Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca1-09-01574/USCOURTS-ca1-09-01574-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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The Hon. David H. Souter, Associate Justice (Ret.) of the *

Supreme Court of the United States, sitting by designation.

United States Court of Appeals

For the First Circuit

No. 09-1574

CIANBRO CORPORATION; HORNBECK OFFSHORE SERVICES, LLC;

and HORNBECK OFFSHORE TRANSPORTATION, LLC,

Plaintiffs, Appellees,

v.

GEORGE H. DEAN, INC., d/b/a DEAN STEEL,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. D. Brock Hornby, U.S. District Judge]

Before

Torruella, Circuit Judge,

Souter, Associate Justice, *

and Stahl, Circuit Judge.

Stephen P. Griffin, with whom Griffin Law LLC, was on brief

for appellant.

John R. Bass, II, with whom Bradford R. Bowman and Thompson,

Bull, Furey, Bass & MacColl, LLC, P.A., were on brief for appellee

Cianbro Corporation.

Leonard W. Langer, with whom Marshall J. Tinkle and Tompkins,

Clough, Hirshon & Langer, P.C., were on brief for appellees

Hornbeck Offshore Services, LLC and Hornbeck Offshore

Transportation, LLC.

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February 22, 2010

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 See 28 U.S.C. § 1333. We have jurisdiction under 46 U.S.C. 1

§ 31343 ("The district courts of the United States shall have

jurisdiction over a civil action in Admiralty to declare that a

vessel is not subject to a lien claimed under [the Maritime Lien

Act], or that the vessel is not subject to the notice of claim of

lien, or both, regardless of the amount in controversy or the

citizenship of the parties.").

 See 46 U.S.C. §§ 31301-31343. 2

 See 28 U.S.C. § 1331. 3

 The district court adopted and affirmed the recommendations of 4

the magistrate judge.

- 3 -

TORRUELLA, Circuit Judge. We are called upon to

determine whether an in rem maritime lien should be allowed against

the vessels BENNO C. SCHMIDT and ENERGY SERVICE 9001 ("the

Vessels") in favor of Defendant-Appellant George H. Dean, Inc.,

d/b/a Dean Steel ("Dean Steel"). This claim is challenged by

Plaintiff-Appellee Cianbro Corporation ("Cianbro"), and PlaintiffIntervenors Hornbeck Offshore Services and Hornbeck Offshore

Transportation, LLC, ("the Hornbeck entities"). The Hornbeck

entities are the owners of the Vessels and had entered into a

contract for the repair and conversion of the Vessels with Cianbro

as general contractor for this work. Because of the admiralty and

maritime nature of this dispute, and because we are required to 1

interpret the Maritime Lien Act to resolve the issues presented, 2 3

this controversy is deemed properly before us.

The district court granted a motion for summary judgment4

in favor of Cianbro and thereafter issued a declaratory judgment to

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 Whose place of business is Louisiana. 5

- 4 -

the effect that the Vessels were not subject to a maritime lien in

favor of Dean Steel. Dean Steel filed a timely appeal to this

decision.

Upon due consideration of the record and the arguments of

all parties, we affirm the decision of the district court in all

respects.

I. Background

A. Facts not in issue

In 2006 the Hornbeck entities entered into a Vessel 5

Conversion Contract ("the Contract") with Cianbro for the

conversion of the Vessels from sulfur tankers into multi-purpose

supply vessels. Section 6.1 of the Contract provided that:

All portions of the Work that [Cianbro] does

not perform shall be performed under

subcontracts or by other appropriate agreement

between [Cianbro] and the entity performing

the work. Nothing contained in the

Contract . . . shall create any contractual

relationship between [the Hornbeck entities]

and any subcontractor of [Cianbro].

Notwithstanding the foregoing, for

informational purposes only, [Cianbro] shall

furnish to [the Hornbeck entities] at its

request a copy of each Subcontract it enters

into in connection with the Work. At the

request of [the Hornbeck entities], [they]

shall be included in all negotiations with

the subcontractor and/or shall be provided

pertaining thereto [sic]. Upon [the Hornbeck

entities'] request, [Cianbro] will provide

[the Hornbeck entities] with copies of all

work papers and correspondence relating or

pertaining to a subcontractor.

