United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS June 13, 2003
For the Fifth Circuit
Charles R. Fulbruge III
Clerk
No. 02-30627
STEVENS SHIPPING AND TERMINAL COMPANY; ET AL
Plaintiffs,
STEVENS SHIPPING AND TERMINAL COMPANY
Plaintiff-Appellant,
VERSUS
JAPAN RAINBOW II MV, its engines, tackle, & apparel, in rem;
Defendant-Appellee,
and
RUBY TRADING S A
Claimant-Appellee.
Appeal from the United States District Court
For the Eastern District of Louisiana, New Orleans
Before DUHÉ, EMILIO M. GARZA, and DeMOSS, Circuit Judges.
DeMOSS, Circuit Judge:
Plaintiff-Appellant, Stevens Shipping & Terminal Co., Inc.,
("Stevens"), claimed a maritime lien for agency and stevedoring
services that it rendered to the M/V JAPAN RAINBOW II in Savannah,
Georgia, in February 2001. The district court, however, found that
Stevens provided those services with actual knowledge that the
charter party of the M/V JAPAN RAINBOW II contained a prohibition
of liens clause, and that the time charterer who hired Stevens,
Tokai Shipping Co., Ltd. ("Tokai"), could not incur liens or pledge
the credit of the vessel to secure Stevens's charges. The district
court, therefore, held that Stevens could not hold a maritime lien
for the services it provided, and Stevens's in rem claims against
the M/V JAPAN RAINBOW II were dismissed. Stevens now appeals.
I. BACKGROUND AND PROCEDURAL HISTORY
Stevens and Stevedoring Services of America (“SSA”) filed a
complaint under Rule C of the Supplemental Rules for Certain
Admiralty and Maritime Claims of the Federal Rules of Civil
Procedure. Stevens and SSA sought the arrest of the M/V JAPAN
RAINBOW II alleging that Stevens and SSA had not received payment
for services provided to the M/V JAPAN RAINBOW II in Savannah,
Georgia, and New Orleans. Thus, Stevens and SSA alleged they had
maritime liens on the M/V JAPAN RAINBOW II. SSA settled its claims
and is not a party in this appeal.
Tokai chartered the JAPAN RAINBOW II and dispatched Voyage
Instructions to Zodiac Maritime Agencies, Ltd. (“Zodiac”), the
vessel owners’ managing agent. Ruby Trading (“Ruby”) is the
claimant-appellee in this case. Stevens served as stevedore and
husbanding agent for Tokai. As stevedore, Stevens loaded and
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unloaded the JAPAN RAINBOW II, and as husbanding agent, Stevens
ordered goods and services for the vessel, such as tug and wharfage
services. Stevens would order the services and goods on behalf of
the JAPAN RAINBOW II, pay for them, and receive reimbursement from
Tokai. If Stevens paid a third party for services provided to the
JAPAN RAINBOW II, it took the third party’s maritime liens as
assignee upon payment.
Clive Ferguson, a Zodiac employee, served as the operations
supervisor of the JAPAN RAINBOW II. Zodiac had been aware since
late 2000 that Tokai was having financial problems, and Ferguson
was instructed to fax a notice of the prohibition of liens clause
in the charter to each agent listed in Tokai’s voyage instructions.
On January 23, 2001, Ferguson faxed the notice to Stevens at the
fax number listed in Tokai’s voyage instructions. The letter
accompanying the notice requested that Stevens notify other
Savannah providers about the prohibition of liens clause. The
letter also requested that Stevens return an acknowledgment of the
notice to Zodiac. Zodiac received a fax confirmation establishing
that the letter and notice were successfully transmitted to Stevens
at the fax number listed in the voyage instructions. Ferguson
testified that faxes were used in the shipping industry as a
reliable and customary means of communication.
At a deposition of Stevens through its designated
representative, Frank Coslick, Vice President of Finance, Stevens
conceded that the fax number to which Zodiac sent the letter and
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notice belonged to a fax machine in the agency department of
Stevens's downtown corporate office in Savannah, Georgia; but
contended that the fax machine was in an area separate from the
company's administration and was not one that officers would use.
Coslick testified that office procedure, when such a fax arrived,
would be for Ed Manucy, who was formerly Stevens's general manager
of the operations department, or Deborah Tillman, of Stevens's
operations department, to notify an officer of the corporation.
Corporate office employees from other departments may have used the
fax machine on an occasional basis.
