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Reel Pipe, LLC v. USA Comserv, Inc.

United States District Court, E.D. Louisiana

April 22, 2019

REEL PIPE, LLC
v.
USA COMSERV, INC.

         SECTION "L" (5)

          ORDER AND REASONS

          ELDON E. FALLON UNITED STATES DISTRICT JUDGE

         Before the Court is a 12(b)(6) motion to dismiss filed by Reel Pipe, LLC and C-Logistics, LLC. R. Doc. 20. USA Comserv, Inc. opposes. R. Doc. 23. By order of the Court, both sides submitted additional briefing. R. Docs. 32, 36. Having considered the parties' briefs and the applicable law, the Court now issues this Order and Reasons.

         I. PRESENT MOTION

         USA Comserv, Inc. (“USA Comserv”) chartered Reel Pipe, LLC (“Reel Pipe”)'s vessel, the M/V CAROL CHOUEST (the “Vessel”) to transport 850, 000 gallons of fuel to Puerto Rico. Under the terms of the Charter, USA Comserv agreed to pay $20, 000 per day charter hire; $1, 200 per day for C-Logistics LLC (“C-Logistics”), an affiliate of Reel Pipe, to coordinate the receiving, loading, and manifesting of all equipment; and certain other defined expenses. Reel Pipe invoiced USA Comserv after the 28-day charter period, but has not been paid. Accordingly, it sued USA Comserv for breach of the Charter and under Louisiana's Open Account statute.

         In answer, USA Comserv asserts that the Vessel was unfit for its intended voyage. It brings counterclaims against Reel Pipe and third-party claims against C-Logistics for breach of the Charter; negligent misrepresentation; violations of the Louisiana Unfair Trade Practices Act; and “recognition of its maritime lien against the Vessel.”

         II. PRESENT MOTION

         At issue here is Count 2 of USA Comserv's counterclaim, titled “recognition of maritime lien.” R. Doc. 10 at 13. Specifically, “USA Comserv requests recognition of its maritime lien against the Vessel for all damages resulting from Reel Pipe's breach of the time charter.” Id. Reel Pipe moved to dismiss this claim under Rule 12(b)(6), arguing that USA Comserv had waived its right to a lien under the terms of the Charter. The Court, however, ordered supplemental briefing on a potential issue that neither side had addressed: whether a non-vessel owner can seek recognition of a maritime lien when the Vessel is not before the Court.

         Reel Pipe now argues that this Court cannot adjudicate the merits of USA Comserv's alleged maritime lien, since USA Comserv did not assert an in rem claim against the Vessel, did not name the Vessel as an in rem defendant, and did not arrest the Vessel. USA Comserv counters that it seeks only recognition - not enforcement - of its maritime lien, so there is no requirement that the Vessel be arrested. Alternatively, USA Comserv asserts that Reel Pipe waived its objection to in rem jurisdiction by failing to raise the issue in its 12(b)(6) motion.

         III. LAW AND ANALYSIS

         A maritime lien “is an ancient and unique feature of admiralty doctrine, ” Cardinal Shipping Corp. v. M/S Seisho Maru, 744 F.2d 461, 466 (5th Cir. 1984), that “developed as a necessary incident of the operation of vessels.” Silver Star Enterprises, Inc. v. Saramacca MV, 82 F.3d 666, 668 (5th Cir. 1996) (internal quotations omitted). As the Fifth Circuit has explained,

A maritime lien is not, like a dry-land lien, a security interest arising from the personal obligation of the vessel's owner under a contract. A maritime lien is based instead on the fiction that the vessel may be a defendant in a breach of contract action when the vessel itself has begun to perform under the contract. While the legal fiction of the personality of the vessel may seem anachronistic, it is grounded in sound policy. The existence of a maritime lien affords special protection to the party who has been injured by a breach of contract and provides the basis for in rem admiralty jurisdiction. The injured party may arrest the vessel to ensure that should it prevail in the breach of contract action, it will be able to satisfy its judgment. The lien holder is therefore placed in a privileged position in relation to other creditors who do not have the security of a lien and must proceed in personam against the owner of the vessel.

E.A.S.T. Inc. of Stamford v. M/V Alaia, 876 F.2d 1168, 1174 (5th Cir. 1898) (internal citations omitted).

         A vessel is “an entity apart from its owner, ” and a maritime lien “represents a property interest entirely distinct from an in personam right.” Merchants Nat'l Bank of Mobile v. Dredge Gen. G.L. Gillespie, 663 F.2d 1338, 1350, 1345. (5th Cir. 1981). It “adheres to the vessel wherever it may go” and “follow[s] the vessel even after it is sold to an innocent purchaser.” Equilease Corp. v. M/V Sampson, 793 F.2d 598, 602 (5th Cir. 1986). “Thus, the maritime lien is a lien on the vessel, and only indirectly, inasmuch as it conflicts with the owner's rights in the vessel, it is connected with the owner.” Id. (internal quotations omitted). “[T]he in personam action is filed ...


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