Filed: Oct. 24, 2000
Latest Update: Mar. 02, 2020
Summary: UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT No. 99-30909 GULF MARINE AND INDUSTRIAL SUPPLIES, INC; ET AL Plaintiffs, v. GOLDEN PRINCE M/V, ETC; ET AL, Defendants, MURPHY, ROGERS & SLOSS, APLC Plaintiff-Appellant, v. GOLDEN PRINCE M/V, HER ENGINES, TACKLE, APPAREL, AND APPURTENANCES, IN REM; PRINCE NAVIGATION, INC. Defendants-Appellees, ROYAL BANK OF SCOTLAND Appellee Cons/w No. 99-31293 GULF MARINE AND INDUSTRIAL SUPPLIES, INC; ET AL Plaintiffs, v. GOLDEN PRINCE M/V, ETC; ET AL, Defenda
Summary: UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT No. 99-30909 GULF MARINE AND INDUSTRIAL SUPPLIES, INC; ET AL Plaintiffs, v. GOLDEN PRINCE M/V, ETC; ET AL, Defendants, MURPHY, ROGERS & SLOSS, APLC Plaintiff-Appellant, v. GOLDEN PRINCE M/V, HER ENGINES, TACKLE, APPAREL, AND APPURTENANCES, IN REM; PRINCE NAVIGATION, INC. Defendants-Appellees, ROYAL BANK OF SCOTLAND Appellee Cons/w No. 99-31293 GULF MARINE AND INDUSTRIAL SUPPLIES, INC; ET AL Plaintiffs, v. GOLDEN PRINCE M/V, ETC; ET AL, Defendan..
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UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-30909
GULF MARINE AND INDUSTRIAL SUPPLIES, INC; ET AL
Plaintiffs,
v.
GOLDEN PRINCE M/V, ETC; ET AL,
Defendants,
MURPHY, ROGERS & SLOSS, APLC
Plaintiff-Appellant,
v.
GOLDEN PRINCE M/V, HER ENGINES, TACKLE,
APPAREL, AND APPURTENANCES, IN REM;
PRINCE NAVIGATION, INC.
Defendants-Appellees,
ROYAL BANK OF SCOTLAND
Appellee
Cons/w No. 99-31293
GULF MARINE AND INDUSTRIAL SUPPLIES, INC; ET AL
Plaintiffs,
v.
GOLDEN PRINCE M/V, ETC; ET AL,
Defendants,
MURPHY, ROGERS & SLOSS, APLC
Plaintiff-Appellant,
v.
GOLDEN PRINCE M/V, HER ENGINES, TACKLE,
APPAREL, AND APPURTENANCES, IN REM;
PRINCE NAVIGATION, INC.
Defendants-Appellees,
Appeals from the United States District Court for the
Eastern District of Louisiana
October 24, 2000
Before JONES and BENAVIDES, Circuit Judges, and COBB,1 District
Judge.
EDITH H. JONES, Circuit Judge:
The law firm of Murphy, Rogers & Sloss, APLC (“MRS”)
filed suit to establish a maritime lien on the sale proceeds of the
vessel M/V GOLDEN PRINCE (“GOLDEN PRINCE”). MRS argued that legal
services it provided on behalf of the GOLDEN PRINCE were
“necessaries” under the Federal Maritime Law Act (FMLA), 46 U.S.C.
§ 31342 (2000), and that the firm therefore held a maritime lien
for its attorney fees senior to a mortgage on the vessel. The
district court rejected this claim, and MRS appeals. We affirm
1
District Judge of the Eastern District of Texas, sitting by
designation.
2
because under the FMLA, legal services furnished to the vessel are
not “necessaries.”
BACKGROUND
The parties in interest in this case are MRS and the
Royal Bank of Scotland (“Bank”). MRS is a professional law
corporation based in New Orleans, Louisiana. Bank is a foreign
secured creditor of the GOLDEN PRINCE.
