Opposition Brief — Racal NCS, Inc. v. Tidewater Marine International, Inc.

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No. 00-1342

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IN THE

Supreme Court of the Hnited States

RACAL SURVEY, U.S.A., INC., NCS INTERNATIONAL, INC.,

Petitioners,

Vv.

M/V COUNT FLEET, her engines, tackle,

furniture & appurtenances, in rem, et al.,

TIDEWATER MARINE INTERNATIONAL, INC.,

Respondent.

On PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

BRIEF IN OPPOSITION OF RESPONDENT,

TIDEWATER MARINE INTERNATIONAL, INC.

Cuirre E. Lasoroe III

SUSAN STAGG ROBINSON*

MELISSA L. THERIOT

LABORDE & NEUNER

One Petroleum Center, Suite 200

1001 West Pinhook

Lafayette, LA 70505

337-237-7000

Counsel for Respondent,

Tidewater Marine International, Inc.

* Counsel of Record

166673 cel

(800) QRMNIE& FDS 359-6859

i

QUESTION PRESENTED

Whether the Fifth Circuit was correct in concluding that

petitioner had no in rem maritime lien against respondent’s

vessels under the Maritime Lien Act, 46 U.S.C. § 31341,

et seq., when the evidence showed that:

1. Petitioner did not rely on the credit of the vessels when

providing goods and services to the charterer of the

vessels; and

2. Petitioner did not provide the goods and services to the

vessels within the meaning of the Maritime Lien Act

because the vessels’ charterer had complete discretion

as to choice of vessels, placement of equipment, and

assignment of personnel.

ii

LIST OF ALL PARTIES AND CORPORATE

DISCLOSURE STATEMENT

Pursuant to Supreme Court Rules 15, 24(1)(b), and 29.6,

the following entities were parties to the proceeding in the

court for whose judgment review is sought:

1. Racal Survey U.S.A., Inc.;

2. NCS International, Inc.;

3. Tidewater Marine International, Inc.; and

4. Input/Output, Inc.

Tidewater Marine International, Inc. is a wholly-owned

subsidiary of Tidewater Inc., which is a publicly-held

corporation, the stock of which is traded on the New York

Stock Exchange.

iti

TABLE OF CONTENTS

Question Presented... 6. cise es ovdddidveuun

List of All Parties and Corporate Disclosure

IER. . i.g 6céannkben thes taeetie ee

Citations of Reports of Opinions Below .........

Statement of Jurisdiction ..............ccee0e:

eae ne Ne a a a!

A. Maritime Liens and Jn Rem Liability ......

B. No Lien Without Reliance on the Credit of

og ER eee eee

IS Ses Ran eo ee a nn ee a

20

24

TABLE OF CITED AUTHORITIES

Page

Cases:

Associated Metals & Minerals Corp. v. Alexanders

Unity MV, 41 F.3d 1007 (Sth Cir. 1995) ....... l

Bankers Trust Co. v. Hudson River Day Line, 93 F.2d

Ce Gas AED 6 naen cade’ bp Kadeedaween 21, 24

Bellingham National Bank v. Oil Screw Pacific

Horizon, 587 F.Supp. 26 (W.D. Wash. 1984) ... = 23

Dampskibsselskabet Dannebrog v. Signal Oil & Gas

Cg BES Ue. BE CUNO hb vee ancdiee 15, 21, 22, 23

Equilease Corp. v. M/V Sampson, 793 F.2d 598

(Sth Cir. 1986), cert. denied, 479 U.S. 984

| EEO Oe MTS 11, 12, 13, 18, 20

Farrell Ocean Services, Inc. v. United States of

America, 681 F.2d 91 (1st Cir. 1982) ......... 19

Farwest Steel Corporation v. Barge Sea-Span 241,

828 F.2d 522 (9th Cir. 1987), cert. denied,

Re Uh. SD ko. bs cd0k Hed caeenwekias 12

Foss Launch & Tug Co. v. Char Ching Shipping

U.S.A. Ltd., 808 F.2d 697 (9th Cir. 1987),

cert. denied, 484 U.S. 828 (1987) .. 11, 12, 20, 23, 24

Fred S. James & Co. of Texas, Inc. v. Equilease

oe I | ee er 1]

In re Marine Transit Corporation, 94 F.2d 7

oe ee, BOP Re err te rrr ery 12, 16, 19

Vv

Cited Authorities

Page

Itel Containers Intern. Corp. v. Atlanttrafik Exp.

Service Ltd., 982 F.2d 765 (2nd Cir. 1992) .....

iocveedecsuurbbetiia eae 13, 20, 21, 23, 24

Itel Containers Intern. Corp. v. M/V C.C.

San Francisco, 484 U.S. 828 (1987) .......... 11

Navieros Intern-Americanos, §.A. v. M/V Vasilia

Express, 120 F.3d 304 (1st Cir. 1997) .. 12, 13, 16, 19

Piedmont v. George’s Creek Coal Co. v. Seaboard

Fisheries Co., 254 U.S. 1 (1920) .............

ee rer Pees ‘sss cha, 13, 14,545, 20; 31, 22, 23

Point Landing Inc. v. Alabama Dry Dock &

Shipbuilding Co., 261 F.2d 861 (5th Cir. 1958)... 17

Racal Survey U.S.A., Inc. v. M/V Count Fleet, 231

F.3d 183 (Sth Cir. 2000) ..... 1, 5, 7, 9, 10, 17, 18, 23

Redcliffe Americas Limited v. M/V Tyson Lykes,

996 F.2d 47 (4th Cir. 1993) .......... 20, 21, 23, 24

Silver Star Enterprises, Inc. v. Saramacca MV,

G2 F.30 666 (Sth Cis. 1996). ciccccccccss 11, 20, 23

South Carolina State Ports Authority v. M/V Tyson

Lykes, 67 F.3d 59 (4th Cir. 1995) ............. 16, 19

Stevens Technical Services, Inc. v. SS Brooklyn,

885 F.2d 584 (9th Cir. 1989) ................ 16

Stevens Technical Services, Inc. v. United States,

913 F.2d 1521 (1 ith Cir. 1990) ........... 12, 16, 19

vi

Cited Authorities

Page

Stoot v. Fluor Drilling Services, Inc., 851 F.2d 1514

tots Brrr Per rrr rT re l

The American Star, 11 F.2d 479 (3d Cir. 1926) .... 16, 19

The Now Then, 55 F. 523 (3d Cir. 1893) ......... 13

The Roanoke, 189 U.S. 185 (1903) ............. 13

The St. Jago De Cuba, 22 U.S. (9 Wheat.)

