Our reader’s question requires us to look at a number of legal issues, but in the long run his biggest problems will be apparent when he tries to mend some seriously broken family fences.
We have talked about maritime liens in quite a few installments of this column, but it seems that our readers are always able to add a new twist to the discussion. In this case, the vague nature of the agreement between the boat owner and our reader will complicate the claims against the boat. But we should first review some of the fundamental characteristics of a maritime lien.
Maritime liens are not “put” on a boat in the way that our reader has assumed by his question. They arise as a matter of law, not as a consequence of a clerical act. If a service provider completes a project on a boat, and that project was authorized by the owner of the boat, the service provider has a maritime lien against the boat until the claim is satisfied. This assumes that the project itself is a service which will qualify as a maritime lien, but in most cases any service that is actually provided to a boat will give rise to a maritime lien when the work is completed, without filing any documents with anyone.
The document that is “placed” on a vessel is called a Notice of Claim of Lien, and it is simply a notice that somebody claims to have a lien. The recording of that notice with the Coast Guard has no bearing whatsoever on whether the lien is valid, and the filing of the notice therefore has no significant legal consequence. The sole purpose of recording the notice is to alert other parties that someone has asserted a claim against the boat, which may be helpful in resolving the claim when and if the boat is sold someday, but it will not automatically lead to the payment of the claim.
While the notice has no legal significance, the lien itself is a powerful legal device. When a maritime lien is established, the lienholder may file a lawsuit in federal court to foreclose on the vessel and collect the funds that are owed to him, subject to any defenses asserted by the boat owner. No recording is necessary, and the lawsuit may be initiated as a “sneak attack” to prevent the boat from running away before things are resolved. Unfortunately, this type of lawsuit is usually very expensive. It requires the boat to be taken into custody by the U.S. Marshals at the beginning of the lawsuit and then turned over to a commercial custodian. The legal fees, court costs, and custodial fees may easily exceed the amount of a claim.
Looking at our reader’s claim, he will be deemed to have a maritime lien without recording anything, but only if his boat-owner brother did in fact breach their agreement. This will be difficult because of the vague nature of their agreement. His brother promised to bring the boat to Morro Bay, which inferred certain things to our reader and his wife. But those inferences may have been too ambiguous to translate into an agreement to form a boat partnership.
Notwithstanding the ambiguity of their agreement, our reader is entitled to some form of compensation in exchange for his services and the money that he spent on the repair parts. His brother asked him to repair the engine, and he did repair the engine. The amount of that compensation will be difficult to determine, but a reasonable fee for the repair may be established by comparing the work to prevailing rates for engine repair in the community.
Our reader therefore has a maritime lien, but it arose from the repair of an engine on a sailboat. The amount of that claim, while significant to our reader, will probably be less than the cost of a lawsuit in Federal Court to foreclose on a maritime lien. It most likely will not make economic sense to initiate that lawsuit. So what can he do?
Under these circumstances, where a service provider has a valid but relatively small claim against a boat, the most logical solution is usually to ignore the maritime lien. Since the lien arose from a breach of contract, a lawsuit may be filed in state court, even though the contract involves a boat. The legal fees and costs for a simple breach of contract lawsuit will be a lot less than a federal court lawsuit to foreclose on a maritime lien. And for our reader, the claim may be small enough to allow him to file suit in small claims court. If successful, the lawsuit will lead to a judgment that may be enforced against any of the boat owner’s property, including the boat. The only real difference with this strategy is that the boat will not be seized by the court until after the conclusion of the lawsuit.
A leading Admiralty Law Treatise once advised that “a lien is a lien is a lien, but a maritime lien is not.” This is a very specialized area of the law, so contact an experienced maritime attorney if you are confronted with this type of dispute.
David Weil is licensed to practice law in the state of California and, as such, some of the information provided in this column may not be applicable in a jurisdiction outside of California. Please note also that no two legal situations are alike, and it is impossible to provide accurate legal advice without knowing all the facts of a particular situation. Therefore, the information provided in this column should not be regarded as individual legal advice, and readers should not act upon this information without seeking the opinion of an attorney in their home state.
David Weil is the managing attorney at Weil & Associates (weilmaritime.com) in Long Beach. He is an adjunct professor of Admiralty Law at Loyola University Law School, is a member of the Maritime Law Association of the United States and is former legal counsel to the California Yacht Brokers Association. If you have a maritime law question for Weil, he can be contacted at 562-438-8149 or at email@example.com.
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