The managers of the three vessels related to this action
retained MRS in March 1998 to represent them and the owners of the
vessels in a wage dispute. Current and former crewmembers, seeking
wages and penalty wages, alleged that the owners had breached an
agreement governing their pay. The claims against the vessels were
substantively identical. The crewmembers seized two of the
vessels, including the GOLDEN PRINCE, to enforce their claims. MRS
provided legal services to enable the settlement of the wage claims
against all three vessels and obtained the release of the seized
vessels. MRS caused approximately $136,000 in legal fees and
disbursements between March 1998 and January 1999, all of which
remains unpaid.
In January 1999, creditors of the GOLDEN PRINCE seized
the vessel. The district court consolidated creditor suits into
this action, including in rem claims by MRS and Bank. The vessel
was sold at a public auction for $3.51 million. Bank holds a $60
million foreign first preferred ship’s mortgage on the GOLDEN
3
PRINCE and other vessels. If MRS does not have a maritime lien on
its legal fees, its claim will be inferior to Bank’s mortgage and
the firm will receive none of the sale proceeds.
MRS and Bank filed motions for summary judgment to
establish their relative priorities. The district court granted
summary judgment against MRS. The court rejected MRS’s argument
that the firm’s legal services were “necessaries” within the
meaning of 46 U.S.C. § 31342 (2000). It also ruled that MRS did
not “earmark” legal services specifically to GOLDEN PRINCE to
establish its claim for necessaries, and it found that MRS did not
rely on the credit of the GOLDEN PRINCE to secure its fees. MRS
appeals.
STANDARD OF REVIEW
This Court reviews issues of law and denials of summary
judgment de novo, applying the same standards as the district
court. See Benningfield v. City of Houston, 157 F.3d 369, 374 (5th
Cir. 1998); Associated Metals and Minerals Corp. v. Alexander's
Unity MV,
41 F.3d 1007, 1010 (5th Cir. 1995).
DISCUSSION
The terms of the FMLA lend little support to MRS’s claim
that a maritime lien secures its attorney fees. Section 31342
provides that “a person providing necessaries to a vessel . . . has
a maritime lien on the vessel.” 46 U.S.C. § 31342 (2000). Section
31301 states that “‘necessaries’ includes repairs, supplies,
4
towage, and the use of a dry dock or marine railway.” MRS thus
holds a maritime lien only if its legal services were necessaries.
While the enumerated examples in § 31301 are far from exhaustive,
legal services do not fit naturally into this list of traditional
shore-to-ship goods and services.
MRS cites no cases classifying legal services as
necessaries, because there are none. The absence of precedent
signifies the weakness of MRS’s position, since admiralty enjoys an
unusually rich legal tradition and, more than nearly any other
contemporary area of federal law, relies on venerable precedents
where they exist. In fact, this Court has held that maritime liens
do not secure attorney fees in cases predating the FMLA. See
United States v. Knauth, 183 F.2d 874, 878 (5th Cir. 1950)
(attorneys defending ships from government seizure do not hold a
maritime lien for their legal fees); Gray v. Hopkins-Carter
Hardware Co.,
32 F.2d 876, 879 (5th Cir. 1929) (attorney who
represented parties to a yacht seizure did not hold a lien for his
fees). Since Congress enacted the FMLA, courts have consistently
held that legal services are not necessaries. See Bradford Marine,
Inc. v. M/V SEA FALCON,
64 F.3d 585, 589 (11th Cir. 1995) (legal
services rendered for claimant of a maritime lien were not
necessaries); American Oil Trading, Inc. v. M/V SAVA,
47 F. Supp.
2d 348, 353 (E.D.N.Y. 1999) (same); James Creek Marina v. Vessel MY
GIRLS,
964 F. Supp. 20, 23 (D.D.C. 1997) (same).
5
MRS urges this Court to define necessaries expansively.
It points to the decision in Equilease Corp. v. M/V SAMPSON, which
defined necessaries to include “most goods or services that are
useful to the vessel, keep her out of danger, and enable her to
perform her particular function.” 793 F.2d 598, 603 (5th Cir.
1986) (en banc). In holding that insurance was a necessary, this
Court stated that “[n]ecessaries are things that a prudent owner
would provide to enable a ship to perform well the functions for
which she has been engaged.”
Id.
MRS’s reliance on Equilease has some merit. Equilease
establishes that claimants can get a maritime lien for “providing”
intangible services.2
Id. This Court declared that the definition
of “necessaries” is particular to the vessel. “It is the present,
apparent want of the vessel, not the character of the thing
supplied, which makes it a necessary.”
