Can a Boatyard Hold My Boat ‘Hostage’ During an Invoice Dispute?

I own a Coast Guard-documented sailboat that I recently took to a local boatyard for bottom paint and other minor maintenance. When the job was completed, the yard presented an invoice, which included a significant amount of work that I did not authorize. I offered to pay the undisputed part of the invoice and demanded the immediate return of my boat. However, they are refusing to return the boat until I pay the full amount of their invoice, and they are charging me $150 per day in lay days while they hold the boat hostage. To make matters worse, they have recorded a claim of lien with the Coast Guard, which exceeds the amount of their invoice. This really seems like extortion. Is there anything I can do?

The yard is not authorized to hold the boat hostage, and they may be liable to our reader for damages under various legal claims if they refuse to surrender possession of the boat and amend the amount of the claim filed with the Coast Guard.

The biggest issue facing the yard in this case is their failure to comply with the owner’s demand to release the boat. A marine service provider has no right to unilaterally retain possession of a Coast Guard-documented vessel, even if he or she claims a valid maritime lien. As we have noted in several previous installments of this column, the foreclosure of a maritime lien on a documented vessel requires the lien claimant to initiate a very expensive lawsuit against the vessel in federal court. They cannot simply hold the boat hostage in exchange for payment.

The remedies available to a lien claimant may be somewhat different if the boat were state registered rather than Coast Guard documented. The provisions of the California Boaters Lien Law, and similar laws in other states, do allow a service provider to retain possession of a state-registered boat pending payment of an invoice if certain procedures are followed. However, those procedures must be carefully observed, and they are only available under limited circumstances. They would not be relevant to our reader, in any case, since Coast Guard-documented vessels are expressly excluded from the provisions of the Boaters Lien Law.

The remedies available could also be different if the yard had obtained a judgment against the boat owner in state court and the boat was seized to enforce that judgment. But again, this requires the intervention of the court system through the filing of a lawsuit. In the case described by our reader, the boatyard had no right to possession of the boat, and they were required to return the boat to the owner promptly upon the owner’s demand for possession.

When one person wrongfully retains the property of another, the owner of the property may assert a claim for “conversion” against the party holding the property. Conversion is basically the civil equivalent of theft, and the party holding the property may be liable to the owner for damages, including punitive damages under certain circumstances. A boatyard may be liable to a boat owner for conversion if they retain possession of a documented boat without taking the proper legal steps.

Regardless of whether the yard may retain possession of the boat, the business is, of course entitled to be paid for its services. In the case described above, the reader has disputed the amount of the claim because he did not authorize some of the work that was listed on the invoice. This question is distinct from, and often more complicated than, the question of whether the yard has a legal right to retain possession of the boat.

Under the Federal Maritime Lien Act, a person who provides services “on the order of the owner or a person authorized by the owner” has a maritime lien on the vessel (46 U.S. Code, sec. 31342). The question here is whether all of the work invoiced by the yard was actually performed “on the order of the owner.”

The Maritime Lien Act does not require a service provider to prepare a written estimate, so a dispute over the scope of authorized services is often difficult to resolve. To make matters even more complicated, the analysis may involve the application of state contract law in addition to maritime law, which could lead to the owner being personally liable for the claim even if the boat is not subject to a maritime lien for the full amount. In the end, if the yard can establish that the work was performed in good faith and that it was reasonably necessary, it will probably be able to support the full amount of the claim.

The reader also mentioned that the yard had filed a claim of lien with the Coast Guard that exceeded the amount of the yard’s invoice. If this was a purposeful attempt by the yard to harass the boat owner, it may be deemed a violation of federal law. Even if it was an honest clerical mistake, the yard could be liable to the owner for attorneys’ fees and other damages if it refuses to correct the error upon request from the owner.

A marine service provider who pursues a “self-help” remedy against a boat without pursuing a formal legal claim may be liable to the boat owner for damages. However, the question of whether the underlying claim is valid, and the obligation of the owner to pay the service provider irrespective of whether the claimant holds a lien against the vessel, may be a lot more complicated.

Maritime liens are unique security devices that differ substantially from liens upon other forms of property, and a maritime attorney experienced in this area of the law should be consulted for information on a specific issue.