Ask a Maritime Attorney: I won a judgment in court, can I use the vessel to receive the money I am owed?

Question:

I won a $25,000 judgment against a boat owner in state court. The boat is registered with the Coast Guard, and since the judgment is related to a business dispute I’m not sure if I can use the boat to satisfy the judgment. I considered recording a maritime lien against the boat and pursuing the matter in Federal Court but I understand that a federal vessel arrest is very expensive. The owner has no assets other than the boat and no real income, so it appears that I am out of luck if I can’t go after the boat. 

 

Answer

The short answer for our reader is that since he already has a judgment against the vessel owner, he can pursue him using the collection tools available through a state court procedure to go after any of the debtor’s assets, including the boat. The judgment could be for anything, and the fact that the underlying claim did not involve the boat is irrelevant at this point. Similarly, the fact that the boat is Coast Guard documented doesn’t make any difference.

Many of our readers are familiar with the procedure to foreclose on a maritime lien through the filing of a lawsuit in Federal Court and the “arrest” of the vessel by the U.S. Marshals. State law procedure available to our reader is similar to the Federal vessel arrest in some respects. Both procedures involve taking custody of a boat to enforcement a lien. But the similarities stop there.

A lien is a financial security device that provides collateral to secure payment of an obligation. That is a universal concept, but different types of liens may arise from different types of claims. A maritime lien will arise from services rendered to a boat. Our reader does not have a maritime lien, but he does have a “judgment lien” (also known as a “judicial lien”), which gives him the right to pursue certain property owned by the judgment debtor (the defendant in the lawsuit). He may seek a writ of execution to enforce his judgment lien from the court that issued the judgment in his favor, and a County Sheriff may then seize and sell the vessel.

The difference between the two procedures is that a Federal Court lawsuit to foreclose on a maritime lien will call for the vessel to be seized at the very beginning of the lawsuit, which could be years before a judgment is issued. Under most circumstances, the state court approach will require a judgment to be issued before the boat can be seized.

Our reader has also considered recording a lien against the boat’s Coast Guard title. But enforcing a judgment against a boat – whether in state court or federal court – does not require the recording of a lien with the Coast Guard. This gets a little confusing because the Coast Guard will essentially accept anything for recording, whether or not it amounts to a valid maritime lien, and recording the claim has no legal effect at all. The sole purpose for recording a “Notice of Claim of Lien” is to give notice to the world that somebody has a maritime claim against the vessel.

So our reader does have a state-court option that may allow him to satisfy the judgment through the sale of the boat. But there are still a few problems that he may face. The biggest problem may involve a fight with competing creditors and legitimate maritime lienholders. A County Sheriff may sell a boat on behalf of a judgment creditor such as our reader, but neither the Sheriff nor a state court judge have the power to sell a vessel free of all liens or claims. That power rests solely with a federal judge in a vessel arrest case. And, the claim of a judgment creditor is junior to all valid maritime liens or mortgages. This won’t help the boat owner very much, but lien priority is critical in a case where multiple creditors are seeking custody of the same asset.

As always, each specific case will bring different facts and legal issues that should be discussed with an experienced attorney. A case like this may in fact require the expertise of attorneys from several different practice areas since it involves both collection law and maritime law questions, and any case involving the enforcement of a judgment may lead to a bankruptcy, which may require the creditor to seek advice from a bankruptcy attorney. Do your homework and seek competent counsel

 

 

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 dweil@weilmaritime.com.