Shelter Cove Marina, Ltd. v. M/Y Isabella, U.S.C.G. Official No. 1192004, No. 3:2019cv01106 - Document 8 (S.D. Cal. 2019)
Court Description: ORDER Granting Motion for Issuance of in rem Warrant (Dkt. 3 ); ORDER Granting Motion to Appoint Custodian (Dkt. 4 ). Signed by Chief Judge Larry Alan Burns on 6/18/2019. (jdt)
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Shelter Cove Marina, Ltd. v. M/Y Isabella, U.S.C.G. Official No. 1192004 Doc. 8 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 10 SOUTHERN DISTRICT OF CALIFORNIA SHELTER COVE MARINA, LTD., 11 CASE NO. 19cv1106-LAB (WVG) Plaintiff, 12 vs. 13 M/Y ISABELLA, U.S.C.G. OFFICIAL NO. 1192004, an 81.6-Foot, 1952 Motor Yacht, and All of Her Engines, Tackle, Accessories, Equipment, Furnishings, and Appurtenances, in rem, 14 15 16 ORDER GRANTING MOTION FOR ISSUANCE OF IN REM WARRANT [Dkt. 3]; ORDER GRANTING MOTION TO APPOINT CUSTODIAN [Dkt. 4] Defendant. 17 18 The yacht rock classic “How Long” by Ace begins with a simple question: “How 19 long has this been going on?” Ace, How Long, on Five-A-Side (Anchor Records 1974). 20 In the case of Shelter Cove Marina and the M/Y Isabella, an 82-foot yacht moored in San 21 Diego Bay with a poor track record of paying her wharfage fees, the answer to that 22 question is approximately two years. Despite its previous orders directing seizure and 23 sale of the Isabella to satisfy Shelter Cove’s maritime liens, the Court finds itself 24 confronted yet again with a vessel that is both unwilling to pay its debts and unwilling to 25 leave. So taking another page from the yacht rock hymnal, we’ll “go back, Jack, do it 26 again.” Steely Dan, Do It Again, on Can’t Buy a Thrill (ABC Records 1972). Shelter 27 Cove’s motions for the issuance of an in rem warrant and to appoint Shelter Cove as the 28 vessel’s custodian are GRANTED. Dkts. 3, 4. -1Dockets.Justia.com Background1 1 2 Shelter Cove first brought suit against the Isabella in 2017, alleging that the vessel 3 and her owners had breached a maritime contract by failing to pay the marina roughly 4 $37,000 in wharfage fees. See Case No. 17-cv-1578-GPC, Dkt. 1. In order to satisfy 5 Shelter Cove’s maritime lien, the Court ordered the United States Marshal to seize (and 6 later sell) the vessel. Scott Sumner and Crescent Bay Corp., LLC purchased the Isabella, 7 but by that time the vessel had fallen into disrepair. As an accommodation, Shelter Cove 8 agreed to continue mooring the vessel for a year at a reduced rate if Sumner would work 9 to make her seaworthy again. Unfortunately for Shelter Cove, more than a year passed 10 and Sumner showed no signs of honoring his end of the bargain—today, the Isabella 11 remains covered in the same tarps Shelter Cove originally placed over her to prevent 12 flooding. Adding insult to injury, Shelter Cove alleges that Sumner stopped paying 13 wharfage fees in December 2018. As of May 31, 2019—and despite multiple letter 14 informing the owners of their obligations to pay—Shelter Cove estimates that the Isabella 15 has incurred arrearages of approximately $19,243.16, an amount that increases by 16 $217.50 daily. Shelter Cove brought this suit against the Isabella in rem to collect on the 17 debt. 18 Jurisdiction 19 Federal district courts have original jurisdiction over “[a]ny civil case of admiralty 20 or maritime jurisdiction.” 28 U.S.C. § 1333. If a plaintiff demonstrates that it provided 21 necessaries to a vessel by order of the owner of the vessel or a person authorized by the 22 owner, “it may invoke the admiralty jurisdiction of the federal courts to enforce a 23 necessaries lien in rem.” Ventura Packers, Inc. v. F/V Jeanine Kathleen, 305 F.3d 913, 24 919 (9th Cir. 2002). A maritime contract is not needed to invoke the admiralty jurisdiction 25 pursuant to the Maritime Lien Act. Id. at 919-22. 26 27 28 All facts are taken from Shelter Cove’s verified complaint and the declarations attached to Shelter Cove’s motions. 1 -2- 1 Arrest Warrant 2 1. 