GOP COGS io cc cadccscdaceeekaeneenaeee 13

TTT Stevedores of Texas, Inc. v. M/V Jagat Vijeta,

G36 F.2G TISS COUR GA. EGE) sé aedecivecdscee 20

W.A. Marshall & Co. v. The President Arthur,

ry, pte OT er ey 13, 14, 15

West Kentucky Coal Co. v. Dillman, 15 F.2d 25

(A | Pe ee re be 16, 21, 24

Statutes:

28 UBS. § EGGS éccccccecestescascneaae 2

y gts fo BBP e ol l

ae UA. @ BRED 06 cdaddwantsatcseeeaeaeee l

46 U.BA. S978 GO. civcntissievecaciaaeanl 15

SF Tome bo eer ere ere 15

46 U.S.C. § 31341, ef seg. .........00. 000: i, 2,5, 15

vii

Cited Authorities

Page

46 UBL. § SIZE 2. cccedésvcsssssessnneee 12, 15

46 UBL. § SIDERED: 20 0's 0tese04eeseeee 12

Supplemental Rules for Certain Admiralty and

peassiiene Coane BES © os ac cccctcascevectos 3,12

Rule:

United States Supreme Court Rule ......... 4,11, 18,24

S. Rep. No. 690, 61st Congress, 2d Sess. 1 (1910) .. 14

Fitz-Henry Smith, Jr., The New Fedéral Statute

Relating to Liens on Vessels, 24 Harv. L. Kev. 182

PTET + cw adeetee ces ae Rees cade cin 14, 16

1

Tidewater Marine International, Inc. (“TMI”) opposes

the petition for a writ of certiorari of Racal Survey, U.S.A.,

Inc. and NCS International, Inc. (collectively “Racal”).'

CITATIONS OF REPORTS OF OPINIONS BELOW

The Fifth Circuit’s opinion in Racal Survey U.S.A.,

Inc. v. M/V Count Fleet, et al., No. 98-31382, 98-31383 is

reported at 231 F.3d 183. It is attached to petitioner’s brief

as Appendix A, pp. la-17a.

The district court judgment attached as petitioner’s

Appendix D, pp. 42a-44a, does not pertain to petitioner’s

claim, but is instead the ruling granting intervenor, Input/

Output, Inc., all of the Coastline equipment on the TMI

vessels pursuant to a UCC lien. The district court’s judgment

on petitioner’s claim is located on the final pages of

the district court’s ruling and amended ruling, both of which

are unreported and are attached as petitioner’s Appendix B,

pp. 18a-29a and Appendix C, pp. 30a-41a.

STATEMENT OF JURISDICTION

This case is within the district court’s admiralty

jurisdiction pursuant to 28 U.S.C. § 1333. The Fifth Circuit

had appellate jurisdiction under 28 U.S.C. § 1292(a)(3)

because the district court’s grant of summary judgment

determined the rights and liabilities of Racal and TMI.

Interlocutory determinations of maritime liens and

interlocutory decrees which determine the liability of at least

one party to a maritime case are appealable, even when

damages have not been finally determined. Associated Metals

& Minerals Corp. v. Alexanders Unity MV, 41 F.3d 1007

(5th Cir. 1995); Stoot v. Fluor Drilling Services, Inc., 851

F.2d 1514 (Sth Cir. 1988).

1. Racal is referred to as “petitioner” throughout since the two

companies have now merged.

2

The judgment of the court of appeals was entered on

October 24, 2000, and petitioner’s petition for rehearing en

banc was denied on November 20, 2000. This Court has

jurisdiction under 28 U.S.C. § 1254(1).

RELEVANT STATUTES

In addition to those constitutional and statutory

provisions listed by the petitioner, the following statutes are

also involved in this matter: ;

1. The Federal Maritime Lien Act of June 23, 1910,

ch. 373, 36 Stat. 604 (1910)(repealed) is relevant to the

historical development of the Maritime Lien Act, 46 U.S.C.

§ 31341, et seq.:

An Act Relating to liens on vessels for repairs,

supplies, or other necessaries. Be it enacted by

the Senate and House of Representatives of the

United States of America in Congress assembled,

That any person furnishing repairs, supplies, or

other necessaries, including the use of dry dock

or marine railway, to a vessel, whether foreign or

domestic upon the order of the owner or owners

of such vessel, or of a person by him or them

authorized, shall have a maritime lien on the

vessel which may be enforced by a proceeding in

rem, and it shall not be necessary to allege or prove

that credit was given to the vessel.

* * *

SEC. 4 That nothing in this Act shall be construed

to prevent a furnisher of repairs, supplies, or other

necessaries from waiving his right to a lien at any

time, by agreement or otherwise, and this Act shall

3

not be construed to affect the rules of law now

existing, either in regard to the right to proceed

against a vessel for advances, or in regard to laches

in the enforcement of liens on vessels, or in regard

to the priority or rank of liens, or in regard to the

right to proceed in personam.

SEC. 5 That this Act shall supersede the

provisions of all state statutes conferring liens on

vessels in so far as the same purport to create

rights of action to be enforced by proceedings in

rem against vessels for repairs, supplies, and other

necessaries.

2. Rule C of the Supplemental Rules for Certain

Admiralty and Maritime Claims is the procedural vehicle by

which a maritime lien is asserted and by which the claimant

to the vessel answers the petition and claims the vessel.

Rule C. Actions in Rem: Special Provisions

(1) When Available. An action in rem may be

brought:

(a) To enforce any maritime lien;

* * *

(6) Claim and Answer; Interrogatories. The

claimant of property that is the subject of an

action in rem shall file a claim within 10 days

after process has been executed, or within

such additional time as may be allowed by

the court....

