In Lozman v. City of Riviera Beach, Florida, the United States Supreme Court once again took up the question of what exactly is a "vessel" for purposes of maritime law.

Why is this important at all?  One reason is the difference in terms of asset financing.  A first priority vessel mortgage is only available on a federally documented vessel, and must be filed with the U.S. Coast Guard.  A senior lien on personal property that is not a vessel is typically perfected under the relevant state's adoption of Article Nine of the Uniform Commercial Code.  In the case of a purchase money security interest, that usually means filing a security agreement with the state Secretary of State.

A "vessel" can also be sued and arrested in federal admiralty court to secure an admiralty claim.  The rules for attachment or foreclosure on non-vessel property are more complex.  State procedure varies by jurisdiction, and while admiralty law also allows for "attachment" of any property as security, the claim must still be maritime in nature and the defendant must be absent from the judicial district where the property is found.

In Lozman, the question was how a local marina could collect unpaid dockage and the like from the owner of a floating home.  If it was a vessel, it could be sued directly in admiralty court, arrested, and sold by the federal marshal.  That is indeed what the City of Riviera Beach was able to do, both in the lower court and on appeal to the Eleventh Circuit Court of Appeals.  All the while, Mr. Lozman, representing himself, strenuously argued that his floating home--which lacked any means of steerage or propulsion, although it could be towed--was not a vessel.

The Supreme Court's last visit to this issue was in Stewart v. Dutra Construction Company.  That case involved the question of whether a large dredge, which could move only by winching itself between anchors or being towed, was a vessel.  A federal statute defines a vessel as including “every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water.”   Although the main mission of the dredge was to scoop up material from underwater, it did serve the transportation purpose of moving workers and machinery over the water.  Thus it qualified as a vessel, even though its primary purpose was not transportation.

What about Lozman's floating home?  Note that it was not a "houseboat," since federal regulations and several state statutes defined a houseboat as a motorized vessel.  Basically, Lozeman's property was a small house, furnished like any other, that happened to float on a empty bilge tank.  It lacked a raked bow for easier towing (and was in fact rather difficult to tow apparently).  Its only movement over the water had been for relocation after it was purchased by Mr. Lozman and twice after that, each time between marinas.  The objective on both occasions was to move the house to another location, not to transport people or things over the water.

A majority of the Supreme Court held that Lozman's floating home was not a vessel.  A structure was not a vessel, the Court announced, "unless a reasonable observer, looking to the home’s physical characteristics and activities, would consider it designed to a practical degree for carrying people or things over water."  Other than its ability to float, nothing about the home suggested that it was designed for any kind of water transportation.  A reasonable observer would not conclude, based on the home's appearance and design, that it was intended for use a means of transportation.  Although the majority did not say this in so many words, they appeared to view the purpose of the home as just that, a home which happened to be located on water.  It was for living in, not riding around on.

A dissent led by Justice Sotomayor objected to the "reasonable observer" test, which had no basis in the Court's prior precedent on this issue.  She favored remanding the case for further evidence on whether Lozman's home was practically capable of being used for maritime transportation.

Early reviews of Lozman seem to be that it introduced some additional complication in this area.  Stewart v. Dutra had been read as endorsing close to an "anything that floats" approach, under which a floating object capable of carrying anything was likely to qualify as a vessel as long as it could move over water--i.e. it was not permanently moored or anchored.  Lozman adds the perspective of the "reasonable observer," who must be persuaded that the floating object was designed "to a practical degree" to carry things over water.  In all likelihood, "reasonable observers" are likely to differ on whether various floating platforms were or were not designed with the transportation of other objects, including people, in mind as a practical objective.  This will likely make for greater uncertainty with respect to asset financing and questions of admiralty jurisdiction.