Court Opinion

ID: 3013855
Source: CourtListenerOpinion
Date Created: 2015-10-13 21:59:08.726298+00
Date Added: 2024-06-11T11:46:49.208350
License: Public Domain

Opinions of the United
2004 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

8-25-2004

PNC Bank DE v. F/V Miss Laura
Precedential or Non-Precedential: Precedential

Docket No. 03-1695

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Recommended Citation
"PNC Bank DE v. F/V Miss Laura" (2004). 2004 Decisions. Paper 353.
http://digitalcommons.law.villanova.edu/thirdcircuit_2004/353

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                        PRECEDENTIAL             District Judge: Honorable Joseph E.
                                                                 Irenas
    UNITED STATES COURT OF                                  _____________
            APPEALS                                    Argued: March 22, 2004
     FOR THE THIRD CIRCUIT
          _____________                            Before: FUENTES, SMITH and
                                                     GIBSON,* Circuit Judges.
             No. 03-1695
            _____________                              (Filed: August 25, 2004)

                                               For Appellant:
 PNC BANK DELAWARE, a banking                  Cianciulli & Ouellette
 institution organized under the laws of       Stephen M. Ouellette     (ARGUED)
  the State of Delaware with a place of        163 Cabot Street
business in Wilmington, County of New          Beverly, MA 01915
       Castle, State of New Jersey
                                               For Appellee:
                   v.                          Archer & Greiner
                                               Arthur H. Jones, Jr.
F/V MISS LAURA, (O.N. 542762), her             One Centennial Square
engines, machinery, equipment, masts,          P.O. Box 3000
     fishing permits, etc., in rem             Haddonfield, NJ 08033

 R.D. GRIER & SONS, INC.; MAINE                Tompkins, Clough, Hirshon & Langer
 SHIPYARD & MARINE RAILWAY,                    Leonard W. Langer     (ARGUED)
  INC.; SMITHWICK & MARINERS                   3 Canal Plaza
     INSURANCE COMPANY;                        P.O. Box 15060
    DON'S HYDRAULICS, INC.,                    Portland, ME 04112-5060

 Intervenor-Plaintiffs in District Court
                                                     _______________________
Maine Shipyard & Marine Railway, Inc.,
                 Appellant                           OPINION OF THE COURT
                                                     _______________________
            _____________

   On Appeal from the United States
            District Court                           *The Honorable John R. Gibson,
    for the District of New Jersey             United States Court of Appeals for the
           No. 01-cv-04427                     Eighth Circuit, sitting by designation.

                                           1
JOHN R. GIBSON, Circuit Judge:                       permits"). The amount and species of fish
                                                     that a particular vessel is licensed to catch
                                                     often depends on that vessel's fishing
        This case presents the novel                 history, and certain species cannot be
question of whether, assuming a vessel's             fished at all except by or in place of
fishing history may be the subject of a              vessels that have previously held permits
maritime lien, the lien follows the transfer         to do so.        See, e.g., 50 C.F.R. §
of the fishing history to a replacement              648.4(a)(1)(i). However, when a vessel
vessel after the original vessel sinks. The          sinks, its fishing history does not go down
district court held that fishing history could       with the ship; instead, the history and
not be "salvaged" from a sunken vessel               permits may be applied to a replacement
and therefore any maritime lien that may             vessel. See id. Thus, when the Miss
have existed was extinguished at the time            Penelope sank, Greenly applied her fishing
of the sinking. We affirm, but on different          history and permits to the vessel he bought
grounds.                                             to replace her, the F/V Miss Laura.
                      I.                                      Greenly's purchase of the Miss
                                                     Laura was financed by the appellee, PNC
       Maine Shipyard & Marine Railway,
                                                     Bank Delaware, Inc., which made an
Inc., provided repair services in 1997 to
                                                     initial loan of $475,000 and later increased
the vessel F/V Miss Penelope, which was
                                                     the amount of the loan to $570,000. In
owned by David Greenly. This provision
                                                     exchange, Greenly executed and delivered
of services entitled Maine Shipyard under
                                                     a Promissory Note to PNC, which was
federal law to a maritime lien against the
                                                     secured by a Preferred Ship Mortgage on
vessel and its appurtenances. See 46
                                                     the Miss Laura. Greenly later defaulted on
U.S.C. § 31342 (2000); Gowen, Inc. v.
                                                     the note.
F/V Quality One, 244 F.3d 64, 67 (1st Cir.
2001).    The Miss Penelope sank on                          PNC commenced the present action
January 28, 1998.                                    seeking the judicial sale of the Miss Laura.
                                                     Maine Shipyard intervened, claiming that
       As a result of a complex scheme of
                                                     it held a maritime lien on the Miss Laura
federal rules and regulations designed to
                                                     to the extent of her fishing permits and
protect declining fishing stocks and
                                                     history because the permits and history had
otherwise conserve fishery resources, the
                                                     been transferred from the Miss Penelope.
fishing history and fishing permits of a
                                                     Maine Shipyard further contends that its
vessel like the Miss Penelope are integral
                                                     lien has priority over any security interest
to the value of the vessel itself. See
                                                     held by PNC.
generally 16 U.S.C. § 1801 (2000);
Gowen, 244 F.3d at 68 (some fishing                                       II.
vessels "are valuable significantly, and
                                                           Maine Shipyard rests its argument
sometimes almost entirely, because of their
                                                     primarily on Gowen, Inc. v. F/V Quality