4

3. Rule 10 of the Rules of the Supreme Court of the

United States provides considerations governing review on

certiorari:

Review on a writ of certiorari is not a matter of right,

but of judicial discretion. A petition for a writ of certiorari

will be granted only for compelling reasons. The following,

although neither controlling nor fully measuring the Court’s

discretion, indicate the character of the reasons the Court

considers:

(a) a United States court of appeals has entered a

decision in conflict with the decision of another

United States court of appeals on the same

important matter; has decided an important federal

question in a way that conflicts with a decision

by a state court of last resort; or has so far departed

from the accepted and usual course of judicial

proceedings, or sanctioned such a departure by a

lower court, as to call for an exercise of this

Court’s supervisory power;

(b) a state court of last resort has decided an

important federal question in a way that conflicts

with the decision of another state court of last

resort or of a United States court of appeals;

(c) astate court or a United States court of appeals

has decided an important question of federal law

that has not been, but should be, settled by this

Court, or has decided an important federal

question in a way that conflicts with relevant

decisions of this Court.

A petition for a writ of certiorari is rarely granted when the

asserted error consists of erroneous factual findings or the

misapplication of a properly stated rule of law.

5

STATEMENT OF THE CASE

The United States Fifth Circuit Court of Appeals

concluded that Racal did not have an in rem lien under the

Maritime Lien Act, 46 U.S.C. § 31341, et seg., (“MLA”)

against vessels owned by TMI because the evidence

demonstrated that (1) Racal did not rely on the credit of the

vessels when it provided goods and services to the vessels’

charterer and (2) Racal did not provide the goods and services

to the vessels themselves, but instead provided them to the

charterer. Racal Survey U.S.A., Inc. v. M/V Count Fleet,

231 F.3d 183, 190, 192 (Sth Cir. 2000); Petitioner’s Appendix -

A, pp. 12a, 16a. Racal now seeks a writ of certiorari arguing

that the Fifth Circuit ignored the law and that there is a

conflict in the circuits. Racal is wrong on both counts.

The facts, as set forth below, prove that Racal does not have

a lien under the Maritime Lien Act as that Act has been

consistently interpreted by this Court as well as the circuit

courts.

This action arose when Racal filed an in rem claim and

arrested TMI’s vessels seeking to hold the vessels responsible

for the debts of Racal’s customer, Coastline Geophysical,

Inc.” Coastline is an insolvent seismic company that obtained

seismic equipment and services from Racal. Coastline was a

new company that performed offshore surveys to obtain

seismic data which was provided to its clients for use in oil

and gas exploration. (R.E. 10).’ Coastline purchased and

leased equipment from Racal and contracted with Racal for

personnel to install, operate, and maintain the equipment.

2. TMI as owner pro hac vice of the vessels, M/V COUNT

FLEET, M/V COUNT TURF, M/V SECRETARIAT, and their

engines, tackle, furniture, and appurtenances, is claimant to these

vessels in this in rem action.

3. TMI’s record excerpts in the appellate court are cited as

“R.E.,” while the record is cited as “Rec. Vol.”

6

(R.E. 8, pp. 45-47). Coastline’s operations were modularized,

such that the seismic equipment was housed in containers

that could be easily moved from vessel to vessel to satisfy

the world-wide needs of its customers as cheaply as possible.

(R.E. 10; R.E. 9, pp. 38-39, 42-43, 84; Rec. Vol. 9, p. 1357).

The Racal/Coastline agreements did not involve TMI or

its vessels. At the time Racal agreed to provide goods and

services to Coastline, Coastline had not decided what vessels

it would use or from which company it would charter the

vessels. (R.E. 8, pp. 45-47). Consequently, as confirmed by

Richard Pender, the president of Racal who negotiated

Racal’s contract with Coastline, Racal did not know or care

what vessels would be used by Coastline when Racal

contracted with Coastline because Coastline had not yet

chartered any vessels. (R.E. 8, pp. 45-47). Racal never

specified what vessels Coastline could or should use, and

Coastline could and did switch vessels during its operations.

(R.E. 8, pp. 45-47). Throughout the venture, Coastline

retained complete discretion over the vessels that would be

used. (R.E. 8, pp. 45-47). Both Racal’s Vice President of

Operations and Racal’s surveyor admitted that Racal installed

and transferred the equipment aboard vessels as directed by

Coastline and that Racal would have installed the equipment

on any vessel chosen by Coastline. (Rec. Vol. 9, p. 1357;

exhibit E, pp. 35-36; exhibit H, p. 44; R.E. 8, pp. 45-47).

The equipment and personnel were not earmarked by Racal

for specific vessels. (Rec. Vol. 1, pp. 55, 57, 60, 63-65, 68-

71, 74-75, 80-82, 84). The Racal personnel also worked when

and where Coastline directed, and Coastline had authority

to substitute Racal personnel aboard different vessels as it |

saw fit. (Rec. Vol. 9, p. 1357, exhibit H, pp. 65-66, 133). As

Racal’s surveyor explained, “We were constantly jumping

from boat to boat.” (Rec. Vol. 9, p. 1357, exhibit H, p. 147).

7

Racal’s president, Pender, also confirmed that Racal did

not rely on the credit of the vessels when Racal agreed to

provide goods and services to Coastline. Pender testified:

Q: So you weren’t relying on [the] credit of

Tidewater or any of its vessels when you were

entering into this contract with Coastline?

* * &

A: Yeah, I mean, our contract was with Coastline.

That was our customer.

* * &

Q: At the time of contracting with Coastline, you

weren’t looking to Tidewater or any of its

vessels for payment of Coastline’s contract

with NCS?

A: I had no contract with Tidewater.

Q: You had no dealings with Tidewater

whatsoever?

A: No. I had no — no.

Racal, 231 F.3d at 189; R.E. 8, pp. 50-51; Petitioner’s

Appendix A, pp. 9a-i0a. The absence of any reliance by Racal

on the credit of the vessels is obvious since Coastline

had not yet chartered any vessels at the time Racal

agreed to provide goods and services to Coastline. (R.E. 8,

pp. 45-47). Pender further explained that Racal relied only

on Coastline’s personal credit, rather than the credit of the

8

vessels, based on a number of factors including (1) Pender’s

prior relationship with Coastline’s president, Keith Jones,

(2) Pender’s investigation into Coastline’s credit worthiness

during contract negotiations, (3) Pender’s confirmation that

Coastline’s funding was from reputable sources, and (4)

Pender’s evaluation of the proposed operation and Coastline’s

chance of success, which induced Pender to personally invest

$50,000 in the venture. (R.E. 8, pp. 45-47).

