Ciena Capital, LLC v. F/V Friendship

Filing 19

Order re: 18 MOTION for Order of Sale filed by Ciena Capital, LLC. Ciena shall file a supplement to its 18 Motion for Interlocutory Sale of Vessel to clarifies that Suzanne Ly is an agent of L & N or otherwise indicates that L & N has been provided actual notice of this action, and indicates that the motion has been served on L & N. If the above-mentioned supplement has been filed beforehand, the Court will consider the 18 Motion on 6/3/2013. Signed by Judge Kristi K. DuBose on 4/22/2013. (sdb)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
CIENA CAPITAL, LLC,
Plaintiff,
v.
F/V FRIENDSHIP,
Defendant.

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) CIVIL ACTION NO. 13-00043-KD-N
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In Rem
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ORDER

This action is before the Court on the Motion for Interlocutory Sale of Vessel (Doc. 18)
filed by Plaintiff Ciena Capital, LLC, f/k/a Business Loan Center, Inc. and Business Loan Center
LLC (“Ciena”). Pursuant to Rule E(9)(a) of the Supplemental Rules for Admiralty or Maritime
Claims and Asset Forfeiture Actions of the Federal Rules of Civil Procedure, Ciena moves that
the Court issue an Order scheduling a sale of the defendant vessel F/V Friendship (“the Vessel”)
by the U.S. Marshal.
Ciena initiated this in rem action to enforce a preferred ship mortgage pursuant to 46
U.S.C. § 31325(b)(1). The Vessel was seized by the Marshal on February 7, 2013, pursuant to
Rule C, and is currently being held by a court-authorized substitute custodian. (Docs. 16-17).
Normally, “in in rem admiralty matters, notice satisfying due process means seizure.”
Thorsteinsson v. M/V Drangur, 891 F.2d 1547, 1553 (11th Cir. 1990) (citing United States v.
Steel Tank Barge H 1651, 272 F. Supp. 658, 660, 662 (E.D. La. 1967). See also Merchants Nat.
Bank of Mobile v. Dredge Gen. G. L. Gillespie, 663 F.2d 1338, 1346 (5th Cir. Unit A Dec.
1981) (“Arrest in admiralty in rem regards the vessel as the interest concerned, and the seizure in
rem of a vessel accomplished under Rule C brings notice of the action to all persons having an

interest in the vessel.”). In addition, publication of this action and the Vessel’s arrest has been
duly accomplished as required by Supplemental Rule C(4) and SD ALA LAR 3. (Doc. 18-2).
However, the record is unclear that actual notice has been given to the owner/mortgagor
of the Vessel, L & N Friendship Corp. (“L & N”). A review of the Marshal’s Return of Process
does not conclusively establish actual notice to L & N. Ciena represents that it served L & N
with notice of this action via certified mail. (Docs. 18-1 at 2, 18-4, 18-5). However, the notice
was addressed only to L & N, without being directed to a specific individual. (Docs. 18-4, 18-5).
The certified mail return receipt for the notice was signed as being received by Suzanne Ly on
February 23, 2013. (Doc. 18-5). Ly did not indicate that she was an agent of L & N, and
Ciena’s motion makes no representation as to who Ly is or her relationship to L & N.
As to Ciena’s entitlement to an interlocutory sale, Rule E(9)(a)(i) states:
(i) On application of a party, the marshal, or other person having custody of the
property, the court may order all or part of the property sold--with the sales
proceeds, or as much of them as will satisfy the judgment, paid into court to await
further orders of the court--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.
“To obtain an order for an interlocutory sale, a plaintiff need only show the existence of
one of these three criteria. See 20th Century Fox Film Corp. v. M.V. Ship Agencies, 992 F.
Supp. 1434, 1437 (M.D. Fla. 1997), citing Silver Star Enterprises, Inc. v. M/V Saramacca, 19
F.3d 1008, 1014 (5th Cir. 1994).” Regions Bank v. Motor Yacht ROYAL INDULGENCE, No.
3:10CV100/LAC/EMT, 2010 WL 4595792, at *3 (N.D. Fla. Oct. 13, 2010), report and

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recommendation adopted, No. 3:10CV100/LAC/EMT, 2010 WL 4595729 (N.D. Fla. Nov. 4,
2010). Ciena has made no effort to specifically argue any of these criteria; however, the Court
will construe Ciena’s motion as arguing “unreasonable delay in securing release of” the Vessel.
Ciena’s motion notes that no verified statement of right or interest has been filed pursuant
to Supplemental Rule C(6), either in response to its publication of this action (setting the date for
filing such claims as “March 20, 2013, . . . or within such further time as may be allowed by the
court” (Doc. 18-2)) or in response to its notice to L & N via certified mail (setting the date for
filing a claim as “20 days after receipt” (Doc 18-4) – March 15, 2013, if the notice was actually
served on L & N, see supra). “Compliance with Supplemental Rule C(6) is obligatory in order
for a party to have standing to challenge an in rem claim.”

