Revised November 1, 2000
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,
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
Cons/w No. 99-31293
GULF MARINE AND INDUSTRIAL SUPPLIES,
INC; ET AL
Plaintiffs,
v.
GOLDEN PRINCE M/V, ETC; ET AL,
MURPHY, ROGERS & SLOSS, APLC
Plaintiff-Appellant,
v.
GOLDEN PRINCE M/V, HER ENGINES, TACKLE,
APPAREL, AND APPURTENANCES, IN REM;
PRINCE NAVIGATION, INC.
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 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 penalties, 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 settle
the wage claims against all three vessels and obtained the release of the
seized vessels. MRS earned 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 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, 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).
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.
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 penalties. 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 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 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.
1. District Judge for the
Eastern District of Texas, sitting by designation.
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. |