After Coastline contracted with Racal for equipment and

services, Coastline set out to charter vessels.‘ For its first

survey operation in the Gulf of Mexico, Coastline chartered

five offshore supply and utility vessels from Tidewater

Marine, Inc. n/k/a Tidewater Marine, L.L.C. (Rec. Vol. 8,

pp. 1184, 1190-1207). Under the charter, Coastline was

expressly prohibited from incurring liens or permitting liens

to be imposed on the vessels. /d. Coastline was required to

pay for all equipment it loaded onto the vessels, and none of

the equipment was to be provided on the credit of the vessels.

Id. The equipment remained the property of Coastline, and

Coastline was required to maintain it. Jd.

Several months after the charter with Tidewater Marine,

Coastline obtained a contract to perform a survey off the

coast of Africa. To handle that job, Coastline executed a

Blanket Time Charter with TMI for vessels qualified to

operate overseas, and transferred the seismic equipment from

the vessels operated by Tidewater Marine during the first

charter to different vessels operated by TMI during the second

charter. (R.E. 12; R.E. 10; Rec. Vol. 9, p. 1357; exhibit H,

pp. 135-137). Coastline was permitted to install and load

seismic equipment on the vessels, but had to pay for and

4. Contrary to Racal’s contention, Racal agreed to provide

equipment and personnel to Coastline in February of 1996, prior to

_ Coastline’s charter of both the Tidewater Marine and TMI vessels.

(R.E. 8, pp. 45-47, 60; Rec. Vol. 8, pp. 1190-1207; R.E. 12).

9

maintain the equipment. (R.E. 12). Coastline was again

prohibited from permitting liens to be imposed on the vessels

or from obtaining equipment on the credit of the vessels. Jd.

Coastline failed to pay TMI more than $2 million in

charter hire, and the charter was terminated at the conclusion

of the Africa project. (R.E. 11). The TMI vessels then sailed

to Trinidad for another job. When the vessels returned to the

United States, Racal arrested three of the TMI vessels

contending it had a maritime lien pursuant to the MLA.*

Before the vessels could return to work, TMI was required

to provide security for the amounts claimed by Racal.

(Rec. Vol. 2, p. 191; R.E. 9, pp. 69-70).

At the district court, TMI filed a motion for summary

judgment seeking dismissal of Racal’s claims on the basis

that Racal does not have a maritime lien over the TMI vessels

that were arrested. Racal filed a motion for partial summary

judgment seeking a declaration that it had a valid maritime

lien against the three TMI vessels. The district court denied

TMI’s motion, but granted Racal’s motion.® (Petitioner’s

Appendixes B and C).

The Fifth Circuit reversed because the undisputed facts

reveal that Racal has no maritime lien against TMI’s vessels

under the MLA. (Racal, 231 F.3d at 193; Petitioner’s

Appendix A, p. 17a). The Fifth Circuit first held that

testimony from Racal’s president that he did not rely on the

credit of the TMI vessels was sufficient as a matter of law to

5. Tidewater Marine’s vessels were not arrested by Racal prior

to the district court’s ruling and are not part of the ruling from which

Racal seeks relief. However, to prevent the arrest of Tidewater

Marine’s vessels, Tidewater was forced to issue a second Letter of

Undertaking to Racal.

6. The district court did not even mention Pender’s testimony

in its ruling. See Petitioner’s Appendixes B and C.

10

prove that Racal did not have a lien under the MLA because

it did not rely on the credit of the TMI vessels when providing

goods and services to Coastline. 231 F.3d at 190; Petitioner’s

Appendix A, p. 12a. The Fifth Circuit then held that Racal

did not provide goods and services to the vessels because

the goods and services were not provided to the TMI vessels

but to Coastline, which had complete discretion over which

vessels would be used and onto which vessels the equipment

and personnel were to be placed. 231 F.3d at 192; Petitioner’s

Appendix A, p. 16a. Because each of these holdings disposed

of the matter, the Fifth Circuit did not address the remaining

two defects in Racal’s claim for a lien, i.e., the goods and

services were not vessel necessaries and were not provided

on the order of the owner.’

Racal requested rehearing en banc in the Fifth Circuit,

contending the same things it contends in its petition for a

writ of certiorari. Racal’s petition for rehearing was denied,

and this petition followed.

RACAL’S PETITION SHOULD BE DENIED

Racal’s petition for a writ of certiorari should be denied

because the Fifth Circuit correctly applied well-settled law

to undisputed facts. There is no conflict among the circuits,

and the Fifth Circuit interpreted and applied the MLA in

accordance with 90 years of jurisprudence interpreting that

statute. Contrary to Racal’s argument that this Court has not

addressed the issue of maritime liens in more than 60 years,

both of the issues raised by Racal in its petition have been

the subject of writ denials, with this Court denying writs in

7. Because the Fifth Circuit based its decision on two defects,

each of which is independently sufficient to defeat Racal’s alleged

lien, this Court must deem both issues worthy of review to have any

potential effect on the outcome of this case.

se il 5 ote tas eae Sen es 8

Siemans

11

the very cases the Fifth Circuit relied on in rendering its

opinion below.*®

Racal’s actual quarrel is with the Fifth Circuit’s

conclusion that the evidence proved Racal had no maritime

lien over TMI’s vessels. In essence, Racal contends that the

appellate court either made-erroneous factual findings or

misapplied a properly stated rule of law. Under Rule 10 of

the Rules of this Court, certiorari is not warranted.

A. Maritime Liens and Jn Rem Liability

To obtain a lien under the MLA, the supplier must prove

the following:

1. The goods or services must be provided on

the order of the owner;

2. The goods or services must be provided to

the vessel; and

3. The goods or services must be necessary to

the vessel.