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 See Fed. R. Civ. P. 24(a). 6

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In Section 6.2 of the Contract it is further established

that:

[The Hornbeck entities] may designate specific

persons or entities from whom [Cianbro] shall

obtain bids. [Cianbro] shall obtain bids from

prospective Subcontractors and from suppliers

of Materials or equipment fabricated

especially for the Work and shall deliver such

bids to [the Hornbeck entities] prior to the

award in sufficient time for [the Hornbeck

entities] to evaluate the bids without

compromising the Project Schedule. [The

Hornbeck entities] shall then determine, with

the advice of [Cianbro,] which bids will be

accepted. [Cianbro] will not be required to

contract with anyone to whom [Cianbro] has

reasonable objection.

In the following section, 6.3, the parties stipulated

that "any subcontracts of any tier with affiliates of [Cianbro] or

entities owned in whole or in part by shareholders of [Cianbro]

. . . are to be awarded only with the written approval of [the

Hornbeck entities]." The Contract further provided that Cianbro

warranted to the Hornbeck entities that it would complete the work

free and clear of any liens, a provision which fueled Cianbro's

filing of the present action seeking a declaration that such liens

had not been established, and an action in which the Hornbeck

entities have intervened as interested parties.6

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 Whose principal place of business is Pittsfield, Maine, and who 7

also has a place of business in Portland, Maine.

 Whose principle place of business is Middleboro, Massachusetts. 8

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Thereafter, on or about November 1, 2006, Cianbro, as

general contractor, by means of a purchase order so dated 7

contracted with Hub Technologies, Inc. ("Hub"), a business entity 8

engaged in the manufacture, design, engineering and fabrication of

structures used in various industrial applications, to fabricate

for Cianbro certain steel components to be used in the conversion

work of the Vessels. As required by Section 6.2 of the Contract,

prior to awarding the bid to Hub, Cianbro identified the bid to the

Hornbeck entities and delivered Hub's bid to them. There is no

evidence in the record that the Hornbeck entities had any other

involvement in this relationship or in the performance by Hub of

its contract with Cianbro.

Cianbro agreed that it would supply some of the necessary

steel to Hub from its stores since it was aware that Hub itself did

not supply or warehouse structural steel, and that Hub would need

to acquire the steel from other suppliers. Cianbro never informed

Hub that Hub was not authorized to incur liens on the Vessels or to

extend credit on the Vessels to its subcontractors. Nor did

Cianbro instruct Hub to inform its subcontractors that the

subcontractors would not be allowed to place liens on the Vessels

or to rely on the credit of the Vessels.

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 Whose principal place of business is Warwick, Rhode Island. 9

- 7 -

In December of 2006, Dean Steel became involved in the 9

project as a subcontractor to Hub. Dean was to perform some of the

initial cutting work on the steel as part of Hub's project to

fabricate the steel into components for the Vessels. Both Hub and

Dean Steel were provided with the plans, drawings, and

specifications for the conversion project ("the specifications") by

Cianbro, so that the finished components to be delivered to Cianbro

by Hub would meet the specifications. In the meantime, Cianbro

shipped approximately 230,000 pounds of raw structural steel

directly to Dean Steel at Hub's request, and as a result, together

with the steel supplied by Dean Steel itself, between November,

2006 and October, 2007 Dean Steel supplied Hub with substantial

quantities of structural steel which had been cut in accordance

with the specifications. Thereafter, Hub used the steel delivered

by Dean Steel to Hub's facilities to fabricate the components that

Hub had contracted for with Cianbro for installation in the

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 Cianbro and the Hornbeck entities claim that, aside from the 10

communications necessary to facilitate the transfer of steel, there

was no communication between Cianbro and Dean Steel, and that there

was never any communication between the Hornbeck entities and Dean

Steel. Cianbro further claims that its management had no knowledge

that Dean Steel was part of the project until September of 2007.

However, Dean Steel claims that by virtue of Cianbro's agreement to

ship steel to Dean Steel, the management at Cianbro knew that Dean

Steel was a part of the project. Dean Steel also introduced into

evidence a statement from Harley Waite, Jr., the president of Hub,

who claimed that in December 2006, Cianbro, Hub, and Dean Steel

engaged in "extensive communications concerning the raw structural

steel which Cianbro was supplying Hub for the Conversion Project."