3 The Federal Maritime Lien Act provides that: 4 The Maritime Lien Act [A] person providing necessaries to a vessel on the order of the owner or a person authorized by the owner – (1) has a maritime lien on the vessel; (2) may bring a civil action in rem to enforce the lien; and (3) is not required to allege or prove in the action that credit was given to the vessel. 5 6 7 8 46 U.S.C.§ 31342. A lien claimant must meet three requirements before a court may 9 grant a maritime lien under Section 31342: namely, (1) that the individual provided 10 necessaries; (2) to a vessel; (3) on the order of the owner or a person authorized by the 11 owner. Ventura Packers, 305 F.3d at 922. The relevant statute defines “necessaries” as 12 “repairs, supplies, towage, and the use of a dry dock or marine railway.” 46 U.S.C. 13 § 31301(4). This list, however, is not exhaustive. The term is broadly construed to refer 14 to “anything that facilitates or enables a vessel to perform its mission or occupation.” 15 Ventura Packers, 305 F.3d at 923. As the Court recognized in the prior iteration of this 16 case, wharfage services are “necessaries” within the meaning of maritime law. See Case 17 No. 17-cv-1578-GPC, Dkt. 5 at 3 (citing The Western Wave, 77 F.2d 695, 698 (5th Cir. 18 1935) (wharfage fees constitute necessaries); Humphreys Railways, Inc. v. F/V Nils S, 19 603 F. Supp. 95, 98 (E.D. Va. 1984) (same); Crescent City Harbor Dist. v. M/V Intrepid, 20 2008 WL 5211023, *3 (N.D. Cal. 2008) (same)). 21 2. Admiralty Rule C 22 An action may be brought in rem to enforce a maritime lien only when the complaint 23 is (1) verified; (2) describes the property that is the subject of the action with “reasonable 24 particularity”; and (3) states that the property is within the district or will be within the 25 district while the action is pending. Fed. R. Civ. P. Supp. Adm. Rule C. If a court 26 determines, after reviewing the complaint and supporting papers, that the conditions for 27 an in rem action exist, “the court must issue an order directing the clerk to issue a warrant 28 for the arrest of the vessel or other property that is the subject of the action.” Id. “The -3- 1 rule envisions that the [arrest] order will issue upon a prima facie showing that the plaintiff 2 has an action in rem against the defendant in the amount sued for and that the property 3 is within the district. A simple order with conclusory findings is contemplated.” Id., 4 Advisory Committee Note (1985 Amendment). 5 3. 6 Little has changed since the Court first encountered the Isabella in 2017. The first 7 two requirements for establishing a maritime lien under Section 31342 are plainly met: (1) 8 Shelter Cove has provided “necessaries” to the Isabella (in the form of wharfage) since 9 the vessel was sold in February 2018, and (2) the Isabella, despite her battered status, 10 remains a “vessel.” See 1 U.S.C. § 3 (defining “vessel” to include any watercraft “used, 11 or capable of being used, as a means of transportation on water.”) (emphasis added); 12 see also Crimson Yachts v. Betty Lyn II Motor Yacht, 603 F.3d 864, 872 (11th Cir. 2010) 13 (citations omitted) (“In deciding whether a watercraft is a vessel, the focus ... is the craft's 14 capability, not its present use or station. 15 watercraft's use as a means of transportation on water is a practical possibility or merely 16 a theoretical one.”). Analysis The dispositive question is whether the 17 Only the statute’s third requirement—that the necessaries were provided “on the 18 order of the owner or a person authorized by the owner”—gives the Court pause. Shelter 19 Cove alleges that, despite its repeated requests, the Isabella’s owner refused to execute 20 a written contract for wharfage. See Complaint ¶ 13. Without a written contract, the 21 Isabella’s owners could conceivably argue they didn’t approve the necessaries rendered. 22 Nonetheless, the Court finds this element is satisfied. First, even if there was no written 23 contract, the parties apparently operated under an oral agreement, as evidenced by the 24 fact that the Isabella’s owner paid wharfage fees for the first ten months the vessel was 25 docked. 