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PUBLISH
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
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No. 00-11565
________________________
D. C. Docket No. 97-01680-CV-T-25A
IN RE: CONTAINER APPLICATIONS INTERNATIONAL, INC.,
Debtor.
CONTAINER APPLICATIONS INTERNATIONAL, INC.,
Plaintiff-Appellant,
versus
LYKES BROS. STEAMSHIP CO., INC.,
Defendant-Appellee.
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Appeal from the United States District Court
for the Middle District of Florida
_________________________
(November 22, 2000)
Before CARNES and BARKETT, Circuit Judges, and POLLAK1,
District Judge.
BARKETT, Circuit Judge:
Container Applications International, Inc. ("CAI")
appeals from a summary judgment granted by the bankruptcy court,
and affirmed by the district court, in favor of Lykes Bros. Steamship
Co., Inc. ("Lykes") disallowing maritime liens asserted
by CAI against vessels owned by Lykes, pursuant to the Federal
Maritime Lien Act, 46 U.S.C. § 31341 et seq.
(the "FMLA"). We affirm.
BACKGROUND
The relevant facts are undisputed. CAI leases and sells cargo
containers that are used by transportation companies to transport
goods, and Lykes is a shipping company providing cargo service
throughout the world. In February 1993, CAI and Lykes entered
into an agreement whereby CAI would lease cargo containers in
bulk to Lykes for use in its shipping business. The lease agreement
provided that the leased containers would be used only on vessels
owned and/or operated by Lykes and would be used for oceanic
transportation of goods and land transport in connection with
the oceanic transportation.
From time to time Lykes picked up containers leased from CAI
at locations throughout the world. No container was delivered
directly to any of Lykes' vessels, nor did any of the lease documents
"earmark" containers to any one vessel or otherwise
make reference to any vessel. While the lease required Lykes
to maintain tracking reports showing exactly which containers
were used on which vessels and for how many days, neither Lykes
nor CAI knew at the time of commencement of the lease on which
vessels the containers would be used and Lykes, in its complete
discretion, determined upon which vessels or vehicles to place
the containers.
Lykes filed a petition for bankruptcy in October 1995. At
the time of filing, it owed CAI a substantial amount for outstanding
rental fees on the leased containers. In the bankruptcy court,
CAI asserted maritime liens1
against various vessels owned by Lykes based upon each vessel's
usage of CAI's containers. In defending against the liens, Lykes
argued that maritime liens can be asserted under the FMLA only
when the containers are either provided directly to or are earmarked
for specific vessels and cannot be claimed for containers furnished
in bulk to fleet owners who then decide upon which ships the
containers will be placed. The bankruptcy court agreed with Lykes
and disallowed CAI's liens on the vessels. The district court
affirmed, and CAI now appeals. We review the bankruptcy and district
court's conclusions of law de novo. See American
Dredging Co. v. Lambert, 153 F.3d 1292, 1295 (11th Cir.1998).
DISCUSSION
CAI asserts its maritime liens pursuant to the FMLA, which provides in relevant part:
(a) Except as provided in subsection (b) of this section,
a person providing necessaries to a vessel on the order of the
owner or a person authorized by the owner-
(1) has a maritime lien on the vessel;
(2) may bring a civil action in rem to enforce the lien;
and
(3) is not required to allege or prove in the action that
credit was given to the vessel.
46 U.S.C. § 31342(a).2
The parties do not dispute that containers are "necessaries"3 or
that Lykes owned the vessels in question and ordered the containers.
The sole issue for our determination is whether CAI "provided"
the containers to the vessels within the meaning of the statute
when it leased the containers in bulk to Lykes without reference
to any vessels.
The seminal Supreme Court case on this question is Piedmont
& George's Creek Coal Co. v. Seaboard Fisheries Co.,
254 U.S. 1 (1920). In Piedmont, a coal dealer supplied
coal to an oil company for use at its oil refineries and on its
fleet of fishing vessels. The coal was not designated "for
any particular vessel or even for the vessels then comprising
the fleet." Id. at 13. Rather, the coal was placed
in bins at the oil company's factory where it was intermingled
with other coal purchased by the oil company and then at various
times used on the oil company's ships. The coal was billed to
the oil company, the invoices did not reference the vessels,
and the oil company controlled the distribution of the coal to
its vessels. Id. at 7-8. As in this case, the question
in Piedmont was whether, under the facts of the case,
the coal was "furnished" or provided to the vessels
by the party seeking the lien, pursuant to the meaning of the
FMLA.4
The Court disallowed the lien, holding that the coal had not
been provided to the vessels by the coal company asserting the
lien, but rather by the oil company to whom the coal had been
sold.