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Vessels. Most importantly, it is undisputed that Dean Steel never 10

delivered any components directly to Cianbro nor to the Vessels.

These components were later installed in the Vessels by

Cianbro, which paid Hub in full for the work and materials that it

had provided in manufacturing these components. Unfortunately, Hub

had failed to pay Dean Steel for all of the work and materials that

Dean Steel had invested in the steel used in these components.

When Hub filed for bankruptcy in November 6, 2007, Hub owed Dean

Steel the sum of $249,910.52 for the materials and labor that Dean

Steel had provided to Hub. Nevertheless, Dean Steel proceeded to

file notices of maritime liens against the Vessels for said amount,

claiming that it had provided necessaries to the Vessels between

November 15, 2006 and September 18, 2007 but had not been paid for

the same. In response, Cianbro filed an action for declaratory

judgment under 46 U.S.C. § 31343(c)(2). The Hornbeck entities

intervened as a plaintiff, and Cianbro and the Hornbeck entities

moved for summary judgment on their claim.

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B. The decision of the District Court

In adopting the Recommended Decision of the Magistrate

Judge, the district court granted summary judgment against Dean

Steel on two alternate grounds which succinctly encapsulate the

medulla of the question to be decided by us: first the district

court concluded that Dean Steel failed to raise a genuine issue

that it acted at the direction of the Vessels' owners or the

Vessels' designee; and second that Dean Steel failed to raise a

genuine issue of material fact regarding whether it provided

necessaries to the Vessels.

II. Discussion

A. Rules of engagement

We review a district court's grant of summary judgment de

novo. Bukuras v. Muller Group, LLC, Nos. 08-2160, 08-2161, 2010

U.S. App. LEXIS 1169, at *13 (1st Cir. Jan. 20, 2010). Summary

judgment is appropriate if, viewing all factual disputes in the

light most favorable to the non-moving party, there is no genuine

issue of material fact that would prevent judgment for the moving

party as a matter of law. Meuser v. Federal Express Corp., 564

F.3d 507, 515 (1st Cir. 2009). A fact is material if its

resolution would "affect the outcome of the suit under the

governing law," and the issue is genuine "if the evidence is such

that a reasonable jury could return a verdict for the nonmoving

party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

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B. The law and the conclusions that follow

To establish a maritime lien on a vessel, the lien

claimant must prove, inter alia, that it provided necessaries to

the vessel "on the order of the owner or a person authorized by the

owner." 46 U.S.C. § 31342(a); Sweet Pea Marine, Ltd. v. APJ

Marine, Inc., 411 F.3d 1242, 1249 (11th Cir. 2005). Under 46

U.S.C. § 31341, there are certain persons who are presumed to have

authority to procure "necessaries" to a vessel. These include the

owner, the master, "a person entrusted with the management of the

vessel at the port of supply," or an officer or agent appointed by

the owner or "a charterer" of the vessel. 46 U.S.C. § 31341.

At the very outset, Dean Steel is faced with the wellestablished precept that the requirements for the allowance of a

maritime lien are strictly construed, Tramp Oil & Marine, Ltd. v.

M/V "Mermaid I", 805 F.2d 42, 46 (1st Cir. 1986). Because a

maritime lien is deemed to "encumber commerce," People's Ferry Co.

v. Beers, 61 U.S. 393, 402 (1857), it is "disfavored in the law,"

and its requisites are construed stricti juris by the courts. Sweet

Pea Marine, Ltd., 411 F.3d at 1252; Container Application Int'l,

Inc. v. Lykes Bros. S.S. Co., 223 F.3d 1361, 1366 (11th Cir. 2000).

Dean Steel has failed to overcome this burden on at least two

grounds.

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C. Dean Steel failed to make the factual showing that it provided

necessaries to the Vessels as is required by 46 U.S.C. § 31342(a)

46 U.S.C. § 31342(a) states that "a person providing

necessaries to a vessel on the order of the owner or a person

authorized by the owner . . . has a maritime lien on the

vessel . . . ." (emphasis added). It has long been the law that an

essential element of establishing a maritime lien is that the

necessaries be either (1) physically delivered to the vessel, or

(2) constructively dispatched to the vessel by the handing over of

the supplies to the owner or the owner's authorized agent for use

on a designated vessel. See Piedmont & George's Creek Coal Co. v.

