Kanaway Seafoods, Inc. v. Pacific Predator, AK Registration No. AK3565AN

• Court: District Court, D. Alaska
• Decided: September 23, 2022
• Docket: 3:22-cv-00027
• Status: Unknown

Opinion

1 IN THE UNITED STATES DISTRICT COURT

2 FOR THE DISTRICT OF ALASKA

4 KANAWAY SEAFOODS, INC., and LIBERTY PACKING, LLC, 5 Plaintiffs, 6 Case No. 3:22-cv-00027-JMK-KFR v. 7 PACIFIC PREDATOR, and BRYAN 8 HOWEY and DANA HOWEY, and ALASKA WILD EXPORTS, LLC, 9 Defendants. 10 11 12 FINDINGS AND RECOMMENDATIONS 13 The Court recommends that Plaintiff’s Motion for Replevin at Docket 22 be 14 denied. Replevin is an action for recovery of property wrongfully seized or detained 15 by another party. In this case, Plaintiff seeks possession from Defendants of a fishing 16 vessel, the Pacific Predator, that was utilized as collateral for a loan Plaintiff alleges 17 Defendants have breached. Because Defendants do not at presently possess the 18 Pacific Predator because of its seizure by the United States Marshals as part of this 19 case, the property cannot be taken from Defendants and replevin cannot be ordered. 20 I. Statement of Facts1 21 On April 17, 2019, Defendants Bryan and Dana Howey (hereinafter collectively 22 “Defendants”) entered into a loan agreement with Liberty Packing, LLC, (hereinafter 23 “Liberty”).2 As part of the contract, Liberty agreed to loan $800,000 to Defendants 24 so that they could pay off an existing debt to another lender.3 Defendants secured 25 the Liberty loan with their fishing vessel, the Pacific Predator, an Alaskan registered 26 1 This Statement of Facts is limited to those facts necessary to decide the motion before the 27 Court. 2 Doc. 1-1; Doc. 35 at 4. 28 3 Doc. 1-1 at 1. 1 58-foot seiner used by Defendants to commercially fish Alaskan waters; the 2 equipment and appurtenances on the vessel; and fishing rights possessed by 3 Defendants.4 4 In exchange, Defendants agreed to enter into a fishing agreement with Liberty 5 to deliver and sell seafood products to Liberty for a fixed period.5 Defendants also 6 agreed to make payments on the Liberty loan in 15 equal installments due yearly on 7 September 30, with 25% of the gross proceeds from the delivery of seafood to 8 Liberty deducted from the amount due.6 Defendants also agreed to register the 9 Pacific Predator in Washington State and to list Liberty as the owner of the vessel.7 10 Approximately six weeks after signing the Liberty loan, Defendant Bryan 11 Howey signed a Promissory Note with Kanaway Seafood, Inc., doing business as 12 Alaska General Seafood (hereinafter “Kanaway” or “AGS”).8 Under the AGS note, 13 AGS agreed to loan Defendant Bryan Howey up to approximately $24,000 to be used 14 for the purchase of “necessaries” – food, fuel and other expenses incurred during the 15 fishing season - for the Pacific Predator.9 Any money loaned under the AGS note was 16 to be repaid through fish credits and tender charters, with the full amount due no 17 later than September 30, 2019.10 18 Between 2019 and 2021, AGS advance Defendant Bryan Howey and the Pacific 19 Predator a line of credit of approximately $353,000, with accrued interest on this 20 line of credit totaling approximately $90,000.11 During those three years, Defendant 21 Bryan Howey repaid approximately $340,000 through deliveries of fish to AGS.12 22 In July 2019, Defendant Bryan Howey had mechanical issues with a skiff that 23 4 Id. at 1, 4; Doc. 35 at 3-4. 24 5 Doc. 1-1 at 1. 6 Doc. 1-2 at 2. 25 7 Doc. 1-1 at 6; Doc. 35 at 4. 26 8 Doc. 1 at 5; Doc. 1-3. 9 Doc. 1 at 5. 27 10 Doc. 1 at 6; Doc. 1-3 at 1. 11 Doc. 1 at 6; Doc. 64-4 at 6. 28 12 Doc. 1 at 7; but see Doc 64-4 at 6 (showing credits in the amount of $326,664.13). 1 he used as part of his commercial fishing operation.13 As a result of issues associated 2 with the operation and repair of the skiff, Defendant Bryan Howey was unable to 3 fully fish the 2019 season. Lingering issues with the skiff also affected Defendant 4 Bryan Howey’s ability to fish during the 2020 and 2021 season.14 Defendants were 5 unable to repay the amounts owed on the Liberty loan, AGS note, and AGS line of 6 credit in accordance with the terms and conditions of those agreements. 