Maine Uniform Rental, Inc. v. Nova Star M/V ( 2017 )

  •           United States Court of Appeals
                          For the First Circuit
    No. 16-2467
           COMPANY INC., d/b/a Portland Tugboat LLC; DNV GL AS,
     MAINE UNIFORM RENTAL, INC., d/b/a Pratt Abbott Uniform & Linen,
                           Plaintiff, Appellant,
                          NOVA STAR M/V, in rem,
                           Defendant, Appellee,
                        THE M/V NOVA STAR, in rem,
                        FOR THE DISTRICT OF MAINE
               [Hon. D. Brock Hornby, U.S. District Judge]
                           Howard, Chief Judge,
                  Torruella and Barron, Circuit Judges.
         Robert W. Kline, with whom Kline Law Offices LLC was on brief,
    for appellant.
         Edward S. MacColl, with whom Thompson, MacColl & Bass, LLC,
    P.A. was on brief, for appellee.
    November 7, 2017
               TORRUELLA, Circuit Judge.       We have before us an appeal
    from the district court's judgment limiting the in rem maritime
    lien claim of Plaintiff-Appellant Maine Uniform Rental, Inc.,
    d/b/a Pratt Abbott Uniform & Linen ("Pratt Abbott" or "Appellant")
    on the arrested ship, the M/V NOVA STAR ("NOVA STAR").                 Pratt
    Abbott's claim arises from its agreement (the "Agreement") with
    the   ship's   charterer,   Nova   Star   Cruises   Limited   ("Nova    Star
    Cruises"), to rent linens and other related items for the ship's
    ferry service.    Given this case's maritime and admiralty nature,1
    and the need to interpret the Federal Maritime Lien Act2 (FMLA) to
    reach a resolution, this case was properly before the district
    court.   28 U.S.C. § 1331.     This Court has appellate jurisdiction
    of that district court's final decisions, 28 U.S.C. § 1291, and
    the case is now properly before us.
               We are asked to extend the reach of a maritime lien claim
    to encompass a pre-established purchase cost of items rented by a
    charterer pursuant to a temporary rental and service contract.
    1   28 U.S.C. § 1333.
    2  46 U.S.C. §§ 31301-31343. Section 31343 provides that "[t]he
    district courts of the United States shall have jurisdiction over
    a civil action in Admiralty to declare that a vessel is not subject
    to a lien claimed under [the Maritime Lien Act], or that the vessel
    is not subject to the notice of claim of lien, or both, regardless
    of the amount in controversy or the citizenship of the parties."
    After review of the record and the parties' arguments, we refrain
    from doing so and affirm the judgment of the district court.
                                   I.   BACKGROUND
    A.   Setting Sail (The Facts)
                 Given that neither party claims to challenge the court's
    factual findings, we draw the facts from the district court's
    findings, filling in undisputed facts from the record as necessary
    to the analysis.
                 In    2013,   Singapore     Technologies    Marine    Ltd.   ("ST
    Marine"), owner of the NOVA STAR, and Quest Navigation, Inc.
    ("Quest") entered into a joint venture to operate a ferry service
    between Yarmouth, Nova Scotia, and Portland, Maine.               Together, ST
    Marine and Quest incorporated Nova Star Cruises in Nova Scotia to
    operate the ferry service, and Nova Star Cruises chartered the
    NOVA STAR.        The plan was to turn the NOVA STAR into a floating
    hotel that cruised between Yarmouth and Portland.
                 Appellant is a Maine corporation in the business of
    supplying linens, uniforms, mats, rugs, towels, and related items
    to   large    customers,     such   as       hotels,   restaurants,    medical
    establishments, and auto dealerships.             The relationship between
    Nova Star Cruises and Pratt Abbott began when Nova Star Cruises
    reached out to Pratt Abbott asking if it would be interested in
    supplying linens3 for the NOVA STAR.     While the general practice
    in the hotel industry is to have customers purchase their own goods
    with the supplier processing (wash, dry, fold, press, etc.) and
    returning them, Pratt Abbott offered Nova Star Cruises the option
    of renting the linens to reduce its upfront expenses.      Nova Star
    Cruises opted for the rental option.      In April 2014, Nova Star
    Cruises entered into the Agreement with Pratt Abbott, agreeing to
    rent linens over a five-year period.      The Agreement included a
    clause that stated:
           If the contract is terminated prior to the expiration
           date, [Nova Star Cruises] agrees to promptly purchase
           all merchandise that has been ordered for or put into
           service for [Nova Star Cruises] at [Pratt Abbott's]
           then current published replacement rate schedule
           (this agreed sale of all merchandise is in recognition
           of the substantial investment of [Pratt Abbott]
           including, but not limited to merchandise, equipment,
           labor, energy, transportation and future planning).
