Is it a boat or a house?
Is it a boat or a house? That is the question that will be answered by the United States Supreme Court in the case of Fane Lozeman versus the City of Riviera Beach. Earlier this year Supreme Court heard oral arguments on the matter and maritime experts anxiously await the court's ruling.
The case began when the city of Riviera Beach arrested and sold Lozeman’s vessel for failure to pay dock fees and make improvements according to city officials. Lozeman in defending his position by asserting that the vessel was not a vessel of all and instead a home. He noted that it had no motor, no steering device, no GPS, was rectangular in shape and had no bow. It did, however, float on the water and if it were to be moved, it would have to be towed. The trial court in the Southern District of Florida disagreed with Lozeman and the vessel was sold to the City and then destroyed. Lozeman appealed to the 11th Circuit Court of Appeals in Atlanta. The case was again affirmed and the United States Supreme Court accepted jurisdiction over the case to determine the status of Lozeman’s property.
While this may seem to be a rather mundane issue, it has far-reaching effects across a broad spectrum of maritime interests. First, the lending industry is looking very closely at this case. Banks and other lenders that loan money for the purchase of boats and secure the loan with a preferred ship's mortgage are particularly interested in the outcome of Lozeman’s case. A preferred ship's mortgage is a superior and primary instrument that will operate to eradicate any secondary liens on the vessel once it has been arrested. If Lozeman’s craft is deemed to be a home, rather than a vessel, the banks will lose their priority position in so far as a preferred ship's mortgage is concerned. That means that banks will be less likely to loan money on boats since they will not be in a primary and superior position to other lien holders. This could have a chilling effect on the financing of vessels and thereby cause the manufacturing industry great pain.
Second, the gaming industry is looking also at this case with great interest. Across the nation, there are gambling barges that are currently being classified as non-vessels. If they are deemed to be vessels, the status of the crew will change from waiters, waitresses, dealers, etc. to those with Jones act status. The benefits enjoyed by any injured worker will change dramatically to the expense of the casino. Currently, the workers are protected by workers comp and not general maritime laws. The gaming industry wants to keep it that way in hopes the United States Supreme Court deems Lozeman’s craft a house not a vessel.
As you can see, there are competing interests in the outcome of this case. The Supreme Court grabbed this hot potato when it could've easily punted the issue. Whatever decision they make, some party will not be happy and will be hurt by the result. Stay tuned this could get interesting.