7 II. Procedural History 8 a. Complaint and Maritime Arrest of Pacific Predator 9 On February 23, 2022, Plaintiffs Kanaway/AGS and Liberty (hereinafter 10 collectively “Plaintiffs”) filed a complaint in rem against the Pacific Predator, and in 11 personam against Defendants and their business Alaska Wild Exports (“AWE”).15 In 12 the complaint, Plaintiffs make three claims. First, Plaintiffs allege Defendants 13 defaulted on the Liberty loan, AGS note, and AGS line of credit, by failing to repay 14 approximately $746,000 owed on the Liberty loan (and secured by the Pacific 15 Predator), $24,000 owed on the AGS note, and $79,000 owed on the AGS line of 16 credit; by failing to properly register the Pacific Predator in the State of Washington; 17 and by failing to identify Liberty on the registration as the owner of the vessel.16 18 Second, Plaintiffs seek foreclosure of a maritime lien against the Pacific Predator, 19 alleging the Defendants failed to repay the AGS note and AGS line of credit, which 20 were advanced to Defendants for the purpose of paying for “necessaries” for the 21 vessel. Plaintiffs also seek foreclosure of a lien against the Pacific Predator because 22 of Defendants’ alleged default on the Liberty loan.17 Finally, Plaintiffs allege 23 Defendants failed to respect AWE’s corporate form, using it to evade duties owed to 24 13 Doc. 35 at 7-8; Doc. 36 at 6. 25 14 Doc. 35 at 8-11; Doc. 36 at 8-13. 26 15 Doc. 1. On September 7, 2022, Plaintiffs filed an Amended Complaint. Doc. 64. This amended complaint repeated the claims made previously, adding only an itemized 27 accounting of the losses alleged by Plaintiffs. Id. at 34-39. 16 Id.at 7-8. 28 17 Id. at 8-9. 1 Plaintiffs.18 2 On February 28, 2022, Plaintiffs filed a motion seeking the maritime arrest of 3 the Pacific Predator pursuant to Supplemental Admiralty Rule C(3).19 This rule 4 requires the Court to issue an arrest warrant for a vessel in order to enforce a 5 maritime lien upon the filing of a verified complaint that describes the vessel with 6 sufficient particularity and that states that the vessel is or will be within the 7 District.20 This Court issued the warrant on March 16, 2022,21 and the United States 8 Marshals seized the vessel on April 14, 2022.22 Following its arrest, the Marshal 9 placed the Pacific Predator in the custody of “Buck Fowler and Alaska Marine 10 Services,” Plaintiff Liberty’s designated substitute custodian for the vessel.23 11 Following a hearing pursuant to Supplemental Admiralty Rule E(4)(f), and 12 briefing by the parties, this Court denied Defendants’ motion to vacate the arrest.24 13 Pursuant to Supplemental Admiralty Rule E(5)(a), the Court set a special bond of 14 $148,500 for release of the vessel, an amount sufficient to cover “twice the amount 15 of plaintiff’s claim, or…the value of the property at due appraisement, whichever is 16 smaller.” 17 Bond has not been posted and the Pacific Predator remains in the possession 18 of the United States Marshal. 19 b. Motion for Order Authorizing Seizure of Pacific Predator 20 On May 1, 2022, Plaintiff Liberty filed a motion for replevin.25 In its motion, 21 Plaintiff Liberty seeks relief pursuant to Fed. R. Civ. P. 64, which permits 22 “seizing…property to secure satisfaction of a potential judgment,” and asks the Court 23 18 Id. at 10. 24 19 Doc. 3. 20 Supp. Admiralty Rule C(1)-(3). 25 21 Doc. 7. 26 22 Doc. 11. 23 Docs. 4, 8, and 11 (motion for order for custodian, order appointing custodian, and 27 notice of arrest, respectively). 24 Doc. 52. 28 25 Doc. 22. 1 to issue an order directing seizure of the Pacific Predator. Plaintiff Liberty argues 2 that under Washington State law, replevin is an appropriate remedy “upon a 3 showing that the plaintiff has the right to possess the property.”26 Plaintiff Liberty 4 also claims the right to self-help repossession of the Pacific Predator under the 5 Uniform Commercial Code (UCC).27 6 Defendants opposed the motion.28 In their opposition, Defendants argued that 7 Alaska law applies in this case, and that Plaintiff Liberty’s motion for replevin fails 8 to meet Alaska’s pleading requirements under Alaska Civil Rule 89.29 Defendants 9 also argue that they are not in breach of contract, and that any alleged breach in this 10 case was the result of Plaintiff Liberty’s failure to act in good faith.30 11 Plaintiff Liberty replied.31 In their reply, Plaintiff Liberty argued the merits 12 of its right to possession of the Pacific Predator by virtue of the terms of the Liberty 13 loan agreement.32 Plaintiff also stated that Defendants’ arguments in opposition to 14 the motion were irrelevant as they either implicated a civil rule not at issue in a 15 replevin action, or asserted a defense against Plaintiff Liberty’s right to possession 16 that implicated actions taken by Kanaway/AGS, not Liberty.33 17 The Court held a hearing on the motion for replevin. At the hearing, the Court 18 challenged Plaintiff Liberty on whether their motion for replevin met either the 19 Alaska or Washington pleading requirements. In response, Plaintiff Liberty argued 20 that Washington law applied by virtue of the choice of law provision contained in 21 the Liberty loan agreement, and that, under either Washington or Alaska law the 22 verified complaint, as well as other supporting documents filed as part of its motion 23