    Before finalizing the Agreement, Nova Star Cruises paid Pratt
    Abbott a deposit of $51,536.45 and filled out a credit application
    through Pratt Abbott.      On this application, Nova Star Cruises
    provided its bank account information at the Bank of Nova Scotia.
              Pratt   Abbott    purchased   specific   items   in   large
    quantities to meet Nova Star Cruises's needs pursuant to the
    3  As did the district court, we use this term to encompass
    everything that Pratt Abbott supplied to the NOVA STAR for use
    under the Agreement, including towels, linens, carts, napkins,
    contract, such as special linen carts that could maneuver around
    tight spaces on the vessel, bed sheets, table linens, and napkins.
    Some of these linen products, such as the table cloths, were
    uniquely shaped to meet the needs of the NOVA STAR.    Pratt Abbott
    also purchased new equipment that it would not have purchased
    otherwise in order to meet the needs of the rental contract.   Under
    the contract, Pratt Abbott maintained ownership of all these linens
    and specialty items.
              At the end of the 2015 ferry season, Nova Star Cruises
    asked that Pratt Abbott leave specific items onboard the NOVA STAR.
    Pratt Abbott did so and sent Nova Star Cruises an invoice for the
    cost of the items.     That same year, Nova Star Cruises terminated
    the ferry service after just two seasons.   Upon realizing that the
    Agreement was, in effect, terminated, Pratt Abbott demanded that
    Nova Star Cruises purchase the inventory of linens pursuant to the
    Agreement and pay past-due invoices.    The unpaid invoices totaled
    $16,187.50 for the last completed rental service and regular
    cleaning ($12,558.21), the items that Nova Star Cruises requested
    remain on the ship ($3,223.29), and the specialty items that were
    cleaned and returned to the ship prior to its arrest ($406).    Nova
    Star Cruises ignored Pratt Abbott's requests for payment.        The
    inventory of linens that Pratt Abbott had purchased for use on the
    NOVA STAR remains in Pratt Abbott's warehouse in Westbrook, Maine.
    The total replacement cost of the stored inventory under the
    Agreement is $178,023.02.4
    B.   Steering the Course (Procedural History)
                A number of creditors asserted maritime liens against
    the NOVA STAR in the U.S. District Court for the District of Maine,
    and the district court issued several warrants for the ship's
    arrest.     On November 17, 2015, Pratt Abbott filed a motion to
    intervene, asserting its own maritime lien against the arrested
    vessel for the replacement cost of the stored inventory and the
    balance of unpaid invoices.      A week later, Pratt Abbott also filed
    a verified complaint against the vessel and Nova Star Cruises for
    the same amount, alleging breach of contract, unjust enrichment,
    and quantum meruit.     In its in rem action, Appellant initially
    claimed a lien in the amount of $262,001.50, but this claim has
    since been reduced to $194,510.12 ($16,187.50 for the unpaid
    invoices,    and   $178,023.02   for     its   stored   inventory).   On
    4  Pratt Abbott alleges that the district court found the "cost"
    of the stored inventory, and therefore its "value," to be
    $178,023.02.    But Pratt Abbott ignores the qualifier in the
    district court's finding.       The district court found the
    "replacement cost" of the inventory "under the contract" to be
    this amount. This did not reflect the cost to Pratt Abbott of the
    stored inventory, but rather the "replacement cost," or purchase
    price in the event of contractual breach, established by Pratt
    Abbott's replacement rate schedule.       Our reference to the
    "replacement   cost"  throughout   this  opinion   reflects   the
    established purchase price of the stored inventory in the
    November 30, 2015, the district court granted ST Marine's motion
    to substitute the vessel for a bond.