                                                 2
One, 244 F.3d 64, 67-70 (1st Cir. 2001), in         fleet cannot be made liable under the
which the First Circuit held that a vessel's        [Federal Maritime Lien Act] for supplies
fishing permits were appurtenances to the           furnished to the others, even if the supplies
vessel and therefore subject to a lien on the       are furnished to all upon orders of the
vessel. The court reasoned that the market          owner under a single contract."); In re
value and creditworthiness of the vessel            Container Applications Int'l, Inc., 233 F.3d
depended as much on the fishing permits             1361, 1365-66 (11th Cir. 2000) (following
as on tangible items like the engine or             Piedmont and denying maritime lien
navigation equipment; thus, a creditor's            because the purported lienholder did not
lien should be understood to extend over            provide necessaries to any particular
the permits. Id. at 68-69.                          vessel). The vessel-specific character of
                                                    maritime liens results from the legal
        PNC persuasively responds that
                                                    fiction that a vessel receiving services "is
Gowen does not govern the instant
                                                    considered to be a distinct entity
situation because the fishing permits in
                                                    responsible only for its own debts." Foss
that case were still attached to the original
                                                    Launch & Tug Co. v. Char Ching Shipping
vessel, whereas the present situation
                                                    U.S.A., Ltd., 808 F.2d 697, 701 (9th Cir.
involves the transfer of the fishing permits
                                                    1987). Because Maine Shipyard provided
to a replacement vessel. Thus, even if we
                                                    no services to the Miss Laura, its attempt
were to follow Gowen and hold that a
                                                    to enforce a lien over that vessel violates
vessel's fishing permits may be the subject
                                                    this principle of maritime liens. The Miss
of a maritime lien, we would still need
                                                    Laura cannot be held responsible for the
some legal basis for concluding that the
                                                    debts of the Miss Penelope.
lien extends to a replacement vessel once
the permits are transferred.                               In resolving this case, we need not
                                                    endorse the district court's position that
       Maine Shipyard simply ignores this
                                                    fishing history cannot be salvaged from a
problem, perhaps because neither Gowen
                                                    sunken vessel. The court believed that
nor other statutory or case law provides
                                                    Maine Shipyard's lien over the fishing
such a legal basis. Instead, the law of
                                                    permits could survive the sinking of the
maritime liens has consistently recognized
                                                    Miss Penelope, if at all, only through
that a maritime lien attaches only to the
                                                    principles of salvage law. However, the
specific vessel to which services are
                                                    court concluded that salvage law was
provided. See, e.g., 46 U.S.C. § 31342
                                                    inapplicable because it understood salvage
(2004) ("[A] person providing necessaries
                                                    to involve some sort of physical rescuing
to a vessel on the order of the owner or a
                                                    or saving of a tangible piece of property,
person authorized by the owner– (1) has a
                                                    which did not occur here. Thus, it held
maritime lien on the vessel. . . .")
                                                    that Maine Shipyard's lien extinguished at
(emphasis added); Piedmont & Georges
                                                    the time of the sinking.
Creek Coal Co. v. Seaboard Fisheries Co.,
254 U.S. 1, 4 (1920) ("[O]ne vessel of a                   We believe this rationale comes