Seaboard Fisheries Co., 254 U.S. 1, 6-7 (1920) ("No coal was

delivered by the Coal Company directly to any vessel; and it had no

dealings of any kind concerning the coal directly with the officers

of the vessel. All the coal was billed by the Coal Company to the

Oil Corporation and there was no reference on any invoice, or on

its books, either to the fleet or any vessel.").

As the facts established show, the steel fabricated by

Hub was provided by either Cianbro or Dean Steel, and delivered by

Dean Steel to Hub in Hub's Massachusetts facilities. Hub then

proceeded to use that steel to fabricate components which were then

delivered to Cianbro's facilities in Portland, Maine for

installation in the Vessels. Dean Steel has provided no evidence

that it had dealings with the Vessels or their owners. Dean Steel

dealt only with Hub and provided the steel to Hub. What happened

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 Cf. Mass. Gen. Laws ch. 254, §§ 1 et seq. 11

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to the steel after Hub took possession of it from Dean Steel broke

the chain of events leading to the establishment of a maritime lien

as far as the Vessels are concerned.

There are at least four barriers insulating the Vessels

from the establishment of a maritime lien by Dean Steel: the first

barrier is raised by reason of the facts establishing the

relationship between Dean Steel and Hub. Dean Steel was a supplier

of steel to Hub, not to either Cianbro or the Vessels. The Vessels

played no role in this relationship. Although Dean Steel might

have been able to claim a mechanic's lien against Hub for the steel

and labor invested while the steel remained in Hub's possession,

Dean Steel made no attempt to exercise such right.11

The second barrier arises because Hub was the entity

which received the steel from Dean Steel and fabricated it into

components to be installed on the Vessels. At this point no claim

of any nature could be made by Dean Steel against the Vessels,

certainly not one involving a maritime lien, as it had not

delivered any necessaries to the Vessels or anyone with authority

to manage the Vessels.

The third barrier arises from the fact that Hub then

transferred the fabricated component to Cianbro, an entity with

which Dean Steel had no relationship other than that it shaped some

of the raw steel provided by Cianbro (in addition to Dean Steel's

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 However, since Cianbro's contract with Hornbeck explicitly 12

states that it did not have the authority to create a maritime lien

against the Vessels, that would not be the case here.

- 13 -

own), which was to be manufactured in accordance with the

specifications that Cianbro had provided. Again, however, there

are no facts involving the Vessels or anyone authorized to manage

the Vessels that would provide the basis for the establishment of

a maritime lien against the Vessels.

Finally, we have the fourth barrier, which is the

installation of the fabricated steel sections onto the Vessels by

Cianbro, the only party in this matter with whom representatives of

the Vessels had any dealings. It is only Cianbro that supplied

"necessaries" (i.e., the components) to the Vessels and thus it is

only Cianbro that might have legal standing to assert a maritime

lien on its own behalf.12

Dean Steel is apparently under the mistaken apprehension

that a maritime lien is the functional equivalent of a

materialman's lien in land-related jurisprudence, a misconception

which was clarified by the Supreme Court some time ago. See

Piedmont & George's Creek Coal Co., 254 U.S. 1. In that case the

Court stated that:

[T]he principle upon which maritime liens rest

. . . [is a] very different principle [from

that] which underlies mechanics' and

materialmans' liens on houses and other

structures. The former had its origin in

[the] desire to protect the ship; the latter

mainly in the desire to protect those who

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furnish work and materials. The maritime lien

developed as a necessary incident of the

operation of vessels . . . . Because the

ship's need was the source of the maritime

lien it could arise only if the repairs were

necessary; if the pledge of her credit was

necessary to obtaining them; if they were

actually obtained, and if they were furnished

upon her credit. The mechanic's and

materialmans' lien, on the other, attaches

ordinarily although the labor and material

cannot be said to be necessary, although at

the time they were furnished there was no

thought of obtaining security upon the

building; and although the credit of the owner

or others had in fact been relied upon. The

principle upon which the mechanic's lien rests

is, in a sense, that of unjust enrichment. 

