United States Court of Appeals

Fifth Circuit



## FILED

August 21, 2003

Charles R. Fulbruge III

Clerk UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

____________

No. 02-30891

____________

FRERET MARINE SUPPLY, a division of Freret Hardware Inc,

Plaintiff - Appellee,

and

NOEL NOLASCO; EDUARDO SEDO; SERGIY BILOGOLOVY;

OLEKSANDR ZHUKOV; YURIY PALAMARCHUK; DIXIE

TRADING CORPORATIO N ; AIR MOVEMENT INC; AIR

SPECIALTY; ET AL

Intervenor Plaintiffs - Appellees,

versus

HARRIS TRUST & SAVINGS BANK,

Intervenor Plaintiff - Appellant,

versus

ENCHANTED CAPRI MV, Etc

Defendant,

______________________________________________________ RELIABLE DISPOSAL COMPANY INC

Plaintiff - Appellee,

versus

ENCHANTED CAPRI MV, Etc

Defendant,

versus-2- HARRIS TRUST & SAVINGS BANK

Appellant,

______________________________________________________ A&L SALES INC

Plaintiff - Appellee,

versus

ENCHANTED CAPRI MV, Etc

Defendant,

versus

HARRIS TRUST & SAVINGS BANK,

Appellant,

______________________________________________________

Case No. 02-31156

EFFJOHN INTERNATIONAL CRUISE HOLDINGS INC; EFFSHIPPING LIMITED

Plaintiffs - Appellees,

RALSTON MOODIE; VIOLET DOCK PORT INC; A&L SALES

INC; RELIABLE DISPOSAL COMPANY INC; FRERET MARINE

SUP PLY; BOARD OF COMMISSIONERS OF THE PORT OF

NEW ORLEANS; AMWEST SURETY INSURANCE COMPANY;

SWI SS REINSURANCE AMERICA CORPORATION; COOPER/T

SMITH STEVEDORING INC; CRESCENT TOWING I NC;

MARINE MEDICAL UNIT INC; GEORGE OTT

TRANSPORTATION INC; CASTROL NORTH AMERICA INC;

AD VANCE MARINE INC; SCHEURING SECURITY INC;

ABELARD SOTARIDONA

Intervenor Plaintiffs - Appellees,

versus* District Judge of the Southern District of Texas, sitting by designation.

** Pursuant to 5 TH C IR

. R. 47.5, the court has determined that this opinion should not be

published and is not precedent except under the limit ed circumstances set forth in 5 TH C IR

. R. 47.5.4.

-3- HARRIS TRUST & SAVINGS BANK

Intervenor Plaintiff - Appellant,

versus

ENCHANTED ISLE MV, its appurtenances, engines, equipment,

tackle, etc, in rem; ALMIRA ENTERPRISES INC, in personam

Defendants - Appellees,

and

CUSIMANO PRODUCE CO

Movant - Appellee.

Appeals from the United States District Court

for the Eastern District of Louisiana

01-CV-2617

Before EMILIO M. GARZA and DENNIS, Circuit Judges, and HEAD, * District Judge.

PER CURIAM: **

Harris Trust and Savings Bank (“Harris”) appeals the district court’s denial of marit ime lien

status with regard to Harris’s claims against the M/V ENCHANTED CAPRI (“CAPRI”) and M/V

ENCHANTED ISLE (“ISLE”). This case arises out of the insolvency of New Commodore Cruise

Lines Limited (“Commodore”), a Florida-based compan y t hat operated a number of luxury cruise

vessels.1 Freret Marine Supply and EffJohn International Cruise Holdings, Inc. sought to have Harris’s

claims dismissed in the CAPRI and ISLE actions, respectively.

-4- In 2001, creditors of the CAPRI and th e ISLE seized the vessels and filed i n rem claims

against each vessel. Both of the vessels were sold at public auction, and a number of claimants are

now competing for the limit ed funds generated by the sales. Harris intervened in each of the i n rem

actions and asserted claims under the Commercial Instruments and Maritime Liens Act (“CIMLA”),

46 U.S.C. § 31342, for alleged “necessaries.” In each case, Harris moved for summary judgment on

the validity of its claims, while som e of t he other claimants 1 argued that Harris’s claims should be

dismissed. The district court granted the claimants’ mo t io ns fo r summary judgment and denied

Harris’s motions, holding (1) that the underlying contract was non-maritime; (2) that t he financial

services that Harris provided to Commodore w ere not “necessaries” under CIMLA; and (3) that

Harris did not have a lien against the vessels under the “rule of advances.” Harris timely appealed,

and the ISLE and CAPRI actions have now been consolidated.

