Roy Anderson Corp v. Treasure Bay Corp

* District Judge of the Southern District of Florida, sitting
by designation.
** Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________
m 98-60580
_______________
In the Matter of:
TREASURE BAY CORPORATION,
Debtor.
HAM MARINE, INC.,
Appellant,
VERSUS
FIRST TRUST NATIONAL ASSOCIATION,
Appellee.
_________________________
Appeal from the United States District Court
for the Southern District of Mississippi
(1:97-CV-488-BrR)
_________________________
April 16, 2001
Before SMITH and DENNIS, Circuit Judges, and ROETTGER,*
District Judge.
ROETTGER, District Judge:**
Ham Marine Inc. appeals from the district court’s order
affirming the summary judgment entered by the Bankruptcy Court
against appellant in which the Bankruptcy Court determined Ham

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Marine Inc. did not possess a water craft lien pursuant to Miss.
Code Ann. § 85-7-7. As this Court finds that any such lien would
be subordinate to appellee’s mortgage, we affirm.
I.
Treasure Bay Gaming & Resorts, Inc. (“TBGR”) issued notes to
finance the construction of a floating dockside casino in Biloxi,
Mississippi. These notes evidenced the indebtedness of TBGR to
First Trust National Association (“First Trust”). The proceeds
of these notes were lent to Treasure Bay Corporation (“Treasure
Bay”) a wholly owned subsidiary of TBGR in return for a first
preferred ship’s mortgage and further security in the form of a
deed of trust, leasehold deed of trust, assignment of rents,
security agreement, financing statement and fixture filing upon
all the assets of Treasure Bay. TBGR then assigned all its
interests to First Trust.
The Treasure Bay Biloxi Casino opened in April 1994.
Several months later Treasure Bay hired appellant, Ham Marine
Inc. (“Ham Marine”), to make certain modifications to facilitate
transportation of the casino barge in event of a hurricane and to
stabilize the casino barge to reduce motion sickness among its
patrons. Ham Marine developed a hurricane evacuation plan which
was required of TBGR by the Mississippi Gaming commission. In
case of a storm, the casino barge would be towed forty miles from
Biloxi to Pascagoula. Modifications by Ham Marine readied the
casino barge for such a potential journey. This work included

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1Subsequently, after instructions from the gaming commission
to remain in Biloxi during any storm, another contractor was hired
who welded the casino barge to the surrounding pilings converting
it into a semi-permanently moored structure.
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reinforcement of the stern of the barge, construction of push
knees and tow devices, and construction of chains and anchors to
secure the barge on its arrival in Pascagoula.1
Ham Marine was not paid for the work it performed and sought
to establish various liens including a water craft lien pursuant
to Miss. Code Ann. § 85-7-7. On November 2, 1994, Ham Marine
filed suit in Mississippi Circuit Court for the enforcement of a
water craft lien for improvements made to the Treasure Bay
Casino. On November 4, 1994, Ham Marine filed a Notice of Water
Craft Lien in the records of Harrison County, Mississippi.
In December, 1994, an involuntary petition for relief under
Chapter 7 of the United States Bankruptcy Code, later converted
into a Chapter 11 petition, was filed against TBGR. In
February, 1997, First Trust filed a motion for summary judgment
as to the priority of its encumbrances. In June 1997, the
bankruptcy court granted the motion in favor of First Trust on
the grounds that the Treasure Bay Biloxi Casino was not a water
craft and, therefore, Ham Marine did not possess a water craft
lien. Ham Marine filed a notice of appeal as to this order on
June 20, 1997. The district court affirmed the bankruptcy

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2Also in February 1997, Treasure Bay, TBGR and First Trust
filed an amended joint plan of reorganization which classified Ham
Marine’s claim as both a secured and unsecured claim. In August
1997, the bankruptcy court confirmed the plan identifying Ham
Marine as an unsecured creditor. Ham Marine did not appeal the
confirmation order. First Trust contends that Ham’s appeal is
barred by the doctrine of res judicata as no appeal was taken from
the order confirming the plan. However, on June 26, 1998, the
bankruptcy court entered an order recognizing the pendency of Ham
Marine’s appeal and its lack of jurisdiction concerning any issues
related thereto. Alternatives to the handling of Ham Marine’s
claims were established so that distribution according to the plan
could proceed. In light of this reservation of right, the doctrine
of res judicata does not apply. See King v. Provident Life and
Accident Insurance Company, 23 F.3d 926 (5th Cir. 1994). First
Trust also contends that this appeal is equitably moot. In the
Matter of: GWI PCS 1 Inc.,230 F.3d 788 (5th Cir. 2000). As the
resolution of this appeal does not alter the reorganization plan,
this issue will not be addressed.
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court’s decision.2
II.
Appellant seeks review of the determination that the
Treasure Bay Biloxi Casino does not qualify as a water craft for
purposes of Miss. Code Ann. § 85-7-7. A summary judgment is
reviewed de novo using the same standards applied by the lower
court. Norman v. Apache Corp., 19 F.3d 1017, 1021 (5th Cir.
1994). In resolving issues of state law, the Court will
interpret a state statute in the manner the court believes the
state Supreme Court would. F.D.I.C. v. Shaid, 142 F.3d 260, 261
(5th Cir. 1998).
Miss. Code Ann. § 85-7-7 provides:
There shall be a lien on all ships,
steamboats and other water craft for work
done or materials supplied by any person in
this state for or concerning the building,