               The district court held a one-witness bench trial on
    Pratt Abbott's maritime lien claim on August 24, 2016.                        At the
    conclusion, the district court found that the supplies and services
    that   Pratt   Abbott     had    provided      to   the   NOVA    STAR   under   the
    Agreement,     allowing    the    ship    to   operate     as    a   mobile   hotel,
    constituted "necessaries"5 under maritime law.                  However, the court
    found that the lien did not extend to the period after the arrest,
    when the rental items were no longer being used by the NOVA STAR.
    Additionally, the court found that only the rental and cleaning
    services provided by Pratt Abbott before the service ceased at the
    end of the 2015 season, the specialized items that Nova Star
    Cruises requested remain with the ship, and the specialty items
    that were cleaned and returned to the ship had been provided or
    "delivered" for purposes of the maritime lien requirement.                       See
    Cianbro Corp. v. George H. Dean, Inc., 
    596 F.3d 10
    , 14-15 (1st
    Cir. 2010); see also Piedmont & George's Creek Coal Co. v. Seaboard
    Fisheries Co., 
    254 U.S. 1
    , 6-7 (1920).               The district court denied
    Pratt Abbott's claim for the replacement cost of the inventory
    remaining in its Maine warehouse, stating that those physical items
    5   46 U.S.C. § 31301(4).
    had not been furnished to the ship.      The district court entered
    judgment for Pratt Abbott on September 7, 2016, for the unpaid
    invoice amount of $16,187.50.     Me. Unif. Rental, Inc. v. M/V Nova
    Star, No. 2:15-cv-442-DBH (D. Me. Sept. 7, 2016).       This appeal
                              II.   DISCUSSION
    A.   Rules of Engagement (Standard of Review)
               As this appeal arises following a bench trial, we review
    "the [district] court's factual determinations for clear error and
    its legal conclusions de novo."    Ne. Drilling, Inc. v. Inner Space
    Servs., Inc., 
    243 F.3d 25
    , 37 (1st Cir. 2001); accord Commercial
    Union Ins. Co. v. Seven Provinces Ins. Co., 
    217 F.3d 33
    , 40 (1st
    Cir. 2000).   We adopt the district court's findings of fact "unless
    we are left with the definite and firm conviction that a mistake
    has been committed."   Vinick v. United States, 
    205 F.3d 1
    , 6 (1st
    Cir. 2000) (citation and internal quotation marks omitted).
               Pratt Abbott claims to agree with all of the district
    court's factual findings and appeals only the legal conclusions,
    yet asserts facts in its brief beyond those found below.    In light
    of Pratt Abbott's pronouncement that it does not dispute the
    district court's factual findings and appeals only the court's
    legal conclusions, we review the legal conclusions only, and do so
    de novo.
    B.   Navigating the Waters (Analysis)
               Appellant argues that the district court erred when it
    refused to grant Appellant's maritime lien claim in its entirety.
    The purpose of a maritime lien is two-fold: first, to allow ships
    to continue to function for their intended purpose, and second, to
    hold the ship -- rather than its owner -- liable for its debts.
    Equilease Corp. v. M/V Sampson, 
    793 F.2d 598
    , 602 (5th Cir. 1986)
    (en banc) ("The maritime lien concept thus somewhat personifies a
    vessel as an entity with potential liabilities independent and
    apart from the personal liability of its owner."). "The overarching
    goal is keeping the channels of maritime commerce open-by ensuring
    that people who service vessels have an efficient way of demanding
    reimbursement for their labor and are thus willing to perform the
    services necessary to keep vessels in operation."               Mullane v.
    438 F.3d 132
    , 138 (1st Cir. 2006); see Atl. & Gulf
    Stevedores, Inc. v. M/V Grand Loyalty, 
    608 F.2d 197
    , 201 (5th Cir.
    1979) ("[I]t was the intent of the Congress to make it easier and
    more certain for stevedores and others to protect their interests
    by making maritime liens available where traditional services are
    routinely rendered.").
