2015 -- S 0373

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LC001578

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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: Senators Felag, Ciccone, and Walaska

     Date Introduced: February 26, 2015

     Referred To: Senate Judiciary

     It is enacted by the General Assembly as follows:

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

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

follows:

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

following meanings unless the context clearly indicates otherwise:

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

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

of renting or leasing storage space for vessels.

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

its commercial operation, the storage of vessels.

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

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

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

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

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

rent from the owner under a rental agreement.

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

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

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

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

security.

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

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

not.

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

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

in a dry dock facility.

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

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

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

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

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

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

reasonable attorneys' fees and costs.

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

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

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

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

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

either of the following:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

      (1) Sale -- Use of proceeds.

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

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

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

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

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

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

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

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

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

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

be paid in the order of priority; and

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

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

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

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

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

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

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

the facility operator and/or lienholder for the deficiency.

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

facility operator shall:

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

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

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

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

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

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

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

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

record. The notice must include:

      (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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

nearest suitable location.

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

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

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

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

accomplished the requirements set forth herein.

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

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

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

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

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

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

this section.

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

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

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

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

arising in connection with verifying the vessel's condition.

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

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

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

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

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

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

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

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

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

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

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

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

enforcement actions immediately upon any of the following:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

published rate; or

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

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

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

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

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

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

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

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

responding to the civil action.

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

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

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

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

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

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

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

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

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

or the purchaser.

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

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

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

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

acquiring title in the vessel pursuant to this chapter.

     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

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

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

     This act would take effect upon passage.

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