Four other circuits have subsequently applied Piedmont
to the specific situation before us, that is, to the lease of
containers in bulk to a shipping company which decides when,
where, and how it will use the containers within its fleet of
ships. All four circuits have held that under such circumstances
the supplier has not "provided" necessaries to the
vessel within the meaning of the FMLA. See Silver Star
Enterprises, Inc. v. Saramacca MV, 82 F.3d 666 (5th Cir.
1996); Redcliffe Americas Ltd. v. M/V Tyson Lykes, 996
F.2d 47 (4th Cir. 1993); Itel Containers Int'l. Corp. v. Atlanttrafik
Express Services, Ltd., 982 F.2d 765 (2d Cir. 1992); Foss
Launch & Tug Co. v. Char Ching Shipping U.S.A., 808 F.2d
697 (9th Cir. 1987), cert denied, 484 U.S. 828
(1988).
Moreover, numerous other courts have cited to Piedmont
for the proposition that the term "providing necessaries
to a vessel" in the FMLA requires that there be a direct
connection between the provider of necessaries and a specific
vessel. See e.g., Jeffrey v. Henderson Bros., Inc.,
193 F.2d 589, 593-95 (4th Cir. 1951) (recognizing a lien where
merchandise used to repair machinery for cleaning coal was supplied
to a single vessel and the invoices asserted that the goods were
intended for this operation); Evorosa Southern Coal and Coke
Co. v. Kugniecibas, 93 F.2d 732, 734-35 (4th Cir 1937) (recognizing
a lien and distinguishing Piedmont based on the fact that
the coal "was sent to a particular vessel, loaded on her
by the coal company's representative and paid for by her master
by drafts on the charterer to order of the coal company");
Bankers Trust Co. v. Hudson River Day Line, 93 F.2d 457,
458 (2d Cir. 1937) (denying maritime liens to a supplier of oil
and holding that necessaries, though delivered in mass to the
owner of the fleet under a single contract, must be expressly
ordered for the use of named vessels in specified portions);
Carr v. Warren Corp., 2 F.2d 333, 334 (4th Cir. 1924)
(recognizing a lien and distinguishing Piedmont based
on the fact that "85 percent of the coal was sold directly
for use of the steamers named, and so billed to the vessels,
and received and used by them"); Christiana Marine Service
Corp. v. The Hercules, 1991 AMC 1274 (E.D. Pa. 1990) (recognizing
a towing company's lien where all towing services were provided
to a single vessel and the invoice reflected that all services
were to be provided to that vessel); Northern Shipping Co.,
v. M/V Tivat, 1988 AMC 1468 (E.D. Pa. 1987) (noting that
in Piedmont there was no "attempt to designate the
particular vessel to receive any portion or component of the
goods" and recognizing a lien where stevedoring, berthing
and wharfage services were "furnished" directly to
the vessel); Steamer Atlantic Steamer Supply Co. v. The SS
Tradewind, 153 F.Supp. 354, 363-64 (D. Md. 1957) (recognizing
a lien where advertisement was furnished to a vessel and citing
Piedmont for the proposition that "necessaries are
furnished to the vessel only when they are ordered for a particular
vessel and thereafter are either actually put on board or brought
within the control of the ship's officers is settled law");
The American Eagle, 30 F.2d 293, 295 (D. Del. 1929) (holding
that a coal supplier "furnishes" coal to vessels if
"the supplies, though delivered in mass to the owner of
the fleet under a single contract, are expressly ordered by the
owner and delivered to him by the supplyman for the use of named
vessels in specified portions, and are promptly delivered to
the named vessels by their owner").
However, two district courts in the Eleventh Circuit have
rejected a restrictive reading of the FMLA's requirements for
the creation of a maritime lien.5 In Transamerica ICS, Inc. v.
M/V Panatlantic, 1984 AMC 489 (S.D. Fla. 1983), thedistrict
court suggested that "it may not be essential, and indeed
may not be desirable, that the container . . . be earmarked for
a particular vessel." Id. at 490. Similarly, the
court in Triton Containers International Limited v. M/S Itapage,
774 F.Supp. 1349 (M.D. Fla. 1990), relying on Transamerica,
held that "it is not necessary that a container be identified
with a particular vessel." Id. at 1350-51.