               However,   as   such   liens   are   believed   to    "encumber
    commerce," People's Ferry Co. v. Beers, 61 U.S. (20 How.) 393, 401
    (1857); Cianbro, 596 F.3d at 14 ("Because a maritime lien is deemed
    to encumber commerce, it is disfavored in the law . . . ." (internal
    quotation marks and citation omitted)), the requirements for the
    allowance of a maritime lien are construed stricti juris.     Tramp
    Oil & Marine, Ltd. v. M/V "Mermaid I", 
    805 F.2d 42
    , 46 (1st Cir.
    1986).   As advised by the Supreme Court, such liens must not be
    extended by "construction, analogy, or inference."     Osaka Shosen
    Kaisha v. Pac. Exp. Lumber Co., 
    260 U.S. 490
    , 497 (1923).
               To establish a maritime lien on a vessel, a claimant
    must show that it provided "necessaries" to the vessel6 at the
    order of the vessel's owner or a person authorized by the owner,
    including a "charterer."    Cianbro, 596 F.3d at 14 (quoting 46
    U.S.C. § 31341).    Thus, although the in rem claim asserted by
    Pratt Abbott bears no particular relation to the NOVA STAR qua a
    ship, and arises as a result of a default purchase provision in
    the Agreement, Appellant may still be entitled to a maritime lien
    by showing that it provided items that were "necessary" to the
    ship's intended purpose.    46 U.S.C. § 31342; see Equilease, 793
    F.2d at 602.
          1. The rental and cleaning services of the inventory were
               "'[N]ecessaries' includes repairs, supplies, towage, and
    the use of a dry dock or marine railway," 46 U.S.C. § 31301(4), as
    6   46 U.S.C. § 31342(a).
    well as "most goods or services that are useful to the vessel,
    keep her out of danger and enable her to perform her particular
    function."    Trico Marine Operators, Inc. v. Falcon Drilling Co.,
    116 F.3d 159
    , 162 (5th Cir. 1997) (quoting Equilease, 793 F.2d at
    603); see Farrell Ocean Servs., Inc. v. United States, 
    681 F.2d 91
    , 92-93 (1st Cir. 1982).      "It is the present, apparent want of
    the vessel . . . which makes it a necessary." Equilease, 793 F.2d
    at 603 (quoting 2 Benedict on Admiralty § 34 (7th ed. 1984)).
              Consistent with the FMLA's goal of affording financial
    protection to those who provide vessels with required services and
    provisions,   courts   have   broadly    interpreted   what   constitutes
    "necessaries" under the Act.      See Farrell Ocean Servs., 681 F.2d
    at 92 (interpreting Section 971, from which Section 31301 was
    derived, and finding "'other necessaries' [as used in Section 971]
    should be interpreted broadly in order to encourage the provision
    of services that will keep ships active . . . ."); see, e.g., Trico
    Marine Operators, 116 F.3d at 162 (transportation of drinking
    water,   food,   drilling     equipment,    and   supplies    constituted
    "necessaries"); Port Ship Serv., Inc. v. Int'l Ship Mgmt. &
    Agencies Serv., Inc., 
    800 F.2d 1418
    , 1421 (5th Cir. 1986) (water
    taxi service to and from vessel may give rise to a maritime lien);
    Equilease, 793 F.2d at 600 (finding that insurance is a "necessary"
    to keep a vessel in commerce, giving rise to a maritime lien);
    Sec. Pac. Bank of Wash. v. September Morn, 
    754 F. Supp. 813
    , 814-
    15 (W.D. Wash. 1990) (services to secure, prepare, and file
    documents in connection with marine mortgages were "necessary").
    But see, e.g., Bradford Marine, Inc. v. M/V Sea Falcon, 
    64 F.3d 585
    , 589-90 (11th Cir. 1995) (attorney's fees incurred by vessel
    repair company were not necessaries); James Creek Marina v. Vessel
    My Girls, 
    964 F. Supp. 20
    , 23 (D.D.C. 1997) (attorney's fees to
    enforce lien were not "necessaries").           To determine whether Pratt
    Abbott's services constituted "necessaries," we examine its role
    in enabling the vessel to continue in its intended function.              See
    Farrell Ocean Servs., 681 F.2d at 92-93.
