2015 -- H 5629

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LC001651

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2015

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A N   A C T

RELATING TO PROPERTY -- DRY DOCK FACILITIES

     

     Introduced By: Representatives Marshall, Costantino, Winfield, O`Grady, and Gallison

     Date Introduced: February 25, 2015

     Referred To: House Judiciary

     It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 34-46-2, 34-46-3, 34-46-4, 34-46-5, 34-46-6 and 34-46-7 of the

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General Laws in Chapter 34-46 entitled "Dry Dock Facilities" are hereby amended to read as

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follows:

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     34-46-2. Definitions. -- As used in this chapter, the following words shall have the

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following meanings unless the context clearly indicates otherwise:

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      (1) "Default" means the failure to pay obligations incurred by the storage of a vessel.

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      (2) "Dry dock" means any space and/or real property designed and used for the purpose

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of renting or leasing storage space for vessels.

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      (3) "Facility" means a marina, boatyard, or marine repair facility that provides, as part of

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its commercial operation, the storage of vessels.

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      (4) "Last known address" means that address provided by the owner in the latest rental

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agreement or the address provided by the owner in a subsequent notice of a change of address.

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      (5) "Lien holder" means a person holding a security interest.

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      (6) "Operator" means the proprietor, operator, lessor, or sublessor of a dry dock facility,

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his or her agent, or any other person authorized by him or her to manage the facility or to receive

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rent from the owner under a rental agreement.

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      (7) "Owner" means a person, other than a lienholder, having a property interest in or title

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to a vessel. The term includes a person entitled to use or have possession of a vessel subject to an

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interest in another person, reserved, or created by agreement and securing payment or

 

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performance of an obligation, but it does not include a lessee under a lease not intended as

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security.

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      (8) "Personal property" means movable property not affixed to land and includes, but is

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not limited to equipment, goods, furniture, and household items whether affixed to the vessel or

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not.

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      (9)(8) "Rental Storage agreement" means any written agreement or lease that establishes

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or modifies the terms, conditions, rules, or any other provisions concerning the storage of a vessel

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in a dry dock facility.

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      (10)(9) "Vessel" means every description of watercraft used or capable of being used as

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a means of transportation on water and any personal property located thereon and shall include its

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appurtenances, engines, tackle, sales, generators, electronics, gear, bunkers and contents.

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     34-46-3. Lien. -- (a) Lien created. - A facility operator has a lien on a vessel stored or

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located at that facility for storage charges, labor, or other charges and for expenses reasonably

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incurred in the sale of that vessel under the provisions of this chapter including, but not limited to,

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reasonable attorneys' fees and costs.

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      (b) Exclusion. - This chapter does not create a lien on a documented vessel subject to a

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preferred ship mortgage or other preferred maritime lien pursuant to 46 U.S.C. § 31301 et seq.

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     34-46-4. Notice of lien. -- (a) A vessel owner must be notified The facility operator must

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provide notice of the lien created by this chapter before enforcement of the lien by a facility

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operator it may enforce the lien. Notification of the lien created by this chapter is satisfied by

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either of the following:

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      (1) Written storage agreement. - A written storage agreement signed by the vessel owner

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that includes the following language in bold, capitalized font: "BEWARE—THE VESSEL AND

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ITS CONTENTS MAY BE SOLD AT PUBLIC AUCTION FOR FAILURE TO PAY

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STORAGE CHARGES." a notice of the lien created by this chapter; or

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      (2) Written notice of lien. - Written notification of the lien sent by the facility operator to

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the vessel owner owner's last known address. Where the identity of the vessel owner is unknown

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or uncertain, notification of the lien shall be provided to the last known address of the person or

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entity the facility operator has on record as being responsible for the vessel. Notices shall be

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provided in the manner described in § 34-46-5(7).

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      (b) A facility operator who does not have a written storage agreement that includes a

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notice of the lien created by this chapter may not initiate an enforcement action under § 34-46-5

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until delivery of the written notice is effected pursuant to § 34-46-4(2) until thirty (30) days after

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the written notice of a lien required by subdivision (a)(2) is delivered to the vessel owner.

 

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     34-46-5. Enforcement of lien. -- A facility operator may enforce a lien created by this

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chapter only if the vessel owner has been notified of the lien as required by § 34-46-4.

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      (1) Sale -- Use of proceeds.

