Goods & Services Must Be Delivered In Order To Create A Lien
On November 7, 2017, the United States Court of Appeals for the First Circuit issued Portland Pilots, Inc., et al. v. NOVA STAR M/V, No. 16-2467, 2017 U.S. App. LEXIS 22248 (1st Cir. Nov. 7, 2017), affirming the District Court of the District of Maine’s judgment limiting the reach of a maritime lien in a case involving the supply of necessaries to a vessel. In 2014, Nova Star Cruise Line (“NSCL”) as charterer of the M/V NOVA STAR, entered into a five-year contract with Maine Uniform Rental d/b/a Pratt Abbott Uniform & Linen (“Pratt Abbott”) to rent linens and other related items for the ship’s ferry and hotel services. In anticipation of the performance requirements under the contract, Pratt Abbott purchased large quantities of inventory, including specialty linens and products just for the NOVA STAR. Under the agreement, Pratt Abbott was regularly supplying the vessel with fresh clean linens and removing and laundering soiled linens. At all times, Pratt Abbott maintained ownership over the linens. In 2015, NSCL terminated its ferry service after only two (2) seasons. Pratt Abbott immediately filed an action in the District of Maine seeking to enforce a maritime lien against the vessel to recover past due invoices and the replacement value of the advanced inventory that was stored in its warehouse.
Pratt Abbott argued it was entitled to a maritime lien because it had purchased necessaries specifically for the M/V Nova Star which had been used on the vessel during its time as a hotel ferry. The District Court limited Pratt Abbott’s recovery to $16,187.50, i.e. the value of the rental services previously performed. The Court found there was no dispute that the rental items and services provided pursuant to the agreement enabled the ship to serve as a hotel and were necessary to keep the business afloat. Hence these rental services met the requirements of the maritime lien act. The Court rejected the claim for the replacement cost of the stored inventory totaling $178.023.02, as it did not meet the maritime lien act requirement of a necessary that was ‘delivered’ to the vessel. In affirming the District Court decision, the First Circuit confirmed that necessaries must be physically delivered or constructively dispatched to the vessel by distributing supplies to the owner or authorized agents of the vessel. The First Circuit held that the inventory had not been delivered to the vessel, because even though they had been onboard at one point or another as part of the rental services agreement, under the contract, Pratt Abbott continued to own the items. The Court held “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.”
To read the full opinion of the Fifth Circuit, please click here.
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