               As the district court correctly noted, the Agreement
    specified two types of services that Pratt Abbott performed for
    Nova Star Cruises: the delivery and cleaning of the rental items,
    and the rental -- or use -- of the physical items themselves.             The
    details of both of these services were laid out in the Agreement.
    The very first line of the Agreement states that the contract is
    for all of Nova Star Cruises's "rental requirements."              The first
    page of the Agreement further states that the rental rates shall
    be   increased   at   each   anniversary   of    the   Agreement   and   that
    merchandise worn out through normal wear will be replaced at no
    charge to Nova Star Cruises.       The addendum to the contract lists
    the items to be rented, the rental rates, and the quantity of each
    item being rented.     The Agreement also describes the delivery and
    cleaning services of the items that Appellant agreed to perform,
    stating that the rental items "will be furnished, cleaned and
    maintained    exclusively     by    [Pratt   Abbott]."     Thomas    Gridley,
    General Manager of Pratt Abbott, testified at trial that this
    delivery and cleaning service included the processing of the linens
    being taken on and off the ship, including "soil counting, washing,
    drying, folding, pressing, packaging, staging, [and] shipping."
                 Having described the service performed by Pratt Abbott,
    we next look to the NOVA STAR's intended purpose to determine
    whether   these    services        were   "necessaries."     Trico     Marine
    Operators, 116 F.3d at 162.           The intended function of the NOVA
    STAR was to operate a ferry service between Yarmouth, Nova Scotia,
    and Portland, Maine, serving as the functional equivalent of a
    mobile hotel.     Hotels, by their very nature, require clean linens,
    whether those linens are purchased by the hotel itself or rented
    and serviced by an outside contractor.          For the operation of this
    hotel, Pratt Abbott supplied the NOVA STAR with two changes of
    linen to be placed on board the ship for each roundtrip service to
    and from Nova Scotia.       Upon the ship's return to Portland, Pratt
    Abbott off-loaded the soiled linens and restocked the ship with
    two full sets of linens in preparation for the next ferry service.
    The ship operated seven days a week, with the inventory used by
    the ship set up to be laundered and processed every two to three
                 There   is    little   dispute    that   the   rental    items   and
    services provided pursuant to the Agreement, both on the ship and
    at the processing facility, enabled the ship to serve as a hotel
    and were necessary to keep the ship's business afloat.                        See
    Dampskibsselskabet Dannebrog v. Signal Oil & Gas Co. of Cal., 
    310 U.S. 268
    , 280-281 (1940).           The district court found as much and
    neither party has challenged this conclusion.                 Based upon our
    review, we agree with the district court that the two services
    that     Pratt    Abbott   provided    under    the    contract      constituted
    "necessaries" during the time of the ship's operation.
            2. After termination of the Agreement, the rental and cleaning
            services were no longer "necessaries"
                 In   addressing    the    rental    services,     including      the
    delivery and retrieval of the rental items from the ship, the
    district court found that
              Pratt Abbott cannot assert a maritime lien for rental
              services that it did not actually provide to the
              vessel. The lien extends to the period during which
              the rental items were actually necessaries but does
              not include the period after the arrest, when the
              rental items were no longer being used by the Nova
    Me Unif. Rental, 
    2016 WL 4681097
    , at *4.                    In light of this
    conclusion, the district court limited the maritime lien that it
    awarded to Appellant to the rental services rendered prior to the
    ship's arrest.    Inherent in its finding was that, after the ship's
    arrest, the rental items were no longer "necessaries" to the
    continued operation of the vessel.
                 Pratt Abbott postures that the district court conflated
    a claim for future rental charges with one for contract-supported
    replacement cost, and therefore denied a claim that Pratt Abbott
    did not assert.       We disagree.    Pratt Abbott asserted a maritime
    lien claim for the total replacement cost of the inventory in its
    warehouse, as well as the balance of unpaid invoices (for the
    rental and cleaning services already provided).           In its motion to
    intervene, Pratt Abbott alleged that "[n]either Nova Star Cruises
    nor M/V Nova Star has fully paid for the linen rental and cleaning
    and merchandise," and included the cost of those services in the
    amount of the total asserted maritime lien.               In its verified
    complaint,    Pratt    Abbott   alleged     that   the   financial   benefit
    conferred on the NOVA STAR for unpaid services was $262,001.50.