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repairing, fitting, furnishing, supplying or
victualing such ships, steamboats or other
water craft, and for the wages of the persons
employed on board such vessel, boat, or
craft, for work done or services rendered, in
preference to all other debts due and owing
from the owners thereof. The said lien shall
expire six months after the claim is due
unless judicial proceedings have been
commenced to assert it.
As appellant concedes that the Treasure Bay Biloxi Casino is
not a ship or steamboat, the inquiry turns to the meaning of the
phrase “other water craft”. The Mississippi Code provides no
definition. In Archibald v. Citizens’ Bank of Louisiana, 1 So.
739 (1887), the Mississippi Supreme Court recognized an
enforceable water craft lien with respect to a barge. In so
doing, the court did not set forth the attributes of the barges
involved. As the defining characteristics of a barge are not
set forth, this case sheds no light on whether the Treasure Bay
Biloxi Casino is a type of barge which would qualify for a water
craft lien.
However, review of the legislation permitting the existence
of floating dockside casinos under Mississippi law sheds light on
their classification. In approving gambling, the Mississippi
legislature set forth that gaming was to take place on a vessel
or cruise vessel in navigable waters. See Miss. Code Ann. §§
97-33-1(a) and (b). Miss. Code Ann. § 27-109-1 defines a “cruise
vessel” as:

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3 If the Court were to draw an analogy with federal law,
the Treasure Bay Biloxi Casino might qualify as a vessel under
Fifth Circuit precedent. Ham Marine seeks a maritime lien for
modifications made to the Treasure Bay Biloxi in order to transport
it to safe harbor in the event of a hurricane. There is authority
in cases dealing with claims for repairs rendered a vessel which
(continued...)
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a vessel which complies with all U.S. Coast
guard regulations, having a minimum overall
length of one hundred fifty (150) feet and a
minimum draft of six (6) feet and which is
certified to carry at least two hundred (200)
passengers; and the term “vessel” shall mean
a vessel having a minimum overall length of
one hundred fifty (150) feet.
In King v. Grand Casinos of Mississippi, Incorporated-
Gulfport, 697 So.2d 439 (1997), the Mississippi Supreme Court
discussed the nature of these dockside casinos in a Jones Act
case requiring the interpretation of federal law. Although
ruling the casino barge was not a vessel for purposes of the
Jones Act, the court noted that these casinos could be viewed
entirely differently from the perspective of Mississippi law. In
advocating the position that a casino is a vessel for purposes of
the Jones Act, Justice McCrae underscores this point by stating
in dissent “. . . the majority fails to take into consideration .
. . the legislative directive limiting gaming activities to
vessels located on certain navigable waterways . . . .” Id. at
443. As Mississippi law confers these gambling barges with
vessel status, it follows that those who provide repair services
would qualify for the protection afforded by the state’s water
craft lien statute.3

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3(...continued)
give rise to claims for maritime liens that a type of water craft,
long afloat, readily towable, and entirely capable of being used,
even if inefficiently, in transportation is a vessel. See Miami
River Boat Yard, Inc. v. 60' Houseboat, Serial No. SC-40-2860-3-62,
390 F.2d 596 (5th Cir. 1968); Pleason v. Gulfort Shipbuilding Corp.,
221 F.2d 621 (5th Cir. 1955); and Campbell v. Loznicka, 181 F.2d 356
(5th Cir. 1950).
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However, it is unnecessary to reach a conclusion with
reference to the status of the Treasure Bay Biloxi Casino in
order to affirm the district court. Appellee argues that even
were appellant to possess a water craft lien under Miss. Code
Ann. § 85-7-7, the decision of the Bankruptcy Court should be
affirmed as appellee’s claim would have priority by virtue of its
first preferred ship’s mortgage under 46 U.S.C. § 31322. 46
U.S.C. § 31326(b) provides that a preferred mortgage lien has
priority over all claims against a vessel except for expenses and
fees allowed by the court, costs imposed by the court, and
preferred maritime liens. A preferred maritime lien is defined
as one arising before a preferred mortgage is filed; for damage
arising out of maritime tort; for wages of a stevedore; for wages
of the crew of a vessel; for general average; or for salvage. 46
U.S.C. § 31301(5).
Appellant’s water craft lien would not fall into these
categories and would, therefore, be subordinate to appellee’s
preferred mortgage. While appellant advances equitable concerns
in its brief, the priority of a mortgage holder will not be
subordinated absent inequitable conduct by the mortgagee which

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results in injury to other creditors or confers an unfair
advantage to the mortgagee. There is no inequitable conduct by
the mortgagee in the instant case rising to the level requiring a
finding of equitable subordination such as in Custom Fuel
Services, Inc. v. Lombas Industries, Inc., 805 F.2d 561 (5th Cir.
1986).
Accordingly, the summary judgment entered by the bankruptcy
court and affirmed by the district court is hereby AFFIRMED.

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