ST Eng'g Marine, Ltd. v. Thompson, Maccoll & Bass, LLC

88 F.4th 27

ST ENGINEERING MARINE, LTD., Plaintiff, Appellee, v. THOMPSON, MACCOLL & BASS, LLC, P.A., Defendant, Appellant.

No. 22-1844

United States Court of Appeals, First Circuit

December 6, 2023

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MAINE [Hon. Jon D. Levy, U.S. District Judge]

James M. Bowie, with whom Thompson Bowie & Hatch LLC was on brief, for appellant.

Lee H. Bals, with whom Marcus Clegg was on brief, for appellee.

Before Rikelman, Selya, and Howard, Circuit Judges.

SELYA, Circuit Judge.

Following a bench trial, the district court found that a law firm, defendant-appellant Thompson, MacColl & Bass, LLC, P.A. (TM&B), had breached its duty of care in advising its quondam client, plaintiff-appellee ST Engineering Marine, Ltd. (STEM), about the viability of a maritime lien. The district court further found that TM&B's negligence was the actual and proximate cause of STEM's loss and awarded STEM damages in the amount of $261,839.04. TM&B appeals. Affording due deference to the district court's findings of fact, we affirm.

I

We briefly rehearse the relevant facts and travel of the case. In 2013, STEM owned the M/V Nova Star. At that time, it entered into a bareboat charter agreement for the vessel with Nova Star Cruises Ltd. (NSC). NSC assumed responsibility for all aspects of the vessel's operations and associated costs (including providing and paying for bunker fuel). It hired the ship-management company Fleetpro Ocean Inc. (Fleetpro) to operate the M/V Nova Star as its agent.

In June of 2015, Fleetpro contacted Bunkers International Corporation (BIC), a firm that arranged the delivery of fuel for charterers, to supply fuel for the M/V Nova Star. Fleetpro proceeded to send BIC purchase orders for two sales. Each purchase order laid out the details of the particular sale, listed Fleetpro "AS AGENTS FOR" NSC, and listed BIC as the "Supplier."

BIC thereafter engaged Sprague Operating Resources, LLC (Sprague) to supply fuel to the vessel. Neither the vessel's owner, its master, nor Fleetpro had any involvement in the selection of Sprague as the fuel vendor.

Withal, Sprague supplied fuel to the M/V Nova Star on two separate occasions. At the end of each delivery, the master and chief engineer of the vessel signed or stamped the fuel receipts. Sprague sent an invoice to BIC after each delivery ($147,354.92 for the first delivery and $149,719.68 for the second delivery). In turn, BIC sent invoices to NSC "and/or Master, Owners, Operators, Charterers, Managers, Managing Agents" for $156,460.73 and $157,729.23. Fleetpro paid BIC, but BIC filed for bankruptcy without paying Sprague.

Months later, the M/V Nova Star was arrested at the instance of a company asserting a maritime lien for unpaid services. In the ensuing melee, several other entities (including Sprague) purposed to assert maritime liens on the vessel. Pertinently, Sprague alleged that it had acquired its maritime lien of $297,074.60 upon supplying the M/V Nova Star with fuel.

With its vessel embroiled in numerous legal actions, STEM turned to TM&B for legal advice. STEM asked TM&B to analyze the flurry of lien claims and assess the validity of each claim so that STEM could decide which claims should be resisted (that is, bonded but not paid) and which claims should be settled. In mid-November 2015, a TM&B attorney and STEM's president and in-house counsel exchanged multiple emails. The attorney advised that Sprague's lien should be honored and its claim paid. In one of his November 16, 2015, emails, the attorney added:

Dear All,

I have reviewed the lien claims and have requested back-up documents from the claimants. Once we get the back-up documents, I will provide my comments on the bona fide nature of the lien claims.

. . . Sprague Energy is the provider of bunker on the order of [BIC] . . . . Sprague has attached to its complaint copies of the bunker receipts for its two deliveries, both signed by the Master. I understand that BIC is the bunker trader that filed for bankruptcy protection . . . .

If BIC was acting as agent or broker for the ship and ordered bunkers for the ship from Sprague and then filed in bankruptcy, the fact that Fleetpro paid BIC would not help us in the lien claim filed by the innocent provide[r] that actually delivered the bunkers. Our recourse is to file a claim in the BIC bankruptcy proceeding for the amount paid to Sprague. [STEM] would in effect step into the position of Sprague claiming against BIC.

Acting on TM&B's advice, STEM proceeded to settle Sprague's claim for $267,366. It then filed a counterpart claim in the BIC bankruptcy proceeding for an equivalent sum. But in the end, STEM recovered only $5,526.96 as a result of its bankruptcy claim.

