Does the definition of “vessel” in 1 U.S.C. § 3 include, and thus grant federal maritime jurisdiction over, indefinitely-moored structures like Lozman’s houseboat that are capable of transportation where their owners never intend to use them in that way?
The City of Riviera Beach seized Fane Lozman’s houseboat after he did not comply with new city regulations. The Eleventh Circuit Court of Appeals affirmed the district court’s holding that the indefinitely moored houseboat was a “vessel” for purposes of maritime jurisdiction under 1 U.S.C. § 3. Lozman argues that courts should interpret “vessel” purposively and that his houseboat was not a vessel because its purpose was not to transport people or goods. The City of Riviera Beach counters that the definition of “vessel” requires a capability test that asks merely if the structure is capable of transporting people or goods. Additionally, both parties and the U.S. Solicitor General argue the subsequent purchase and destruction of Lozman’s houseboat by the City of Riviera Beach does not render the case moot because of a $25,000 security bond that the City posted. The Supreme Court’s decision in this case may reshape the role of state and federal courts in some maritime matters. The decision could also expand current maritime legislation to apply to structures such as casino boats or floating homes, or remove federal legislative protections for maritime lenders.
Questions as Framed for the Court by the Parties
Whether a floating structure that is indefinitely moored receives power and other utilities from shore and is not intended to be used in maritime transportation or commerce constitutes a "vessel" under 1 U.S.C. § 3, thus triggering federal maritime jurisdiction.
The res in the putative in rem admiralty proceeding was sold at judicial auction in execution of the District Court’s judgment on a maritime lien and maritime trespass claim, and subsequently destroyed. Does either the judicial auction or the subsequent destruction of the res render this case moot?
From March 2006 to April 2009, Fane Lozman docked his houseboat at the City of Riviera Beach (“the City”) Marina and used the houseboat as his primary residence. When Lozman first docked at the marina, he signed an initial dockage agreement with the City.
On June 14, 2007, the city council passed new rules for the marina. The new rules include requirements that all houseboat owners docked at the marina have a specified amount of insurance coverage, show proof of valid registration, and sign a new dockage agreement with the City. The City sent Lozman three notice letters, in July, November, and January, describing the new requirements. Lozman claims that he did not receive any of these letters, although he did admit to receiving a fourth letter in March 2008. This fourth letter stated that the City would evict him from the Marina unless he brought the houseboat into compliance with the new regulations and paid an outstanding balance with the Marina. In March 2008, the City inspected houseboats at the Marina for compliance, and found that Lozman had not corrected the deficiencies.
On April 20, 2009, the City “arrested" the houseboat and filed an admiralty claim in the United States District Court for the Southern District of Florida. Lozman filed a motion the next day to dismiss the complaint and return the houseboat, which the court rejected on April 23, 2009. The district court found that the residence was a “vessel” for purposes of admiralty jurisdiction, and further found that the houseboat had been trespassing on City property. Additionally, Lozman owed the City $3,039.88 in delinquent payments and a total of $3,053.26. In March 2010, the city put the houseboat up for auction, and bought it as the highest bidder. Rather than pay for keeping the houseboat, the city destroyed it.
On August 19, 2011, the United States Court of Appeals for the Eleventh Circuit affirmed the grant of jurisdiction and damages, without addressing the question of mootness, and Lozman appealed. The Supreme Court granted certiorari on February 21, 2012 on the question of whether the houseboat was a “vessel” under the definition of 1 U.S.C. § 3.
Federal courts exercise exclusive maritime jurisdiction over vessels. Federal law defines a vessel as a “watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water” Lozman argues that a structure’s intended purpose should determine its status as a “vessel” under the statute. On the other hand, the City argues that the structure’s practical capability as a means of transportation is determinative. As a separate matter, both parties and the Solicitor General of the United States agree that the case is not moot, even though the City purchased Lozman’s houseboat at auction and subsequently destroyed it.
Owner’s Purpose versus the Structure’s Capabilities
Lozman advances a purposive interpretation of 1 U.S.C. § 3 that looks at whether the owner intends to use the alleged “vessel” for transportation. To support this interpretation, Lozman appeals to ordinary and legal definitions of the words “transportation” and “capable.” On the ordinary usage of “transportation,” Lozman notes that Webster’s Dictionary defined transportation in 1873 as “[t]he act of transporting, carrying, or conveying from one place to another” and defined transportation in 1989 as “conveyance of passengers, goods, or materials esp. as a commercial enterprise.” Lozman argues that the legal usage of transportation has remained static in Black’s Law Dictionary published since 1891, which today defines transportation as “[t]he movement of goods or persons from one place to another by a carrier.”
