Court Opinion

ID: 9394787
Source: CourtListenerOpinion
Date Created: 2023-05-16 15:01:11.536903+00
Date Added: 2024-06-11T17:19:02.923266
License: Public Domain

USCA11 Case: 22-12242    Document: 28-1      Date Filed: 05/16/2023    Page: 1 of 10

                                                    [DO NOT PUBLISH]
                                    In the
                 United States Court of Appeals
                         For the Eleventh Circuit

                             ____________________

                                  No. 22-12242
                             Non-Argument Calendar
                             ____________________

        WINDSPEED ENTERPRISE LIMITED,
                                                       Plaintiff-Appellant,
        versus
        M/V SEMI 1 et al.,

                                                              Defendants,

        MODERN AMERICAN RECYCLING & REPAIR SERVICES,
        LLC,

                                                     Defendant-Appellee.
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        2                     Opinion of the Court                22-12242

                            ____________________

                  Appeal from the United States District Court
                     for the Southern District of Alabama
                     D.C. Docket No. 1:21-cv-00523-JB-N
                           ____________________

        Before JORDAN, BRANCH, and MARCUS, Circuit Judges.
        PER CURIAM:
               Windspeed Enterprises Limited agreed to buy two vessels,
        M/V SEMI 1 and M/V SEMI 2 (“the Vessels”), from Semi Sub Ser-
        vices BV. While working under a purchase-and-sale agreement
        (the “Agreement”), Windspeed provided items, crew, and services
        to the Vessels. But the Agreement’s closing date came and went,
        and Windspeed ended up not purchasing the Vessels. Modern
        American Recycling & Repair Services, LLC (“MARRS”) swept in
        to buy them instead.
               After MARRS’s purchase, Windspeed filed an in rem com-
        plaint to arrest the Vessels, claiming it had a maritime lien under
        the Commercial Instruments and Maritime Liens Act (“CIMLA”)
        because the items, crew, and services were “necessaries” provided
        on Semi Sub’s orders. MARRS moved to vacate the arrests, argu-
        ing that these did not amount to necessaries for purposes of the
        statute, but instead were conditions precedent to the Agreement
        and did not give rise to admiralty jurisdiction. The district court
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        22-12242               Opinion of the Court                         3

        granted the motion to vacate for lack of admiralty jurisdiction, and
        Windspeed appealed. After careful review, we affirm.
                                          I.
                In January 2020, Windspeed agreed to purchase the Vessels
        from Semi Sub for $1,350,000. Under the Agreement, Windspeed
        would take the Vessels “AS IS, WHERE IS, WITH ALL FAULTS
        AND DEFECTS.” Semi Sub made no guarantee that the Vessels
        were seaworthy or that they complied with any classification soci-
        ety or rules, could pass any inspections, or were eligible for any
        certifications.
                 The Agreement also placed obligations for the operation,
        transport, and costs of the Vessels on Windspeed. Windspeed as-
        sumed the duty to transport the Vessels and pay for any fuel, prep-
        aration, or outfitting required to do so. More specifically, Wind-
        speed was “responsible for . . . the cost of preparing and making
        ready the Vessels at the dock for transport (including any fuel, lub-
        ricants, stores, consumables, repairs, and other costs) and for
        transport to International Waters.” The Agreement permitted
        Windspeed to send six workers for each Vessel to familiarize them-
        selves with its operation, but it placed the “sole[] responsib[ility]”
        with Windspeed to cover “any and all costs[,] expenses[,] liabili-
        ties[,] and obligations with respect to any of its personnel on board
        the Vessels prior to Closing.”
              At the time that Windspeed entered into the Agreement, the
        Vessels were in inactive or port status in Coatzacoalcos, Mexico,
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        4                      Opinion of the Court               22-12242