Additionally, Stevens shared office space with United Arabs
Shipping and a non-profit organization. These entities had their
own fax machines and as a general practice did not use Stevens's
fax machine; however, they did have access to the machine as it was
located off a common area that employees of all three organizations
used to access a break room. The room housing Stevens's fax
machine was not locked.
As to Stevens's knowledge of receipt of the January 23, 2001,
fax, Coslick testified that he did not see the fax. Coslick
conceded that of the 15 employees working in Stevens's downtown
office, he spoke to less than ten people regarding whether they had
seen the fax, and that was approximately one year after the fax was
sent. Coslick also testified that Robbie Harrison, Stevens's
president, informed Coslick that none of the officers who normally
would have been notified of such a fax had seen the document. As
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discussed below, Coslick’s testimony regarding the office procedure
when important faxes arrived and Harrison’s statement were ruled
inadmissable.
On February 20, 2001, when the JAPAN RAINBOW II arrived in
Savannah, the vessel’s master delivered the notice of the
prohibition of maritime liens to Stevens, after Stevens had already
started work on the vessel. Ed Manucy signed the acknowledgment of
the notice, editing the phrase, which apparently initially read,
“For and on behalf of Charterer’s Agent, I confirm acceptance of
above,” to read, “For and on behalf of Charterer’s Agent, I confirm
receipt of above.” Manucy also interlineated, “All ILA labor and
port/tug charges already committed to prior to receipt of this
document.” This document was dated February 20, 2001. Stevens
provided $50,190.11 of stevedoring services and $35,046.54 of third
parties’ goods and services to the vessel.
Aware that Tokai was in financial trouble, Stevens asserts
that it would not have worked the JAPAN RAINBOW II or advanced
funds on its behalf but for Stevens's ability to rely on the
vessel’s credit and receive maritime liens against the vessel.
Rather, Stevens would have demanded payment for the services up
front. Stevens asserted its maritime liens by initiating this
action on March 13, 2001. Stevens asserts that it did not know
about the faxed notice until after it arrested the boat in New
Orleans.
The parties agreed to a trial on the parties’ joint
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stipulations, respective briefs, depositions, and exhibits, in lieu
of live testimony. Each party submitted a trial brief, a bench
book, and depositions. Stevens attached as exhibits to its trial
memorandum the affidavits of three Stevens employees, Manucy,
Coslick, and Tillman, indicating that none of the three had notice
of the no-liens clause before February 20, 2001. In addition,
Stevens attached a series of email correspondence between Stevens
and its counsel, indicating that as of March 14, 2001, Stevens was
unaware of the January 23, 2001, fax.
Ruby objected to the affidavits and the email correspondence
as hearsay. Ruby also objected to portions of Coslick’s deposition
testimony either because it was hearsay or because Stevens failed
to lay a foundation to show that Coslick had personal knowledge of
the matters to which he testified. Although Stevens filed a reply
to Ruby’s objection to the affidavit and emails, Stevens never
responded to Ruby’s objections to Coslick’s deposition testimony.
The district court sustained Ruby’s objections and excluded
from the trial evidence the objected-to portions of Coslick’s
deposition, all three affidavits, and the email correspondence. In
granting the motion to strike affidavits, the district court
reasoned that the parties agreed to submit depositions in lieu of
stipulations for the trial on the papers. The parties did not
request permission to submit affidavits. According to the district
court, had the parties requested such permission, the district
court would have denied the request, as the submissions were to
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take the place of a trial. The district court held that the
affidavits and emails were inadmissable hearsay and that Stevens
had the opportunity to depose the affiants but chose not to do so.
Turning to the merits of the case, the district court noted
the general rule that a party who has actual knowledge of a
prohibition of liens clause before supplying goods or services to
a vessel cannot later claim a maritime lien for those goods or
services. The district court found that the fax confirmation
created a rebuttable presumption that Stevens received the notice.
The district court relied upon Beck v. Somerset Techs., Inc.,
for the proposition that a letter placed in a U.S. Postal Service
mail receptacle creates a presumption that it was actually received
by the person to whom it was addressed. 882 F.2d 993, 996 (5th
Cir. 1989). The district court concluded that, on this record,
Stevens failed to offer competent evidence to rebut the presumption
that the fax was received. Having received the fax, Stevens had
the requisite “actual knowledge” of the prohibition of liens
clause. The district court rejected Stevens's argument that
Stevens would have to read and sign the fax to have actual
knowledge of the no-liens clause. The district court reasoned that
a supplier cannot deny knowledge of a no-liens clause when it was
delivered in a manner that is customary and reliable in the
shipping business. The district court entered a judgment in favor
of Ruby and dismissed Stevens's claims with prejudice. Stevens
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timely filed a notice of appeal.