24 26 Id. at 9. 27 Id. at 10 25 28 Doc. 35. 26 29 Id. at 16-17 and 20-23 30 Id. at 24-25. 27 31 Doc. 45. 32 Id. at 2-4, 11. 28 33 Id. at 12-16 1 and other actions in this case provided each of the essential elements necessary for 2 a replevin action to proceed. Defendants argued for application of Alaska law and 3 stated that the elements of the applicable statute had not been met. 4 The Court also sought further information from the parties regarding the 5 evidence necessary to grant the motion. Specifically, the Court sought the parties’ 6 position on whether the Alaska and Washington replevin rules required a showing 7 by Plaintiff that their entire action was meritorious, or simply their pre-judgment 8 right to possession of the disputed property. Plaintiff Liberty argued that the key 9 question was the right to possession, as opposed to the overall merits of the action. 10 Defendants argued that the defenses raised by them in their pleading were relevant 11 to the Court’s analysis of whether Plaintiff Liberty had a superior possessory 12 interest in the Pacific Predator and that because of those defenses the writ of 13 replevin should not issue. 14 III. Legal Standard and Analysis 15 a. Replevin under Federal Law 16 “Replevin is defined as an action brought to recover goods unlawfully 17 taken.”34 Replevin “may be maintained not only for the unlawful taking but for the 18 unlawful detention of property.”35 A writ of replevin authorizes “the retaking of 19 personal property wrongfully taken or detained.”36 20 Federal Rule of Civil Procedure 64 makes replevin and other prejudgment 21 remedies available in federal court.37 Rule 64 states, as follows:

22 (a) At the commencement of and throughout an action, every remedy is available that, under the law of the state where the court is located, 23 provides for seizing a person or property to secure satisfaction of the potential judgment. But a federal statute governs to the extent it 24 applies.