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      (i) If a vessel owner is in default for a period of more than ninety (90) days, a facility

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operator may enforce a lien by selling the stored vessel at a commercially reasonable public sale

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for cash. As used in this section, "commercially reasonable" shall have the same meaning as in

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the Uniform Commercial Code. The proceeds of the sale shall be applied in the following order:

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     (ii) A facility operator may bid the amount of its lien at the sale.

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     (iii) The proceeds of the sale shall be applied in the following order:

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      (A) To the reasonable expenses of the sale incurred by the facility operator including, but

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not limited to, reasonable attorneys' fees, legal expenses and expenses of advertisement;

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      (B) To the satisfaction of the lien created by this chapter;

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      (C) To the satisfaction of all other liens on the vessel held by all lienholders of record to

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be paid in the order of priority; and

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      (D) To the extent that the proceeds of sale exceed the sum of the foregoing, the surplus

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must be paid by the facility operator to the vessel owner. Where the identity of the vessel owner

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is unknown or uncertain, or where the surplus is not collected within fourteen (14) days of the

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sale, the facility operator shall deliver the funds to the Rhode Island department of environmental

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management which department shall deposit the same for the use by its office of legal counsel.

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      (ii) If proceeds of the sale are not sufficient to satisfy the vessel owner's outstanding

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obligations to the facility operator or any lienholder of record, the vessel owner remains liable to

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the facility operator and/or lienholder for the deficiency.

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      (2) Advertisement -- Notice of default. - Before conducting a sale under this section, the

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facility operator shall:

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      (i) Personally serve a notice of default on the vessel owner if the vessel owner who is a

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Rhode Island resident or where the identity of the vessel owner is unknown or uncertain,

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personally serve the person or entity the facility operator has on record as being responsible for

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the vessel where such person or entity is a Rhode Island resident. Where an attempt at personal

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service is made, but cannot be accomplished, service shall be made in accord with subdivision (7)

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of this section. If the vessel owner or the person or entity the facility operator has on record as

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being responsible for the vessel is not a Rhode Island resident, notice shall be in accordance with

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subdivision (7). The facility operator shall provide a copy of the notice to each lienholder of

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record. The notice must include:

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      (A) A statement that the vessel is subject to a lien held by the facility operator;

 

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      (B) A statement of the facility operator's claim indicating the charges due on the date of

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the notice, and the amount of any additional charges that will or may become due before the date

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of sale, and the date those additional charges will become due;

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      (C) A demand for payment of the charges due within a specified time not less than forty

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(40) fourteen (14) days after the date the notice is delivered to the vessel owner;

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      (D) A statement that unless the claim is charges are paid within the time stated the vessel

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will be sold, specifying the time and place of the sale; and

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      (E) The name, street address, and telephone number of the facility operator, or the

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facility operator's designated agent, whom the vessel owner may contact to respond to the notice;

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      (ii) After the expiration of the forty (40) fourteen (14) day period set forth in subdivision

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(2)(i)(C), the facility operator shall publish an advertisement of the sale once a week for two (2)

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consecutive weeks in a newspaper of general circulation in the area where the sale is to be held

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and of general circulation in the state. The advertisement must include a general description of the

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vessel, the name of the vessel owner or the person or entity the facility operator has on record as

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being responsible for the vessel, and the date, time and place of the sale. The date of the sale must

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be more than fifteen (15) days after the date the first advertisement of the sale is published.

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      (3) Location of sale. - A sale under this chapter must be held at the facility or at the

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nearest suitable location.

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      (4) Purchasers. - A purchaser of a vessel sold at a sale pursuant to this chapter takes the

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vessel free and clear of any rights of persons against whom the lien was valid and all other

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lienholders of record. The purchaser shall remove the vessel from the facility within ten (10) days

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of the sale provided the facility operator provides the purchaser with a sworn statement of having

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accomplished the requirements set forth herein.

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      (5) Facility operator liability. - If the facility operator complies with the provisions of

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this chapter, the facility operator's liability is as follows:

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      (i) To a lienholder of record, the facility operator's liability is limited to payment from

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the net proceeds received from the sale of the vessel pursuant to § 34-46-5; and

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      (ii) To the vessel owner, the facility operator's liability is limited to the net proceeds

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received from the sale of the vessel after payment in full of all lienholders of record pursuant to

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this section.