8. This Court denied writs in Equilease Corp. v. M/V Sampson,

793 F.2d 598 (5th Cir. 1986)(en banc), where the Fifth Circuit held

that reliance on the credit of the vessel was necessary for a maritime

lien under the MLA and that the testimony of the supplier that it

relied solely on the credit of entities other than the vessel was

sufficient to prove that the supplier did not rely on the credit of the

vessel. See Fred S. James & Co. of Texas, Inc. v. Equilease Corp.,

479 U.S. 984 (1986).

The Court also denied writs in Foss Launch & Tug Co., 808

F.2d 697 (9th Cir. 1987), where the Ninth Circuit held that there is

no lien under the MLA if the supplier does not furnish the supplies

to a particular vessel. See Itel Containers Intern. Corp. v. M/V C.C.

San Francisco, 484 U.S. 828 (1987). In this case, the Fifth Circuit

relied upon Silver Star Enterprises, Inc. v. Saramacca MV, 82 F.3d

666 (Sth Cir. 1996), which relied upon Foss Launch.

12

46 U.S.C. § 31342. If the supplier fails to establish any of

the above elements, the supplier has no lien and cannot

proceed directly against the vessel in rem. Piedmont v.

George s Creek Coal Co. v. Seaboard Fisheries Co., 254 U.S.

1, 11 (1920); Equilease Corp. v. M/V Sampson, 793 F.2d 598

(Sth Cir. 1986)(en banc), cert. denied, 479 U.S. 984 (1986);

Farwest Steel Corporation v. Barge Sea-Span 241, 828 F.2d

522, 524-525 (9th Cir. 1987), cert. denied, 485 U.S. 1034

(1988). Similarly, if the vessel proves that the supplier did

not rely on the credit of the vessel, there is no maritime lien

against the vessel. Piedmont, 254 U.S. at 9; Equilease,

793 F.2d at 605-606; Farwest, 828 F.2d at 525; Navieros

Intern-Americanos, S.A. v. M/V Vasilia Express, 120 F.3d 304,

323 (1st Cir. 1997); Stevens Technical Services, Inc. v. United

States, 913 F.2d 1521, 1537 (11th Cir. 1990); Jn re Marine

Transit Corporation, 94 F.2d 7, 9 (2nd Cir. 1938).

The reason there can be no maritime lien without these

elements is that a maritime lien constitutes a property interest

in the vessel itself and is based on the legal personification

of the vessel as an entity with its own liabilities separate and

apart from the liabilities of the vessel owner. Piedmont,

254 US. at 8-9; Equilease, 793 F.2d at 602; Foss Launch &

Tug Co. v. Char Ching Shipping U.S.A. Ltd., 808 F.2d 697

(9th Cir. 1987), cert. denied, 484 U.S. 828 (1987). This

property right allows a supplier to proceed against the vessel

itself and to have it arrested and sold to satisfy the vessel’s

debts and obligations. 46 U.S.C. § 31342(a)(1); Rule C of

the Supplemental Rules for Certain Admiralty and Maritime

Claims. As a result, a vessel can obtain goods and services

on its own credit and is a self-reliant commercial entity.

Piedmont, 254 U.S. at 8-9. In other words, a maritime lien is

more than a security device. It is a property interest in the

vessel that is based on the principle that the vessel itself is

liable. For this reason, maritime liens are stricti juris and

will not be extended by construction, analogy, or inference.

13

Piedmont, 254 U.S. at 11-12. Consequently, to obtain a lien

against the vessel, the supplier must have relied on the credit

of the vessel and the goods and services must have been

provided to the vessel, rather than to the charterer or the

owner. See e.g., Piedmont, 254 U.S. at 9-10; Equilease, 793

F.2d at 603,605; Navieros, 120 F.3d at 323; Jtel Containers

Intern. Corp. v. Atlanttrafik Exp. Service Ltd., 982 F.2d 765,

__, 768-769 (2nd Cir. 1992). Here, Racal did neither.

B. No Lien Without Reliance on the Credit of the Vessel

Contrary to Racal’s contention, reliance on the credit of

the vessel as a requirement of a maritime lien both predates

and survives the MLA. Before the MLA was enacted in 1910,

suppliers could obtain federal maritime liens only on foreign

vessels, that is, vessels whose home ports were in another

state or country. When supplies were obtained by a vessel in

a port other than her home port, it was presumed that the

supplier relied on the credit of the vessel since the owner

could not be found. The St. Jago De Cuba, 22 U.S. (9 Wheat.)

409, 417 (1824); WA. Marshall & Co. v. The President

Arthur, 279 U.S. 564, 567 (1929). This presumption,

however, was rebuttable, and the vessel could defeat the

supplier’s lien rights by showing that the supplies were

furnished on the owner’s personal credit. The Now Then,

55 F. 523 (3d Cir. 1893). If the supplies were provided to a

vessel in her home port, the !aw presumed that the supplier

relied on the personal credit of the owner who regularly

conducted business and could be found in the home port.

The St. Jago De Cuba, 22 U.S. (9 Wheat.) at 416. In that

case, there would be no maritime lien and the supplier would

be required to seek relief pursuant to state law which varied

from state to state. See The Roanoke, 189 U.S. 185, 193-94

(1903).

os

In 1910, the Maritime Lien Act was enacted to

accomplish three goals:

1. To eliminate the difference between home

port and foreign port transactions;

2. To eliminate the presumption that a supplier

relied on the credit of the owner when the

supplies were provided to a vessel in her home

port; and

3. To substitute a single federal statute for state

statutes conferring liens for vessel repairs,

supplies, and other necessaries.

Piedmont, 254 U.S. at 11; The President Arthur, 279 U.S. at

567; Fitz-Henry Smith, Jr., The New Federal Statute Relating

to Liens on Vessels, 24 Harv. L. Rev. 182, 187-188 (1910-

1911).

The Act made no change to the general principles of the

existing law of maritime liens. See S. Rep. No. 690, 61st

Congress, 2d Sess. 1 (1910) (The Act makes “no change in

the general principles of the law of maritime liens, but merely

substitutes a single statute for the conflicting state statutes”).

