Opinion ID: 78067
Heading Depth: 2
Heading Rank: 3

Heading: The Board's In Rem Contract Claims

Text: Having determined that the BELLE OF ORLEANS was not a vessel, the district court dismissed the Plaintiff's in rem claims and held: [T]he subject matter of the lease agreements sued upon is simply not maritime inasmuch as it has no reference to maritime services or transactions, does not relate to a ship/vessel in its use as such, does not relate to commerce or navigation on navigable waters or to transportation by sea, and is not necessary to the operation, navigation or management of a ship/vessel. Bd. of Comm'rs, 439 F.Supp.2d at 1198. The district court went on to state that even if the BELLE OF ORLEANS were a vessel, a contract providing for lease payments for acres or real property/land, which includes a marina and river bottom adjacent to the marina, is not a maritime contract because it does not facilitate the putative vessel's use in navigation or maritime commerce. Id. at 1200. While we disagree with the district court's analysis, we affirm its dismissal. An in rem suit against a vessel is ... distinctively an admiralty proceeding, and is hence within the exclusive province of the federal courts. Am. Dredging Co. v. Miller, 510 U.S. 443, 446-47, 114 S.Ct. 981, 127 L.Ed.2d 285 (1994). A plaintiff may bring an action in rem to enforce a maritime lien. See Bradford Marine, 64 F.3d at 589 (The lien and the proceeding in rem are, therefore, correlative  where one exists, the other can be taken, and not otherwise.) (quotation and citation omitted). A maritime lien may arise out of the breach of a maritime contract, but [n]ot every contract that somehow relates to a ship or its business is considered maritime. Nehring v. Steamship M/V Point Vail, 901 F.2d 1044, 1048 (11th Cir.1990). See Piedmont & Georges Creek Coal Co. v. Seaboard Fisheries Co., 254 U.S. 1, 41 S.Ct. 1, 65 L.Ed. 97 (1920) (A contract cannot afford the necessary basis for a maritime lien, unless it is maritime in its nature, so as to be cognizable in admiralty.). A maritime contract must pertain directly to and be necessary for commerce or navigation upon navigable waters. Inbesa Am., Inc. v. M/V Anglia, 134 F.3d 1035, 1036 (11th Cir.1998). This definition of a maritime contract is inexact and difficult to apply. As such, courts look to precedent and usage with regard to more common types of contracts and consider less common situations on a case-by-case basis. Nehring, 901 F.2d at 1048. A contract that provides a vessel with necessaries is commonly considered a maritime contract giving rise to a maritime lien. See 46 U.S.C. §§ 31341-342. The term necessaries includes repairs, supplies, towage, and the use of a dry dock or marine railway. 46 U.S.C. § 31301(4). Courts have also commonly interpreted necessaries to include wharfage or dockage, the charge to which vessels are liable for the use of a dock or wharf. Inbesa, 134 F.3d at 1037-38. Necessaries has further been liberally construed to include: what is reasonably needed in the ship's business, such as 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, 64 F.3d at 589 (citations omitted) (holding that legal services provided to claimant in pursuing its in rem action were not necessaries because they were not provided to the vessel itself). See also Inbesa, 134 F.3d at 1036 (The test we apply in deciding whether the subject matter of a contract is necessary to the operation, navigation, or management of a ship is a test of reasonableness, not of absolute necessity.). Services may be important, yet still not be necessary. See id. at 1037 (holding that although cargo services were no doubt important to the business they were not necessary because they took place on land without regard to whether the [ship] was in port and could have taken place before it arrived or after it left). Husbandry contracts for landside marine support services such as cargo solicitation, procurement of supplies, crews, stevedores or tugs, are not cognizable in admiralty since these services are considered to be of a nature preliminary to the voyage. Nehring, 901 F.2d at 1049 (citing Ingersoll Milling Mach. Co. v. M/V Bodena, 829 F.2d 293 (2d Cir.1987)). In deciding to dismiss Plaintiff's action, the district court relied heavily on the fact that the Agreement did not specifically mention wharfage or dockage. The absence of the terms wharfage or dockage