        where they were leased by Mantenimiento Marino de Mexico S. de
        R.L. de C.V. Ten crewmembers of the leasing company worked
        on each Vessel, and Windspeed sent workers of its own in February
        2020 to familiarize themselves with the Vessels. The goal was to
        prepare the Vessels for their eventual trip to a scrapyard in India,
        so Windspeed provided “bunkers, crew, hull cleaning, cost of in-
        surance survey, and flag/class charges.” The leasing company,
        meanwhile, paid for its own expenses and crew.
               After an amendment to the Agreement, the closing date for
        the sale was set as April 22, 2020. If the closing fell through, the
        Agreement stipulated that Semi Sub would retain Windspeed’s de-
        posit and that neither party would have liability to the other. Due
        to complications from the COVID-19 pandemic, the parties were
        unable to close by April 22, and the Agreement expired by its own
        terms.
               Windspeed made a new offer to purchase the Vessels, but it
        placed the price at $300,000 this time around. Uninterested in the
        much lower price, Semi Sub declined the offer and looked for new
        buyers. On June 21, 2021, it agreed to sell the Vessels to MARRS
        for $560,000. They closed the deal in international waters off the
        coast of Mobile, Alabama, and then MARRS towed the Vessels to
        a scrapyard in the Port of Mobile.
               In December 2021, as the Vessels sat in the Port of Mobile,
        Windspeed filed an in rem complaint against the Vessels under the
        Supplemental Rules for Admiralty or Maritime Claims and Asset
        Forfeiture Actions, alleging that it had a maritime lien on them
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        22-12242                Opinion of the Court                         5

        because it had supplied necessaries on Semi Sub’s order. See Fed.
        R. Civ. P. Supp. R. C(1)(a) (allowing a plaintiff to file an in rem ac-
        tion “[t]o enforce any maritime lien”). On the request of Wind-
        speed, the district court issued a warrant for the arrest of the Ves-
        sels and set a bond for their release. See id. C(3)(a)(i) (tasking the
        district court to “review the complaint and any supporting papers”
        to decide whether an arrest of the vessel and an in rem action is
        appropriate).
                MARRS, proceeding in a special appearance as the owner of
        the Vessels, moved to vacate the arrests under Supplemental Rule
        E for Admiralty or Maritime Claims and Asset Forfeiture Actions.
        Id. E(4)(f) (providing the “[p]rocedure for [r]elease [f]rom [a]rrest
        or [a]ttachment). After a hearing, the district court granted the mo-
        tion, determining that it lacked jurisdiction because Windspeed’s
        provisions were not necessaries but rather conditions precedent to
        the sale of the Vessels. The court reasoned that, because a contract
        over the sale of a vessel does not give rise to maritime jurisdiction,
        the Agreement could not give rise to a maritime lien. As a result,
        Windspeed failed to demonstrate probable cause to support the
        Vessels’ arrests, and the district court lacked jurisdiction over the
        matter.
               This timely appeal followed.
                                          II.
              The only issue on appeal is whether the district court erred
        in vacating the arrests of the Vessels for lack of admiralty
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        6                         Opinion of the Court                     22-12242

        jurisdiction because Windspeed did not have a maritime lien on the
        Vessels. We review de novo a district court’s dismissal for lack of
        admiralty jurisdiction. Crimson Yachts v. Betty Lyn II Motor
        Yacht, 603 F.3d 864, 868 (11th Cir. 2010). We also review de novo
        whether a party’s claim gives rise to a maritime lien. Minott v.
        M/Y Brunello, 891 F.3d 1277, 1280 (11th Cir. 2018).
               Federal courts have jurisdiction over “all [c]ases of admiralty
        and maritime [j]urisdiction.” U.S. Const. art. III, § 2; see also 28
        U.S.C. § 1333(1). In deciding whether a contract claim falls under
        our maritime jurisdiction, we focus “on the nature of the contract,
        as to whether it has reference to maritime service or maritime
        transactions.” Nehring v. Steamship M/V Point Vail, 901 F.2d
        1044, 1048 (11th Cir. 1990) (quotation marks omitted). But “a con-
        tract for the sale of a ship is not a maritime contract.” S.C. Love-
        land, Inc. v. E. W. Towing, Inc., 608 F.2d 160, 164 (5th Cir. 1979). 1
        That means that contract claims over the sale of a vessel are not
        cases within admiralty and maritime jurisdiction. Cooper v. Meri-
        dan Yachts, Ltd., 575 F.3d 1151, 1166 (11th Cir. 2009) (“[A] contract
        for the sale or construction of a ship is not within the federal courts’
        admiralty jurisdiction.”); Hatteras of Lauderdale, Inc. v. Gemini
        Lady, 853 F.2d 848, 850 (11th Cir. 1988); Richard Bertram & Co. v.
        Yacht Wanda, 447 F.2d 966, 967 (5th Cir. 1971).