25 34 Rollins v. Leibold, 512 P.2d 937 (1973) (citing Clark on Code Pleading 80 (2d ed. 1947)). 26 35 J.E. Cobbey, A PRACTICAL TREATISE ON THE LAW OF REPLEVIN AS ADMINISTERED BY THE COURTS OF THE UNITED STATES 7, 34 (2d ed. 1900). 27 36 Replevin, Black’s Law Dictionary, (3rd Pocket Edition). 37 See Aleut Corp. v. Arctic Slope Regional Corp., 424 F.Supp. 397, 399 (D.Alaska 1976); see 28 also Murphy v. Foster, 518 F.Supp.2d (D.Me. 2007) 1 (b) The remedies available under this rule include the following – 2 however designated and regardless of whether state procedure requires an independent action: arrest; attachment; garnishment; 3 replevin; sequestration; and other corresponding or equivalent remedies. 4 5 b. Alaska State Law Governs this Motion. 6 As a threshold matter, the parties dispute what law governs Plaintiff Liberty's 7 claims. Plaintiff Liberty claims that Washington law applies while Defendants 8 asserts that Alaska law applies.38 Both parties cite to the choice of law provision 9 contained within the Liberty loan agreement and argue for or against its 10 enforcement. However, those arguments overlook the unambiguous language 11 within Rule 64 which states that the law to be applied in an action for replevin is the 12 law of the “state where the court is located.” In this case, given the fact that this 13 matter has been filed within the District of Alaska, that law is Alaska state law. 14 Rule 64 codifies “long-settled federal law providing that in all cases in federal 15 court, whether or not removed from state court, state law is incorporated to 16 determine the availability of prejudgment remedies for the seizure of person or 17 property to secure satisfaction of the judgment ultimately entered.”39 Alaska state 18 law codifies the rules for replevin at Alaska Statute 09.40.260, et seq.40 The 19 procedure for replevin under Alaska state law is found at Alaska Civil Rule 88, 20 Procedure for Claiming Delivery of Personal Property. Under that provision,

21 [t]he plaintiff shall file a motion with the court requesting the delivery of personal property, together with an affidavit showing: 22 (1) A particular description of the property claimed, and if the property 23 claimed is a portion of divisible property of uniform kind, quality and value, that such is the case, and the amount thereof which the plaintiff 24 38 Compare Doc. 22 at 8 with Doc. 35 at 14. 25 39 Granny Goose Foods, Inc. v. Brotherhood of Teamsters & Auto Truck Drivers Local No. 70 26 of Alameda Co., 415 U.S. 423, 436 n.10 (1974); United States v. Van Cauwenberghe, 934 F.2d 1048, 1063-64 n.13 (9th Cir. 1991); see also 11A Wright, Miller & Kane, Federal 27 Practice and Procedure, Civil 2d § 2932 (1995 ed.) (“[S]tate law ordinarily determines when and how a provisional remedy [such as attachment] is obtained....”). 28 40 See Aleut Corp., 424 F.Supp. at 399. 1 claims; and

2 (2) That the plaintiff is the owner of the property or lawfully entitled to its possession, and the facts and circumstances relating thereto; and 3 (3) The value of the property claimed; and if more than one article is 4 claimed, the current value of each article; and

5 (4) That the property is in the possession of the defendant, and the facts and circumstances relating to such possession according to the 6 plaintiff's best knowledge or belief; and

7 (5) That the prejudgment seizure is not sought and the action is not prosecuted to hinder, delay or defraud any other creditor of the 8 defendant; and

9 (6) That the plaintiff has no information or belief that the defendant has filed any proceeding under the National Bankruptcy Act or has 10 made a general assignment for the benefit of creditors, or, if any such proceeding has been terminated, that the claim of the plaintiff was not 11 discharged in such proceeding.41 12 Under Alaska law, the plaintiff bears the burden of “establish[ing] by a 13 preponderance of the evidence the probable validity of the plaintiff's claim to the 14 property and the absence of any reasonable probability that a successful defense can 15 be asserted by the defendant.”42 16 c. Plaintiff Cannot Make the Necessary Showing for Replevin under 17 Alaska Law. 18 Plaintiff Liberty did not file a motion and supporting affidavit as required 19 under Rule 88. The Court finds this alone could be a basis upon which to recommend 20 denial of Plaintiff Liberty’s motion as Rule 88 states that Plaintiff Liberty “shall file” 21 a conforming motion and affidavit.43 However, even if the Court were to liberally 22 construe Plaintiff Liberty’s verified complaint and exhibits, along with its other 23 relevant filings on this issue as sufficient to meet Rule 88’s dictates in form, it would 24 still fall short in substance. 25