Next, Lozman argues that the word “capable” has both a broad meaning (“within the realm of conceivability”) and a narrow meaning (“purpose or suitability for performing some function”). To establish that “capable” in 1 U.S.C. § 3 adopts the latter view, Lozman first cites Holloway v. United States in which the Court notes that a word’s meaning in a statute depends not “only [on] the bare meaning of the critical word or phrase but also its placement and purpose in the statutory scheme.” Second, Lozman appeals to Benedict’s on Admiralty, a leading treatise on admiralty law, which argues that the “purpose and business” of an alleged vessel determines whether it actually is a vessel.
The City counters that the definition of a vessel relies on a “practical-capability test,” which holds that any floating structure that is capable of transporting people or goods over water constitutes a vessel under 1 U.S.C. § 3. In support of a capability interpretation, the City starts from the premise that the Court announced in Hertz Corp. v. Friend that jurisdictional rules should be “as simple as possible.”
The City argues that the plain language of 1 U.S.C. § 3 confers federal jurisdiction on two kinds of vessels because the statute distinguishes between vessels that are “used, or [those] capable of being used” for transportation. The City asserts that this distinction is significant under the principle of statutory construction that “no clause, sentence, or word shall be superfluous.” From this principle, the City argues that the latter category (“capable of being used”) must encompass at least some vessels that the former category (“used”) does not cover. Finally, while Lozman tracked the ordinary usage of “transportation” from the enactment of 1 U.S.C. § 3 to today, the City focuses on the usage of “capable” over the same time frame. Particularly, the City argues that the inclusion of “capable” in 1 U.S.C. § 3, based on its ordinary usage, necessarily implies that the definition of a vessel encompasses objects beyond those for which transportation is the primary purpose.
Lozman and the City Disagree Over the Applicable Interpretation of Supreme Court Precedent
Lozman cites a series of Supreme Court cases that support the application of a purposive test to the definition of a vessel. In Cope v. Vallette Dry Dock Co., the Court held that a drydock is not a vessel under 1 U.S.C. § 3 because it is “permanently moored by means of large chains.” Additionally, in Evansville & Bowling Green Packet Co. v. Chero Cola Bottling Co., the Court held that a wharfboat, a floating structure used primarily as a business office, was not a vessel under 1 U.S.C. § 3 because it “performed no function that might not have been performed as well by an appropriate structure on the land.” Finally, Lozman distinguishes Stewart v. Dutra Constr. Co. on the ground that the Court’s holding that a harbor dredge is a vessel is consistent with precedent.
Nevertheless, the City argues that the line of cases that Lozman cites in favor of a purposive interpretation actually bolster the case for a capability interpretation. First, the City argues that the drydock in Cope was not a vessel because it “could not be practically used” for transportation. Thus, the City argues that Cope’s holding extends past a narrow, purposive interpretation into a broad, capability interpretation. The City argues that the holding in Evansville is similarly broad because, although the owners of the wharfboat moved it every winter to protect it from ice damage, the owners also physically attached the wharfboat to the land in a manner that rendered the wharfboat not “practically capable of being used as a means of transportation.” Finally, the City argues that the holding in Dutra Constr. Co. rejected the First Circuit’s “primary purpose” test and established that an object’s status as a vessel under 1 U.S.C. § 3 hinges on whether transportation “is a practical possibility or merely a theoretical one.”
Mootness based on the City’s Purchase (and Subsequent Destruction) of Lozman’s Houseboat
The Solicitor General, quoting the Supreme Court in Camreta v. Greene, argues that a case is moot if, at any point during the litigation, no judicial ruling would affect the parties. The Solicitor General argues the standard for mootness is strict, quoting Chief Justice John Marshall as stating that a case is not moot if “the judgment will have any effect whatever.” Here, the Solicitor General argues that a $25,000 security bond posted by the City does not render the judgment moot because a ruling for Lozman will compensate Lozman from the bond money.
Lozman and the City argue that the judicial auction and subsequent destruction of the houseboat has not rendered the case moot. The City notes that the mootness doctrine has specific rules for in rem actions, such as the present case against Lozman’s houseboat. Although the City destroyed the initial res in this case, Lozman’s houseboat, the City argues that the auction proceeds constitute a “substitute res” for the destroyed houseboat. To support this argument, the City relies on the Court’s holding from Republic National Bank v. United States that the case there was not moot because the government could transfer proceeds from the sale of the original res to the claimant if the claimant prevailed.
Lozman largely echoes the City’s view, arguing that the court’s judgment here is not “useless” because the City has never renounced its claim against Lozman’s houseboat. Moreover, Lozman notes that if the Supreme Court reverses, the District Court may compensate Lozman for his losses. Lozman argues that such a possibility of compensation represents a “live case or controversy . . . over who is the rightful owner of that money [from the judicial auction].”
