Opinion ID: 197477
Heading Depth: 2
Heading Rank: 1

Heading: Arrest and Attachment

Text: 33 Vasilia admitted before trial that it was in breach of the charter party with Navieros. The main issue on appeal is whether Navieros was entitled to take the measures it took prior to trial regarding the vessel. Vasilia's position remains that (1) Navieros had no maritime lien and thus no right to arrest and (2) Vasilia had appointed an agent within the district for service of process on its behalf and so attachment was improper. Vasilia apparently infers that Navieros is responsible for the chain of events set in motion by the subsequent unavailability of the vessel: i.e., the breach of the Comet charter; Gulf Coast's decision to bring its foreclosure action; and the need for Transcaribbean to incur the custodial costs associated with the arrest of the vessel. Vasilia's position appears to be that Navieros should have brought an in personam suit against Vasilia for breach of contract, rather than moving against the vessel under Rules C and B, and that this would not have resulted in the same domino effect. 34 Navieros first invoked Rule C, seeking the arrest of the vessel on the basis of an asserted maritime lien. After Vasilia challenged the existence of a maritime lien, Navieros moved alternatively for Rule B attachment. 11 The two strategies, though similar in effect, are based on entirely different theories. 35 An in rem action [under Rule C] differs from maritime attachment [under Rule B] in that an in rem action is brought against the vessel itself as defendant. By contrast, a vessel is attached only as an auxiliary to an in personam claim because the vessel is property belonging to the defendant. 36 2 Schoenbaum, supra, § 21-3, at 478-79. The district court ordered both Rule C arrest and Rule B attachment of the vessel, and ruled both procedures proper in its written opinion. Vasilia challenges both rulings on appeal. Either procedure standing alone would have been sufficient to enable Navieros to ensure the continued presence of the vessel in Puerto Rico while the litigation proceeded. 12
37 The Rule C question is a close one, and it takes us into waters uncharted by this circuit. In order to invoke Rule C to arrest a vessel, a plaintiff must have a valid maritime lien against the defendant's vessel. See Bunn v. Global Marine, Inc., 428 F.2d 40, 48 n. 10 (5th Cir.1970) (a maritime lien is the foundation of a proceeding in rem ); Rainbow Line, Inc. v. M/V Tequila, 480 F.2d 1024, 1028 (2d Cir.1973) (in rem jurisdiction in the admiralty exists only to enforce a maritime lien); 2 Schoenbaum, supra, § 21-3, at 478-79. We affirm the district court holding that Navieros had a maritime lien. The Rule C arrest was thus valid. 38 Under the executory contract doctrine, charterers have no maritime lien until performance of the charter contract begins. Krauss Bros. Lumber Co. v. Dimon S.S. Corp. (The Pacific Cedar), 290 U.S. 117, 121, 54 S.Ct. 105, 106, 78 L.Ed. 216 (1933); Osaka Shosen Kaisha v. Pacific Export Lumber Co. (The Saigon Maru), 260 U.S. 490, 495, 43 S.Ct. 172, 172-73, 67 L.Ed. 364 (1923). Liability arises in the admiralty as elsewhere from breach of any valid contract, but until the parties have entered in performance remedy for the breach is in personam only; the added advantages of lien status are reserved to claimants under executed contracts. Gilmore & Black, The Law of Admiralty § 9-22, at 635 (2d ed.1975); see also Bunn, 428 F.2d at 48 n. 10 (The rule in admiralty is well settled that no lien attaches for the breach of an executory contract.... [U]ntil the parties have entered into performance, the remedy in admiralty for the breach is in personam only.); Rainbow Line, 480 F.2d at 1027 n. 6; The Oceano, 148 F. 131, 133 (S.D.N.Y.1906); Rule C(1) (setting forth when an action in rem may be brought). 39 Here the goods to be shipped were never actually loaded on the vessel. The vessel never got to the dockside for loading. There is no evidence that the goods to be shipped were ever in the custody or control of the vessel master. Ordinarily, those facts would most likely end any claim of maritime lien. See Gilmore & Black, supra, § 9-22, at 636. 40 The great majority of cases addressing the executory contract doctrine, however, have concerned contracts of affreightment evidenced by bills of lading or voyage charters. 13 E.A.S.T., Inc. v. M/V Alaia, 673 F.Supp. 796, 802 (E.D.La.1987), aff'd, 876 F.2d 1168 (5th Cir.1989). This case involves a time charter agreement. The district court relied heavily on the reasoning in E.A.S.T., where the court distinguished between voyage charters and time charters as to when the contract is no longer executory (and, consequently, as to when a maritime lien arises). With voyage charters, whether control over the cargo shifted to the vessel will most likely determine whether a maritime lien exists. E.A.S.T., 673 F.Supp. at 802-04. With time charters, however, a maritime lien may arise even before control of the cargo shifts to the vessel. Id.; see also Rainbow Line, 480 F.2d at 1027 n. 6 (noting that cargo need not be loaded for time charter to lose executory status). 