Reported / Citable
Background
Trailer Bridge, a freight service company, chartered two oceangoing barges—the ATLANTA BRIDGE and the MEMPHIS BRIDGE—to Work Cat Trans Gulf in August 2020. The charter agreement contained a standard “no-lien” clause prohibiting Work Cat from allowing liens to attach to the barges. Work Cat, in turn, separately chartered two tugboats from Louisiana International Marine (LIM) in November 2020 to tow the barges along a Gulf Coast route between Tampa and Brownsville. LIM began performing towage services on December 11, 2020, but Work Cat paid only two weeks of invoices before filing for bankruptcy in May 2021, leaving LIM with over $1.3 million in unpaid towage, fuel, and lubricant charges.
LIM filed notices of maritime lien claims against the barges with the National Vessel Documentation Center. After Trailer Bridge sold the barges to third parties and stepped in to defend them under its purchase agreements, it filed suit in the Eastern District of Louisiana seeking a declaration that no lien had attached. LIM counterclaimed in rem against the barges for approximately $1.56 million in unpaid towage and $361,000 in fuel and lubricant costs, and cross-claimed for attorney’s fees. Following a two-day bench trial, the district court upheld LIM’s maritime liens—valued at roughly $863,000 against the MEMPHIS BRIDGE and $630,000 against the ATLANTA BRIDGE—but denied attorney’s fees to both sides. Both parties appealed.
The Court’s Holding
The Fifth Circuit affirmed the district court in full. Writing for the panel, Judge Jones held that LIM’s towage services satisfied all three requirements for a maritime lien under the Commercial Instruments and Maritime Liens Act (CIMLA): towage is an enumerated “necessary,” the barges are vessels, and Work Cat’s agents were presumed authorized as charterers to procure necessaries on the owner’s behalf under 46 U.S.C. § 31341(a)(4). The no-lien clause in the barge charter was ineffective to defeat LIM’s lien because LIM did not receive the charter—and thus did not have actual knowledge of the clause—until December 20, 2020, nine days after it had already begun performance under a contract executed on November 12, 2020. Under Fifth Circuit precedent, actual knowledge must precede the formation of the contract, not merely its performance.
The court also rejected Trailer Bridge’s argument that LIM had an independent duty of reasonable diligence to investigate whether a no-lien clause existed. Congress removed that duty when it amended the predecessor statute in 1971, and the court held—consistent with the broad statutory text covering all providers of “towage” and other enumerated services—that LIM as a towage provider is a “materialman” covered by CIMLA and therefore benefits from that elimination. On lien value, the court upheld inclusion of standby (port) time in the lien calculation under its Trico Marine precedent but affirmed exclusion of fuel and lubricant costs, which were necessaries provided to the tugs rather than to the barges, and which the contract separately itemized from the day rate.
On attorney’s fees under 46 U.S.C. § 31343(c)(2), the court held the district court did not abuse its broad discretion in directing each side to bear its own costs. Because attorney’s fees cannot form part of a maritime lien (they are not necessaries), they must be awarded in personam, and there was no independent substantive basis for Trailer Bridge’s personal liability to LIM beyond the existence of the lien itself. The court also rejected Trailer Bridge’s arguments that LIM’s claims were discharged in Work Cat’s bankruptcy—noting that 11 U.S.C. § 524(e) limits discharge to the debtor’s own obligations—and that prejudgment interest running from the last unpaid invoice was an abuse of discretion.
Key Takeaways
- A no-lien clause in a vessel charter defeats a maritime lien only if the supplier had actual knowledge of the clause before contracting; knowledge acquired after the contract is formed—even if communicated in a customary and reliable manner—comes too late.
- Under CIMLA as amended in 1971, providers of towage and other enumerated necessaries have no duty of reasonable diligence to investigate whether a charter contains a no-lien provision; the burden falls on vessel owners to give timely notice.
- Standby and port time are lienable components of a towage contract structured on day rates, but consumable costs (fuel, lubricants) supplied to the towing vessel are not necessaries provided to the towed vessel and cannot be included in the lien.
- A charterer’s bankruptcy discharge does not extinguish maritime liens against the chartered vessel or the vessel owner; it reduces the lien only by amounts actually recovered in the bankruptcy.
- Attorney’s fees under CIMLA § 31343(c)(2) are discretionary and must be awarded in personam; absent an independent basis for personal liability, a court may equitably decline to award them even to the prevailing party.
Why It Matters
This decision reinforces a practical asymmetry in maritime commerce: vessel owners who want no-lien clauses to actually protect their ships must affirmatively communicate those clauses to service providers before any contract is signed. Burying the restriction in a charter agreement and hoping suppliers will discover it on their own is insufficient. For maritime lenders, operators, and insurers, the case is a reminder that the strong federal presumption in favor of maritime lien formation—combined with Congress’s 1971 elimination of the supplier’s duty of inquiry—places the compliance burden squarely on the owner’s side of the transaction.
The court’s treatment of standby time and fuel costs also has practical significance for the offshore energy and towing industries, where complex multi-party charter arrangements are common. Day-rate towage contracts will include port standby time in any resulting lien, but suppliers cannot bootstrap their own vessel’s consumables into a lien against the towed vessel merely by including those costs in the charter. Parties structuring towage agreements should itemize costs carefully with these lien consequences in mind.