26 necessaries—the slip where the vessel was docked—by virtue of their decision to leave 27 the vessel there. Had they desired to forfeit this, they were perfectly entitled to make the 28 Isabella seaworthy and (after paying the arrearages) take her to another location. Shelter Second, the owners implicitly consented to Shelter Cove providing the -4- 1 Cove has demonstrated, at least at this stage of the case, that they were authorized by 2 the owners to provide necessaries to the Isabella. This finding is bolstered by the Ninth 3 Circuit’s decision in Venura Packers, which held that a “maritime lien for necessaries 4 created by § 31342 is not predicated on the existence of a maritime contract.” Ventura 5 Packers, 305 F.3d at 920. “In general, maritime liens, including necessaries liens, exist 6 to keep ships moving in commerce, while preventing them from sailing away from the 7 debts they incur.” Id. at 919. 8 The Court likewise finds that Admiralty Rule C’s requirements for bringing an in 9 rem action are met. Shelter Cove’s Verified Complaint reasonably describes the vessel— 10 an 81.6-foot, 1952 motor yacht of steel construction which is documented with the United 11 States Coast Guard under Official Number 1192004—and establishes that it will remain 12 in this district during the litigation. See Complaint ¶ 3. With these requirements satisfied, 13 Shelter Cove has made a prima facie showing that this Court has subject matter 14 jurisdiction and that an in rem action is proper. Shelter Cove’s motion for an arrest order 15 is GRANTED. Dkt. 3. 16 Arrest Order 17 The Court, having reviewed the Verified Complaint of Plaintiff Shelter Cove Marina, 18 Ltd. (“PLAINTIFF”) and the Declaration of Philip E. Weiss, an attorney acting on its behalf, 19 and upon application of PLAINTIFF for an Order Authorizing a Warrant of Arrest, finds 20 that the conditions for an action in rem appear to exist, and it is therefore: 21 ORDERED that the immediate issuance of a warrant for the arrest of the 22 Defendant Vessel, M/Y ISABELLA, U.S.C.G. Official No. 1192004, a 81.6-Foot, 1952 23 Motor Yacht and all of her tackle, accessories, equipment, furnishings (the “DEFENDANT 24 VESSEL”) and appurtenances is authorized; and 25 IT IS FURTHER ORDERED that the Clerk of the District Court shall immediately 26 prepare a Warrant for the Arrest of the DEFENDANT VESSEL and shall deliver it to the 27 United States Marshal for the Southern District of California for service; and 28 -5- 1 IT IS FURTHER ORDERED that any person claiming an interest in the 2 DEFENDANT VESSEL shall be entitled upon request to a prompt post-seizure hearing 3 at which the Plaintiff shall be required to show why the arrest should not be vacated or 4 other relief granted consistent with the Supplemental Rules for Certain Admiralty and 5 Maritime Claims; and 6 7 IT IS FURTHER ORDERED that a copy of this Order be attached to and served with the said Warrant For Arrest In Action In Rem. 8 9 10 Substitution of Custodian Order Shelter Cove has also moved to appoint itself as the custodian of the Isabella for the duration of this litigation. Dkt. 4. Local Civil Rule E.1(2) provides that: 11 On motion of any party, made after notice to the marshal and all parties who have appeared, a judge may order that custody of the vessel be given to the operator of a marina or similar facility, repair yard, or company regularly carrying on the business of ship’s agent, if a judge finds that such firm or person can and will safely keep the vessel and has in effect adequate insurance to cover liability for failure to do so. If the vessel must be moved to the place where custody will be maintained, a judge may also require insurance or other security to protect those having an interest in the vessel, as well as those claiming against her, from loss of or damage to the res, or liability of the vessel, incurred during the movement. 12 13 14 15 16 17 18 19 20 As in 2017, the Court is satisfied that Shelter Cove Marina is able to safely harbor 21 the Isabella during these proceedings. According to the declaration of Shaun McMahon, 22 the general manager of Shelter Cove, the marina is one of the best-known and well- 23 established marinas in the San Diego area. Dkt. 4-1 ¶ 2. Access to the vessels moored 24 there is possible only with a gate access key, and marina staff regularly patrol the docks. 