United States District Court, D. Maine
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Brock Hornby United States District Judge.
August 23, 2016, I conducted a bench trial of the Portland
Development Corporation (“PDC”)'s claim to a
maritime lien on the M/V Nova Star (“Nova Star”).
I heard closing arguments the next day. The following are my
findings of fact and conclusions of law. See
2013, Singapore Technologies Marine Ltd. (“ST
Marine”) and Quest Navigation, Inc.
(“Quest”) entered into a joint venture to operate
a ferry service between Yarmouth, Nova Scotia and Portland,
Marine and Quest incorporated Nova Star Cruises Ltd. in Nova
Scotia to operate the ferry service. ST Marine owned ten
percent of the company.
Star Cruises Ltd. chartered a vessel owned by ST Marine, the
M/V Nova Star, to make the crossing.
City of Portland wanted to restore Yarmouth-Portland ferry
service, which had lapsed in 2009.
City of Portland owned premises on the Portland waterfront
called Ocean Gateway.
City of Portland leased Ocean Gateway to Nova Star Cruises
Ltd. to serve as a location where the ferry could embark and
disembark passengers, passenger vehicles, and commercial
vehicles. The lease granted Nova Star Cruises Ltd.
unrestricted exclusive use over the office and ticketing
space at the Ocean Gateway departure building to be used for
ticketing operations and general passenger support purposes.
It also granted Nova Star Cruises Ltd. time-limited use-from
the hours of 5:00 p.m. to 11:00 p.m. during ferry season-over
the “queuing area” where cars, commercial
vehicles, and passengers would pass through U.S. Customs as
they embarked and disembarked the ferry. The lease granted
Nova Star Cruises Ltd. time-limited use-between 7:00 p.m. and
11:00 p.m. during ferry season-of the berthing channel at
Ocean Gateway. Nova Star Cruises Ltd. was also able to access
the berthing channel outside those hours if the channel was
reasonably available, but the City of Portland had a right to
assign a secondary berth to Nova Star Cruises Ltd. The lease
granted Nova Star Cruises Ltd. time-limited use-5:00 p.m. to
9:00 p.m. during ferry season-of the terminal building at
Ocean Gateway for the processing of passengers and related
functions by U.S. Customs.
Because the Portland-Yarmouth crossing is an international
crossing, the parties needed to accommodate United States
Border Patrol and Customs requirements, which included
alterations and additions to Ocean Gateway.
PDC, a nonprofit corporation operated by the City of
Portland, decided to enter into a loan agreement with Nova
Star Cruises Ltd. Initially, the PDC sought guarantees from
each of ST Marine and Quest. When that request was rebuffed,
the PDC sought a purchase money security interest in all
assets being financed, acquired, or installed under the loan
and a third security position on all business assets of Nova
Star Cruises Ltd. as collateral for its loan to Nova Star
Cruises Ltd. That request, too, was rebuffed. The staff of
the PDC recommended that the PDC nevertheless proceed with
the loan on an “unsecured” basis, because the
benefit to the City (improvements to Ocean Gateway,
employment, and the local economy) supported resuming ferry
service between Yarmouth and Portland. Ultimately the PDC
agreed that it would take no security interest in any
business assets of Nova Star Cruises Ltd., but that the City
of Portland would have actual ownership over the assets at
Ocean Gateway that the PDC loan financed.
PDC agreed to advance up to $250, 000 as an unsecured loan to
fund the alterations and additions to Ocean Gateway required
for the ferry service. Nova Star Cruises Ltd. signed a
promissory note to repay the advances at five percent
interest over a period of six years, the first payment
scheduled for May 1, 2014 and the final payment scheduled for
May 1, 2020. Nova Star Cruises Ltd. executed the loan
agreement and the promissory note through its President, Mark
Amundsen. Nova Star Cruises Ltd. designated the City of
Portland its agent to make the alterations and improvements
at Ocean Gateway and to advance the money for materials and
it turned out, Nova Star Cruises Ltd. terminated the ferry
service in 2015 after just two seasons.
number of creditors seized the M/V Nova Star through process
originating in this court, asserting maritime liens against
it. Most of the claims have been resolved, and ST Marine as
owner of the vessel posted a bond that allowed the vessel to