2019 -- S 0599

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LC002104

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

RELATING TO PROPERTY -- DRY DOCK FACILITIES

     Introduced By: Senators Felag, McCaffrey, Sosnowski, and Euer

     Date Introduced: March 14, 2019

     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 and 34-46-6 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 and/or

ownership of a vessel.

     (2) "Dry dock" means any space and/or real property designed and/or 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

storage 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) "Rental 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) "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, sails, 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 of the lien created by this chapter before enforcement

of the lien by a facility operator. The facility operator must provide notice of the lien created by

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

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

     (i) To the last known address of the individual or entity identified as the registered

owner(s) of the vessel; and

     (ii) To the last known address of the person or entity the facility operator has on record as

being responsible for the vessel if different from the vessel's registered owner. Notices shall be

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

     (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 thirty (30) days after the written notice of a lien required by subdivision (a)(2) is delivered to

the vessel owner delivery of written notice of the lien is effected pursuant to § 34-46-4(a)(2).

     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 notice requirement set forth in § 34-46-4 is

satisfied.

     (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 at the sale including bidding the amount of its lien.

     (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 surplus is not collected

within thirty (30) days of the sale, the facility operator shall provide the funds to the Rhode Island

department of environmental management which department shall deposit the same for use by its

office of legal counsel.

     (ii)(iv) 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 is a Rhode

Island resident. If the vessel owner 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

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record. The notice must include: Serve:

     (A) A notice of default on the person or entity identified as the registered owner of the

vessel; and

     (B) Serve a notice of default on the person or entity the facility operator has on record as

being responsible for the vessel if different than the vessel's registered owner. Service shall be

made in accordance with § 34-46-5(7). The facility operator shall also provide a copy of the

notice of default to each lienholder of record. In addition, the facility operator shall affix a copy

of the notice of default on the outside of the vessel in a manner where it can be reasonably seen.

     The notice of default must include:

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

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

of the notice, 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)(III) A demand for payment of the charges due within a specified time not less than

forty (40) fourteen (14) days after the date the last notice of default required hereunder is

delivered to the vessel owner;

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

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

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

facility operator's designated agent, whom the vessel owner or the person or entity the facility

operator has on record as being responsible for the vessel 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) subsection (2)(i)(III) of this section, 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. In lieu of print publication,

one of the two (2) advertisements may be published online by said newspaper provided the online

advertisement is visible for no fewer than three (3) days. The advertisement must include a

general description of the vessel, the name of the vessel owner (if known), and 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. In addition, the facility operator shall affix a copy of the

advertisement on the outside of the vessel in a manner where it can be reasonably seen.

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

nearest suitable location.

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     (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 on condition that the facility operator provides the purchaser with a sworn statement of

having accomplished the requirements set forth in this chapter. The purchaser may not resell or

transfer the vessel until such time as a duplicate title or registration for the vessel has been

obtained.

     (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 or

responsible party 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 condition to access the vessel that the vessel owner or responsible party sign a release

releasing 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 All notices required by

this chapter must be sent by registered or certified mail, return receipt requested may be served

personally using a process server or served by registered or certified mail, return receipt requested

or served via a recognized commercial courier with proof of signed-for 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's 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 Except as otherwise provided by this chapter,

notices are considered delivered on the date the return receipt is signed or, if the notice is

undeliverable, the date the post office last attempts to deliver the notice personal service is made,

or on the date notice is deposited with the postal service or received by the commercial courier.

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     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 necessary to satisfy the lien of the

lien on the date payment is tendered and removing the vessel from the facility;

     (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 with the lienholder, 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 or one claiming ownership rights in

the vessel files in a court of competent jurisdiction and 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 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.

     SECTION 2. Section 34-46-7 of the General Laws in Chapter 34-46 entitled "Dry Dock

Facilities" is hereby repealed.

     34-46-7. Rental agreements -- Notice of this chapter.

     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."

     SECTION 3. Chapter 34-46 of the General Laws entitled "Dry Dock Facilities" is hereby

amended by adding thereto the following section:

     34-46-8. Issuance of title cessation of enforcement actions.

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     (a) Where by a sworn statement, the facility operator establishes having accomplished the

requirements set forth in this chapter, 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.

     (b) 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 this 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 4. 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 amend the lien and notice procedures for facility operators of dry dock

facilities.

     This act would take effect upon passage.

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LC002104

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