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United States Court of Appeals,
Fifth Circuit.
No. 94-30747.
SILVER STAR ENTERPRISES, INC., et al., Plaintiffs,
v.
SARAMACCA MV, her engines, tackle, apparel, etc., in rem,
Defendants.
TRANS OCEAN LTD., Plaintiff-Appellee,
v.
SCHEEPVAART MAATSCHAPPIJ SURINAME N.V., et al., Defendants,
v.
SILVER STAR ENTERPRISES, INC., Appellant.
May 14, 1996.
Appeal from the United States District Court for the Eastern
District of Louisiana.
Before WISDOM, GARWOOD and JONES, Circuit Judges.
EDITH H. JONES, Circuit Judge:
Plaintiff Silver Star Enterprises, Inc. (Silver Star), appeals
the judgment of the district court granting Trans Ocean Ltd. (Trans
Ocean), a lessor of cargo containers to a shipping company, a
maritime lien in the vessel M/V SARAMACCA. Like three other
circuit courts, we decline to extend coverage of the Federal
Maritime Lien Act to bulk cargo container leases to entities other
than "a vessel." Accordingly, we reverse. 1995 WL 16773.
I. FACTS AND PROCEEDINGS BELOW
Scheepvaart Maatschappij Suriname N.V. (SMS), a corporate
entity wholly owned by the Republic of Suriname, operated a
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shipping container service from Suriname to the United States,
particularly Houston and New Orleans, and Rotterdam. SMS owned or
chartered eight different vessels, including the M/V SARAMACCA, on
which appellant Silver Star held two preferred ship mortgages.
Beginning in May 1991, Appellee Trans Ocean began furnishing
up to one hundred twenty-two cargo containers to the SMS fleet
pursuant to a Master Container Lease. The lease set a per diem
rental rate for each container and obliged SMS to pay repair costs
and depreciated replacement values for damaged or lost containers.
The lease did not "earmark" particular containers for service on
particular SMS vessels and indeed left needed flexibility with SMS
to deploy the containers. The lease did not prevent intermodal use
of the containers in land or even air transport.
Barely a year later, Silver Star commenced an in rem action in
Houston, Texas, to enforce its preferred ship mortgages against the
M/V SARAMACCA. Trans Ocean then sued and claimed maritime lien
rights arising from the lease of containers, including those used
aboard the M/V SARAMACCA.1 Ultimately, the M/V SARAMACCA was
1With certain exceptions, foreign sovereigns, such as the
Republic of Suriname, are immune from suit in the United States
under the Federal Sovereign Immunities Act, 28 U.S.C. § 1602 et
seq. (1988). One of the exceptions provided for in the Act
permits an in personam action to enforce maritime lien rights
against a vessel of a foreign state when the lien is based upon
the commercial activities of the foreign state. 28 U.S.C. §
1605(b). Pursuant to the Act, after notice of the suit is given
to the master or other person in charge of the vessel, "the suit
to enforce [the] maritime lien shall thereafter proceed ...
according to the principles of law and rules of practice of suits
in rem...." 28 U.S.C. § 1605(b)(1) and (c); see H.R. No. 823,
100th Cong., 2d Sess. (1988), reprinted in 1988 U.S.C.C.A.N.
4511, 4511-12. Trans Ocean filed suit under this exception. The
Act further permits the seizure of a foreign state's vessel to
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seized and sold at auction; her proceeds were deposited in the
registry of the district court awaiting division among SMS, Trans-
Ocean and other claimants.
Trans Ocean moved for summary judgment after conducting
discovery of cargo manifests and other documents to determine what
portion of its leased containers had actually been used aboard the
M/V SARAMACCA. Only in this way could Trans Ocean demonstrate that
sixty-four containers were used at least once aboard the M/V
SARAMACCA on voyages between the United States and Suriname, and
ten of those had been used exclusively aboard the seized vessel.
The district court granted partial summary judgment in favor
of Trans Ocean, acknowledging a maritime lien for past due rentals,
repair costs, and depreciated replacement values for the ten
containers used exclusively aboard the M/V SARAMACCA, and for
prorated rentals, repair costs, and depreciated replacement values
for the other fifty-four containers. In reaching this conclusion,
the court held that for purposes of establishing a maritime lien,
it was not necessary that the containers be earmarked for use
aboard a particular vessel.