The Court’s determination of whether Lozman’s houseboat is a “vessel” presents many policy issues. First, the case presents concerns over the balance of authority between federal and state governments in regulating certain areas. Second, the decision’s impact could affect other indefinitely moored structures, such as oil rigs or riverboat casinos, and alter the contours of maritime law with respect to other areas of law.
Lozman asserts that classifying the houseboat as a “vessel” creates federalism concerns. He contends that because his houseboat is not engaged in maritime transport or interstate commerce, there is no federal interest in regulating it—or similar structures—uniformly across the states. Lozman notes that regulating homes and local small businesses are some of the most traditional local governmental privileges. One group of maritime law professors argue that the dispute in this case is essentially one between a landlord and tenant, an area of law sensitive to local conditions. They note that landlord-tenant law varies from state-to-state due to differing urbanization rates, alternative dispute resolution mechanisms, and histories between the landlords and the tenants. The American Gaming Association (“AGA”) adds that a ruling granting jurisdiction could affect dockside casinos and the role states play in licensing, regulating, and supervising the gambling industry.
In response, the Maritime Law Association of the United States (“MLAUS”) highlights that the Constitution grants the federal government exclusive jurisdiction in admiralty cases. It also argues that an expansion of maritime jurisdiction is not a concern because it only applies to “vessel[s] in navigation.” Because structures not used in transportation, such as casinos and floating homes, do not navigate U.S. waters, there would be no extension of maritime laws converting blackjack dealers and homeowners into “seamen” who are subject to federal, rather than state, regulation and jurisdiction. Additionally, the City claims that if the definition of “vessel” were a state matter, it would hopelessly muddy jurisdictional questions. Every case involving structures that are capable of maritime transportation would have to apply state law, possibly including a determination of whether the owner of the structure intends to use it for transportation.
Scope of Admiralty Jurisdiction and Regulation
A group of maritime law professors argues that if Lozman’s houseboat is a “vessel,” many other floating structures will become subject to admiralty law despite there being no functional reason why. One particular area of concern would be the expansion of maritime liens, requiring contractors to account for their existence and owners to purchase maritime insurance. Lozman emphasizes that maritime liens exist to ensure that owners cannot avoid paying for work performed on their vessels by relocating the vessel. This is not a concern with indefinitely moored structures. The Seattle Floating Homes Association (“SFHA”) and the Floating Homes Association of Sausalito (“FHAS”) note that many owners of floating homes could be subject to legal rules designed to facilitate maritime transportation. For example, they argue that Coast Guard regulation 33 C.F.R. § 173.55 could require homeowners to submit detailed reports to the federal government for simple home repairs.
The City notes that admiralty jurisdiction historically has a broad scope because structures that are practically capable of transportation over water are able to move, thus can avoid paying for services. Although Lozman’s houseboat may be “indefinitely moored,” Lozman had moved it over water before this dispute, showing that it was at least possible that he could remove it from the Marina. Furthermore, some admiralty and maritime law professors argue that courts have classified houseboats as vessels without the adverse consequences asserted by Lozman and other amici. The National Marine Bankers Association (“NMBA”) asserts that narrowing the scope of admiralty jurisdiction will convert ship mortgages to real estate mortgages, removing lenders’ collateral. This would create uncertainty and risk in the marine lending industry, leading to higher interest rates and a smaller number of lenders in the industry.
The City seized—and subsequently destroyed—Lozman’s houseboat after Lozman failed to comply with new city regulations. The Eleventh Circuit Court of Appeals affirmed the district court’s holding that Lozman’s houseboat constituted a “vessel” for purposes of maritime jurisdiction under 1 U.S.C. § 3 and that Lozman’s houseboat trespassed on city property. Lozman argues that the Supreme Court should purposively interpret 1 U.S.C. § 3 and that consequently his floating home was not a vessel because its purpose was not to transport people or goods. The City counters that the Supreme Court should apply a capability test, under which a structure is a vessel if it capable of such transportation. As an additional matter, both parties and the U.S. Solicitor General believe that, even though the City destroyed Lozman’s floating home, that the case is not moot because of the $25,000 security bond that the City posted. Because of its impact on the scope of federal maritime jurisdiction, this case may reshape the allocation of legal matters between state and federal governments. Lozman and amici argue that his dispute with the City is essentially a landlord-tenant matter that is traditionally a state law matter. The City and its amici counter that a constrained view of “vessels” would frustrate the uniformity of federal maritime law. Finally, the Court’s view on maritime law’s boundaries could affect other floating structures, requiring many contractors and businesses to purchase maritime insurance and comply with other rules.