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      (6) Denying access to storage facility. - A facility operator may deny a vessel owner who

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has been notified under § 34-46-4 access to the storage facility, except that the vessel owner is

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entitled to access to the facility during normal business hours for the purpose of satisfying the lien

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or viewing and verifying the condition of the vessel. A facility operator may require as a

 

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condition of access that the vessel owner release in writing the facility operator from claims

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arising in connection with verifying the vessel's condition.

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      (7) Notices. - Except as otherwise provided in subdivision (2)(i), all notices required by

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this chapter must be sent by registered or certified mail, return receipt requested or via a

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recognized commercial courier with proof of delivery. Notices sent to a facility operator must be

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sent to the facility operator's business address or to the address of the facility operator's

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designated representative. Notices to a vessel owner or the person or entity the facility operator

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has on record as being responsible for the vessel must be sent to the vessel owner at the vessel

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owner's person or entity's last known address. Notices to a lienholder of record must be sent to the

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address of the lienholder as provided in the public filings that serve to perfect the lienholder's

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interest in the vessel. Notices are considered delivered on the date the notice is deposited with the

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postal service or received by the commercial courier return receipt is signed or, if the notice is

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undeliverable, the date the post office last attempts to deliver the notice.

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     34-46-6. Cessation of enforcement actions. -- A facility operator shall cease

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enforcement actions immediately upon any of the following:

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      (1) Payment by owner. - The vessel owner pays the facility operator the full amount

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necessary to satisfy the amount of the lien on the date payment is tendered and removes the vessel

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from the facility. At any time before the conclusion of a sale conducted under this chapter, the

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vessel owner may redeem the vessel by paying the full amount of the lien on the date payment is

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tendered and removing the vessel from the facility necessary to satisfy the lien;

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      (2) Payment by other lienholders. - A person other than the facility operator who has a

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lien on the vessel pays the facility operator the full amount necessary to satisfy the lien held by

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the facility operator. Upon payment by a lienholder of record, the facility operator shall hold the

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vessel for the benefit of and at the direction of that lienholder and may not deliver possession of

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the vessel to the vessel owner. Unless the facility operator and the lienholder enter into a new

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storage agreement, the lienholder shall arrange removal of the vessel from the facility forthwith

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absent a new storage agreement, where the lienholder fails to remove the vessel from the facility

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within fourteen (14) days of its payment, the facility operator, without prejudice to any other

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remedy, may assess and collect storage charges from the lienholder at three (3) times its

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published rate; or

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      (3) Initiation of Civil Action. - An owner of a vessel files in a court of competent

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jurisdiction and personally serves on the facility operator, not less than ten (10) days before the

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scheduled date of sale, a complaint against the facility operator relating to the obligations

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incurred by the storage of the vessel or any claims related to the vessel and in such complaint

 

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objects to the enforcement of the lien and sets forth the legal reasons why the lien should not be

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enforced. The enforcement action shall not resume until either the civil action is resolved or the

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court enters an order permitting the enforcement action to proceed. Where the court enters an

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order permitting the enforcement action to proceed, and without prejudice to any other remedy,

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the facility operator shall be awarded all of its reasonable attorneys' fees and costs incurred in

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responding to the civil action.

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     34-46-7. Rental agreements -- Notice of this chapter Issuance of title. -- All rental

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agreements which are subject to this chapter shall contain clear and conspicuous language as

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follows: "BEWARE -- THE VESSEL AND ITS CONTENTS MAY BE SOLD AT PUBLIC

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AUCTION FOR FAILURE TO PAY STORAGE CHARGES." Cessation of enforcement actions:

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     (1) Whereby a sworn statement, the facility operator establishes having satisfied the

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requirements set forth herein, the Rhode Island department of environmental management shall

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issue a new title to the facility operator or to the entity or person who purchased the vessel at the

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sale as identified by the facility operator. Title shall be promptly issued no later than ten (10) days

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from receipt of a written request. The written request may be made by either the facility operator

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or the purchaser.

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     (2) No claim, cause of action or lawsuit shall lie against any officer or employee of the

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Rhode Island department of environmental management, any person holding or acquiring a lien

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or security interest in the vessel, and any successor in interest of said purchaser or person on

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account of any defect in or undisclosed claim upon the right, title and interest of the person

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acquiring title in the vessel pursuant to this chapter.

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     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO PROPERTY -- DRY DOCK FACILITIES

***

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     This act would expand the means by which marine facility operators may achieve service

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of written notice of liens on vessels, would permit a facility operator to bid at any subsequent

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sale, and would provide for the issuance of new title.

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     This act would take effect upon passage.

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