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

633 F.Supp.3d 354

ST ENGINEERING MARINE, LTD., Plaintiff, v. THOMPSON, MACCOLL & BASS, LLC, Defendant.

2:20-cv-00327-JDL

United States District Court, D. Maine

Signed September 30, 2022

Lee H. Bals, Marcus Clegg, Portland, ME, for Plaintiff.

Benjamin Wahrer, Hillary J. Bouchard, James M. Bowie, Thompson Bowie & Hatch LLC, Portland, ME, for Defendant.

DECISION AND JUDGMENT

JON D. LEVY, CHIEF UNITED STATES DISTRICT JUDGE

Plaintiff ST Engineering Marine, Ltd. ("STEM") asserts a claim (ECF No. 1) for legal malpractice under Maine law against Defendant Thompson, MacColl & Bass, LLC ("TM & B"). A three-day bench trial was completed on March 30, 2022. The primary disputes between the parties are: (1) whether TM & B breached the applicable standard of care when it advised STEM in connection with a possible maritime lien asserted by a third party against a vessel owned by STEM; (2) if the advice that TM & B gave was erroneous, whether (a) STEM had the burden to show that the third party would not have been able to prove a maritime lien or (b) TM & B had the burden to show that the third party would have been able to prove a maritime lien; and (3) what the trial evidence revealed about whether the third party would have been able to prove the asserted maritime lien.¹

After hearing the testimony and carefully reviewing the parties' post-trial submissions (ECF Nos. 67, 68), I make the following findings of fact and conclusions of law. See Fed. R. Civ. P. 52(a). I first address the standards for breach of duty in a professional setting under Maine law. Finding that TM & B breached its professional duty to STEM when it provided erroneous legal advice, I then determine that STEM, as the plaintiff in a professional negligence action, held the burden of proving at trial that TM & B's negligent advice was the proximate cause of its injury. Based on the record evidence, I conclude that it is more likely than not that STEM would have prevailed in challenging the third-party lien claim, but-for TM & B's advice.

I. FINDINGS OF FACT

STEM is involved in shipbuilding, among other industries. After a shipbuilding contract was terminated by a prospective purchaser, STEM unexpectedly found itself as the owner of the M/V Nova Star. Although STEM was not in the business of owning and operating ships, it was able to lease the M/V Nova Star to Nova Star Cruises Ltd. ("Nova Star Cruises") in December 2013. Nova Star Cruises used the vessel to operate a ferry service. In addition to the lease agreement, STEM held a ten percent ownership share in NOVA Star Cruises. The lease agreement between STEM and Nova Star Cruises was a "bareboat" charter, meaning that Nova Star Cruises, not STEM, was responsible for all aspects of the vessel's operations and the associated expenses, including the cost of fuel.

While the M/V Nova Star was bareboat chartered to Nova Star Cruises, it was arrested in Portland, Maine, on October 31, 2015, by Portland Pilots, Inc., which asserted a maritime lien on the vessel for pilotage services. Following the arrest, other entities came forward to assert additional maritime-lien claims on the vessel. STEM, as the owner of the vessel, sought legal advice from TM & B in connection with the vessel's arrest and specifically inquired as to whether each of the asserted claims would in fact support a maritime lien.

One of the asserted maritime-lien claims was from Sprague Operating Resources, LLC ("Sprague") for fuel that it had supplied to the M/V Nova Star. The orders for this fuel had originated with Fleetpro Ocean Inc. ("Fleetpro"), a ship-management company that Nova Star Cruises had engaged to operate the M/V Nova Star. Bunkers International Corporation ("BIC")—a company that arranged fuel deliveries for charterers at different ports—had served as an intermediary between Fleetpro and Sprague. Fleetpro paid BIC for the fuel that Sprague had delivered, but BIC filed for bankruptcy and failed to pay Sprague. In Sprague's motion to intervene in the arrest proceeding, Sprague filed a proposed complaint alleging, on information and belief, that BIC had authority to procure necessaries for and establish liens on the M/V Nova Star, and that BIC was an agent for the benefit of the vessel.

An attorney from TM & B advised STEM in November 2015 that Sprague's maritime-lien claim was valid. The basis for this advice was the attorney's belief that, under First Circuit law, the direct supplier of fuel had a lien on the vessel if the fuel (1) was delivered and (2) had been ordered by someone with authority to do so, no matter how many intermediaries there were between the authorized person and the direct supplier. Sprague had supplied fuel to the vessel on June 12, 2015, and again on July 2, 2015, and was seeking $298,073. On TM & B's advice, STEM settled Sprague's claim for $267,366 and filed a claim in the BIC bankruptcy proceeding for the same amount. STEM was paid $5,526.96 from the bankruptcy claim. In the bankruptcy proceeding, STEM alleged that, in exchange for fuel, it had made two payments to BIC in the amounts of $156,460.73 and $157,729.23, each of which BIC wrongfully retained instead of paying Sprague.