    Given these claims, the district court properly tailored its legal
    conclusions to address whether a maritime lien is proper, and the
    amount thereof, for both of the "necessaries" that were purportedly
                 Once ferry operations ceased at the end of the 2015
    season and the Agreement was terminated, the rental items ceased
    to be "necessaries" for the NOVA STAR's intended purpose.               See
    Itel Containers Int'l. Corp. v. Atlanttrafik Express Serv. Ltd.,
    781 F. Supp. 975
    , 986 (S.D.N.Y. 1991) ("Plaintiffs' rental charges,
    however, must be limited to the time period during which the
    [rental items] were actually 'necessaries.'"), rev'd on other
    982 F.2d 765
     (2d Cir. 1992); see, e.g., Patricia Hayes &
    Assocs., Inc. v. M/V BIG RED BOAT, II, No. 00-cv-6925, 
    2002 WL 1163555
    , at *8 (S.D.N.Y. May 31, 2002) (amusement games not
    necessary for vessel's care and preservation after its arrest, and
    therefore accrual of lien for lease payments for games terminated
    at ship's arrest).      Even before the ship's arrest, Nova Star
    Cruises had ceased the ship's function as a mobile hotel and the
    rental items in inventory were no longer being used.         Thus, Pratt
    Abbott cannot assert a lien for the use of these rental items, or
    the rental delivery, retrieval, and cleaning services beyond the
    date that the 2015 ferry season concluded.
         3. "Delivery" of the rental and cleaning services
               We are left to determine whether the rental items and
    cleaning   services,   which   were   "necessaries"   only   during   the
    vessel's ferry operations, were "provided" or "delivered" to the
    ship during that time for purposes of a maritime lien.            Herein
    lies the heart of this dispute.
               Appellant challenges the district court's findings that
    the items that remained in Pratt Abbott's inventory had not been
    provided or "delivered" to the ship in a manner sufficient to
    establish a maritime lien.       In rejecting this portion of Pratt
    Abbott's claim, the district court relied on the fact that,
    pursuant to the Agreement, Pratt Abbott continued to own the items
    in the warehouse.     The district court reasoned that any previous
    movement of the items to and from the vessel was simply the rental
    and cleaning services for which the parties contracted, and not a
    "delivery"    sufficient   to   establish   a   maritime   lien   for   the
    replacement cost of the items.      While Pratt Abbott may have had a
    breach of contract claim against Nova Star Cruises7 for failing to
    purchase this inventory in accordance with the terms of the
    Agreement, the district court found this to be distinct from a
    maritime claim in rem for items that had been "delivered" to the
                 Pratt Abbott argues that the district court construed
    the term "delivered" too narrowly, contrary to precedent and public
    policy.   Even though the linens were not onboard the ship at the
    time of its arrest and were not delivered that very day, they
    remained "necessaries" that had been "delivered" to the NOVA STAR
    on a consistent, rotating basis, allowing the ship to serve its
    7  On June 15, 2016, Pratt Abbott filed a notice of dismissal of
    its in personam action against Nova Star Cruises, but preserved
    its in rem action against the vessel.
    purpose.    In furthering its public policy argument, Appellant
    avers that the district court's narrow interpretation runs afoul
    of FMLA's goal of protecting those who provide required provisions
    to vessels.
               To establish that the "necessaries" have been provided
    or   furnished   to   a   vessel,   the    "necessaries"   must    be   either
    physically delivered or "constructively dispatched to the vessel
    by the handing over of the supplies to the owner or the owner's
    authorized agent for use on a designated vessel."             Cianbro, 596
    F.3d at 14; see Piedmont, 254 U.S. at 6-10 (finding no maritime
    lien when coal delivered by a coal company was not directly
    delivered to any vessel, the company had no direct dealings with
    the officers of any vessel, and there were no invoices to the fleet
    or any vessel).       Appellant urges this court to broadly interpret
    the term "delivered," as both the linens onboard at the time of
    arrest and the linens stored for future voyages were, at one point,
    physically delivered to the vessel.          Appellant cites to the Fifth
    Circuit's decision in Equilease to support the notion that this
    Court should view "delivery" through a broad lens.                793 F.2d at
    603 ("We find no persuasive reason to read the term 'furnishing'
    so narrowly as [to require a physical delivery to the vessel].").
