## Facts

- USL Capital (as agent for Ford Motor Credit Company) held a preferred ship mortgage on the vessel *New York 30*.
- Simpson Towing & Salvage Company, Inc. contracted with New England Marine Services (NEMS), the vessel’s owner, to provide towage services for NEMS barges; the agreement was made in 1986 and modified in 1987.
- NEMS purchased the *New York 30* in January 1988.
- Simpson performed towage services for NEMS from about June 1987 through June 1988, including services connected to the *New York 30*, and alleged NEMS failed to pay towage charges exceeding $160,000.
- On June 3, 1988, NEMS sued Simpson in the District of New Jersey over alleged damage to a different NEMS barge; related litigation also proceeded in the District of Massachusetts, and the actions were consolidated in Massachusetts.
- In the consolidated litigation, Simpson asserted a counterclaim and later obtained a final in personam judgment against NEMS for the unpaid towage charges.
- NEMS paid only part of that judgment and then entered bankruptcy, leaving a balance unpaid.
- In April 1995, USL filed a foreclosure action in the District of Massachusetts to foreclose its preferred ship mortgage against the *New York 30* (and sought related in personam relief).
- On June 12, 1995, the vessel was sold pursuant to court order, and the sale proceeds were held for distribution to claimants.
- In May 1995, Simpson moved to intervene in the foreclosure proceeding, asserting a maritime lien against the *New York 30* for the same towage services and seeking recovery from the sale fund.
- USL moved for summary judgment to dismiss Simpson’s complaint-in-intervention, arguing Simpson’s in rem claim was barred by res judicata because Simpson had already reduced the towage debt to an in personam judgment against NEMS.

## Issues

1. Does res judicata bar a maritime lienholder from bringing an in rem action against a vessel to recover unpaid towage charges when the lienholder previously obtained an in personam judgment against the vessel’s owner for the same debt?
2. Does a maritime lien merge into, or become extinguished by, a prior in personam judgment absent satisfaction of the judgment or a clear waiver of the lien?

## Decision

- The court denied USL’s motion for summary judgment.
- The court held that Simpson’s prior in personam judgment against NEMS did not, by itself, preclude Simpson from asserting an in rem maritime lien claim against the *New York 30* (and the judicial sale proceeds).
- The court found no showing, on this record, that Simpson’s lien rights were extinguished through satisfaction of the judgment or a clear waiver/election that would bar an in rem remedy.
- The case could proceed with Simpson’s lien claim to the sale fund, subject to maritime priority rules and the rule against double recovery.

## Legal Principles

- Claim preclusion generally requires a final judgment on the merits, identity (or privity) of parties, and identity of the cause of action.
- In admiralty, an in rem action against a vessel is a distinct proceeding in which the vessel is treated as the defendant; it is not merely a second suit against the owner in a different form.
- A maritime lien arises when qualifying maritime services (including towage) are furnished to a vessel and constitutes a property interest in the vessel that can be enforced in rem.
- Obtaining an in personam judgment on the underlying maritime debt does not automatically merge or extinguish the maritime lien; extinguishment typically requires satisfaction of the debt or a clear and intentional waiver of the lien remedy.
- A creditor may pursue in personam and in rem remedies for the same maritime obligation, but may not obtain a duplicative recovery.

## Conclusion

The court ruled that Simpson’s earlier personal judgment against NEMS for unpaid towage charges did not automatically bar Simpson from asserting a maritime lien in rem against the *New York 30* and the judicial sale proceeds; without satisfaction of the judgment or a clear waiver, res judicata did not require dismissal of the lien claim.


USL Capital v. New York 30, 975 F. Supp. 382 (1996)