41 This distinction is sensible because under a time charter the shipowner agrees to put his vessel, master, and crew to the service of the time charterer for a named period. E.A.S.T., 673 F.Supp. at 802. The time charterer must begin his performance well before cargo is, if ever, loaded on the vessel--by paying hire, appointing and funding a port agent, and arranging and paying for pilotage, tug assistance and line handlers and all else necessary to berth the vessel in order to load cargo. Id. at 803. 42 Here, the time charter form agreement specified that: 43 Vessel to be placed at the disposal of the Charterers, at Delivery Arrival Pilot Station Port Everglades Any Time, Day, Night.... 44 The president of the plaintiff charterer boarded the vessel 30 miles from Port Everglades, and changed the instructions as to the destination (berthing at Pier 19 at Port Everglades instead of at the pilot station). The vessel proceeded until it experienced mechanical problems and it stopped for repairs short of Port Everglades. While it was undergoing repairs, the charterer boarded the vessel four or five times, ordered fuel for the vessel, confirmed its reservation of a berth space, and issued a check to pay U.S. Customs fees. 45 Under these circumstances, we cannot say that the experienced trial judge erred in concluding that there was sufficient delivery of the vessel to the charterer, Navieros, and sufficient performance of the contract that the charter was no longer executory. 14 Accordingly, there was a maritime lien and the Rule C arrest was proper.
46 We also affirm the Rule B attachment because Vasilia was not within the district at the time attachment was sought and granted. 47 On April 30 Vasilia submitted to the court a copy of a letter saying that Vasilia had appointed an agent for service in the district. The letter, dated April 26, 1996, states in its entirety: 48 This is to confirm that owners are authorizing CALVESBERT and BROWN as attorneys to accept service of process on behalf of VASILIA INC. who is the owner of M/V VASILIA EXPRESS which was named in a suit filed by Navieros Interamericanos in Federal District Court in Puerto Rico. 49 There is no addressee designated on the face of the letter. There is evidence at the top of the page that the letter had been sent via fax to the recipient on April 29. 50 Rule B allows the attachment of a vessel or other tangible property under certain circumstances to gain quasi in rem jurisdiction over a defendant. A Rule B attachment may only proceed when the defendant is not found within the district. The case law makes it clear that: 51 whether or not [a foreign defendant] can be found within the district presents a two-pronged inquiry: first whether it can be found within the district in terms of jurisdiction, and second, if so, whether it can be found for service of process. 52 The first inquiry is directed to whether or not the respondent is present within the district by reason of activities on its behalf by authorized agents so as to subject it to [the district court's] jurisdiction in in personam proceedings. If not, then the respondent cannot be found within the district and this ground alone would be sufficient to support the attachment. 53 Even if the foreign respondent be found within the district in a jurisdictional sense, its property is not immunized from attachment. The second question ... then presents itself. Could the respondent be found within the district with due diligence for service in the libel proceeding? 54 United States v. Cia. Naviera Continental S.A., 178 F.Supp. 561, 563-64 (S.D.N.Y.1959) (footnote omitted). If the respondent can be found within the district, then attachment may not proceed. 55 As to the first inquiry, it is undisputed that by purposefully sending its vessel into Puerto Rico, Vasilia subjected itself to personal jurisdiction in that district. As to the second inquiry, Vasilia argues that the attachment was wrongful because it had appointed an agent for service of process in the district. But the fact is Vasilia's purported appointment of the agent came, at the earliest, on April 26, two days after Navieros moved for an order of attachment (and after Navieros filed an affidavit, as required by Supplemental Rule B, saying Navieros had been unable to find the defendant within the district). 15 56 The district court was not unjustified in stating that Vasilia's argument would eviscerate the time-honored process of maritime attachment. If we were to accept Vasilia's position, a defendant who was otherwise safely outside the service power of the district could effectively avoid Rule B attachment by waiting until after the plaintiff filed a Rule B motion to designate an agent for service. 16 57 Nor was Vasilia, simply by virtue of its subsequent appearance in this action, entitled to dissolution of the attachment. Swift v. Compania Colombiana, 339 U.S. 684, 693, 70 S.Ct. 861, 867, 94 L.Ed. 1206 (1950). 17 But Vasilia was not without options. Prior to trial, Vasilia had the opportunity, pursuant to Supplemental Rule E(5)(a), to post a bond of $200,000 in order to obtain the release of the vessel. Vasilia declined to exercise this right.