26 41 Alaska Civil Rule 88(b). 42 Alaska Civil Rule 88(d). 27 43 Alaska Civil Rule 88(b); see Kalman v. Omni World Financial Corp., 651 So.2d 1249 (Fla. Dist. Ct. App. 2 1995) (finding “numerous questions” with the claim for replevin, including 28 that the petition was supported by an unverified complaint in violation of statute) 1 Plaintiff Liberty’s verified complaint and motion for replevin contain 2 sufficient detail for the Court to conclude that they have met Rule 88’s requirement 3 to describe the Pacific Predator and its value, and to relate facts and circumstances 4 about Plaintiff Liberty’s claim to lawful possession of the vessel.44 Where Plaintiff 5 Liberty falls short is any showing that the “property is in the possession of the 6 defendant[.]”45 Indeed, Plaintiff Liberty cannot make this showing as the Pacific 7 Predator, by virtue of the maritime arrest sought at the outset of this case, is 8 currently in the custody of Mr. Fowler and Alaska Marine Services, Plaintiff Liberty’s 9 designated substitute custodian for the vessel, and has been since April 18, 2022.46 10 This fact was known to Plaintiff Liberty at the time it filed its motion for replevin on 11 May 1, 2022.47 12 Given the fact that the Pacific Predator is not currently in Defendants’ 13 possession, Plaintiff Liberty’s motion effectively seeks an order from this Court that 14 would order delivery by the Pacific Predator’s approved custodian to Plaintiff 15 Liberty, or that would come into effect only upon the posting of a bond under 16 Supplemental Admiralty Rule E(5)(a) and the subsequent release of the Pacific 17 Predator by the custodian to Defendants pursuant to that bond. The Court is 18 unaware of, and the parties do not cite to any authorities that grant the Court the 19 authority to order replevin from a third party in lawful possession of property, or to 20 issue a preemptive writ of replevin upon recovery of that property by a defendant 21 from that third party. Indeed, the Court does not believe such authority exists. 22 The very nature of replevin - “the retaking of personal property wrongfully 23 44 See Alaska Civil Rule 88(b)(1)-(3). 24 45 Id. at (4). 46 Doc. 11. The Court’s findings and recommendation would be no different even if it were 25 to apply Washington law as requested by Plaintiff. Washington law requires that Plaintiff 26 file an affidavit or declaration showing “[t]hat the property is wrongfully detained by [D]efendant.” Revised Code of Washington (RCW) 7.64.020. As Defendant does not 27 currently possess the Pacific Predator by virtue of its arrest, the necessary showing to proceed on a replevin action under Washington law cannot be made. 28 47 Dkt. 22. 1 taken or detained by the defendant” - precludes such orders.48 Rule 88, in addition 2 to requiring an affidavit from the plaintiff showing that the property is “in the 3 possession of the defendant,”49 also requires a plaintiff to “endorse in writing upon 4 the motion attached to the affidavit a request that the property claimed be taken by 5 a peace officer from the defendant and be delivered to the plaintiff.” (Emphasis 6 added). Moreover, Alaska law regulating the recovery of personal property speaks 7 to plaintiffs and defendants, and addresses third parties only in the context of 8 delivery to a third party after seizure from the defendant.50 9 Other jurisdictions have interpreted the replevin rules similarly. In Testerion, 10 Inc. v. Skoog, the district court denied a motion for a writ of replevin for computer 11 equipment the plaintiff claimed was in the possession of defendants.51 Part of the 12 reason for the court’s denial of the motion was the fact that the actual equipment, 13 had been delivered to “the record owner, the lessee, and the operator of the 14 machine,” who were not parties to the dispute.52 Similarly, in Howell v. U.S. 15 Marshal, the court upheld the dismissal with prejudice of a motion for a writ of 16 replevin filed by a convicted bank robber seeking to recover money seized from safe 17 deposit box that was used as evidence in Appellant’s conviction and was then in the 18 possession of the United States Marshal.53 The Court held that there was no basis for 19 replevin because the property “was in the custody of the law.” 20 Furthermore, Alaska law and procedure directs a “peace officer” to take 21 possession of the replevied property from a defendant and deliver it to a plaintiff 22 48 Replevin, Black’s Law Dictionary, (3rd Pocket Edition) (emphasis added); see also Bank 23 of America, N.A. v. Won Sam Yi, 294 F.Supp.3d 62, 71 (W.D.N.Y. 2018) (permitting replevin under New York law “[w]here a defendant refuses ‘ to surrender possession of the 24 collateral subject to the security agreement voluntarily’”) (emphasis added); J.E. Cobbey, supra at 35 (concluding that the defendant in an act of replevin must have 25 committed “an actual taking” or “actual detention” for replevin to apply.) 26 49 Alaska Civil Rule 88(b)(4). 50 See AS 09.40.310 (addressing third party claims to property seized through replevin). 27 51 602 F.Supp.578 (D.Minn. 1984), 52 Id. at 581. 28 53 241 F.2d 119 (3rd Cir. 1957) 1 when replevin is ordered.54 In this case, Plaintiff Liberty’s writ of replevin would 2 direct the United States Marshals, the federal equivalent of an Alaska “peace officer,” 3 to take possession of the Pacific Predator from themselves. Such a result is clearly 4 illogical. 5 The Court recognizes that its order may only delay a decision on the merits of 6 Plaintiff Liberty’s motion and whether or not Plaintiff Liberty is entitled to court- 7 ordered possession of the Pacific Predator during the pendency of this action. The 8 current posture of the case may result in Plaintiff Liberty refiling a motion for 9 replevin that meets the requirements of Rule 88 should Defendants post a bond 10 pursuant to this Court’s order at Docket 52 and regain possession of the Pacific 11 Predator from Mr. Fowler and Alaska Marine Services. Such a result would force 12 both parties to relitigate this issue, to the financial detriment of their clients and at 13 a not insignificant cost to the time and resources of the attorneys and the Court. 14 This outcome also perhaps runs counter to Fed. R. Civ. P. 1’s directive that the Rules 15 “should be construed, administered, and employed by the court and the parties to 16 secure the just, speedy, and inexpensive determination of every action and 17 proceeding.” 18 Nonetheless, the Court recommends denial of Plaintiff’s motion. Because 19 replevin involves the seizure of property before final judgment, Due Process 20 concerns are implicated.55 And while “the nature and form” of the statutory 21 prerequisites “are open to many potential variations,” they cannot be ignored given 22 the power Plaintiff is asking the Court to employ in this case.56 Compliance with the 23 substantive requirements of the relevant statute and rule are a necessary component 24 that must be met prior to the ordering of a “harsh remedy [that] causes the 25