               We do not find the holding in Equilease to support the
    requested extension of the scope of maritime liens as asserted in
    this case.      The issue before the Equilease Court was whether an
    intangible item, insurance for the ship, could be "furnished" when
    no physical item had actually been delivered.                Id.      Here, there
    is no question that the entire stock of physical inventory had, at
    some   point,    been    physically    placed       aboard   the      NOVA    STAR.
    Furthermore, whereas the vessel insurance policies in Equilease
    were owned by the vessel charterer and insured the vessels, id. at
    600, Pratt Abbott maintained ownership and full control of all of
    the inventory in question.      During the period in which the rental
    items were "necessaries," Nova Star Cruises contracted for the use
    -- not ownership -- of the inventory stored at the Westbrook
    warehouse.       As   acknowledged    at     oral   argument,      Pratt     Abbott
    remained free to do with the specific items in its inventory, each
    bedsheet, towel, napkin, or cart, as it pleased so long as it
    fulfilled its service obligations to the charterer.
                 Continued   ownership,    in    itself,    does    not    prevent   a
    finding that rental items have been provided or "delivered" to a
    vessel. See Itel Containers, 781 F. Supp. at 982-84.               Nonetheless,
    when necessary items have been rented or leased to a vessel's
    authorized agent, courts have consistently found that it is the
    use of the necessary item -- not the necessary item itself -- that
    has been furnished to the vessel, and have limited maritime liens
    to the accrued rental value, depreciation, cost of necessary
    repairs, and replacement value of unrecoverable inventory.            Id.
    at 986-87; see S.C. State Ports Auth. v. M/V Tyson Lykes, 
    67 F.3d 59
    , 61 (4th Cir. 1995) (finding lien for dockage and wharfage while
    loading and unloading containers); see also Total Safety US, Inc.
    v. Con-Dive, LLC, No. H-08-2782, 
    2009 WL 3673051
    , at *1 (S.D. Tex.
    Nov. 4, 2009) (finding maritime lien for the rental value of
    "required   safety   equipment");   Silver   Star   Enters.,   Inc.    v.
    Saramacca M/V, Civ. A. No. 92-1297, 
    1994 WL 794721
    , at *1-3 (E.D.
    La. July 20, 1994) (finding maritime lien for full rental charges
    of containers used exclusively aboard the vessel and prorated
    rental charges for containers used occasionally), rev'd on other
    82 F.3d 666
     (5th Cir. 1996); Redcliffe Ams. Ltd v. M/V
    Tyson Lykes, 
    806 F. Supp. 69
    , 72-73 (D.S.C. 1992) (finding leased
    containers had been "furnished" to vessels in amount of unpaid
    monthly rental charges, plus repair and replacement charges),
    rev'd on other grounds, 
    996 F.2d 47
     (4th Cir. 1993); Clubb Oil
    Tools, Inc. v. M/V George Vergottis, 
    460 F. Supp. 835
    , 837 (S.D.
    Tex. 1978) (finding maritime lien for rental expense, as well as
    costs for recovery, testing, repairing, and replacing damaged oil
                We have found no cases that extend this lien to include
    the replacement cost of inventory retained by the plaintiff after
    termination of a rental agreement, and Pratt Abbott cites none.
    In light of the doctrine of stricti juris noted above, we find it
    unwise to extend the application of maritime liens to encompass
    Appellant's asserted claim.        We find that the limitations noted
    in the preceding paragraph apply in this case.