        1 All Fifth Circuit decisions handed down before the close of business on Sep-
        tember 30, 1981, are binding precedent in the Eleventh Circuit. Bonner v. City
        of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981) (en banc).
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        22-12242                Opinion of the Court                         7

               Cases of admiralty jurisdiction also can include in rem ac-
        tions over vessels themselves, but “[a]n in rem admiralty proceed-
        ing requires as its basis a maritime lien.” Crimson Yachts, 603 F.3d
        at 868; see also The Rock Island Bridge, 73 U.S. (6 Wall) 213, 215
        (1867) (“The lien and the proceeding in rem are, therefore, correl-
        ative -- where one exists, the other can be taken, and not other-
        wise.”). “A maritime lien is a special property right in a ship given
        to a creditor by law as security for a debt or claim, and it attaches
        the moment the debt arises.” Crimson Yachts, 603 F.3d at 1228
        (quotation marks omitted). Under the CIMLA, “a person provid-
        ing necessaries to a vessel on the order of the owner or a person
        authorized by the owner . . . has a maritime lien on the vessel . . .
        [and] may bring a civil action in rem to enforce the lien.” 46 U.S.C.
        § 31342(a)(1)–(2). So, “to obtain a maritime lien, a person must:
        (1) provide necessaries; (2) to a vessel; (3) on the order of the owner
        or agent.” Galehead, Inc. v. M/V Anglia, 183 F.3d 1242, 1244 (11th
        Cir. 1999); accord Barcliff, LLC v. M/V DEEP BLUE, IMO
        No. 9215359, 876 F.3d 1063, 1068 (11th Cir. 2017). The necessaries
        must also be provided at a reasonable price. Sweet Pea Marine,
        Ltd. v. APJ Marine, Inc., 411 F.3d 1242, 1249 (11th Cir. 2005).
                The statute defines “necessaries” to “include[] repairs, sup-
        plies, towage, and the use of a dry dock or marine railway.” 46
        U.S.C. § 31301(4). But “[t]he word ‘includes’ in this definition was
        not intended to be exhaustive.” Bradford Marine, Inc. v. M/V Sea
        Falcon, 64 F.3d 585, 589 (11th Cir. 1995). Instead, necessaries “has
        been liberally construed to include what is reasonably needed in
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        8                       Opinion of the Court                 22-12242

        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 par-
        ticular function.” Id. (quotation marks omitted).
                Under Supplemental Rule E for Admiralty or Maritime
        Claims and Asset Forfeiture Actions, “any person claiming an in-
        terest in [an arrested vessel] shall be entitled to a prompt hearing at
        which the plaintiff shall be required to show why the arrest or at-
        tachment should not be vacated.” Fed. R. Civ. P. Supp. R. E(4)(f).
        As the parties, the district court, and other courts have all agreed,
        “[t]he post-arrest hearing is not intended to resolve definitively the
        dispute between the parties, but only to make a preliminary deter-
        mination whether there were reasonable grounds for issuing the
        arrest warrant, and if so, to fix an appropriate bond.” Salazar v.
        Atlantic Sun, 881 F.2d 73, 79–80 (3d Cir. 1989); accord World Fuel
        Servs. Singapore PTE, Ltd. V. M/V, 727 F. App’x 811, 814 (5th Cir.
        2018); Mujahid v. M/V Hector, 948 F.2d 1282, at *1 (4th Cir. 1991)
        (unpublished table opinion); 20th Century Fox Film Corp. v. M.V.
        Ship Agencies, Inc., 992 F. Supp. 1423, 1427 (M.D. Fla. 1997).
                Here, Windspeed did not provide “reasonable grounds” for
        the arrests because Windspeed did not provide sufficient evidence
        that it had a maritime lien. For starters, the Agreement at the heart
        of this case is a contract for the sale of the Vessels. Consequently,
        the Agreement is not a maritime contract, so it does not create a
        maritime lien, and it does not give rise to maritime jurisdiction.
        See Cooper, 575 F.3d at 1166. Cf. Chase Manhattan Fin. Servs., Inc.
        v. McMillian, 896 F.2d 452, 457 (10th Cir. 1990) (observing that
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        22-12242              Opinion of the Court                       9

