Oliver et al v. M/V Barbary Coast et al
ORDER entered that upon consideration, it is ORDERED that Midsouths (amended) motion (Docs. 117, 146) is GRANTED. As such, the Clerk of Court is ORDERED to pay the requested in custodia legis expenses from the proceeds of the sale of the M/V BARBARY COAST to Midsouth Bank, N.A., the U.S. Marshal, and Alex Lankford, Esq., as follows: 1) $6,962.47 payable to Midsouth Bank, N.A. (for insurance premiums); 2) $4,677.00 payable to Midsouth Bank, N.A. (for installation of the fire-detection system); 3) $1,515.00 payable to the U.S. Marshal (sales commission); and 4) $205.09 payable to Alex Lankford, Esq. (advertising costs). Signed by Judge Kristi K. DuBose on 11/18/2011. (mca)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
MARC E. OLIVER, d/b/a GULF COAST
ENVIRONMENTAL AND RECOVERY,
And T.M. JEMISON CONSTRUCTION
CO. INC. d/b/a JEMISON MARINE, INC.,
MIDSOUTH BANK, N.A.,
In Personam and In Rem
M/V BARBARY COAST, her engines,
tackle, furniture, and appurtenances, etc.,
In Rem, and RODD CAIRNS, an
individual, and ATCHAFALAYA MARINE,:
LLC, In personam,
EAGLE RIVER TOWING, L.L.C., p/k/a or
a/k/a EAGLE INLAND TOWING,
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA,
LOUISIANA LIMESTONE & LOGISTICS,
L.L.C., and CURTIS BUFORD,
This matter is before the Court on Substitute Custodian Southern Marine’s “Motion to
Disburse Custodial Fees” (Doc. 121) and Intervenor-Plaintiff Midsouth Bank, N.A.’s Objection
thereto (Doc. 137).
On July 19, 2011, Intervenor Plaintiff Midsouth Bank, N.A. (“Midsouth”) filed a motion
requesting that the substitute custodian Southern Marine be required to furnish information and to
perform certain acts (Doc. 54), to which the custodian responded (Doc. 73). On August 25, 2011,
U.S. Magistrate Judge Cassady granted Midsouth’s motion and ruled that the installation of a high
water bilge alarm, the reasonable costs associated with an evacuation plan (for the vessel should
Mobile be threatened by a hurricane or tropical storm) and any reasonable expenses associated
with repairs (as required by the COTP before the vessel is allowed to be evacuated), were
authorized as in custodia legis expenses. (Doc. 94). On August 26, 2011, Judge Cassady
amended that Order to add, as an additional in custodia legis expense, the costs of the insurance
premiums for the Great American insurance policy covering the vessel (not to exceed $19,000).
(Doc. 98). On August 30, 2011, Midsouth filed an emergency motion for approval of in custodia
legis expenses (Doc. 100), which Judge Cassady granted on August 31, 2011, ruling that the
requested expenses for the removal of excessive water/oil mixture in the bilge by a certified oil
collection facility and the installation of a fire-detection system were also authorized as in custodia
legis expenses. (Doc. 101).
In sum, the expenses previously authorized by the Court as in custodia legis expenses
consist of: 1) the installation of a high water bilge alarm; 2) the reasonable costs associated with an
evacuation plan for the vessel; 3) any reasonable expenses associated with repairs required for
evacuation; 4) the insurance premium expenses of the Great American insurance policy covering
the vessel (not to exceed $19,000); 5) the removal of excessive water/oil mixture in the bilge by a
certified oil collection facility; and 6) the installation of a fire-detection system.
On September 20, 2011, Midsouth filed the present motion seeking payment for in
custodia legis expenses. (Doc. 117). While the parties were given the opportunity to do so (Doc.
125), no oppositions were filed in response to Midsouth’s motion.
In Custodia Legis expenses are expenses reasonably incurred during custodia legis (i.e.,
post-arrest of a vessel). Standard Fed. Bank, N.A. v. M/Y PLEASURES, 2003 WL 22722077,
*5 (S.D. Fla. Jul. 24, 2003). See also Bender Welding & Machine Co., Inc. v. M/V SOVEREIGN
OPAL, 415 F. Supp. 772, 773 (S.D. Ala. 1976). As explained in Bunkers Intern. Corp. v. M/V
ANASAZI, Slip Copy, 2010 WL 2330327, *1 (M.D. Fla. Jun. 9, 2010):
Expenses in custodia legis are generally entitled to priority payment…a person or
entity that furnishes goods or services to a vessel after it has been arrested does not
acquire a maritime lien against the vessel; however, a district court sitting in
admiralty has inherent equitable power to give priority to such claims…
Additionally, as set forth in Associated Metals and Minerals Corp. v. ALEXANDER’S UNITY
MV, 41 F.3d 1007, 1018 (5th Cir. 1995) (cited by Dresdner Bank AG v. M/V OLYMPIA
VOYAGER, 465 F.3d 1267, 1273 (11th Cir. 2006)):
Generally, “services or property advanced to preserve and maintain the vessel
under seizure, furnished upon authority of the court or of an officer of the court...