In September of 2020, STEM sued TM&B for professional negligence. STEM alleged that TM&B had advised it that Sprague possessed a valid maritime lien on the M/V Nova Star and that the only way to extinguish the lien was by paying Sprague for the fuel it had supplied. In providing this advice, STEM alleged, TM&B fell below the standard of care that it owed to STEM and was negligent. As STEM saw the matter, TM&B negligently failed to advise it that the governing law was "unsettled generally and in a state of transition"; that there was no controlling decision on the issue in the District of Maine; that further investigation into Sprague's claim was needed; that STEM could try to provide security to obtain the release of the M/V Nova Star while contesting Sprague's lien claim; and that there were legal arguments that could be made to defeat Sprague's claim. Because it paid Sprague "as a direct and proximate result" of TM&B's negligent advice, STEM averred, it was entitled to recover damages from TM&B.

TM&B denied that its legal advice fell below the applicable standard of care but it did not deny that it had advised STEM that Sprague had a valid lien. Pretrial discovery ensued, followed by a three-day bench trial. The district court ruled in favor of STEM. See ST Eng'g Marine, Ltd. v. Thompson, MacColl & Bass, LLC, 633 F. Supp. 3d 354, 365 (D. Me. 2022). In the process, the court found that Sprague was a subcontractor. See id. at 357. It then found that "STEM, Nova Star Cruises, and Fleetpro did not control the selection or performance of Sprague, nor did they have other dealings with Sprague apart from the routine acceptance of the delivery." Id. at 357-58.

In its conclusions of law, the court held that TM&B breached the duty of care that it owed to STEM. See id. at 361. The most recent First Circuit case concerning maritime liens at the time TM&B advised STEM (November of 2015) was Cianbro Corp. v. George H. Dean, Inc., 596 F.3d 10 (1st Cir. 2010), which established that "a subcontractor who was not directly ordered to provide necessaries can assert a lien if 'it can be shown that an entity authorized to bind the ship controlled the selection of the subcontractor and/or its performance.' " ST Eng'g Marine, 633 F. Supp. 3d at 358 (quoting Cianbro, 596 F.3d at 17). Nevertheless, TM&B predicated its advice on the older case of Tramp Oil & Marine, Ltd. v. M/V Mermaid I, 805 F.2d 42 (1st Cir. 1986), and failed to "account for Cianbro's analysis of the issue." ST Eng'g Marine, 633 F. Supp. 3d at 359-60. The court further concluded that — by not conducting legal research beyond Tramp Oil and by not rereading any of the cases cited and/or relied upon in Cianbro — TM&B furnished advice based on an "erroneous interpretation of the controlling law at the time." Id. at 361. TM&B — the district court determined — thereby failed to exercise due diligence in investigating Sprague's lien claim and, thus, breached the professional duty that it owed to STEM. See id.

The district court proceeded to find that this breach of duty proximately caused STEM's loss: "it is more likely than not that STEM would have been able to prove in the underlying arrest proceeding that BIC was not acting as an agent of STEM, Nova Star Cruises, or Fleetpro." Id. at 365. So, STEM proved "by a preponderance of the evidence that it would have prevailed in the arrest proceeding on Sprague's maritime lien claim but for TM&B's negligent advice." Id. The court concluded its decision by ordering TM&B to pay STEM $261,839.04 in damages. See id.

This timely appeal ensued.

II

When a district court conducts a bench trial, we review de novo its legal conclusions. See United States v. 15 Bosworth St., 236 F.3d 50, 53 (1st Cir. 2001). This review encompasses "determinations about the sufficiency of the evidence." Aadland v. Boat Santa Rita II, Inc., 42 F.4th 34, 41 (1st Cir. 2022) (quoting 15 Bosworth St., 236 F.3d at 53). The district court's factual findings are, of course, reviewed for clear error. See id.; see also Fed. R. Civ. P. 52(a)(6) ("Findings of fact, whether based on oral or other evidence, must not be set aside unless clearly erroneous, and the reviewing court must give due regard to the trial court's opportunity to judge the witnesses' credibility."). The clear error standard is deferential and, where it applies, we will not overturn a factual finding unless — on the whole of the record — we are "left with the definite and firm conviction that a mistake has been committed." United States v. U.S. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948).

Although the parties do not raise the question, "we have an obligation to inquire into our subject matter jurisdiction sua sponte." One & Ken Valley Hous. Grp. v. Me. St. Hous. Auth., 716 F.3d 218, 224 (1st Cir. 2013). Here, that inquiry reduces to a determination as to whether we are sitting in diversity jurisdiction or in admiralty jurisdiction.

STEM's cause of action sounds in legal malpractice (a tort arising under the common law). STEM is a business entity organized under the laws of Singapore and has its principal place of business there. TM&B is a professional services company organized under Maine law, which maintains its principal...