemingly could be filed under either, the PVA controls. See United States v. United States Continental Tuna Corp., 425 U.S. 164, 180-81 (1976). The MCILA directly addresses maritime liens, and it states:
46 U.S.C. § 31342.
The only Circuit Court of Appeals opinion that opines on whether the MCILA prohibits in personam actions against the United States is Bonanni Ship Supply, Inc. v. United States. 959 F.2d 1558. The Bonanni court acknowledged that “the MCILA on its face appears to preclude the imposition of a maritime lien on a public vessel . . . .” Id. at 1562. However, the court held that the MCILA did not prohibit in personam actions based on in rem principles. Id. at 1564. As a result, it concluded that the MCILA “does not preclude the imposition of maritime liens against a public vessel.” Id. at 1563. The court's reasoning was that the legislative history of the MCILA shows that Congress was not intending to change the state of maritime law. Id. at 1562. However, the court's view of pre-MCILA maritime law differed from that of Congress.[1] Since the Eleventh Circuit previously had upheld in...
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