should be allowed as custodia legis expenses.”…Even if such expenditures are
made absent a court order, “ ‘ custodia legis ’ expenses may be ordered by the court
…if equity and good conscience so require.”… Turner & Blanchard, Inc. v. The
S.S. Emilia, 322 F.2d 249, 250 (2d Cir.1963) (holding that “ ‘service rendered to the
ship, in the aid of cargo, necessarily inured to their [lienors] benefit’ ”and were
properly considered custodia legis expenses (alteration in original)); Morgan Guar.
Trust, 593 F.Supp. 1004, 1010 (S.D.N.Y.1984) (finding that cargo discharge costs
necessary to minimize the possibility of additional claims against the vessel and to
maximize the sales price of the vessel were custodia legis expenses)…
See also e.g., Oil Shipping (Bunkering) B.V. v. Sonmez Denizcilik Ve Ticaret A.S., 10 F.3d 176,
182 (3rd Cir. 1993) (providing that “the class of administrative expenses for goods supplied in
custodia legis is not broad enough to include every post-arrest expense that might add to the value
of the res when it is sold. Where the district court has not specifically ordered goods or services,
only those expenses that are necessary to preserve the value of the res are in the category of in
custodia legis expenses”).
To qualify for preferential treatment as an in custodia legis expense an expense must be
incurred “upon the authority of the court or its officer,” and be “for the common benefit of those
interested in [the] fund.’” Oil Shipping (Bunkering), 10 F.3d at 182. See also e.g., Fortis Bank
(Nederland) N.V. v. M/V SHAMROCK, 379 F. Supp. 2d 2, 7-8 (D. Me. 2005) (same); Dresdner
Bank, 465 F.3d at 1272 (discussing that a party is not entitled, under the doctrine of custodia legis,
to equitable prioritization of a claim for the value of insurance it provided to the vessel after its
arrest when it does not first seek or receive the district court’s permission for same).
In its motion Midsouth seeks recovery of the following as in custodia legis expenses: 1)
$6,962.47 payable to Midsouth for the premium cost associated with the insurance policy during
the time the vessel was under arrest at a pro rated rate; 2) $4,677.00 payable to Midsouth for
installation of the fire-detection system; 3) $1,515.00 payable to the U.S. Marshal as its sales
commission for selling the vessel; and 4) $205.09 payable to Alex Lankford, Esq. (counsel for
Midsouth) for the costs to advertise the vessel’s sale (an expense which was approved by the Court
in the Decree Ordering Sale of Vessel (Doc. 81 at 2) which provides that the advertisement be
“taxed as costs”), as he placed the charge on his personal credit card. Midsouth has also provided
appropriate documentation in support of these expenses.
As detailed supra, all of the requested expenses were previously authorized by this Court,
with the exception of the U.S. Marshal’s sales commission for handling the sale of the vessel.
However, the Marshals’ entitlement to the requested amount for a sales commission is standard in
this District in such circumstances.1
Accordingly, upon consideration, it is ORDERED that Midsouth’s (amended) motion
(Docs. 117, 146) is GRANTED. As such, the Clerk of Court is ORDERED to pay the requested
in custodia legis expenses from the proceeds of the sale of the M/V BARBARY COAST to
Midsouth Bank, N.A., the U.S. Marshal, and Alex Lankford, Esq., as follows: 1) $6,962.47
payable to Midsouth Bank, N.A. (for insurance premiums); 2) $4,677.00 payable to Midsouth
Bank, N.A. (for installation of the fire-detection system); 3) $1,515.00 payable to the U.S. Marshal
(sales commission); and 4) $205.09 payable to Alex Lankford, Esq. (advertising costs).
DONE and ORDERED this the 18th day of November 2011.
/s/ Kristi K. DuBose
KRISTI K. DuBOSE
UNITED STATES DISTRICT JUDGE
1 The U.S. Marshal’s office recovers a sales commission when handling the sale of a vessel. This sales commission
consists of 3% of the first $1,000 of the sales price plus 1.5% of the remaining balance (of the sales price).
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