See also Piedmont, 254 U.S. at 11-12 and The President

Arthur, 279 U.S. at 568. Consequently, the rebuttable

presumption that the supplier relied on the credit of the vessel

remained in place and was applicable regardless of whether

the vessel was in her home port or a foreign port. This was

explained in The President Arthur:

[T]he Act gave a maritime lien on any vessel,

whether foreign or domestic, for necessaries

furnished on the order of the owner or his

authorized agent, and relieved the libellant from

eee iil

15

the necessity of alleging or proving that credit was

given to the vessel. The Committee reports show,

however, that it was not intended to make any

other change in the general principles of the

existing law of maritime liens, and the specific

provision that the Act should not be construed as

preventing the furnisher of the necessaries from

waiving his right to a lien, “by agreement or

otherwise,” indicates clearly, we think, that it was

not intended to change the principles of the

maritime law in respect thereto. That an express

renunciation of the lien is not essential, is plain.

279 U.S. at 568 (citations omitted).

The 1910 Act, like the current MLA,?° contained a

provision which stated, “it shall not be necessary to allege

or prove that credit was given to the vessel.” That provision,

however, did not eliminate the requirement that the supplier

rely on the credit of the vessel. As made plain by this Court

in Piedmont, The President Arthur, and Dampskibsselskabet

Dannebrog v. Signal Oil & Gas Co., 310 U.S. 268 (1940),

the requirement that the supplier rely on the credit of the

vessel survived the enactment of the MLA. In each case, the

Court acknowledged that if the supplier did not rely on the

credit of the vessel, it had no lien over the vessel. Piedmont,

254 U.S. at 9 (a maritime lien can arise only if the pledge of

the vessel’s credit was necessary); The President Arthur,

279 U.S. at 568 (no lien when supplier relies solely on

personal security); Dampskibsselskabet, 310 U.S. at 276-77

(reliance presumption not rebutted when oil was supplied

exclusively for the vessels in question, was delivered directly

to the vessels, and was so invoiced).

9. In 1920, the Maritime Lien Act was reenacted and codified

at 46 U.S.C. § 971 et seg. In 1988, the Act was recodified at

46 U.S.C. § 31341, § 31342, and § 31305. There was no substantive

change in any provisions relevant to this case.

16

Further, all circuit courts addressing the issue agree that

a supplier has no maritime lien without reliance on the credit

of the vessel. Navieros, 120 F.3d at 323 (1st Cir.) (the party

attacking the lien has the burden of showing that the party

rendering the service relied solely on personal credit); South

Carolina State Ports Authority v. M/V Tyson Lykes, 67 F.3d

59, 62 (4th Cir. 1995) (while sole reliance on personal

security is sufficient to defeat lien, joint reliance on vessel

and personal security is not sufficient); Stevens Technical

Services, 913 F.2d at 1537 (11th Cir.)(the party attacking the

lien has the burden of showing that the party rendering the

service relied solely on personal credit); Stevens Technical

Services, Inc. v. SS Brooklyn, 885 F.2d 584, 587 (9th Cir.

1989)(same); The American Star, 11 F.2d 479, 482 (3d Cir.

1926)(same); West Kentucky Coal Co. v. Dillman, 15 F.2d

25, 27 (8th Cir. 1926)(same); Jn re Marine Transit, 94 F.2d

at 9 (2nd Cir.)(no lien arises without reliance on the credit

of the vessel).

Commentary also confirms that there is no maritime lien

under the MLA without reliance on the credit of the vessel:

[This provision] does not mean, however, that the

lien shall exist regardless of the question of credit.

Although the reforms in the law are accomplished

largely by the first section, the Act must be read

as a whole and section 4 provides that nothing in

the Act shall be construed to prevent a furnisher

from waiving his right to a lien at any time “by

agreement or otherwise.” The effect of the law,

therefore, is to say that when necessaries are

furnished a vessel upon the order of one in

authority to procure them, they shall be presumed

to be on the credit of the vessel.

Fitz-Henry Smith, Jr., The New Federal Statute Relating to

Liens on Vessels, 24 Harv. L. Rev. 182, 190 (1910-1911).

17

As a result, lower courts are left to determine only

whether the evidence produced by the vessel is sufficient to

rebut the presumption by proving that the supplier did not

rely on the credit of the vessel. That is what the Fifth Circuit

did here. And, given that Racal’s president testified that Racal

did not rely on the credit of the vessels, the Fifth Circuit

correctly concluded there was no maritime lien:

Pender’s testimony clearly indicates that Racal did

not rely on the credit of the vessels. Almost

nothing is more conclusive than such testimony

as to whether there was reliance .. . [B]ecause

the testimony explicitly shows that Racal

deliberately chose not to rely on the credit of the

four chartered vessels, as a matter of law, Racal

purposefully intended to forego its maritime lien.

Racal, 231 F.2d at 190; Petitioner’s Appendix A, p. 12a.

Racal’s argument that there is a conflict among the

circuits is without merit. First, in an attempt to show a conflict

among the Fifth, First, and Eleventh Circuits, Racal claims

that the Fifth Circuit found there was no lien merely because

Racal expected to be paid by Coastline. This is simply not

true. All circuits, including the Fifth Circuit, hold that

expectation of payment from entities other than the vessel is

insufficient on its own to defeat a lien under the MLA.

In fact, in this case, the Fifth Circuit specifically stated that

evidence that Racal expected to be paid by Coastline was

not legally sufficient to rebut the presumption of reliance on

the vessel’s credit. Racal, 231 F.3d at 190 n.6, citing Point

Landing Inc. v. Alabama Dry Dock & Shipbuilding Co.,

261 F.2d 861, 867 (Sth Cir. 1958); Petitioner’s Appendix A,

pp. lla-12a.

Moreover, contrary to Racal’s contention, the Fifth

Circuit did not base its decision on Racal’s expectation that

18

it would be paid by Coastline, rather than by TMI or the

vessels. Instead, the Fifth Circuit relied on the testimony of

Pender that Racal did not rely on the credit of the vessels

when providing goods and services to Coastline: “Pender’s

testimony clearly indicates that Racal did not rely on the

credit of the vessels. Almost nothing is more conclusive than

such testimony as to whether there was reliance.”!° Racal,

231 F.3d at 190; Petitioner’s Appendix A, p. 12a. In short,

the Fifth Circuit followed the same settled rule of law

followed by other circuits, and there is no conflict among

the circuits on this issue.