CAI argues that we should follow Transamerica and disregard
the cases from our sister circuits, arguing that these circuits
have erroneously interpreted Piedmont to hold that pre-delivery
earmarking of supplies for a specific vessel is a prerequisite
to a maritime lien. CAI argues that not only do these cases erroneously
interpret Piedmont, but that their holdings are in conflict
with Piedmont. CAI suggests that two factors were critical
to the Court's decision in Piedmont, both of which distinguish
it from the case at hand. First, because the coal had been co-mingled
with coal from other sources in Piedmont, it was impossible
to determine whether the coal ultimately delivered to the vessels
was the same coal for which the debt was owed. In contrast, CAI
argues, it is undisputed that the containers used on Lykes' vessels
actually belonged to CAI. Second, the coal furnished to the vessels
was coal to which the oil corporation had acquired title. As
a result, the coal dealer lost control to determine how the coal
would be used. In this case, Lykes merely leased the containers
and, under the lease agreement, Lykes did not have unfettered
discretion to use the containers as it saw fit because the lease
limited their use to Lykes' vessels and only for the purpose
of "oceanic transportation of goods and . . . land transportation
incidental thereto." CAI argues that in light of these distinctions,
Piedmont does not dictate the result in this case.
We find that CAI reads Piedmont much too narrowly and
that these distinctions are insignificant to the Supreme Court's
rationale and to its holding. The fact that the coal had been
co-mingled or that the oil company had obtained sole title to
the coal was not a dispositive factor in the court's decision.
Rather, in interpreting the FMLA, the Court focused on whether
there was a direct connection between the provider or furnisher
of the necessaries and the vessel itself.
The Court expressly noted that "the difficulty here is
not in failure to show that the coal was furnished to the vessels
but in failure to prove that it was furnished by the libelant."
254 U.S. at 5. In Piedmont, the coal was sold in bulk
to the oil company without any reference to a specific vessel.
In this case, CAI likewise leased the containers in bulk to Lykes
without any reference to any specific vessel. In both cases,
the supplier had no choice in determining which, if any, vessels
would use their product. Thus, no direct connection existed between
CAI, which furnished the containers, and any of the ships upon
which Lykes ultimately placed the containers.
As was the Ninth Circuit in Foss Launch, we are persuaded
that the universal application of Piedmont to require
a narrow construction of the term "providing" is further
supported by Dampskibsselskabet Dannebrog v. Signal Oil &
Gas Co., 310 U.S. 268 (1940). See Foss Launch,
808 F.2d at 701-02. In that case, the Supreme Court affirmed
a maritime lien in favor of an oil supplier only after it had
distinguished Piedmont:
The difficulty which blocked recovery by the Coal Company
[in Piedmont] was `solely that it did not furnish coal
to the vessels'. There `was no understanding when the contract
was made, or when the coal was delivered by the libelant, that
any part of it was for any particular vessel or even for the
vessels then composing the fleet. And it was clearly understood
that the purchasing corporation would apply part of the coal
to a nonmaritime use'. In the instant case, the oil was supplied
exclusively for the vessels in question, was delivered directly
to the vessels and was so invoiced; and there was nothing in
the general contract to the effect that the supplies were to
be furnished upon the exclusive credit of [the vessel's owner]
and not also upon the credit of the vessels.
Id. at 276-77 (internal citations omitted).
The Court in Piedmont read the relevant provision in
the FMLA narrowly, holding that the coal company had failed to
prove that it "furnished" the coal to the ships upon
which it seeks a lien. Id. at 4 ("the difficulty
facing the Coal Company [in Piedmont] was solely that
it did not furnish coal to the vessels upon which it asserts
a maritime lien, and there is nothing in the Act . . . which
removes that obstacle"). The Court was urged, as are we,
to interpret the relevant provision of the FMLA in a more expansive
and liberal manner to permit the lien. However, the Court recognized
that maritime liens are disfavored in the law because they are
secret ones that might operate to the prejudice of prior mortgagees
or of purchasers without notice, and held that the FMLA "is
therefore stricti juris and will not be extended by construction,
analogy or inference." Id.