Id. at 8-9.

There is no evidence in the record that would support a

conclusion that Dean Steel relied on the Vessels' credit in

supplying its steel and labor to Hub. Furthermore, as established

beyond any doubt, the necessaries (the fabricated steel components)

were provided to the Vessels by Cianbro, not Dean Steel. Thus,

Dean Steel lacks standing to claim the establishment of a maritime

lien upon the Vessels. It did not supply necessaries to the

Vessels.

D. Dean Steel has also failed to make a factual showing that in

providing material and labor to Hub, it acted "on order of the

[Vessels'] owner or a person authorized by the owner," as required

by 46 U.S.C. § 31342(a)(1)

As the Maritime Lien Act unequivocally states, to

establish a maritime lien the claimant must have provided the

necessaries to the vessel "on order of the owner or a person

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authorized by the owner." 46 U.S.C. § 31342(a)(1). There are no

facts in the record that would support a conclusion that the owner

of the Vessels, the Hornbeck entities, had any dealings or

communications with Dean Steel of any nature whatsoever, much less

that they authorized Dean Steel to provide material and labor to

anyone. In fact, Cianbro, the general contractor with whom the

Hornbeck entities entered into the contract for the conversion of

the Vessels, had no contract with Dean Steel to provide any

services or materials, and Dean Steel was not even mentioned in

Cianbro's subcontract with Hub for the fabrication of the

components eventually installed in the Vessels.

There is nothing in the record to support a finding that

the Hornbeck entities authorized or approved Cianbro's actions in

subcontracting its fabrication work to Hub, or of Hub's

relationship and actions with respect to Dean Steel. None of these

actions by Cianbro, Hub, and/or Dean Steel have been shown by Dean

Steel to have been taken at the direction or order of the Hornbeck

entities. See Crescent City Marine, Inc. v. M/V NUKI, 20 F.3d 665,

669 (5th Cir. 1994). As the district court concluded, "(1) Dean

Steel has no contractual ties to . . . Cianbro, (2) there is no

evidence that [Dean Steel's] selection as a supplier to H[ub] was

required or even reviewed by Hornbeck or Cianbro, and (3) [Dean

Steel's] performance was not subject to . . . [Cianbro's] or [the

Hornbeck entities'] oversight or approval."

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 In fact, as we have mentioned, Section 6.1 of the Contract 13

specifically states that the Hornbeck entities disavow any

contractual relationship with Cianbro's subcontractors.

- 16 -

Because of this dearth of evidence as to any express

authorization by the Vessels' owners or their authorized

representative, Dean Steel attempts an end run by claiming that 13

Cianbro was "a person entrusted with the management of the vessel

at the port of supply" pursuant to 46 U.S.C. § 31341(a)(3), and

that therefore it had implied authority to bind the Vessels' owners

with Dean Steel. Leaving aside the fact that Dean Steel neither

delivered the necessaries to the Vessels, as previously discussed,

nor had substantive dealings with Cianbro, also as previously

discussed, Dean Steel's interpretation of what is meant by

"management of the vessel" is wrong as a matter of law. Dean Steel

again runs directly into Supreme Court precedent in the form of the

unpronounceable case of a ship named "Dampskibsselskabet," in which

the Court held that management of a vessel means "direction and

control for the purposes for which the vessel is used."

Dampskibsselskabet Dannebrog v. Signal Oil & Gas Co. of Cal., 310

U.S. 268, 279 (1940) (emphasis added). In that case, the Court

held that a charterer who has authority to determine where the

vessel sailed to, and what cargo it would carry, had management

authority sufficient to bind the vessel and to submit it to a

maritime lien. A similar outcome was had in Atlantic & Gulf

Stevedores, Inc. v. M/V GRAND LOYALTY, 608 F.2d 197, 200 (5th Cir.

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1979) (holding that the chief officer of a vessel was deemed to

have sufficient management authority to request additional services

from stevedores and thus bind the vessel). See also The Eastern,

257 F. 874 (D.C. Mass. 1919) (holding that the chief engineer of a

vessel had sufficient management authority with respect to the

placement of an order for coal supply).