Racal next argues that the Fifth Circuit’s treatment of

reliance on the credit of the vessel as a prerequisite to a lien

conflicts with the First and Eleventh Circuit’s treatment of

non-reliance on the credit of the vessel as a waiver of the

lien. Racal is again wrong. First, as the Fifth Circuit made

plain in its opinion in this case and in Equilease, a supplier’s

failure to rely on the vessel’s credit is a waiver of the lien.

See Racal, 231 F.3d at 190; Petitioner’s Appendix A, p. 12a

(because “Racal deliberately chose not to rely on the credit

of the four chartered vessels, as a matter of law, Racal

purposefully intended to forego its maritime lien”) and

Equilease, 793 F.2d at 606, 607 n.9 (when the supplier

“deliberately chose not to rely on the credit of the vessel, as

10. Racal’s criticism of Pender’s testimony as “two bits of

deposition testimony” and “the subjective intent of an employee” is

further indication that Racal’s complaint is merely a factual one.

Racal also misinterprets Pender’s testimony when it argues that the

testimony merely reflects that Pender expected to be paid by

Coastline. As the Fifth Circuit found, Pender expressly testified that

he did not rely on the credit of the vessels when providing goods to

Coastline. Once again, Racal is complaining of alleged erroneous

factual findings, which are not a basis for a writ grant under Supreme

Court Rule 10.

19

a matter of law it purposefully intended to forego its right to

claim the lien.”)."' In actuality, Racal is complaining about

the use of different words that mean the same thing. Other

circuits have also noted the overlap between reliance as a

rebuttable presumption and a waiver. In Farrell Ocean

Services, Inc. v. United States of America, 681 F.2d 91

(1st Cir. 1982), the First Circuit explained:

A party can waive a lien by “agreement or

otherwise,” but a presumption exists that the

service was supplied on the credit of the vessel.

The party attacking the lien has the burden of

overcoming that presumption by showing that the

party rendering the service relied solely on

personal credit.

681 F.2d at 93. See also Navieros, 120 F.3d at 323; South

Carolina State Ports Authority, 67 F.3d at 62; Stevens

Technical Services, 913 F.2d at 1537; American Star, 11 F.2d

at 481; Jn re Marine Transit, 94 F.2d at 9. In other words, all

of the other circuits use the same standard used by the Fifth

Circuit, that is, when the vessel proves the supplier did not

rely on the credit of the vessel, there is no lien under the

MLA:

[I]n the absence of reliance— intentional, by

presumption, or otherwise — there is no right to

claim a lien; in different words, if one purposefully

foregoes reliance on the credit of the vessel, it is

tantamount to purposefully foregoing the right to

11. Racal is incorrect when it states that the record does not

reveal whether Racal knew of the MLA prior to Racal/Coastline

agreement. Pender’s deposition shows that Racal knew that vessels

could be arrested in satisfaction of contractual disputes prior to

agreeing to provide goods and services to Coastline and that Pender

had been involved in filing an action for a lien in 1992. (Rec. Vol,

Depo. of Pender, pp. 108-109).

20

claim a lien against the vessel. Thus, when [the

supplier] deliberately chose not to rely on the

credit of the vessel, as a matter of law it

purposefully intended to forego its right to claim

the lien.

Equilease, 793 F.2d at 606 n.9.

In sum, the Fifth Circuit correctly applied well-settled

principles dating back to the early 19th century to undisputed

facts. The court did not disregard the MLA nor did it create

a conflict among the circuits. Review by this Court is not

warranted. :

C. No Lien Unless Goods Are Provided to the Vessel

The requirement that goods be provided to the vessel

means just that. One vessel of a fleet cannot be made liable

under the statute for supplies furnished to other vessels in

the fleet, even if supplied under a single contract. Piedmont,

254 U.S. at 10. The hen attaches only when a vessel has

been identified at the time the obligation is incurred, that is

when the debt arises or at the time of contracting. Equilease,

793 F.2d at 602; Atlanttrafik, 982 F.2d at 768; TTT Stevedores

of Texas, Inc. v. M/V Jagat Vijeta, 696 F.2d 1135 (Sth Cir.

1983). Consequently, there is no lien when goods or services

are provided to the owner or charterer for use at its discretion

instead of being provided directly to a specified vessel. Silver

Star Enterprises, Inc. v. M/V Saramacca, 82 F.3d 666

(Sth Cir. 1996). See also Foss Launch, 808 F.2d at 703;'?

Redcliffe Americas Limited v. M/V Tyson Lykes, 996 F.2d 47

12. Foss Launch uses the term “furnishing”. The term

“providing” was substituted for “furnishing” when the MLA was

amended in 1989. As indicated in the House of Representative report,

no substantive change was intended. See Silver Star, 82 F.3d at

668 n.2.

21

(4th Cir. 1993); Atlanttrafik, 982 F.2d at 768-769; Bankers

Trust Co. v. Hudson River Day Line, 93 F.2d 457, 459

(2nd Cir. 1937); West Kentucky Coal, 15 F.2d at 27.

Racal is incorrect when it argues that the Fifth Circuit’s

holding that Racal failed to provide the goods and services

to the vessels is inconsistent with this Court’s holdings in

Piedmont, 254 U.S. 1 (1920) and Dampskibsselskabet,

310 U.S. 268. Rather, as recognized in Dampskibsselskabet,

Piedmont created a fact-based standard. Dampskibsselskabet,

310 U.S. at 276-77. The Fifth Circuit applied that standard

to undisputed facts. Racal’s real complaint is that it does not

like the result.

Racal seeks to limit the holding of Piedmont to instances

where the supplies can be used both on vessels and on land.

This interpretation ignores 99% of the opinion, and certainly

misses the rule of law.'* The focus of Piedmont was the much

broader issue of the relationships among: (1) a supplier of

coal, (2) a vessel owner who could disburse and use the coal

as it saw fit, and (3) vessels which ultimately received some

of the coal. Because some of the supplies were ultimately

used on the vessels, the Court defined the determinative

question as “Was the coal furnished by the libelant, the Coal

Company, or was it furnished by the Oil Corporation, the

owner of the fleet?” Piedmont, 254 U.S. at 6.

