PNC BANK DELAWARE, a banking institution organized under the laws of the State of… v. F/V MISS LAURA, O.N. 542762 , her engines, machinery, equipment, masts, fishing…

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PRECEDENTIAL
UNITED STATES COURT OF
APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 03-1695
_____________
PNC BANK DELAWARE, a banking
institution organized under the laws of
the State of Delaware with a place of
business in Wilmington, County of New
Castle, State of New Jersey
v.
F/V MISS LAURA, (O.N. 542762), her
engines, machinery, equipment, masts,
fishing permits, etc., in rem
R.D. GRIER & SONS, INC.; MAINE
SHIPYARD & MARINE RAILWAY,
INC.; SMITHWICK & MARINERS
INSURANCE COMPANY;
DON'S HYDRAULICS, INC.,
Intervenor-Plaintiffs in District Court
Maine Shipyard & Marine Railway, Inc.,
Appellant
_____________
On Appeal from the United States
District Court
for the District of New Jersey
No. 01-cv-04427
District Judge: Honorable Joseph E.
Irenas
_____________
Argued: March 22, 2004
Before: FUENTES, SMITH and
GIBSON,* Circuit Judges.
(Filed: August 25, 2004)
For Appellant:
Cianciulli & Ouellette
Stephen M. Ouellette (ARGUED)
163 Cabot Street
Beverly, MA 01915
For Appellee:
Archer & Greiner
Arthur H. Jones, Jr.
One Centennial Square
P.O. Box 3000
Haddonfield, NJ 08033
Tompkins, Clough, Hirshon & Langer
Leonard W. Langer (ARGUED)
3 Canal Plaza
P.O. Box 15060
Portland, ME 04112-5060
_______________________
OPINION OF THE COURT
_______________________
*The Honorable John R. Gibson,
United States Court of Appeals for the
Eighth Circuit, sitting by designation.

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JOHN R. GIBSON, Circuit Judge:
This case presents the novel
question of whether, assuming a vessel's
fishing history may be the subject of a
maritime lien, the lien follows the transfer
of the fishing history to a replacement
vessel after the original vessel sinks. The
district court held that fishing history could
not be "salvaged" from a sunken vessel
and therefore any maritime lien that may
have existed was extinguished at the time
of the sinking. We affirm, but on different
grounds.
I.
Maine Shipyard & Marine Railway,
Inc., provided repair services in 1997 to
the vessel F/V Miss Penelope, which was
owned by David Greenly. This provision
of services entitled Maine Shipyard under
federal law to a maritime lien against the
vessel and its appurtenances. See 46
U.S.C. § 31342 (2000); Gowen, Inc. v.
F/V Quality One, 244 F.3d 64, 67 (1st Cir.
2001). The Miss Penelope sank on
January 28, 1998.
As a result of a complex scheme of
federal rules and regulations designed to
protect declining fishing stocks and
otherwise conserve fishery resources, the
fishing history and fishing permits of a
vessel like the Miss Penelope are integral
to the value of the vessel itself. See
generally 16 U.S.C. § 1801 (2000);
Gowen, 244 F.3d at 68 (some fishing
vessels "are valuable significantly, and
sometimes almost entirely, because of their
permits"). The amount and species of fish
that a particular vessel is licensed to catch
often depends on that vessel's fishing
history, and certain species cannot be
fished at all except by or in place of
vessels that have previously held permits
to do so. See, e.g., 50 C.F.R. §
648.4(a)(1)(i). However, when a vessel
sinks, its fishing history does not go down
with the ship; instead, the history and
permits may be applied to a replacement
vessel. See id. Thus, when the Miss
Penelope sank, Greenly applied her fishing
history and permits to the vessel he bought
to replace her, the F/V Miss Laura.
Greenly's purchase of the Miss
Laura was financed by the appellee, PNC
Bank Delaware, Inc., which made an
initial loan of $475,000 and later increased
the amount of the loan to $570,000. In
exchange, Greenly executed and delivered
a Promissory Note to PNC, which was
secured by a Preferred Ship Mortgage on
the Miss Laura. Greenly later defaulted on
the note.
PNC commenced the present action
seeking the judicial sale of the Miss Laura.
Maine Shipyard intervened, claiming that
it held a maritime lien on the Miss Laura
to the extent of her fishing permits and
history because the permits and history had
been transferred from the Miss Penelope.
Maine Shipyard further contends that its
lien has priority over any security interest
held by PNC.
II.
Maine Shipyard rests its argument
primarily on Gowen, Inc. v. F/V Quality