CAI argues, however, that our precedent requires that we interpret
all provisions of the FMLA liberally, relying on Atlantic
& Gulf Stevedores v. M/V Grand Loyalty, 609 F.2d 197
(5th Cir. 1980).6
CAI suggests that in Grand Loyalty the former Fifth Circuit
held that the FMLA should be interpreted broadly to permit the
liens asserted by CAI. We do not find this to be the holding
in Grand Loyalty and we do not find Grand Loyalty
applicable to these circumstances. Strictijuris is a rule
of construction employed in certain instances to discern legislative
intent in an ambiguous provision. Rather than rejecting the view
that maritime liens are subject to the doctrine of strictijuris,
the court expressly noted that "[i]t is, of course, nigh
onto hornbook law that maritime liens are to be strictly construed."
Id. at 200-01. Grand Loyalty simply held that it
was unnecessary to apply this rule of construction because it
was clear that Congress intended, through the 1971 amendments,
to make it easier and more certain for stevedores performing
traditional services to be protected.
More importantly, Grand Loyalty did not involve an
interpretation of the very same provision that the Supreme Court
construed narrowly under the doctrine of stricti juris.
The court in Grand Loyalty was interpreting the meaning
of certain provisions of sections 971 and 972 in light of the
new 1971 amendments. Id. at 200 ("We, perforce, must
focus on the meaning of `any person to whom management of the
vessel at the port of supply is intrusted,' § 972; `person
authorized by the owner,' § 971; and `other necessaries',
§§ 971 and 972"). In light of the specific directive
of the Supreme Court as it relates to the very same provision
at issue here, we reject CAI's contention that the rule of stricti
juris does not govern this provision of the FMLA and that
we should liberally construe it to permit CAI's lien.
Thus, we agree with our sister circuits and hold that, under
the dictates of Piedmont, cargo containers leased in bulk
to the owner of a group of vessels for unrestricted use on board
the vessels in that group, are not "provided" to any
particular vessel within the meaning of 46 U.S.C. § 31342(a).
In this case, CAI neither physically delivered the containers
to the vessels nor did it direct Lykes to distribute the containers
to particular vessels. CAI merely made containers available to
Lykes for its use, and Lykes had sole discretion to decide whether
to place any of the containers on board any particular vessel.
Thus, CAI did not "provide" necessaries to the liened
vessels within the meaning of the FMLA. For all of the foregoing
reasons, the order of the district court, disallowing the maritime
liens asserted by CAI against Lykes, is
AFFIRMED.
POLLAK, District Judge, concurring:
I concur in the judgment of the court, and I join its opinion.
I add a brief word to make a rather simple point.
The court finds that the Supreme Court's opinion of eighty
years ago, in Piedmont & George's Creek Coal Co. v. Seaboard
Fisheries Co., 254 U.S. 1 (1920), remains the authoritative construction
of the pertinent portion of the Federal Maritime Lien Act (FMLA).
I agree. The Piedmont opinion was written by Justice Brandeis
and the Supreme Court was unanimous. It would take a very strong
showing that the Supreme Court has, in some subsequent case,
undercut, or substantially limited, the Piedmont opinion,
before any lower court could decline to follow it. But there
is no evidence that the Supreme Court has weakened Piedmont.
To the contrary, as the court today points out, the Supreme Court,
in 1940, had occasion to refer to Piedmont, and did so
in a way that evidenced Piedmont's continuing vitality.
In Dampskibsselskabet v. Oil Co., 310 U.S. 268, 276-77
(1940), Chief Justice Hughes, speaking for the unanimous Court,
distinguished Piedmont from the case then before the Court;
but the discussion of Piedmont manifested unhesitating
acceptance of the principles Justice Brandeis had announced twenty
years before.
The only real question before this court today is whether
the language of Piedmont - which dealt with supplying
coal in bulk to a company that used some, but not all, of the
coal on its fishing vessels - has valid application to the case
at bar, which involves the leasing of cargo containers to a shipping
company under an agreement which, as the court aptly summarizes
it, "provided that the leased containers would be used only
on vessels owned and/or operated by [the shipping company] and
would be used for oceanic transportation of goods and land transport
in connection with the oceanic transportation." Leasing
cargo containers to a shipping company is not a unique, or even
an unusual, transaction. As the court makes clear, essentially
the same transaction has been considered, in the context of the
FMLA, by four other courts of appeals, and all four were guided
by Piedmont to the conclusion that no FMLA maritime lien
had attached.