25 Id. The marina has instructed its staff members to keep close watch of the Isabella, and 26 a “live aboard tenant” in a nearby vessel has likewise agreed to routinely verify the ship’s 27 status after hours. Id. The Isabella will be secured to its pier using a high strength chain 28 and lock. Id. -6- 1 Further supporting Shelter Cove’s application, the marina has several insurance 2 policies protecting it in the event of custodial negligence, including at least four policies in 3 excess of $1,000,000. Id. ¶ 7. Shelter Cove declares that it will provide ongoing wharfage 4 and custodial services for the Isabella at the slip where she is located at a cost of $261 5 per day. Id. ¶¶ 5(e)-(f). It will also provide weekly inspections of the vessel to check for 6 watertight integrity, excessive bilge water, and fuel lubricant leaks, at a rate of $50 per 7 inspection. Id. ¶ 5(d). 8 9 Satisfied that Shelter Cove will act as a capable custodian for the Isabella, the Court GRANTS its motion for appointment as custodian of the vessel. Dkt. 4. 10 Substitution of Custodian Order 11 Plaintiff, SHELTER COVE MARINA, LTD., ("PLAINTIFF"), by and through its 12 attorneys, Brodsky, Micklow, Bull & Weiss, LLP, having appeared and made the following 13 recitals: 14 1. On or about June 13, 2019 the Verified Complaint herein was filed praying 15 that the DEFENDANT VESSEL and her tackle, apparel, furnishings, appurtenances, etc., 16 and all other necessaries thereunto appertaining and belonging, be condemned and sold 17 to pay PLAINTIFF’s demands and for other proper relief. 18 2. It is contemplated the United States Marshal will arrest the DEFENDANT 19 VESSEL forthwith following PLAINTIFF’s application therefore and pursuant to Order of 20 this Court. Custody by the United States Marshal requires the services of one or more 21 keepers, and does not include charges for wharfage and the other services usually 22 associated with safekeeping vessels similar to the DEFENDANT VESSEL. 23 3. The DEFENDANT VESSEL is situated in a slip located at 2240 Shelter 24 Island Drive, Shelter Island, San Diego, California, which premises is leased and operated 25 by PLAINTIFF. It has agreed to assume the responsibility for safekeeping of the said 26 DEFENDANT VESSEL and has consented to act as her Substitute Custodian until further 27 order of this Court. It will provide, as necessary under the circumstances, the following 28 services for the safekeeping of the DEFENDANT VESSEL, at a cost not to exceed the -7- 1 prevailing rates for substitute custodian services in the Port of San Diego, as described 2 with further particularity in the Declaration of Shaun McMahon, its General Manager: 3 a. Assume custody of the vessel from the United States Marshal at the 4 place of her arrest, and keep her in her current slip or other suitable location within 5 PLAINTIFF’s marina, at a rate not exceeding the usual and customary rate prevailing in 6 the Port of San Diego for substitute custodian services, until further order of the Court; 7 b. As soon as possible after assuming custody of the vessel, 8 photograph and/or video tape the interior and exterior, and prepare a written inventory of 9 equipment and property aboard which is not installed as part of the vessel; 10 11 12 c. Periodically inspect mooring lines/fenders to assure safe and secure d. Periodically as deemed prudent under the existing circumstances, mooring; 13 but no less than weekly, at the rate of $50.00 per inspection, inspect the vessel for 14 watertight integrity, excessive bilge water and fuel lubricant leaks. Where further action 15 beyond those detailed herein is deemed necessary to preserve the vessel, SHELTER 16 COVE shall advise counsel, so counsel can seek an appropriate order from the Court; 17 e. Provide wharfage services for the DEFENDANT VESSEL during the 18 period of her arrest at the marina’s standard