Northrim Bank v. Pearl Bay Seafoods, LLC

2024 U.S. Dist. Lexis 39509 (W.D. WA March 6, 2024)

The court addressed lien priorities and held that a bank’s preferred mortgage was superior to a maritime lien for necessaries for unpaid moorage and utilities.

Federal law states that a preferred mortgage lien has priority over all claims against the vessel except for *custodial legis* expenses, costs imposed by the court and preferred maritime liens. 46 U.S.C. sec. 31326. Preferred maritime liens are defined as (A) arising before a preferred mortgage was filed; (B) for maritime tort damages; (C) for stevedore wages; (D) crew wages; (E) for general average; or (F) for salvage. Only in the case of a foreign mortgage not filed with the Coast Guard does a maritime lien for necessaries outweigh a preferred mortgage lien.

Because the mortgage at issue was not foreign and the Port of Seattle’s necessaries lien was not preferred, the bank’s mortgage lien was superior to the maritime lien for necessaries.

The court also concluded that the bank’s attorneys’ fees and costs were included in its mortgage lien because they were provided for the mortgage agreement. “[C]ourts have held that ‘attorneys’ fees and interest accrued in the enforcement of a preferred ship mortgage are entitled to the same priority as the mortgage itself.”

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