526 B.R. 127
E.D. Pa.2015Background
- OEC Group New York is an NVOCC that ships for World Imports, Ltd. Debtors filed Chapter 11 on July 3, 2013 and sought turnover of goods held by OEC.
- OEC claimed a maritime lien on goods in its possession (Landed Goods) and on Prepetition Goods; total owed included Landed, Prepetition, and Goods in Transit charges.
- Debtors offered to pay approximately $120,000 to OEC for turnover of Landed Goods; OEC refused.
- Bankruptcy Court granted turnover upon payment of $120,000 and held no maritime lien on Prepetition Goods; ruled the lien could not extend to previously delivered goods.
- OEC appealed on August 1, 2013 arguing (i) contractual maritime liens extend to Prepetition Goods and (ii) such liens prime UCC security interests; Bankruptcy Order affirmed on January 22, 2015.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether maritime lien can be extended toPrepetition Goods | OEC contendsBird of Paradise allows extension | World Imports argues lien restricted to landed goods | No extension; lien limited to existing shipment per precedent |
| Whether maritime liens can extend to prime UCC interests | OEC asserts lien primes UCC interests | Debtors contend no valid maritime lien for Prepetition Goods | Maritime liens cannot be asserted without a valid lien; cannot prime here |
Key Cases Cited
- The Bird of Paradise, 72 U.S. 545 (U.S. Supreme Court 1866) (limited scope of extending/modifying maritime liens; not to pre-delivery shipments beyondنت)
- The Eddy, 72 U.S. 481 (U.S. Supreme Court 1866) (recognizes extension/modification for certain deliveries; context-specific)
- In re 4,885 Bags of Linseed, 66 U.S. 108 (U.S. Supreme Court 1861) (delivery conditional; keeps lien if goods in warehouse; supports lien extension rationale)
- Osaka Shosen Kaisha v. Pacific Export Lumber Co., 260 U.S. 490 (U.S. Supreme Court 1923) (maritime liens arise by operation of law; strict construction; limited extension)
- Atlantic Richfield Co. v. Good Hope Refineries, Inc., 604 F.2d 865 (5th Cir. 1979) (rejects expansive interpretation of lien extending to other cargo)