Judgment was entered in favor of Trans Ocean for a maritime
lien of $73,352.00. When the court transferred and attached the
lien to the proceeds of the vessel's sale, it limited the lien to
$36,698.86, representing rentals, costs, and replacement values for
containers provided in the United States. Upon ranking the
enforce preferred mortgage liens. 28 U.S.C. §§ 1605(d) and
1610(c). Silver Star's suit falls within this exception.
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creditors' competing claims, the court ruled that Trans Ocean
outranked Silver Star in the amount of $36,698.86. Silver Star
timely appealed the Rule 54(b) judgment.
II. DISCUSSION
A maritime lien is a special property right in a vessel that
"developed as a necessary incident of the operation of vessels."
Piedmont & Georges' Creek Coal Co. v. Seaboard Fisheries Co., 254
U.S. 1, 9, 41 S.Ct. 1, 3, 65 L.Ed. 97 (1920). The lien secures
creditors who provide "supplies which are necessary to keep the
ship going." Dampskibsselskabet Dannebrog, et al. v. Signal Oil &
Gas Co., 310 U.S. 268, 280, 60 S.Ct. 937, 943, 84 L.Ed. 1197
(1940). The lien "arises in favor of the creditor by operation of
law ... and grants the creditor the right to appropriate the
vessel, have it sold, and be repaid the debt from the proceeds."
Equilease Corp. v. M/V SAMPSON, 793 F.2d 598, 602 (5th Cir.) (en
banc), cert. denied, 479 U.S. 984, 107 S.Ct. 570, 93 L.Ed.2d 575
(1986).
The Federal Maritime Lien Act, 46 U.S.C.A. §§ 31341-31343
(West Supp.1995) (FMLA) establishes a maritime lien for "providing
necessaries to a vessel on the order of the owner or a person
authorized by the owner." 46 U.S.C.A. § 31342.2 "Necessaries"
2The previous version of the Federal Maritime Lien Act was
superseded by Congress in 1988. See 46 U.S.C. §§ 971-975 (1982)
(superseded sections). In so doing, Congress replaced the word
"furnishing," as contained in the superseded version of the FMLA,
with the word "providing," 46 U.S.C.A. § 31342. The relevant
House of Representative report states that the change was for
consistency within the act and that no substantive change was
intended. H.R. No. 918, 100th Cong., 2d Sess. (1988), reprinted
in 1988 U.S.C.C.A.N. 6104, 6107, 6141. Most of the cases in this
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include "repairs, supplies, towage, and the use of a dry dock or
marine railway." 46 U.S.C.A. § 31301(4).
Three of our sister circuits have recently held that maritime
lien rights do not attach for the benefit of bulk lessors of
containers to owners or charterers of multiple vessels. Redcliffe
Americas Limited v. M/V TYSON LYKES, 996 F.2d 47 (4th Cir.1993);
Itel Containers Int'l Corp. v. Atlanttrafik Express Serv. Ltd., 982
F.2d 765 (2d Cir.1992); Foss Launch & Tug Co. v. Char Ching
Shipping U.S.A., Ltd., 808 F.2d 697 (9th Cir.1987), cert. denied,
484 U.S. 828, 108 S.Ct. 96, 98 L.Ed.2d 57 (1987).
Foss Launch, the earliest of these cases, rests persuasively
on the language of the maritime lien law and its interpretation by
the Supreme Court. Summarizing that court's opinion, Foss Launch
held that although the containers were "necessaries" within the
meaning of the Act, they had not been furnished "to" the vessels as
is statutorily required. Foss Launch, 808 F.2d at 703. The court
also felt bound by the seminal Supreme Court case, Piedmont &
Georges' Creek Coal Co. v. Seaboard Fisheries Co., 254 U.S. 1, 41
S.Ct. 1, 65 L.Ed. 97 (1920). In Piedmont, a coal company agreed to
provide the entire supply of coal for a company that owned both a
fish factory and a fleet of vessels. Despite the fact that the
quantity of coal delivered to each vessel could be established
after the fact, the Court held that the coal company did not have
a maritime lien in the vessels. Piedmont, 254 U.S. at 7-8, 13, 41
area arose under the "furnishing" version of the Act and,
therefore, make reference to the "furnishing" requirement.