transient rate of $2.50 per foot of vessel 19 length per day, which for the 87-foot DEFENDANT VESSEL (overall length) is $217.50 20 per day (i.e., 87 feet overall length x $2.50 per foot per day = $217.50 per day); 21 f. Provide custodial services for the benefit of the DEFENDANT 22 VESSEL during the period of her arrest at the rate of fifty cents per foot of vessel length 23 per day, which for the 87-foot DEFENDANT VESSEL is $43.50 per day (i.e., 87 feet 24 overall length x $0.50 per foot per day = $43.50 per day); 25 g. Provide, at rates not exceeding the usual and customary rates 26 prevailing in the Port of San Diego additional services, such as cleaning, minor 27 maintenance, inspection of bottom by a diver for the purpose of cleaning and reporting 28 -8- 1 findings regarding underwater hull, metal and zinc conditions, as such services are 2 deemed prudent; 3 4 h. SHELTER COVE will operate only machinery described in a proper Court order; and 5 i. 6 by further order of the Court. 7 4. Provide other such services as may be required from time-to-time, PLAINTIFF, in consideration of the Marshal’s consent to the substitution of 8 custodian, agrees to release the United States and the Marshal from any and all liability 9 and responsibility arising out of the case and custody of the DEFENDANT VESSEL, her 10 engines, boilers, tackle, apparel, furnishings, appurtenances, etc., and all other 11 necessaries thereunto appertaining and belonging, from the time the Marshal transfers 12 possession of said vessel over to said substitute custodian, and further agrees to hold 13 harmless and indemnify the United States and the Marshal from any and all claims 14 whatsoever arising out of the substitute custodian’s possession and safekeeping. 15 16 The Court finds that this declaration satisfies the requirements of Local Rule E.1. As such, 17 IT IS ORDERED that the United States Marshal for the Southern District of 18 California be, and is hereby, authorized and directed upon seizure of the DEFENDANT 19 VESSEL, her tackle, apparel, furnishings, appurtenances, etc., and all other necessaries 20 thereunto appertaining and belonging, pursuant to the Warrant for Arrest to surrender the 21 possession thereof to the Substitute Custodian named herein, and that upon such 22 surrender the Marshal shall be discharged from his duties and responsibilities for the 23 safekeeping of said vessel and held harmless from and against any and all claims 24 whatever arising out of said substituted possession and safekeeping; 25 IT IS FURTHER ORDERED that SHELTER COVE MARINA, LTD. be, and is 26 hereby appointed, the Substitute Custodian of said vessel, to retain her in its custody for 27 possession and safekeeping, with the authority to move the DEFENDANT VESSEL to 28 any suitable and safe place within its marina, for the aforementioned compensation and -9- 1 in accordance with the Declaration of Shaun McMahon and the recitals herein contained 2 until further order of this Court; and 3 IT IS FURTHER ORDERED that PLAINTIFF’s attorney will serve by mail a copy 4 of this Order to the last known address of DEFENDANT VESSEL’s owner(s) or apparent 5 owner(s), except that if any named Defendant is known by Plaintiff or its counsel to be 6 represented in connection with Plaintiff’s claims in this action, Plaintiff shall serve this 7 Order on such counsel, rather than on his or her client. 8 9 Conclusion This port on a western bay may not serve a hundred ships a day, cf. Looking 10 Glass, Brandy (You’re a Fine Girl), on Looking Glass (Epic Records 1972), but its 11 marinas nonetheless deserve to be reimbursed when they render necessaries. For the 12 reasons above, Shelter Cove’s motion for the issuance of an arrest warrant to seize the 13 Isabella is GRANTED. Dkt. 3. Its motion for appointment as the vessel’s custodian 14 during the pendency of this litigation is likewise GRANTED. Dkt. 4. 15 16 17 IT IS SO ORDERED. Dated: June 18, 2019 HONORABLE LARRY ALAN BURNS Chief United States District Judge 18 19 20 21 22 23 24 25 26 27 28 - 10 -
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