PUBLISH
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
NOV 22 2000
No. 00-11565 THOMAS K. KAHN
CLERK
________________________
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.
________________________
Appeal from the United States District Court
for the Middle District of Florida
_________________________
(November 22, 2000)
Before CARNES and BARKETT, Circuit Judges, and POLLAK*, District Judge.
BARKETT, Circuit Judge:
*
Honorable Louis H. Pollak, U.S. District Judge for the Eastern District of
Pennsylvania, sitting by designation.
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
2
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
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)).
3
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
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
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
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
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
6
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
7
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), the
district 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
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) with Itel 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). See also,
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).
8
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
9
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
10
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
11
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. Stricti juris 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 stricti juris, 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
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.
12
(“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.
13
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
14
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
15
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.
16