United States v. Ex-USS Cabot/Dedalo
2000 U.S. Dist. LEXIS 21816, 2000 WL 33673009, 179 F. Supp. 2d 697 (2000)
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Rule of Law:
A party establishes a pure salvage lien by voluntarily rendering successful aid to a vessel under a reasonable apprehension of marine peril, even if a contract for other services exists. A settlement agreement dismissing a prior in rem action "without prejudice" does not waive the lien if the agreement is breached, and between competing salvage liens, the last one to accrue has priority.
Facts:
- The decommissioned aircraft carrier Ex-USS Cabot/Dedalo ('the Cabot') was owned by the U.S.S. Cabot Dedalo Museum Foundation, Inc. and docked in New Orleans.
- On May 3, 1997, another vessel collided with the Cabot, severely damaging its moorings and placing it in danger of breaking away on the Mississippi River.
- After the third-party vessel owner ceased paying for a tugboat to hold the Cabot, the Cabot's owner, the Museum Foundation, refused to take any action to secure its ship.
- The United States Coast Guard intervened, performing repairs and hiring tugs to prevent the Cabot from breaking free, incurring costs of over $500,000.
- Around October 1997, Pankaj I. Patel acquired the Cabot and hired William E. Kennon of Marine Salvage & Services, Inc. ('Marine Salvage') to arrange for its wharfage in Port Isabel, Texas.
- In March 1998, while docked in Port Isabel, the Cabot began to list severely.
- Unable to contact the owner Patel, and fearing the vessel would capsize, Kennon acted independently from March 14 to March 21, 1998, to stabilize the ship, incurring costs of $20,908.00.
Procedural Posture:
- Marine Salvage & Services, Inc., the United States, and the Board of Commissioners of the Port of New Orleans asserted competing maritime liens against the proceeds from the court-ordered sale of the Ex-USS Cabot/Dedalo.
- Previously, on June 19, 1998, Marine Salvage filed an in rem suit against the Cabot in the U.S. District Court for the Southern District of Texas, which resulted in the vessel's arrest.
- On September 16, 1998, that lawsuit was dismissed without prejudice after Marine Salvage entered into a settlement agreement with the vessel's owner.
- The United States subsequently filed a separate in rem action, leading to the Cabot's re-arrest on September 29, 1998, but this suit was later voluntarily dismissed on February 25, 1999.
- The current case was initiated on April 27, 1999, resulting in the final arrest of the Cabot.
- The court ordered the vessel sold at auction on September 9, 1999, which generated proceeds of $185,000.
- The court then held a two-phase bench trial to determine the priority and amount of the various maritime liens asserted against the sale proceeds.
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Issue:
Does a party have a valid, high-priority salvage lien for voluntarily acting to save a vessel from peril, even when they had a pre-existing contract for other services and had previously dismissed an in rem action against the vessel pursuant to a settlement agreement?
Opinions:
Majority - Tagle, District Judge.
Yes, a party has a valid, high-priority salvage lien under these circumstances. To establish a pure salvage lien, a claimant must demonstrate: (1) the vessel was in marine peril, (2) the services were rendered voluntarily, and (3) the effort was successful. Marine Salvage's actions met this test because the Cabot was in reasonable danger of capsizing, the services were voluntary as they fell outside the scope of the original mooring contract and the owner was unreachable, and the vessel was successfully stabilized. Similarly, the United States Coast Guard established a valid salvage lien for its earlier efforts because its statutory duty is to the public, not a specific vessel owner, making its intervention voluntary. Furthermore, Marine Salvage did not waive its lien by entering a settlement agreement because waiver is not favored and requires clear intent. The agreement's 'without prejudice' clause and its subsequent breach by the owner demonstrated Marine Salvage's intent to preserve, not relinquish, its right to assert the lien. In ranking the claims, salvage liens are prioritized under the 'last in time, first in right' rule. Therefore, Marine Salvage's lien, which accrued in March 1998, has priority over the United States' lien from May 1997.
Analysis:
This decision provides a clear application of the elements of a pure salvage lien, emphasizing that voluntariness can exist even with a pre-existing contractual relationship if the salvage actions are outside the contract's scope. It solidifies the principle that government entities like the Coast Guard can act as salvors because their public duties do not create a pre-existing obligation to a specific vessel owner. The case offers significant guidance on the issue of waiver, clarifying that a settlement agreement dismissing a claim 'without prejudice' is a conditional waiver that does not extinguish the underlying lien if the agreement is breached, unlike the posting of a bond which acts as a substitute for the vessel. This distinction is critical for lienholders structuring settlements.