Id. (citing 2 Benedict on
Admiralty § 34 (7th ed. 1984)). Unlike Bradford Marine, American
Oil, and James Creek Marina, the legal services in this case did
not enforce a maritime lien against the vessel but released the
GOLDEN PRINCE from seizure. It is arguable that the legal services
that released the GOLDEN PRINCE and prevented rearrest enabled her
to perform her function and were useful to her.
2
At the time of Equilease, the statute used the term “furnishing”
rather than “providing.” See 46 U.S.C. 971 (1982). The legislative history
indicates that the change to “providing” made the statutory terms consistent with
other laws, and did not change substantive law. See H.R. Rep. 100-918, reprinted
in 1988 U.S.C.C.A.N. 6104, 6107, 6141.
6
Equilease, however, focused on the utility of the claimed
necessary to vessel operations. This Court held that because
insurance is “essential to keep a vessel in commerce,” it is a
necessary. Id. at 604. Here, the legal services were not
something the GOLDEN PRINCE needed “just to carry on its normal
business.”
Id. These legal fees stemmed from a breach of contract
claim for unpaid wages and penalty wages. MRS settled claims from
current and former crewmembers of several vessels, many of whom may
never have served on the GOLDEN PRINCE. Not only did the legal
services protect the owners from alleged misconduct claims even
from crewmembers far removed from the GOLDEN PRINCE, but the legal
expenses would have been unnecessary had the vessel kept up with
its costs of doing business. These expenses are beyond the scope
of necessaries for the GOLDEN PRINCE’s normal operations.
MRS argues that this case is unique, and that this Court
could rule in its favor without opening the floodgates to “similar,
but less unique, claims.” We disagree. The district court’s
decision was not the first time that MRS has lost a legal challenge
for attorney fees under similar circumstances. See J.P. Provos
Maritime, S.A v. M/V AGNI et al., 1999 U.S. Dist. LEXIS 12012, 10
(E.D.La. 1999) (denying MRS’s claim that legal services were
necessaries in an unrelated case where MRS released the vessel from
seizure). Indeed, this situation is not unique enough. If legal
services that protect vessels from seizure are “necessary” for the
7
vessel to carry out its function, then all attorneys who defend
ship owners from tort claims, tax claims, or any other type of
claim will automatically hold a maritime lien for their fees.
MRS argues that there is no justification for courts to
treat attorneys differently from other suppliers of necessaries.
The First Circuit, for instance, allowed a maritime lien to the
vessel’s master for his air fare to New York from Puerto Rico as he
attempted to obtain funds from the owners to pay the crew and
prevent the vessel’s arrest. See Payne v. S/S TROPIC BREEZE, 423
F.2d 236 (1st Cir.), cert. denied sub nom. Samadjopoulos v.
National Western Life Ins. Co.,
400 U.S. 964,
91 S. Ct. 363 (1970).
Reimbursing the master, who runs the vessel, and paying the owner’s
attorneys are two different things. Payne hardly compels expansion
of the necessaries lien on behalf of attorneys.
Despite its superficial similarities to other goods and
services that have been deemed necessaries, a maritime lien for
attorney fees would conflict with the purposes of the FMLA. The
FMLA “was intended to encourage private investment in the maritime
industry.” Equilease, 793 F.2d at 603. A judgment for MRS
securing attorney fees would encourage ship owners and attorneys to
spare no expense defending owner financial interests. Such a lien
would prefer ship owners to the claimants for necessaries, whose
attorneys’ fees are unsecured by the FMLA. See
Bradford, supra.
If MRS’s position were the law, an owner could quickly dissipate a
8
supplier’s claim for necessaries simply by hiring attorneys and
encouraging them to run up fees that would offset the claimant’s
lien. Even the threat of such an action would tend to force
suppliers to settle, undermining the very protection the law aimed
for. Ultimately, maritime industry investment would be
discouraged.
CONCLUSION
For these reasons, we decline to become the first court
in the history of American maritime law to declare that legal
services are necessaries. We need not address MRS’s arguments
based on the assumption that they are. The district court’s
judgment is AFFIRMED.
9