                                                3
needlessly close to conflicting with the            afloat," Maine Shipyard has not cited, nor
theory of Gowen, and are mindful of our             have we found, any cases where a lien
obligation to avoid circuit conflict. Under         over salvaged or never-sunken parts of a
the district court's reasoning, any lien held       vessel was extended to a subsequent vessel
by Maine Shipyard over the Miss                     to which those parts became attached.
Penelope's fishing permits ceased to exist          Instead, maritime liens have consistently
once the vessel sank. It is possible that a         been limited to the specific vessel to which
court following Gowen would not agree;              services were provided. See Piedmont,
after all, the fishing permits continued to         254 U.S. at 4 ("The difficulty which under
exist in at least some form, retained               the general maritime law would have
significant value, and contributed to the           blocked recovery by the [purported
creditworthiness of the vessel in the first         lienholder] is solely that it did not furnish
place. See Gowen, 244 F.3d at 68 ("Thus,            coal to the vessels upon which it asserts a
not only the market value but the                   maritime lien; and there is nothing in the
creditworthiness of the fishing vessel may          [Federal Maritime Lien Act] which
well depend on its permits quite as much            removes that obstacle."); see also 1
as on its engine, physical dimensions, and          Thomas J. Schoenbaum, Admiralty and
navigation equipment."); see also United            Maritime Law, § 9-1 (4th ed. 2004) ("A
States v. Freights, Etc. of the Mount               maritime lien is a privileged claim upon
Shasta, 274 U.S. 466, 470 (1927)                    maritime property, such as a vessel, arising
(intangibles may be subject to maritime             out of services rendered to or injuries
liens against the vessel); The Fort Wayne,          caused by that property."). We are bound
6 F. Cas. 119, 122 (S.D. Ohio 1861) ("[I]f          to follow this long-standing principle here
any part of the vessel is saved, this lien          and therefore conclude that any lien held
adheres to it, even to the last plank.").           by Maine Shipyard on the Miss Penelope's
Should a creditor attempt to foreclose on a         fishing permits and history ceased to exist
sunken vessel's fishing permits before the          once the Miss Penelope sank and the
permits become incorporated into a second           fishing history was incorporated into the
vessel, a court following Gowen might               Miss Laura.
enforce the lien, whereas the district
                                                           Because we hold that Maine
court's rationale clearly would deny it.
                                                    Shipyard has no cognizable property
       Rather than in vite this possible            interest in the Miss Laura, we need not
conflict, we base our holding on the                consider its assertion that PNC is ineligible
undisputed fact that Maine Shipyard did             to assert a lien in an in rem action against
not provide services to the vessel over             the Miss Laura. Maine Shipyard has no
which it now claims a lien. Even if, as             standing to make such a challenge. See,
Maine Shipyard metaphorically suggests,             e.g., Citicorp Sav. of Illinois v. First
the "valuable and transferable fishing              Chicago Trust Co. of Illinois, 645 N.E.2d
permits and history remain very much                1038, 1045 (Ill. App. Ct. 1995) ("Standing

                                                4
requires injury in fact to a legally
cognizable interest."); Southern Maryland
Oil, Inc. v. Kaminetz, 272 A.2d 641, 644-
45 (Md. 1971) (party lacks standing to
challenge a mortgage foreclosure sale
unless that party has an interest in the
proceeds of the sale or has an interest in
the property which may be adversely
affected as a result of the sale).
      We will affirm the district court's
judgment.

                                             5