March, 2024 - California Maritime Law

Northrim Bank v. Pearl Bay Seafoods, LLC

2024 U.S. Dist. Lexis 39509 (W.D. WA March 6, 2024)

The court addressed lien priorities and held that a bank’s preferred mortgage was superior to a maritime lien for necessaries for unpaid moorage and utilities.

Federal law states that a preferred mortgage lien has priority over all claims against the vessel except for *custodial legis* expenses, costs imposed by the court and preferred maritime liens. 46 U.S.C. sec. 31326. Preferred maritime liens are defined as (A) arising before a preferred mortgage was filed; (B) for maritime tort damages; (C) for stevedore wages; (D) crew wages; (E) for general average; or (F) for salvage. Only in the case of a foreign mortgage not filed with the Coast Guard does a maritime lien for necessaries outweigh a preferred mortgage lien.

Because the mortgage at issue was not foreign and the Port of Seattle’s necessaries lien was not preferred, the bank’s mortgage lien was superior to the maritime lien for necessaries.

The court also concluded that the bank’s attorneys’ fees and costs were included in its mortgage lien because they were provided for the mortgage agreement. “[C]ourts have held that ‘attorneys’ fees and interest accrued in the enforcement of a preferred ship mortgage are entitled to the same priority as the mortgage itself.”

Olympic Tug & Barge, Inc. v. Lovel Brier, LLC

2024 U.S. Dist. Lexis 49733 (W.D. WA March 20, 2024)

This was a dispute between a barge owner and the charterer of the barge. The charterer sued the barge owner after the latter said it would double the hire rate for the barge and declare the charterer in default.

The barge owner moved to amend its counterclaim to include a claim for breach of the duty of good faith and fair dealing based on the charterer’s refusal to turn over full insurance policies it was required to obtain pursuant to its charter agreement. The court denied the motion concluding that the amendment would be futile.

Section 7 of the charter agreement did not create a duty for the charterer to produce insurance documents at any time upon the barge owner’s demand. The agreement said that the charterer’s insurance policies (1) shall be subject to the barge owner’s approval and (2) shall be endorsed to require 30 days written notice to the barge owner in the event of any cancellation, non-renewal or other material change in policy terms or conditions. The court interpreted this language as stating conditions giving rise to the barge owner’s right to review and approve the charterer’s insurance policies after the barge owner’s initial approval of the policies. But the charterer did not have a duty to produce the policy documents absent the occurrence of the stated conditions, i.e. cancellation, non-renewal or other material change.

The lesson here for vessel owners who charter out their vessels is to include a specific provision in the charter agreement requiring the charterer to produce copies of any insurance documents on demand by the vessel owner.

Shark Tech. LLC v. Gagnon

2024 U.S. Dist. Lexis 45575 (S. Dist. Ala. March 14, 2024)

The court reminds us that attorneys’ fees are generally not recoverable in admiralty unless (1) they are provided for by the statute governing the claim, (2) the nonprevailing party acted in bad faith in the course of the litigation, or (3) there is a contract providing for the indemnification of attorneys’ fees.

Benicia Harbor Corp. v. Louise

2024 U.S. Dist. Lexis 48835 [March 19, 2024]

The District Court in the Eastern District of California was asked to confirm a vessel sale. The vessel’s owner, Lady Benjamin PD Cannon, objected alleging the plaintiff’s inventory of non-appurtenant property omitted a substantial amount of non-appurtenant property. Essentially, the owner objected to the extent her personal property may be destroyed with the vessel.

The court was sympathetic to the owner’s position. However, the court noted that the case had been pending for over a year during which time the vessel sat, decayed and incurred custia legis costs. Meanwhile, the owner offered no clear solution for removing her personal property from the vessel in the near future.

The court confirmed the sale. It also ordered any destruction of the vessel be delayed for at least 30 days so the owner can remove her personal property. The court ordered that the plaintiff was not to bear any expenses associated with removing the property. Unfortunately, the court did not order *who* was to bear the expense which opens the matter up to ambiguity and further motion practice.