Coastal Marine Management v. M/V Sea Hunter (O.N. 598425)

274 F. Supp. 3d 6
CourtDistrict Court, D. Massachusetts
DecidedAugust 14, 2017
DocketCivil Action No. 16-11616-NMG
StatusPublished
Cited by5 cases

This text of 274 F. Supp. 3d 6 (Coastal Marine Management v. M/V Sea Hunter (O.N. 598425)) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Coastal Marine Management v. M/V Sea Hunter (O.N. 598425), 274 F. Supp. 3d 6 (D. Mass. 2017).

Opinion

MEMORANDUM & ORDER

Nathaniel M. Gorton, United States District Judge

Here we have a dispute about the sale at auction of a deeply indebted vessel, the M/V Sea Hunter (O.N. 598425). The purported owner of the Vessel, Gregory Brooks, and Sea Hunters LP (collectively, “defendants”), allegedly failed' to make payments to Boston Harbor Shipyard and Marina’ (“BHS” or “plaintiff’) for the storage and removal of rubbish from the subject vessel, causing BHS to incur a lien for necessaries against the vessel.

In January, 2017, BHS. filed a motion for 1) interlocutory sale of the vessel and. 2) permission to credit bid up to the amount of the indebtedness of the Vessel. For the reasons that follow, the motion will be, with respect to plaintiffs request for interlocutory sale, allowed, but will be, with respect to its request for the right to credit bid, denied.

I. Background

In or about 2008, Gregory Brooks and Sea Hunters LP entered into a maritime contract .with BHS specifying that BHS would provide “necessaries” to the M/V Sea Hunter by storing and removing rubbish from it. In exchange, Brooks and Sea Hunters agreed to pay BHS $1,833 per month for the service. Since March 2,2015, BHS has not, however, received payment from Brooks and Sea Hunters despite repeated demands. Currently, BHS possesses a maritime lien on the vessel for the [8]*8provision of “Necessaries and Services” through July, 2016, in the amount of $33,899.94 plus interest and costs.1

In August, 2016, BHS filed a two-count complaint against Brooks and Sea Hunters LP for 1) enforcement of its maritime lien for necessaries against the subject vessel and 2) breach of maritime contract against Brooks and Sea Hunters LP. In October, 2016, Brooks filed an answer to the complaint but did not deny the factual allegations.

That same month, the United States Marshals served an in rem warrant on the vessel and arrested it. This Court subsequently appointed BHS custodian of the vessel which has remained in its custody and has continued to incur costs.

Several parties have filed statements of claim against, or interest in, the M/V Sea Hunter. Specifically, Additional Return, LLC (“Additional Return”) has asserted a claim or interest in the vessel on the grounds that it has several “preferred ship mortgages” against the vessel totaling approximately $430,000.

In January, 2017, plaintiff moved for interlocutory sale of the vessel and for the right to credit bid up to the amount of the indebtedness of the vessel at such sale. Additional Return objects. This memorandum addresses the pending motion and objections thereto.

II. Plaintiffs Motion for Interlocutory Sale and for an Order Granting It the Right to Credit Bid up to the Amount of the Indebtedness of the Vessel and its Owner

A. Legal Standards

1. Interlocutory Sale

Pursuant to the Supplemental Rules of Civil Procedure, a district court may order the sale of an arrested property if:

(A) the attached or arrested property is perishable, or liable to deterioration, decay or injury by being detained in custody pending the action;
(B) the expense of keeping the property is excessive or disproportionate; or
(C) there is an unreasonable delay in securing release of the property.

Fed. R. Civ. P. Supp. E(9)(a)(i).

Only one of the elements must be satisfied for the Court to permit sale of the subject property. 20th Century Fox Film Corp. v. M.V. Ship Agencies, 992 F.Supp. 1434, 1437 (M.D. Fla. 1997) (citing Silver Star Enters., Inc. v. M/V Saramacca, 19 F.3d 1008, 1014 (5th Cir. 1994)).

2. Permission to Credit Bid

Pursuant to 46 U.S.C. § 31329(a)(2), a mortgagee of a vessel has a statutory right to participate in a court ordered sale of that vessel. There is no statutory right, however, to credit bid at such sale. Courts have granted permission to credit bid only to those with “preferred ship mortgages” who agree to pay any and all claims senior in priority. See, e.g., Yasi v. M/V Horizon’s Edge, No. 14-10128, 2014 WL 8484913, at *5 (D. Mass. Sept. 2, 2014) (allowing plaintiff with a preferred ship mortgage the right to credit bid conditional on plaintiff posting a surety bond).

Furthermore, when a preferred ship mortgagee is involved in the foreclosure of an indebted vessel, it is given priority over all other claims against the vessel except for 1) preferred maritime liens and 2) costs and expenses in custodia legis. 46 U.S.C. § 31326(b)(1).

[9]*9B. Application

Plaintiff contends that the Court should order an interlocutory sale of the subject vessél, in part, because defendants’ failure to secure its release constitutes unreasonable delay. The Court agrees.

Approximately twelve months have elapsed since the fíling of this' lawsuit but defendants have made no attempt to secure the vessel. Such inaction is unreasonable. See Bank of Rio Vista v. Vessel Captain Pete, No. C 04-2736, 2004 WL 2330704, at *2 (N.D. Cal. Oct. 14, 2004) (noting that defendants are typically given four months to bond a vessel).

Accordingly, plaintiffs motion, with respect to its request for an interlocutory sale, will be allowed.

Plaintiff avers that it should be permitted to credit bid on grounds that it has a lien for necessaries against the subject vessel and on ■ condition that it will agree to pay any and all claims adjudged to be senior in priority.

Plaintiff cites only one case in which a holder of a lien for necessaries was allowed to credit bid. See California Yacht Marina-Chula Vista, LLC v. S/V Opily, No. 14-CV-01215, 2015 WL 1197540, at *4-5 (S.D. Cal. Mar. 16, 2015). There, the district court relied upon a local admiralty rule that expressly gave maritime lienholders permission to credit bid provided they could demonstrate that they had the highest priority claim. M. at *5. In this jurisdiction there is, however, no such local admiralty rule and plaintiffs lien for necessaries has not been demonstrated to be a higher priority than the other claims against the subject vessel.

Accordingly, plaintiffs motion, with respect to its request to credit bid, will be denied.

III. Objections by Claimant Additional Return to Plaintiffs Motion for Interlocutory Sale and for the Right to Credit Bid

Additional Return raises two “objections” to plaintiffs requests for an interlocutory sale' of the vessel and for permission to credit bid. It requests that 1) the Court order an appraisal of the subject vessel before it is to be sold and 2) the Court direct plaintiff to advertise the sale more thoroughly.

A. Standing

As a threshold matter, plaintiff avers that Additional Return lacks standing to object to its motion because it did not file a motion to intervene, pursuant to Fed. R. Civ. P. 24

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Bluebook (online)
274 F. Supp. 3d 6, Counsel Stack Legal Research, https://law.counselstack.com/opinion/coastal-marine-management-v-mv-sea-hunter-on-598425-mad-2017.