The case of Rosano v. Manhasset Bay Marina, Ltd. deals with the delicate issue of ensuring that the marina or other marine service provider (like a repair operation) is dealing with the vessel owner, or someone acting on behalf of and authorized by the vessel owner.
In Rosano, a vessel owner brought an action to invalidate a maritime lien asserted against the owner’s vessel, claiming that the services the marina provided has not been provided with the consent of the owner of the vessel.
As many marine owners and operators know, admiralty law provides for establishment of a maritime lien pursuant to 46 U.S.C. § 31342(a) (“Section 31342”). This federal statute provides that such liens are established on behalf of a person “providing necessaries to a vessel on the order of the owner or a person authorized by the owner ….” 46 U.S.C. § 31342(a).
The courts have broadly defined the term “necessaries,” to include “repairs, supplies, towage and the use of a dry dock or marine railway [and] to include any goods and services ‘reasonably needed’ . . . for a vessel’s continued operation.” Traditionally, marina services have been deemed “necessaries.”
In addition to the requirement that a maritime lien represent amounts due for services falling within the broad category of “necessaries,” such a lien is established only if such necessaries were provided “on the order of the owner or a person authorized by the owner.” 46 U.S.C. § 31342(a) (emphasis added).
California Harb. & Nav. Code, § 491 also provides that: “All vessels are liable for: (a) Services rendered on board at the request of, or under contract with, their respective owners, masters, agents, or consignees.” At issue in Rosano was a New York Lien statute that had provisions similar to the California statute.
In Rosano, the plaintiff, Anthony Rosano leased the Vessel to Freedom Boat Corp., d/b/a/ Carefree Boat Club (“Freedom”). Freedom then leased a slip from the Manhasset Bay Marina, Ltd. (the “Marina”). When Freedom did not pay for dock charges, storages charges, repairs, services and tax, the Marina’s asserted a lien against the Vessel in the amount of $12,676.53.
Mr. Rosano asserted that the Marina’s lien was invalid because Mr. Rosano did not make any direct request to the Marina for the services allegedly rendered – only Freedom did.
However, the Rosano court rejected the plaintiff’s argument, pointing out that both maritime and New York law provide that a valid lien is asserted where services are performed with the consent or authorization of the owner. While the Rosano court did not make a final determination regarding the validity of the Marina’s lien, the court stated that: “the nature of the services performed, and identity of the entity requesting those services, support the Lien’s validity.”
What is not clear from the Rosano decision is the actual basis for the court’s conclusion that the “identity of the entity requesting services” – in that case, a lessor of a vessel, supported the validity of the lien.
Many other maritime authorities hold that a “lessor” of a vessel (usually called a “charterer”) is authorized by the owner to incur maritime liens unless providers of “necessaries” are clearly notified that the owner is not authorized to incur liens for “necessaries.”
In other words, the owner is usually deemed to have consented to the acts of its lessors (or charterers) and agents (captains, officers, managers, etc.) as a legal matter by allowing these people to obtain services for the owner’s vessel – without the owner providing any notice that these people were not authorized to obtain such services and create such liens.
However, the Rosano court did not specifically state that this was the basis of its decision, and marinas and marine service operators should not count on other courts – who may not be familiar with marine businesses – having the same understanding of the circumstances of the transactions that the Rosano court did.
One of the problems in Rosano that might have made the decision easier for the court, and provided a clearer basis for its decision, was that there was no clear written agreement between the Marina and Freedom, the lessor, that had an “authorization clause.”
An “authorization clause” in a marine agreement usually provides that the person signing the agreement “represents and warrants” to the marina or marine service company that they are authorized to sign the contract and obtain the services or products for the vessel by the owner of the vessel.
By having persons sign an agreement with an “authorization clause,” the marina or marina operator has a written contract evidencing that the person signing the agreement was doing so on behalf of the vessel owner; and in addition to the contractual representation obtained, can also rely on the legal implications that a court may draw from the circumstances under which the services or products were provided, just like the Rosano court did.
In other words, it is wiser to take the “belt and suspenders” approach with maritime liens – always have a good written agreement; always have the agreement signed and then, if necessary, have the court also rely on the facts and circumstances and the implications of law to ensure that the court is likely to find your lien is valid.
Readers should note that these comments are not a solicitation for any legal representation; readers should not rely on these comments — but instead seek the advice of competent counsel; and no attorney-client relationship is, has or can be formed based on these comments.