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S.Ct. at 3, 5. The Court stated that although the use of the coal
aboard the vessels had been contemplated, "the fact that such a use
had been contemplated does not render the subsequent appropriation
by the owner a furnishing by the coal dealer to the several
vessels." Piedmont, 254 U.S. at 8, 41 S.Ct. at 3 (emphasis added).
Piedmont has been repeatedly construed as preventing the creation
of a maritime lien where it is not the supplier but the fleet user
of the "necessaries" that determines to which vessel or vessels
they will be furnished. Foss Launch, 808 F.2d at 701; Itel, 982
F.2d at 767; Redcliffe, 996 F.2d at 50; see also 2 Benedict on
Admiralty § 38, at 3-46 (7th Ed.1992).
Although the district court considered Foss Launch, Itel, and
Redcliffe, he declined to follow them because of this court's
decision in Equilease Corp. v. M/V SAMPSON, 793 F.2d 598 (5th Cir.)
(en banc), cert. denied, 479 U.S. 984, 107 S.Ct. 570, 93 L.Ed.2d
575 (1986). Trans Ocean also contends that Equilease and Atlantic
& Gulf Stevedores, Inc. v. M/V GRAND LOYALTY, 608 F.2d 197 (5th
Cir.1979), compel a broad reading of the FMLA. We disagree.
Equilease Corp. v. M/V SAMPSON considered whether an FMLA lien
could arise in favor of a provider of insurance to a vessel. This
court decided that insurance is a "necessary", but that actual
physical delivery of "necessaries" is not the sole means to satisfy
the "furnishing" requirement of the Act. Equilease, 793 F.2d at
603-04. Equilease expansively decries "layering technicalities
onto [the Act]," 793 F.2d at 603, but there is no factual
similarity between that case and the present one. In Equilease,
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the charterer "purchased insurance for each vessel," 793 F.2d at
600, an act strongly suggesting earmarking of the insurance to each
vessel. Equilease is inapposite to interpreting the statute to
cover cargo containers that, leased in bulk, were not only not
earmarked but could be used intermodally on land as well as on
numerous vessels.
In Atlantic & Gulf, supra, this court held that maritime lien
rights extended against a vessel for certain stevedoring services
and for costs associated with three days of detention caused by the
presence of water and ammonia in the holds. This decision relied
on the legislative history of the 1971 amendments to the FMLA,
which established that Congress intended to make it easier for
stevedores to "protect their interests by making maritime liens
available where traditional services are routinely rendered."
Atlantic & Gulf, 608 F.2d at 201. Whatever Congress intended with
respect to stevedores hardly compels a statutory interpretation
favoring bulk container lessors.
We find the reasoning of our sister circuits dispositive on
this issue. In this case, Silver Star furnished containers to SMS,
not to the SMS vessels, and it was SMS which ultimately dictated
upon which vessel the containers were placed. Neither party knew
aboard which ship a particular container would be placed at any
given time. Silver Star has therefore failed to demonstrate that
necessaries were provided to a vessel as required by the FMLA.
Trans Ocean, supported by an amicus brief by the Institute of
International Container Lessors, has advanced interesting economic
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and legal reasons why the FMLA ought to protect their industry,
which owns "approximately 4 million [Twenty-Foot Equivalent Units]
of international shipping containers and leases them to hundreds of
shipping companies." Amicus Brief at 1. But in a commercial case
such as this, there is much to be said for legal consistency and
predictability. A decision by this circuit creating a circuit
split and permitting the affixation of maritime liens for bulk
container lessors would spawn uncertainty, compounded by
forum-shopping and extravagant lien claims. Thus, even if we were
not fully persuaded by the other circuit court's decisions, we
should hesitate to launch maritime lien law into the chaotic waters
sought by Trans Ocean and the amicus. As it happens, however, we
have concluded after careful consideration that the sister
circuits' decisions are uniform because they are right in their
interpretation of the FMLA and Piedmont. If Trans Ocean's
arguments are compelling, they should find a sympathetic hearing in
Congress.
We need not reach the other issues raised by Silver Star.
CONCLUSION
For the foregoing reasons, the district court erred in holding
that Trans Ocean is the beneficiary of a lien for providing
necessaries--cargo containers--that were leased in bulk and not
earmarked for use on board the M/V SARAMACCA. The judgment is
REVERSED and REMANDED for further proceedings consistent herewith.

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