13. Racal is factually incorrect when it states in its petition

that none of the equipment or services could be used or performed

on land. Racal personnel testified that the GPS and the differential

systems were not particularly maritime because they are used for

“everything from driving your car to a farmer farming his field.”

(Rec. Vol. 9, p. 1357, exhibit H, p. 192). Racal is also incorrect

when it says the primary role of the equipment was to aid the vessels

because the equipment was essential to Coastline’s operations as a

seismic survey company, and not to the operation of TMI’s vessels.

(R.E. 9, pp. 39, 41-42, 75, 84, 98, 108-109; R.E. 10, pp. 14-17).

22

To answer that question, the Court conducted a factual

inquiry and examined whether the supplier dealt directly with

the officers of the vessel, whether the owner was billed,

whether the vessels were specifically referenced and

identified on the invoices, and whether the parties to the

agreement understood that the supplies would be provided

to specifically identified vessels. Piedmont, 254 U.S. at 6-7.

The Court found it significant that under the agreement the

owner, rather than the supplier, could distribute the coal to

the vessels in its discretion as the purchaser of the coal.

Piedmont, 254 U.S. at 7, 13. Based on these facts, the Court

concluded that the owner, not the supplier, furnished the

coal to the vessels. /d. at 13. Consequently, the supplier had

no lien. /d.

The same relationships are present here. Racal provided

goods and services to Coastline for use at Coastline’s -

discretion. (R.E. 8, pp. 45-47). Coastline was free to charter

any vessel from any company and could use the Racal goods

and services as it saw fit aboard whatever vessels Coastline

chartered. (Rec. Vol. 9, p. 1357, exhibit E, pp. 35-36, exhibit

H, p. 44; R.E. 8, pp. 45-47). Like the supplier in Piedmont,

Racal provided its goods and services to Coastline, not to

the vessels. The Fifth Circuit’s conclusion that Racal did not

provide goods and services to the vessels is parallel to rather

than inconsistent with Piedmont.

Racal also argues that the Fifth Circuit’s decision

is in conflict with Dampskibsselskabet, 310 U.S. 268.

Dampskibsselskabet, however, did not address the “provided

to” requirement of the MLA that is at issue here. Instead,

Dampskibsselskabet examined whether the supplier’s

contract provided that “the oil should be supplied on the

sole credit of Comyn as the owner or charterer of the

vessels. ...” Jd. at 276. In fact, the Court distinguished

Dampskibsselskabet from Piedmont because Piedmont spoke

to the “provided to” requirement, not the reliance issue.

Id. at 276-77.

23

In any event, Dampskibsselskabet is distinguishable

on its facts from both Piedmont and this case.

In Dampskibsselskabet, the supplies were furnished

exclusively for the vessels in question and were invoiced

accordingly. Jd. at 277. The same is not true here.

When comparing this case to Dampskibsselskabet, the Fifth

Circuit evaluated whether Racal furnished its goods and

services exclusively to the TMI vessels. Racal, 231 F.3d at

192; Petitioner’s Appendix A, pp. 15a-16a. The transfer of

the goods and services between vessels established that the

goods and services were not provided exclusively to the TMI

vessels. Jd. Racal’s argument that the Fifth Circuii’s

consideration of the transfer of goods and services from

vessel to vessel is without precedent ignores the legal issues,

and is no more than a disagreement with the Fifth Circuit’s

application of law to fact. See e.g., Bellingham National Bank

v. Oil Screw Pacific Horizon, 587 F.Supp. 26, 28-29

(W.D. Wash. 1984)(the court held the supplier did not have

a lien over the second vessel for the price of the net, where

the owner of several vessels purchased a net for one vessel

and later moved it to a second vessel, because the net

was not provided to the second vessel within the meaning of

the MLA).

Finally, the Fifth Circuit’s decision is consistent with

the other circuit courts who have addressed the issue,

including the Second, Fourth, Eighth, and Ninth Circuits.

In fact, in Silver Star, the Fifth Circuit explicitly stated that

it was following the rule of law of its sister circuits by denying

a maritime lien when goods were not provided to a specific

vessel. Silver Star, 82 F.3d at 669-670. See Redcliffe, 996

F.2d at 51-52; Atlanttrafik, 982 F.2d at 769; Foss Launch,

808 F.2d at 698, 703. In each of these cases, suppliers of

cargo containers provided containers to vessel owners or

charterers who distributed the containers among their fleets

as they saw fit. The courts concluded that the suppliers did

not provide the containers to the vessels and therefore did

24

not have maritime liens. Redcliffe, 996 F.2d at 51-52;

Atlanttrafik, 982 F.2d at 766, 769; Foss Launch, 808 F.2d at

698, 703. See also Bankers Trust, 93 F.2d at 459 (no maritime

lien for coal provided to buyer for use at buyer’s discretion

because it was not provided to the vessel) and West Kentucky

Coal, 15 F.2d at 27 (no maritime lien for oil provided to

buyer for use at buyer’s discretion).

CONCLUSION

There is neither an error of law nor a conflict in the

circuits as suggested by petitioner. Indeed, there are no

Rule 10 grounds for the grant of Racal’s petition for a writ

of certiorari in this fact-specific case. After reviewing the

deposition testimony and affidavits of Racal’s president,

officers, and customers, the Fifth Circuit correctly applied

well-settled law to undisputed facts to hold that Racal has

no maritime lien against TMI’s vessels because Racal

did not rely on the credit of the TMI vessels when providing

goods and services to Coastline, and Racal did not provide

goods and services to the vessels within the meaning of

the MLA. Racal’s petition for a writ of certiorari should

be denied.

Respectfully submitted,

Cuirre E. Lasorpe III

SuSAN STAGG ROBINSON*

MELISSA L. THERIOT

LABORDE & NEUNER

One Petroleum Center, Suite 200

1001 West Pinhook

Lafayette, LA 70505

337-237-7000

Counsel for Respondent,

Tidewater Marine International, Inc.

* Counsel of Record