               Pratt Abbott attempts to characterize the Agreement as
    a "five-year lease back with charterer responsible for paying over
    time for the linens Pratt Abbott purchased." This characterization
    is contrary to the uncontested facts found by the district court
    and the plain language of the Agreement.      As previously noted, the
    Agreement made it clear that this contract was a rental and
    servicing agreement.    On these specific facts, even had Nova Star
    Cruises   ultimately   purchased    the   inventory   according   to   the
    Agreement's default purchase clause, the obligation to purchase
    was triggered only in the event that the charterer breached the
    contract, at which time the linens were no longer "necessaries."
    Therefore, in this situation, no maritime lien would result from
    this default purchase clause.
         4. Exclusive Use
               Appellant further argues that, because the inventory in
    its Westbrook warehouse was purchased and earmarked for exclusive
    use on the NOVA STAR, and Pratt Abbott relied on the credit of the
    vessel in supplying these necessaries, the rental items themselves
    were provided to the vessel and created an enforceable maritime
    lien.     Pratt Abbott cites a host of cases8 from varying federal
    circuits and the Supreme Court to support the proposition that
    setting aside necessaries for exclusive use by a specific vessel,
    unlike     delivering       them   to    a   fleet     of   vessels    for   later
    distribution, creates an actionable in rem claim against that ship.
                    We need not address the merits of Appellant's argument
    as it is simply unsupported by the record.                  In its uncontested
    factual findings, the district court found that, in order to meet
    the Nova Star Cruises's needs under the contract, Pratt Abbott
    purchased certain specialty items in large quantities such as
    specialty linen carts, flat twin sheets, table napkins, and table
    cloths.     The district court further found that, in order to meet
    the rental contract, Pratt Abbott purchased new equipment that it
    would not normally have purchased.                Noticeably absent from the
    district court's findings is Appellant's proclamation that the
    inventory was purchased and earmarked exclusively for the vessel.
    After     the    district    court      issued   its   findings   of    fact   and
    conclusions of law, Pratt Abbott filed a motion for additional
    8  Dampskibsselskabet Dannebrog, 
    310 U.S. 268
    ; Piedmont, 
    254 U.S. 1
    ; In re Container Applications Int'l, Inc., 
    233 F.3d 1361
    Cir. 2000); Rascal Survey U.S.A., Inc. v. M/V Count Fleet, 
    231 F.3d 183
     (5th Cir. 2000); Silver Star Enters., Inc., 
    82 F.3d 666
    Redcliffe Ams. Ltd., 
    996 F.2d 47
    ; Bankers Tr. Co. v. Hudson River
    Day Line, 
    93 F.2d 457
     (2d Cir. 1937).
    findings, requesting that the district court make the following
    additional findings:
           1. The [inventory] supplied by Pratt Abbott for the
           vessel and consisting of the specialty items in large
           quantities . . . were purchased exclusively for the
           . . .
           4. This linen inventory was not used for any other
           customer, remains segregated, and was needed to meet
           the vessel's service requirements . . . .
    ST Marine objected to the adoption of the additional findings, and
    the district court denied the motion.      Given that the Appellant
    has conceded agreement to the court's factual findings, it cannot
    now assert facts outside of the record on appeal.
              We agree with the district court that the items in
    inventory were not "delivered" to the ship in such a manner as to
    create a maritime lien for their replacement cost.   The use of the
    rental items in inventory was part of the rental and cleaning
    service provided under the rental contract, and the district court
    properly awarded a lien for the amount owed for past services at
    the time of termination ($12,558.21).      The district court also
    properly awarded a maritime lien for unrecoverable items remaining
    aboard the ship, including the items that Nova Star Cruises
    requested ($3,223.29), as well as the specialty items that were
    cleaned and returned to the ship ($406).
                                III.    CONCLUSION
                For   the   reasons    stated   above,   the    district   court
    properly limited the maritime lien to the amount of $16,187.50.
    The   district    court   correctly    concluded     that   the   inventory
    remaining in Pratt Abbott's warehouse in Westbrook, Maine, was not
    "delivered" in a manner as to create a maritime lien for its
    replacement cost according to the default provision of the rental
    contract.    Accordingly, the judgment of the district court is

Document Info

DocketNumber: 16-2467P

Filed Date: 11/7/2017

Modified Date: 11/7/2017

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