I would like some legal advice on how to enforce a maritime lien. I am a former crew member of a large American yacht that failed to pay me when I left the boat over two months ago. I recorded a maritime lien against the vessel through an online service but my claim remains unpaid. What are the next steps for collecting my unpaid wages after recording the lien?
This question is a bit more complicated than our reader might expect. Consider the following.
First, as we have discussed many times in this column, foreclosing on a maritime lien is extremely expensive, and the cost may easily exceed the amount of our reader’s claim against the vessel. The foreclosure process requires the filing of a lawsuit in U.S. District Court in the judicial district where the vessel is located, seeking a warrant for the “civil arrest” of the vessel by the US Marshals. The Marshals require a deposit of $5,000 to $20,000 depending on the type of boat and the rules of that particular district.
After the arrest, the Marshals will transfer custody of the vessel to a commercial custodian, and it will remain in their custody during the pendency of the lawsuit unless released upon the filing of a bond or other security by the owner. Commercial custodians submit a monthly bill to the plaintiff for their services, and they will require a significant deposit before the lawsuit is filed. And then of course there are the attorney’s fees. The attorney will spend a lot of time on the case, even if the claim is not disputed, and that translates to significant legal fees. If the claim is disputed, all costs will increase dramatically. The vessel may eventually be sold at auction, and the sale proceeds may be applied to the out-of-pocket expenses for the marshal and the custodian, but attorney fees may not be recoverable.
Our reader indicated that he recorded a lien through an online service, but this will have little or no effect on the process.
First, the Coast Guard’s National Vessel Documentation Center (“NVDC”) requires all claims that are accepted for recording to include the claimant’s notarized signature. I am not personally aware of an online service that assists with the recording of these claims, but the requirement of a notarized signature will complicate any online procedure.
Second, a maritime lien, fundamentally, is a device to secure payment for services provided to the vessel. But the existence of a maritime lien, and the recording of a maritime lien with the Coast Guard, does nothing to actually procure payment. Maritime liens do not need to be recorded anywhere, and their recording has no legal effect. If the services associated with the claim give rise to a valid maritime lien, the lien is valid without recording, and the civil arrest procedure discussed above may proceed as described, without recording anything.
The only reason to record a lien is to provide notice to the vessel owner, other creditors, and prospective buyers if the vessel is for sale, advising that a claimant is asserting a lien against the vessel. This is very effective if a sale of the vessel is pending since the new owner does not want to be burdened with the claim. But as noted above it otherwise serves no purpose.
In light of the foregoing, because of the expense of a foreclosure and the minimal legal effect of recording a lien, our reader may want to consider other options. The lack of a practical and inexpensive maritime remedy does not mean that he has no legal recourse, he may consider filing a lawsuit against the owners in state court for breach of contract. The maritime nature of the contract allows him to pursue the vessel in Federal Court, but this does not preclude him from filing suit in state court. The only real differences are that the claimant cannot seize the vessel when the lawsuit is initially filed in state court, and a state court judge cannot order the sale of a vessel to be free of all possible claims from anywhere in the world. But the claimant may nonetheless sue the owner in state court, and if he prevails, he may enforce his judgment against the defendant’s assets, which may eventually include the vessel.
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 (www.weilmaritime.com) in Seal Beach. He is certified as a Specialist in Admiralty and Maritime Law by the State Bar of California Board of Legal Specialization and a “Proctor in Admiralty” Member of the Maritime Law Association of the United States, an adjunct professor of Admiralty Law, and former legal counsel to the California Yacht Brokers Association. If you have a maritime law question for Weil, he can be contacted at 562-799-5508, through his website at www.weilmaritime.com, or via email at firstname.lastname@example.org.