Harris’s in rem claims against the CAPRI and the ISLE are premised on a 199 8 Merchant

Service Agreement (“MSA”) between Harri s and Commodore. The MSA is the entire agreement

between the parties and its provisions detail the credit card ser vices pro vided by Harris to

Commodore. Generally, Harris processed the credit card transactions for prospective cruise

passengers when they booked a cruise with Commodore and paid the advance deposit with a VISA

or Mastercard credit card. Harris would forward the charges to VISA and Mastercard, receive the

funds from VI SA and Mast ercard, and forward these sums, minus a 3.1% fee, to Commodore’s

accounts. Commodore’s accounts were segregated by vessel name, such that an account existed for

the CAPRI and a separate account existed for the ISLE, and the passengers ’ deposits were-5-

segregated accordingly.

W hen Commodore declared bankruptcy, the customers that had charged their deposits for

upcoming cruises on the CAPRI and the ISLE sought to have their deposits returned. Most of these

customers h ad t heir mo ney refunded by seeking a “charge back” to their VISA and Mastercard

accounts. Harris, in turn, was contractually obligated to remit the funds to the credit card companies.

Ha rris was not insured for the “charge back” liability, nor was it named on Commodore’s Federal

Maritime Commission Passenger Vessel Surety Bond. According to Harris, it has incurred “charge

back” liability of at least $610,962.

We review a grant or denial of summary judgment de novo

, using the same criteria employed

by the district court. M

ongrue v. Monsanto Co.

, 249 F.3d 422, 428 (5th Ci r. 2001). Sum m ary

judgment is proper if, drawing all inferences in favor of the non-moving party, there is no genuine

issue of material fact and the moving party is entitled to judgment as a matter of law. I d. ; F ED

. R.

C IV

. P. 56(c). With regard t o this case, the parties have agreed that the appeal turns solely on

disputed issues of law. Thus, we must simply decide whether Harris’s “charge back” liabilit y gives

rise to maritime liens against the CAPRI and the ISLE under CIMLA.

On this issue, we find the district court’s opinions to be well-reasoned and persuasive. For

generally the same reasons given by the district court, we hold that the MSA is not marit ime in nature,

such that there is a “ direct and substantial link between the contract and the operati on of the ship[s],

[their] navigati o n, or [their] management afloat, taking into account the needs of the s hipping

industry.” I

n re SeaEscape Cruises Ltd. , 191 B.R. 944, 951 (S.D. Fla. 1995) (emphasis added and

internal quotati on marks removed), aff’d sub nom. Maduro Travel v. Skandinaviska

, 98 F.3d 1353

(11th Cir. 1996).-6-

In addition, we hold that Harris did not “provid[e] necessaries to” the CAPRI and the ISLE

such t hat a maritime lien arose in its favor. 46 U.S.C. § 31342; R acal Survey USA, Inc. v. M/V

COUNT FLEET

, 231 F.3d 183, 192 (5th Cir. 2000) (“Maritime liens are stricti juris and will not be

extended by construction, analo gy, or inference.”). Again, we find the district court’s opinions

convincing on t his po int . In particular, it appears that Harris’s services were provided to

Commodore, not the vessels. Further, the MSA does not ment ion the vessels, but was instead

secured with a reserve account.

Finally, we find Harris’s argument that it is entitled to a lien under the rule of advances to be

meritless. Harris has not provided any evidence that the monies it advanced to Commodore were

supposed to be used for “necessaries,” or that, in fact, the funds were used to purchase “necessaries.”

See Tramp Oil & Marine, Ltd. v. M/V MERMAID I

, 805 F.2d 42, 45 (1st Cir 1986) (noting that the

rule of advances applies when any “person advancing money to a ship on the order of the master

. . .

for the purposes of sat isfying outstanding o r fut ure lien claims . . . is entitled to a lien of equal

dignity . . . provided the amounts so advanced are actually applied to the payment of such debts ”

(emphasis added)); Inland Credit Corp. v. M/T BOW EGRET

, 552 F.2d 1148, 11 52-53 (5th Ci r.

1977).

For the foregoing reasons, the judgment of the district court is AFFIRMED.