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

Heading: Motor-Services

Text: 95 Motor-Services moved to intervene on June 7, two weeks after the start of trial and the day on which the district court issued its memorandum and order. This motion was denied as untimely by written order on July 3. The court analyzed the motion under what it called the First Circuit standard of Banco Popular. The timeliness standard applied in Banco Popular, 964 F.2d 1227, is derived from the Fifth Circuit opinion of Stallworth v. Monsanto Company, 558 F.2d 257 (5th Cir.1977). See Culbreath v. Dukakis, 630 F.2d 15, 20 (1st Cir.1980) (adopting Stallworth test). 96 The four factors are: the length of time the would-be intervenor knew or reasonably should have known that its interest was imperilled before it moved to intervene; the foreseeable prejudice to the existing parties if intervention is granted; the prejudice to the would-be intervenor if intervention is denied; and exceptional circumstances which may militate against or in favor of allowing late intervention. Banco Popular, 964 F.2d at 1231. 97 The district court, weighing the matter by relying on the facts as alleged by Motor-Services in the motion, first determined that the credit term extended to Vasilia by Motor-Services expired on April 29, and that from that date until June 7 Motor-Services sought payment of the overdue receivables only by leaving telephone messages that went unreturned. The obvious implication of this finding (not stated by the court) is that Motor-Services sat on its rights when it should have been moving more decisively to protect its interest. 98 Moving on to the second factor, the court then noted that the proposed intervention would prejudice the existing parties because: 99 intervention on the day judgment was entered seeks to disturb the core of the judgment. The M/V VASILIA EXPRESS is appraised at $500,000 and the court has recognized plaintiffs by judgment in the aggregate amount of $593,469.39. The realities of the public sale market for vessels dictated that the public sale ordered would have an initial bidding price set at $400,000. Any sale proceeds will not be enough to cover the existing plaintiffs' rights. It is not fair to reopen the case for late-comers to gain an undue advantage under the circumstances. 100 The court next found that no prejudice would inure to Motor-Services as a result of the denial of the motion because Motor-Services had waived its maritime lien by relying on the credit of Michael and Steven Psarellis, the vessel owners, and the credit of Royal United, the shipping agency. Finally, the court found that there were no exceptional circumstances militating in favor of intervention, as Motor-Services, in the court's view, would still be fully able to litigate the matter in personam against the vessel owners. 101 The denial of the intervention was, in large part, based on erroneous legal conclusions reached by the district court. We believe the district court abused its discretion and that Motor-Services should have been allowed to intervene. 102 The court found that the first factor weighed against Motor-Services because Motor-Services should have realized, as of April 29, that its interests were imperilled, but it failed to do anything about this until June 7, other than to try a few times (unsuccessfully) to reach the vessel owners by telephone. In the context of this expedited litigation, a period of inaction lasting nearly six weeks would be difficult to excuse. But the dates recited are not correct. In fact, it was not until May 19 that the Vasilia account became overdue and Motor-Services actively sought to collect but was misled by the owners. 27 Less than three weeks later, and within a few days of learning of the suit, Motor-Services had a motion before the court. 103 In the days after May 19, the president of Motor-Services attempted to reach the vessel owners by telephone on three separate occasions. He was told that the owners would get back to him, but they never did. The secretary who answered the phone did not tell him about the arrest of the M/V VASILIA EXPRESS. Under these circumstances, we cannot say that Motor-Services, which was actively trying to follow up on a recently overdue account, was guilty of inaction. It was not until June 3 that Motor-Services actually learned of the arrest of the vessel. 28 Local counsel was retained the next day, and the motion to intervene was filed shortly thereafter, on June 6. Motor-Services had no way of knowing its maritime lien was imperilled prior to June 3; once it learned, it took prompt action to protect its interest. The first factor thus clearly militates in favor of allowing intervention. 104 The district court, in discussing the second factor, concluded that the existing plaintiffs would be prejudiced by Motor-Services' intervention simply because the entry into the case of another party, with an arguably superior lien, would diminish the ultimate recovery available to those plaintiffs. This may well be true, but it is not enough to outweigh the other three factors, all of which favor intervention (particularly since the plaintiffs' rights to a specific share in the recovery had not yet become final and the sale proceeds had not yet been disbursed). 105 On the third factor, the court found that there was no prejudice to Motor-Services because Motor-Services had waived its maritime lien. This was error. In inferring that Motor-Services had waived its maritime lien on the vessel, the court relied on the existence of a promissory note given by Michael Psarellis to Motor-Services and on the fact that Motor-Services billed Royal United, the vessel's agent, rather than the vessel owners for much of the work done on the vessel. 106 Motor-Services' maritime lien on the vessel arises by operation of federal law (the Maritime Lien Act). 46 U.S.C. § 31342. In order to acquire a lien on a vessel, a person providing necessaries to the vessel is not required to allege or prove in the action that credit was given to the vessel. Id. § 31342(a)(3); see Dampskibsselskabet Dannebrog v. Signal Oil & Gas Co., 310 U.S. 268, 273, 60 S.Ct. 937, 940, 84 L.Ed. 1197 (1940). This is assumed to be the case unless proven otherwise; the party disputing the existence of the lien is required to show that [t]he party entitled to the lien [took] affirmative actions that manifest[ed] a clear intention to forego the lien. Farrell Ocean Servs. v. United States, 681 F.2d 91, 94 (1st Cir.1982). The taking of additional security by the provider of necessaries from the vessel owner, 29 without more, does not constitute such a step. Dampskibsselskabet Dannebrog, 310 U.S. at 276-77, 60 S.Ct. at 941-42; Farrell Ocean Servs., 681 F.2d at 93-94; Crustacean Transp. Corp. v. Atalanta Trading Corp., 369 F.2d 656, 660-61 (5th Cir.1966); Gilmore & Black, supra, § 9-84, at 786. The party attacking the lien has the burden of ... showing that the party rendering the service [Motor-Services] relied solely on personal credit. Farrell Ocean Servs., 681 F.2d at 93 (emphasis added). No such showing has been made here. 107 The district court, in finding a waiver, also relied on the fact that Motor-Services billed Royal United, the M/V VASILIA's agent, rather than the owner of the vessel, for many of the services provided. However, the submission of a bill to the owner's agent with whom the supplier has been dealing rather than to the owner and the vessel [does not] constitute waiver. Id. at 94; see also Nacirema Operating Co. v. S.S. Al Kulsum, 407 F.Supp. 1222, 1226 (S.D.N.Y.1975) (mere fact that stevedore billed ship's agent for services provided vessel not sufficient to indicate that there was an implied waiver of its right to a lien against the ship). There was no waiver here. 108 Because Motor-Services' lien was not waived by its conduct, it is the execution of the other liens on the vessel in this in rem proceeding which would strip Motor-Services of its lien, which would be forever extinguished. See supra note 26. Clearly, there is ample prejudice to Motor-Services here. 109 Finally, the district court stated that there were no special circumstances militating in favor of intervention because Motor-Services could still bring an action in personam against the vessel's owners. The record is silent as to whether the defendants are presently solvent or not, but Motor-Services is justifiably fearful that this right would be an empty one. At any rate, it is a right that pales in comparison to the right to exercise a lien against an identifiable sum of money. In light of this, and the fact that trial was expedited, we think there were special circumstances favoring intervention. Intervention should have been allowed.