        contracts to construct a vessel “do not create ‘maritime’ liens be-
        cause such contracts are not ‘maritime’ contracts”).
               Since Windspeed cannot rely on the Agreement as a mari-
        time contract, it claims that it had a maritime lien on the Vessels
        because its provision of “necessaries” to the Vessels created one.
        We disagree. No one disputes that Windspeed delivered bunkers,
        fuel, and crew to the Vessels, and also provided for cleaning ser-
        vices, insurance, and flag administration and class survey costs.
        But, as alleged in its own verified complaint, Windspeed did so
        “[p]ursuant to the terms and conditions of the [A]greement and in
        preparation to take delivery of the Vessels.” The Agreement’s
        terms back this up, placing the obligation to supply for the fuel,
        preparation, and costs of the Vessels onto Windspeed.
               To the extent Windspeed claims that those provisions were
        necessaries separable from the Agreement, again, we disagree. Its
        own complaint alleged that those provisions were requirements
        under the Agreement. “In order for a contract to fall within the
        federal admiralty jurisdiction, it must be wholly maritime in na-
        ture, or its non-maritime elements must be either insignificant or
        separable without prejudice to either party.” Inbesa Am., Inc. v.
        M/V Anglia, 134 F.3d 1035, 1036 (11th Cir. 1998). Windspeed of-
        fered no evidence that its provisions were separable from the
        Agreement, especially considering the Agreement’s repeated re-
        quirement that Windspeed bear the burden of getting the Vessels
        ready for sailing. See Hatteras of Lauderdale, 853 F.2d at 850–51
        (holding that “customization” done under a contract for the sale of
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        10                     Opinion of the Court                 22-12242

        a vessel to make it “function as intended” did not give rise to a mar-
        itime contract); Gaster Marine Recovery & Sales, Inc. v. M/V The
        Restless I, 33 F. Supp. 2d 1333, 1335 (S.D. Fla. 1998) (holding that
        repair work “pursuant to the parties’ Brokerage Agreement” in or-
        der to assist the sale of the vessel was not “independent of and sep-
        arable from the ‘nonmaritime’ sale element of the Brokerage
        Agreement”).
                Lastly, we are unconvinced by Windspeed’s argument that
        because it never closed on the Vessels, it obtained a maritime lien
        based on services performed in furtherance of the Agreement. The
        purpose of Windspeed’s provisions was to secure the purchase of
        the Vessels. Even though “[t]he deal for the purchase of the Ves-
        sel[s] never closed,” “[t]he substance of [Windspeed’s] complaint
        clearly involves a contract for the sale of the Vessel[s], which was
        not maritime in nature.” Villaflores v. Royal Venture Cruise Lines,
        Ltd., No. 96-2103-Civ, 1997 WL 728098, at *1, 3 (M.D. Fla. Nov. 17,
        1997). Windspeed’s failure to close did not suddenly turn its con-
        tractual performance into a maritime lien. It does not cite any case
        law or other authority that suggests otherwise.
               Without a maritime contract, Windspeed never obtained a
        maritime lien, and, without a maritime lien, the district court did
        not have in rem jurisdiction over the Vessels. See Crimson Yachts,
        603 F.3d at 868. Vacatur of the arrests was proper.
              AFFIRMED.