does not per se render the Agreement non-maritime. The Agreement specifically provided that Parcel 1 was for [t]he proposed mooring berth for the riverboat casino and the right of exclusive use of the adjacent wharf area. Parcel 1 was necessary to load passengers, employees, and materials onto the BELLE OF ORLEANS. Further, at the time the contract was signed in 1993, the BELLE OF ORLEANS was engaged in casino cruises and was using Parcel 1 as her wharf between cruises. At that time Parcel 1 pertained directly to and was necessary for the BELLE OF ORLEANS' commerce and navigation upon navigable waters. The BELLE OF ORLEANS could not cruise Lake Pontchartrain without a wharf to come back to between journeys to resupply, and she could not conduct her particular function, casino commerce, without a wharf from which her passengers could enter and leave the ship. The fact that the BELLE OF ORLEANS' owners chose to lease a parcel, including a wharf for the purpose of a mooring berth for a specific vessel, rather than pay for wharfage each time they used the dock is simply not outcome determinative. [18] The BELLE OF ORLEANS argued that the Agreement for Parcel 1 was not a maritime contract because it merely provided for the lease of land. The Board provided no services to the BELLE OF ORLEANS, and the Owner was responsible for all casino operations, including loading and unloading passengers and goods. The Agreement was unlike the maritime contract, referenced by the Board, in Kaleidoscope Tours v. M/V TROPICANA, 755 F.Supp. 382 (S.D.Fla. 1990), which arranged for embarkation services for a cruise ship, including the collection of fares and tickets and the checking of passports. One could argue, therefore, that the lease of Parcel 1 was not a maritime contract because it was not tied to services to a specific vessel. See Royal Ins. Co. Of Am. v. Pier 39 Ltd. P'ship, 738 F.2d 1035 (9th Cir.1984) (distinguishing Ex parte Easton, 95 U.S. 68, 24 L.Ed. 373 (1877) (holding that an agreement to pay for use of a berth over eleven days was a maritime contract), and stating, If there is no connection to a specific vessel, however, contracts relating to wharves generally are not within admiralty jurisdiction. A contract to lease a wharf, for example, is not within the jurisdiction if the lease is not tied to services to a specific vessel.). We reject this argument. There is no case law in this circuit to support it, and we find that there is nothing more essential to commerce and navigation upon navigable waters than that a vessel have a port from which to depart and for which to return. Further, this lease serves a specific vessel and expressly provides its purpose is for the proposed mooring berth for that vessel. Thus, under the factual circumstances of this case, the Agreement for Parcel 1 was analogous to wharfage and was maritime in nature. However, Parcel 1 made up only a small percentage of the total land leased under the Agreement, less than five percent. A contract must be wholly maritime in nature to fall within federal admiralty jurisdiction or its non-maritime elements must be either insignificant or separable without prejudice to either party. Inbesa, 134 F.3d at 1036. Parcels 2, 3, 4, and 5 are not necessaries, and we agree with the district court that the contract to procure them has no maritime flavor. These elements of the contract would be equally applicable to a casino functioning on land in a way that the lease of the river bottom in Parcel 1 would not. BELLE OF ORLEANS argues that even if these are not maritime, the contract as a whole may still be so. Such an argument is unpersuasive. These elements, which make up more than ninety-five percent of the total contract, are not insignificant or easily severable. The Board would likely not have leased the wharf space to the Owner but for the agreement regarding the remainder of the property. Further, the contract price, which is based on a quarterly rental fee and a percentage of the gambling revenue, cannot be distilled into a per acre figure so that the portion of the contract dealing with Parcel 1 may be severed. [19] Even if the total cost could be converted into a per acre number, it is unclear whether each acre agreed upon has an equal value to the parties. Thus, although the Agreement regards a vessel and contains maritime elements, it is not a maritime contract giving rise to a maritime lien.