It may reasonably be asked whether the policy reasons that
led the Piedmont Court to find, with respect to the somewhat
clumsy transaction framed by the particular facts of that case,
that there was no maritime lien - a lien of a sort that the Court
deemed "secret" and that "may operate to the prejudice
of prior mortgagees or of purchasers without notice," 254
U.S. at 12 - are of comparable force in the context of the apparently
mature system of large-scale leasing of cargo containers illustrated
by the case at bar. But the answer to that question is not one
that a court is likely to be in a position to make an informed
judgment about on the basis of a record and briefs presented
in litigation. It is the sort of question that members of Congress
- after considering the testimony of those versed in shipping-
industry practices and the operation of the relevant credit structures
- would be better equipped to answer than judges are.
Pending congressional review of the pertinent portion of FMLA,
the course of judicial prudence is for this court - acknowledging
that at least for the time being Piedmont provides doctrinal
guidance - to align itself with the four courts of appeals that
have already rejected the claim of a maritime lien in the context
of leased cargo containers.
FOOTNOTES
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[1]
Honorable Louis H. Pollak, U.S. District Judge for the
Eastern District of Pennsylvania, sitting by designation.
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[1]
"A maritime lien is `[a] special property right
in a ship given to a creditor by law as security for a debt or
claim subsisting from the moment the debt arises[.]'" Galehead,
Inc. v. M/V Anglia, 183 F.3d 1242, 1247 (11th Cir. 1999)
(citing Black's Law Dictionary 969 (6th ed.1990)).
--------------
[2]
In 1989, 46 U.S.C. § 31342 superseded 46 U.S.C.
§ 971 without significant change. Section 971 had used the
verb "furnishing" rather than "providing."
Cases discussed herein that arose before 1989 discuss Section
971, but neither the parties nor earlier case law suggests that
the word change is significant to the issue in this case.
--------------
[3]
The term "necessaries" " has been liberally
construed to include . . . `goods or services that are useful
to the vessel, keep her out of danger, and enable her to perform
her particular function. Necessaries are the things that a prudent
owner would provide to enable a ship to perform well the functions
for which she has been engaged.'" Bradford Marine, Inc.
v. M/V Sea Falcon, 64 F.3d 585, 589 (11th Cir. 1995) (quoting
Equilease Corp. v. M/V Sampson, 793 F.2d 598, 603 (5th
Cir.) (en banc), cert.denied, 479 U.S. 984 (1986)).
--------------
[4]
See supra footnote 1 (46 U.S.C. §
31342 superseded 46 U.S.C. § 971 replacing the term "furnishing"
with the term "providing").
--------------
[5]
Other courts, including one circuit court, that have been
critical of a restrictive reading of the FMLA's requirements
for the creation of a maritime lien have been overruled to the
extent that those courts suggest that earmarking necessaries
is not a prerequisite to creation of a maritime lien. Compare
Equilease Corp. v. M/V Sampson, 793 F.2d 598, 603 (5th
Cir. 1986) (rejecting a literal interpretation of "furnishing"
and holding that the FMLA does not require actual delivery of
necessaries to a vessel), with Silver Star Enters.,
Inc. v. Saramacca MV, 82 F.3d 666, 669-70 (5th Cir. 1996)
(distinguishing Equilease and holding that maritime lien
was not available where containers were leased in bulk and not
earmarked), and Orbis Marine Enterprises, Inc. v. TEC
Marine Lines, Ltd., 692 F.Supp. 280, 283-84 (SDNY 1988) (holding
that earmarking is not a prerequisite to the creation of a maritime
lien) withItel Containers Int'l. Corp. v. Atlanttrafik Express
Services, Ltd., 982 F.2d 765, 768 (2d Cir. 1992) (holding
that a lease of containers to a fleet of vessels did not create
a maritime lien on those vessels). Seealso, Redcliffe
Arms, Ltd. v. M/V Tyson Lykes, 806 F.Supp. 69 (D. S.C. 1992),
rev'd 996 F.2d 47 (4th Cir. 1993) (district court holding
that earmarking is not a prerequisite to the creation of a maritime
lien and finding that the maritime lien extended to containers
leased in bulk to a fleet owner reversed by the Fourth Ciruit).
--------------
[6]
In Bonner v. Prichard, 661 F.2d 1206, 1209 (11th
Cir. 1981) (en banc), the Eleventh Circuit adopted as
binding precedent all Fifth Circuit decisions handed down prior
to the close of business on September 30, 1981.
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