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One, 244 F.3d 64, 67-70 (1st Cir. 2001), in
which the First Circuit held that a vessel's
fishing permits were appurtenances to the
vessel and therefore subject to a lien on the
vessel. The court reasoned that the market
value and creditworthiness of the vessel
depended as much on the fishing permits
as on tangible items like the engine or
navigation equipment; thus, a creditor's
lien should be understood to extend over
the permits. Id. at 68-69.
PNC persuasively responds that
Gowen does not govern the instant
situation because the fishing permits in
that case were still attached to the original
vessel, whereas the present situation
involves the transfer of the fishing permits
to a replacement vessel. Thus, even if we
were to follow Gowen and hold that a
vessel's fishing permits may be the subject
of a maritime lien, we would still need
some legal basis for concluding that the
lien extends to a replacement vessel once
the permits are transferred.
Maine Shipyard simply ignores this
problem, perhaps because neither Gowen
nor other statutory or case law provides
such a legal basis. Instead, the law of
maritime liens has consistently recognized
that a maritime lien attaches only to the
specific vessel to which services are
provided. See, e.g., 46 U.S.C. § 31342
(2004) ("[A] person providing necessaries
to a vessel on the order of the owner or a
person authorized by the owner– (1) has a
maritime lien on the vessel. . . .")
(emphasis added); Piedmont & Georges
Creek Coal Co. v. Seaboard Fisheries Co.,
254 U.S. 1, 4 (1920) ("[O]ne vessel of a
fleet cannot be made liable under the
[Federal Maritime Lien Act] for supplies
furnished to the others, even if the supplies
are furnished to all upon orders of the
owner under a single contract."); In re
Container Applications Int'l, Inc., 233 F.3d
1361, 1365-66 (11th Cir. 2000) (following
Piedmont and denying maritime lien
because the purported lienholder did not
provide necessaries to any particular
vessel). The vessel-specific character of
maritime liens results from the legal
fiction that a vessel receiving services "is
considered to be a distinct entity
responsible only for its own debts." Foss
Launch & Tug Co. v. Char Ching Shipping
U.S.A., Ltd., 808 F.2d 697, 701 (9th Cir.
1987). Because Maine Shipyard provided
no services to the Miss Laura, its attempt
to enforce a lien over that vessel violates
this principle of maritime liens. The Miss
Laura cannot be held responsible for the
debts of the Miss Penelope.
In resolving this case, we need not
endorse the district court's position that
fishing history cannot be salvaged from a
sunken vessel. The court believed that
Maine Shipyard's lien over the fishing
permits could survive the sinking of the
Miss Penelope, if at all, only through
principles of salvage law. However, the
court concluded that salvage law was
inapplicable because it understood salvage
to involve some sort of physical rescuing
or saving of a tangible piece of property,
which did not occur here. Thus, it held
that Maine Shipyard's lien extinguished at
the time of the sinking.
We believe this rationale comes

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needlessly close to conflicting with the
theory of Gowen, and are mindful of our
obligation to avoid circuit conflict. Under
the district court's reasoning, any lien held
by Maine Shipyard over the Miss
Penelope's fishing permits ceased to exist
once the vessel sank. It is possible that a
court following Gowen would not agree;
after all, the fishing permits continued to
exist in at least some form, retained
significant value, and contributed to the
creditworthiness of the vessel in the first
place. See Gowen, 244 F.3d at 68 ("Thus,
not only the market value but the
creditworthiness of the fishing vessel may
well depend on its permits quite as much
as on its engine, physical dimensions, and
navigation equipment."); see also United
States v. Freights, Etc. of the Mount
Shasta, 274 U.S. 466, 470 (1927)
(intangibles may be subject to maritime
liens against the vessel); The Fort Wayne,
6 F. Cas. 119, 122 (S.D. Ohio 1861) ("[I]f
any part of the vessel is saved, this lien
adheres to it, even to the last plank.").
Should a creditor attempt to foreclose on a
sunken vessel's fishing permits before the
permits become incorporated into a second
vessel, a court following Gowen might
enforce the lien, whereas the district
court's rationale clearly would deny it.
Rather than in vite this possible
conflict, we base our holding on the
undisputed fact that Maine Shipyard did
not provide services to the vessel over
which it now claims a lien. Even if, as
Maine Shipyard metaphorically suggests,
the "valuable and transferable fishing
permits and history remain very much
afloat," Maine Shipyard has not cited, nor
have we found, any cases where a lien
over salvaged or never-sunken parts of a
vessel was extended to a subsequent vessel
to which those parts became attached.
Instead, maritime liens have consistently
been limited to the specific vessel to which
services were provided. See Piedmont,
254 U.S. at 4 ("The difficulty which under
the general maritime law would have
blocked recovery by the [purported
lienholder] is solely that it did not furnish
coal to the vessels upon which it asserts a
maritime lien; and there is nothing in the
[Federal Maritime Lien Act] which
removes that obstacle."); see also 1
Thomas J. Schoenbaum, Admiralty and
Maritime Law, § 9-1 (4th ed. 2004) ("A
maritime lien is a privileged claim upon
maritime property, such as a vessel, arising
out of services rendered to or injuries
caused by that property."). We are bound
to follow this long-standing principle here
and therefore conclude that any lien held
by Maine Shipyard on the Miss Penelope's
fishing permits and history ceased to exist
once the Miss Penelope sank and the
fishing history was incorporated into the
Miss Laura.
Because we hold that Maine
Shipyard has no cognizable property
interest in the Miss Laura, we need not
consider its assertion that PNC is ineligible
to assert a lien in an in rem action against
the Miss Laura. Maine Shipyard has no
standing to make such a challenge. See,
e.g., Citicorp Sav. of Illinois v. First
Chicago Trust Co. of Illinois, 645 N.E.2d
1038, 1045 (Ill. App. Ct. 1995) ("Standing

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requires injury in fact to a legally
cognizable interest."); Southern Maryland
Oil, Inc. v. Kaminetz, 272 A.2d 641, 644-
45 (Md. 1971) (party lacks standing to
challenge a mortgage foreclosure sale
unless that party has an interest in the
proceeds of the sale or has an interest in
the property which may be adversely
affected as a result of the sale).
We will affirm the district court's
judgment.

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