Port of Portland v. The M/V Paralla

892 F.2d 825, 1989 WL 154760
CourtCourt of Appeals for the Ninth Circuit
DecidedDecember 27, 1989
DocketNo. 88-4101
StatusPublished
Cited by6 cases

This text of 892 F.2d 825 (Port of Portland v. The M/V Paralla) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Port of Portland v. The M/V Paralla, 892 F.2d 825, 1989 WL 154760 (9th Cir. 1989).

Opinion

FERNANDEZ, Circuit Judge:

The Port of Portland, an Oregon municipal corporation (“the Port”), brought this in rem action to foreclose a maritime lien on the M/V Paralla (“the Paralla”). After a bench trial, the district court found that the Port did not acquire a lien on the Paralla and that if it did acquire a lien, that lien was waived. The court entered judgment accordingly. Port of Portland v. M/V Paralla, 703 F.Supp. 1446 (D.Or.1988). The Port appeals from that judgment. It contends, among other things, that a general contractor retained to do a conversion on the Paralla had authority to bind that vessel. We disagree and affirm.

FACTS

Automar IV created a wholly owned subsidiary, American Automar, Inc. (“Auto-mar”) for the purpose of purchasing, refitting and reselling the Paralla. The refitting or conversion project was necessary, since the prospective purchaser was the United States Department of Transportation Maritime Administration, which planned to use the ship in the Ready Reserve Fleet. Automar in turn retained C.R. Cushing & Co. as a technical consultant on the reconditioning project. Automar also employed Pacific Gulf & Marine, Inc. (“Pacific Gulf”) to manage the conversion and to locate a general contractor to perform the conversion services. Pacific Gulf hired William Burns, one of its retired vice presidents, to oversee the project. In addition, the financing for the project was obtained from Connecticut National Bank (CNB) which received a first preferred ship’s mortgage as security.

The search for a general contractor eventually narrowed to three possible companies: Southwest Marine, Dillingham Ship Repair (“Dillingham”), and Northwest Marine Ironworks, Inc. (“Northwest”). Southwest Marine was located in San Diego, California. Both Dillingham and Northwest were located in Portland, Oregon. Southwest Marine was able to offer a better price than Dillingham or Northwest, because the latter two companies had their primary facilities in Portland, and the Port charged rather high use fees for services it provided to them. Nevertheless, Burns was inclined to prefer one of the Portland companies, and leaned toward Northwest in particular.

Although the Port did have established fee tariffs that it charged to general contractors which used its facilities, it was able to deviate from those. It was often willing to do that, since it had long-term relationships with the contractors, and, of course, it was to everyone’s benefit if the contractors could stay competitive with other shipyards on the west coast.

Thus, before Automar made its final decision on use of a general contractor, the Port and Northwest held a meeting, which Automar representatives attended. The use fee issue was discussed at that meeting, and some time later the Port agreed with Northwest and with Dillingham that it would reduce the fees it charged to them if they obtained the Paralla conversion contract.

Thereafter, Automar decided to award the contract to Northwest. It then entered into a written agreement with Northwest. That agreement made no mention of the Port, and did not direct that the Port’s facilities be used. Moreover, it expressly provided that Northwest would not have authority to incur liens on behalf of the Paralla. Management of the project remained with Automar and Pacific Gulf, the latter personified in Mr. Burns.

Northwest and the Port then entered into an agreement wherein the Port provided facilities to Northwest, which it intended to use for the conversion project. This contract was not joined in by Automar. In fact, the Port had a policy of refusing to enter into contracts with the owners of ships.

The conversion itself proceeded smoothly and in that respect Northwest was a good [827]*827choice. Unfortunately, Northwest was in rather serious financial difficulty. The Port undoubtedly knew that, and in all likelihood the ship’s owners and agents were also aware of it. Northwest was paid by Automar, and Northwest used those funds to pay the Port. However, the payments made to the Port went to earlier Northwest bills, and not to those being incurred on the Paralla project.

On October 29, 1986, the now refitted Paralla put to sea, and Northwest put itself into bankruptcy. On November 4, 1986, the Port arrested the Paralla for the purpose of exercising and foreclosing its claimed lien rights upon that vessel. As already noted, the trial court ultimately decided that no such lien rights existed.

JURISDICTION AND STANDARD OF REVIEW

The district court had jurisdiction pursuant to 28 U.S.C. § 1333, and we have jurisdiction pursuant to 28 U.S.C. § 1291.

We are bound to uphold the district court’s findings of fact unless they are clearly erroneous. See Marine Fuel Supply and Towing, Inc. v. M/V Ken Lucky, 869 F.2d 473, 475 (9th Cir.1988); Farrell Ocean Services, Inc. v. United States, 681 F.2d 91, 93 (1st Cir.1982). We review the district court’s construction of the Federal Maritime Lien Act, 46 U.S.C. §§ 971-973 de novo.1 Marine Fuel Supply & Towing, Inc. v. M/V Ken Lucky, 869 F.2d at 475; United States v. McConney, 728 F.2d 1195, 1201 (9th Cir.) (en banc) (generally, questions of law are reviewed de novo), cert. denied, 469 U.S. 824, 105 S.Ct. 101, 83 L.Ed.2d 46 (1984). In general, mixed questions of fact and law are also reviewed de novo. McConney, 728 F.2d at 1204.

DISCUSSION

Under 46 U.S.C. § 971, when a party claims the right to a maritime lien it must meet three requirements. It must show that it: “(1) furnish[ed] repairs, supplies, or other necessaries, (2) to any vessel, (3) ‘upon the order of the owner of such vessel, or of a person authorized by the owner.’ ” Foss Launch & Tug Co. v. Char Ching Shipping U.S.A., Ltd., 808 F.2d 697, 699 (9th Cir.), cert. denied sub nom. Itel Containers Intern. Corp. v. M/V C.C. San Francisco, 484 U.S. 828, 108 S.Ct. 96, 98 L.Ed.2d 57 (1987).

In this case, there is no doubt that the Port furnished necessaries to the Paralla. The parties do not dispute that. The only issue which separates them is whether the services of the Port were rendered upon the order of Automar or upon the order of someone who was authorized by Automar to bind the vessel.

A. Order by the Owner.

As the statute makes plain, if an owner directly orders necessaries, that will result in a lien on the vessel. It is clear that no such direct relationship existed between the Port and Automar, so this aspect of the statute need not detain us further.

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Port of Portland v. Paralla
892 F.2d 825 (Ninth Circuit, 1989)

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Bluebook (online)
892 F.2d 825, 1989 WL 154760, Counsel Stack Legal Research, https://law.counselstack.com/opinion/port-of-portland-v-the-mv-paralla-ca9-1989.