It would strain the language and purpose of the Maritime

Lien Act to hold that while Cianbro had in its possession the

Vessels for purposes of their reconstruction and conversion, it was

also directing their operation for the purpose for which they were

used. See Farwest Steel Corp v. Barge Sea-Span 241, 828 F.2d 522,

525-26 (9th Cir. 1987) ("[I]t cannot be said that acceptance of

responsibility for repair approximates a delegation of authority

over the movements of a vessel."); see also Integral Control Sys.

Corp. v. Consol. Edison Co., 990 F. Supp. 295, 299 (S.D.N.Y. 1998)

("[T]here is a considerable body of law supporting the proposition

that a subcontractor cannot assert a maritime lien against a

vessel.").

Nor does the so-called "principal/agent or middleman"

line of cases, which creates a minimal exception to these rules,

provide a safe haven for Dean Steel's claims. See Lake Charles

Stevedores, Inc. v. Professor Vladimir Popov M/V, 199 F.3d 220,

228-29 (5th Cir. 1999); Marine Fuel Supply & Towing v. M/V KEN

LUCKY, 869 F.2d 473 (9th Cir. 1988). In Lake Charles Stevedores,

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the Fifth Circuit held that although a general contractor could

assert a maritime lien for services provided to a vessel by both

the general contractor and its subcontractors, subcontractors could

not assert a lien on their own behalf, "unless it can be shown that

an entity authorized to bind the ship controlled the selection of

the subcontractor and/or its performance." 199 F.3d at 229. As

has been abundantly established herein, no such link existed

between the Hornbeck entities and any of the subcontractors,

including Dean Steel specifically. Even if the Hornbeck entities

were aware that subcontractors were performing work on necessaries

that eventually would be attached to the Vessels, because the

record establishes that they did not have any participation in the

subcontracting of this work or control over its performance, this

awareness is irrelevant to the establishment of a maritime lien by

the subcontractors. Id. at 232; Galehead, Inc. v. M/V ANGLIA, 183

F.3d 1242, 1246 (11th Cir. 1999) (a subcontractor is not entitled

to a maritime lien "where the degree of involvement with the owner

is minimal or nonexistent"); see also Tramp Oil & Marine, Ltd., 805

F.2d at 45.

There is nothing on the record that would support the

conclusion that the Vessels' owners or their authorized

representative agreed to, or even knew, that necessaries for the

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Cianbro could not have been an authorized representative of the 14

Hornbeck entities by virtue of the Contract between them.

 Reprinted at 1971 U.S. Code Cong., & Ad. News, 92nd Cong., 1st 15

Sess., 1363. 1971 U.S.C.C.A.N. 1363.

- 19 -

Vessels would be provided by Dean Steel. The factual basis for 14

establishment of a maritime lien is thus lacking.

Last, Dean Steel's contention to the effect that the 1971

amendments to the Maritime Lien Act granted Dean Steel additional

support for its claim to a maritime lien against the Vessels is,

under these facts, also mistaken. The purpose of the 1971

Amendments was "to protect terminal operators, ship chandlers, ship

repairers, stevedores, and other suppliers who in good faith

furnish necessaries to a vessel." H.R. Rep. No. 92-340, at B63

(1971) reprinted in 1971 U.S.C.C.A.N. 1363, 1365-66 (emphasis

added).

As stated in House Report No. 92-340, accompanying H.R.

92-340:15

Your Committee wishes to emphasize that [the

1971 Amendments] make[] no change in maritime

lien law, the priority of maritime liens, or

in the accepted definition of necessaries. The

practical effect of the bill is to negate the

operation of a "no lien provision" in a

charter to which the American materialism

[sic] was not a party and of which he has no

knowledge so that he will not be precluded

from acquiring a lien for his services to

which he would otherwise be entitled.

Enactment of the bill should have no adverse

effect on responsible vessel charterers and

should prove of great assistance to American

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- 20 -

materialmen in collecting amounts owed on

necessaries furnished a vessel.

(emphasis added).

As previously explained, Dean Steel did not furnish

necessaries to the Vessels. Rather, Dean Steel supplied materials

to Hub, which then fabricated these materials, which were in turn

delivered to Cianbro, which was the one that furnished these

necessaries to the Vessels.

The grant of summary judgment in favor of PlaintiffsAppellees is hereby affirmed. Costs are assessed against Appellant.

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