26 54 AS 09.40.270 and Alaska Civil Rule 88(c)(3). Similarly, Washington law directs the sheriff to “put the plaintiff in possession of the property.” RCW 7.64.035. 27 55 See Fuentes v. Shevin, 407 U.S. 67, 93 (1972) (striking down two Florida writs or replevin statutes for violating Due Process requirements of the 14th Amendment). 28 56 Id. at 94, 96 1 defendant to lose control of his property before the plaintiff’s claim is adjudicated.”57 2 Those requirement have not been met in this case. 3 IV. Conclusion 4 The Court recommends that Plaintiff Liberty’s motion be DENIED. Under 5 Alaska law, recovery of personal property in replevin can only be initiated upon a 6 showing by the plaintiff of certain conditions, including that a defendant is in 7 possession of the property the plaintiff wishes to recover. That showing has not 8 been made. Accordingly, Plaintiff Liberty’s motion must be denied. 9 DATED this 23rd of September 2022, at Anchorage, Alaska. 10 s/ Kyle F. Reardon 11 KYLE F. REARDON United States Magistrate Judge 12 District of Alaska 13 14 NOTICE OF RIGHT TO OBJECT 15 Under 28 U.S.C. § 636(b)(1), a district court may designate a magistrate judge 16 to hear and determine matters pending before the Court. For dispositive matters, a 17 magistrate judge reports findings of fact and provides recommendations to the 18 presiding district court judge. A district court judge may accept, reject, or modify, 19 in whole or in part, the magistrate judge’s order. 20 A party may file written objections to the magistrate judge’s order within 14 21 fourteen days. Objections and responses are limited to five (5) pages in length and 22 should not merely reargue positions previously presented. Rather, objections and 23 responses should specifically identify the findings or recommendations objected to, 24 the basis of the objection, and any legal authority in support. Reports and 25 recommendations are not appealable orders. Any notice of appeal pursuant to Fed. 26 R. App. P. 4(a)(1) should not be filed until entry of the district court’s judgment. 27 57 Hamilton Beach Brands, Inc. v. Metric and Inch Tools, Inc., 614 F.Supp.2d 1056 (C.D.Cal. 28 2009) (quoting Martin v. Aboyan, 148 Cal.App.3d 826, 831 (1983)).