II. DISCUSSION
We review the district court's legal conclusions de novo in
admiralty cases tried without a jury. Lake Charles Stevedores,
Inc. v. Professor Vladimir Popov MV, 199 F.3d 220, 223 (5th Cir.
1999). We review the district court's factual findings under the
clearly erroneous standard. FED. R. CIV. P. 52(a). "The clearly
erroneous standard of review does not apply to factual findings
made under an erroneous view of controlling legal principles."
Lake Charles Stevedores, Inc., 199 F.3d at 223.
Stevens raises three arguments on appeal. First, Stevens
asserts that the district court erred in applying the standards of
the Maritime Commercial Instruments and Liens Act ("MCILA"), 46
U.S.C. §§ 31341-31343, to find that Stevens had actual knowledge of
a prohibition of liens clause in the JAPAN RAINBOW II's charter.
Second, Stevens argues that the district court erred in failing to
distinguish Stevens's direct maritime liens from the liens that
Stevens allegedly held as an assignee. Third, Stevens argues that
the district court erred in striking certain affidavits and email
correspondence included as exhibits to Stevens's trial brief.
Having heard oral arguments, having carefully reviewed the entire
record of this case, and having fully considered the parties'
respective briefing on the issues in this appeal, we affirm the
judgment of the district court.
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First, Stevens argues that the district court erred in finding
that the fax confirmation sheet created a rebuttable presumption
that Stevens had actual knowledge of the no-liens clause, thus
shifting the burden to Stevens to prove it did not have actual
knowledge. On appeal of a district court’s ruling following a
bench trial, this Court reviews the district court’s factual
findings for clear error and its legal conclusions de novo. Coggin
v. Longview Indep. Sch. Dist., 289 F.3d 326, 330 (5th Cir. 2002).
This Court reviews the allocation of the burden of proof de novo
and the determinations that the parties met their burdens under the
clearly erroneous standard. Hopwood v. Texas, 236 F.3d 256, 263
(5th Cir. 2000).
Maritime liens "enable a vessel to obtain supplies or repairs
necessary to her continued operation by giving a temporary
underlying pledge of the vessel which will hold until payment can
be made or more formal security given." Lake Charles Stevedores,
Inc. v. M/V POPOV, 199 F.3d 220, 223 (5th Cir. 1999) (internal
quotations and citation omitted). Under section 31342(a) of the
MCILA, "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." There is no doubt that
stevedoring services are necessaries. Lake Charles Stevedores,
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Inc., at 225. However, a party who knows of a prohibition of liens
clause before supplying goods or services to a vessel cannot later
claim a maritime lien for those goods or services. Gulf Oil
Trading Co. v. M/V CARIBE MAR, 757 F.2d 743, 749 (5th Cir. 1985).
In the case at bar, the district court reasoned that the fax
confirmation sheet created a rebuttable presumption that Zodiac
delivered the notice and that Stevens received it. We agree with
the district court in this case. Neither party disputes that
facsimiles are a reliable and customary method of communicating in
the shipping business. To quote the district court, in such an
industry, "[t]he law simply cannot allow a supplier to deny
knowledge of a no lien clause when it was delivered in a manner
that was both customary and reliable in the shipping business."
Thus, on the facts of this case, the district court did not clearly
err in finding that the preponderance of the evidence showed that
Stevens had actual knowledge of the prohibition of liens clause.
Second, this Court need not address whether the district court
erred in failing to distinguish Stevens's direct maritime liens
from the liens that Stevens allegedly held as an assignee, as the
record shows that Stevens failed to put forth evidence that it made
payments on behalf of the assignor of the liens. See Surgical Care
Ctr. of Hammond v. Hospital Serv. Dist. No. 1, 309 F.3d 836, 840
(5th Cir. 2002). Third, the district court did not commit clear
error in declining to admit the affidavits and email correspondence
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under the residual exception to the hearsay rule. See Magouirk v.
Warden, Winn Correctional Center, 237 F.3d 549, 554 (5th Cir.
2001). Based on the foregoing, we affirm the district court.
AFFIRMED.
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