Sprague had sent invoices to BIC for $147,354.92 and $149,719.28 for the two deliveries. In turn, BIC sent invoices addressed to Nova Star Cruises "and/or Master, Owners, Operators, Charterers, Managers, Managing Agents" for $156,460.73 and $157,729.23. Exhibit 18 at 1, 9. The associated purchase orders prepared by Fleetpro list Fleetpro "AS AGENTS FOR" Nova Star Cruises and BIC as the "Supplier." Exhibit 18 at 5, 11. The purchase orders also specify that BIC needed to communicate with the local shipping agent of the vessel, Inchcape Shipping Services ("Inchcape"), to coordinate the delivery to the vessel's master. The master and chief engineer of the M/V Nova Star stamped or signed Sprague's delivery receipts.

STEM's expert witness Frank DeGiulio, an experienced maritime lawyer, testified that BIC was a "one-stop shop[ ]" that allowed shipowners and charterers to arrange for fuel at any location in the world. ECF No. 60 at 15:12-18. He explained that, when a company like BIC delivers fuel, typically a barge carrying the fuel arrives at the vessel, there is a conversation or communication between the supplier and the chief engineer, the fuel is transferred, and the chief engineer signs the paperwork. The TM & B attorney who advised STEM similarly testified that businesses like BIC operate as "one-stop shop[s]" that deliver fuel to a given port within two or three days of a request.

Regarding the documentary evidence, DeGiulio concluded that Fleetpro—as the agent for Nova Star Cruises—contracted with BIC; BIC subcontracted out the order to Sprague; and neither Nova Star Cruises nor Fleetpro controlled the selection or performance of Sprague. DeGiulio cited that the purchase orders expressly refer to Fleetpro as an "AGENT[ ]" for Nova Star Cruises, expressly refer to BIC as the "Supplier," and do not mention Sprague. He also cited the fact that BIC charged Nova Star Cruises more for the fuel than Sprague charged BIC. He interpreted the fact that BIC billed Nova Star Cruises directly to mean that a contractual relationship existed between them that had been facilitated by Fleetpro as Nova Star Cruise's agent. Finally, DeGiulio testified that the signatures and stamps from the master and chief engineer on the fuel receipts reflect nothing beyond the fact that the vessel received the fuel from Sprague.²

Based on the testimony and the documentary evidence received in evidence, I find that STEM was not involved with the day-to-day operations of the M/V Nova Star because the lease between STEM and Nova Star Cruises was a bareboat charter. Nova Star Cruises contracted via its agent Fleetpro with BIC for the delivery of fuel to the vessel. BIC then contracted with Sprague for the same. 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.

II. CONCLUSIONS OF LAW

"[T]o prove attorney malpractice, a plaintiff must show (1) a breach by the defendant of the duty owed to the plaintiff to conform to a certain standard of conduct; and (2) that the breach of that duty proximately caused an injury or loss to the plaintiff." Reppucci v. Nadeau, 2020 ME 114, ¶ 7, 238 A.3d 994 (quoting Brooks v. Lemieux, 2017 ME 55, ¶ 9, 157 A.3d 798). I address whether TM & B breached its duty to STEM, and then I address proximate causation.

A. Breach of Duty

The Maritime Lien Act provides that "a person providing necessaries to a vessel on the order of the owner or a person authorized by the owner . . . has a maritime lien on the vessel." 46 U.S.C.A. § 31342(a) (West 2022). Fuel is a necessary. ING Bank N.V. v. M/V Temara, 892 F.3d 511, 515 (2d Cir. 2018). When analyzing a maritime-lien claim, certain persons are presumed to have the authority to order necessaries for a vessel, including the owner, the master, a person entrusted with the management of the vessel at the port of supply, and an "agent" appointed by the owner or charterer. 46 U.S.C.A. § 31341(a) (West 2022).

When TM & B advised STEM in November 2015 that Sprague had a maritime lien, the most recent First Circuit case analyzing the Maritime Lien Act was Cianbro Corp. v. George H. Dean, Inc., 596 F.3d 10 (1st Cir. 2010). In Cianbro, the court rejected lien claims against two vessels filed by a company that was hired to provide steel that was cut to certain specifications. Id. at 13-14. The company asserting the liens was a subcontractor to a subcontractor. Id. at 12-13. One of the reasons that the lien claims were rejected was that the evidence showed that the steel company had acted on the orders of the subcontractor who hired it, not the vessels' owners or any person authorized by the owners. Id. at 16-18.

In Cianbro, the First Circuit also acknowledged the "so-called ...