Dresdner Bank AG v. M/V

OLYMPIA VOYAGER, 463 F.3d 1233, 1237 (11th Cir. 2006).

However, “because

Supplemental Rule E(9) provides for interlocutory sales, it ‘does not require, or even mention,
the resolution of the merits of any particular claim; instead, the Rule focuses entirely on avoiding
the recognized complications associated with maintaining a vessel under arrest.’ Freret Marine
Supply v. M/V Enchanted Capri, 2001 WL 649764, *1 (E.D. La. 2001); see also Merchants Nat'l
Bank of Mobile v. Dredge General G.L. Gillespie, 663 F.2d 1338 (5th Cir. 1981) (affirming
order of interlocutory sale in action to foreclose preferred ship mortgage).” Regions Bank, 2010
WL 4595792, at *3. Therefore, the fact that claimants to the Vessel may be in default is not
relevant to determining whether Ciena is entitled to an interlocutory sale. Moreover, though the
notice Ciena mailed to L & N stated an intent to proceed with the sale of the Vessel if no
response was made (Doc. 18-4), Ciena’s instant motion does not contain a Certificate of Service
or any other indication that a copy of the motion has been provided to L & N.

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Currently, the Vessel has been held in this action for approximately 2.5 months. With
regard to Supplemental Rule E(9)(a), a general consensus among courts appears to be that
defendants in actions such as this should be given at least 4 months to secure a vessel’s release.
See Regions Bank, 2010 WL 4595792, at *3 (citing cases); Rowan Companies, Inc. v. M/V FR8
PRIDE, Civ. A. No. C-12-163, 2012 WL 5465964, at *2 (S.D. Tex. Oct. 30, 2012) (“The general
practice among courts is to allow vessel owners approximately four months to bond a vessel.”
(citing John W. Stone Oil Distributor, L.L.C. v. M/V LUCY, No. 09–4440, 2009 WL 4166605,
at *1 (E.D. La. Nov. 20, 2009) (unpublished) (collecting cases))) (Magistrate Judge’s
memorandum & recommendation); Vineyard Bank v. M/Y Elizabeth I, U.S.C.G. Official No.
1130283, No. 08CV2044 BTM WMC, 2009 WL 799304, at *2 (S.D. Cal. Mar. 23, 2009) (“A
motion for interlocutory sale generally should not be granted unless the court has permitted
defendants sufficient time to provide a bond to secure the vessel's release. Bank of Rio Vista v.
Vessel Captain Pete, 2004 WL 2330704, at *2 (N.D. Cal. Oct.14, 2004). As a general rule,
defendants are given at least four months to bond a vessel absent some other considerations.”
(Id.) (quoting United States v. F/V Fortune, 1987 WL 27274, at *1 (D. Alaska April 14, 1987).
Here, Defendant has not made any attempts to secure release of the Vessel since its arrest on
November 11, 2008. More than four months have passed since the Defendant Vessel's arrest.
Defendant has not answered Plaintiff's Complaint or responded to the instant Motion. Thus, the
Court has no evidence to suggest that Defendant has made any attempts at all to secure the
release of the Defendant Vessel.”).
Therefore, in accordance with the foregoing analysis, the Court hereby ORDERS the
following:

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Ciena shall file a supplement to its Motion for Interlocutory Sale of Vessel (Doc.
18) that:
o clarifies that Suzanne Ly is an agent of L & N or otherwise indicates that
L & N has been provided actual notice of this action, and
o indicates that the motion has been served on L & N.

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If the above-mentioned supplement has been filed beforehand, the Court will
consider the Motion for Interlocutory Sale of Vessel (Doc. 18) on or about June
3, 2013.

DONE and ORDERED this the 22nd day of April 2013.
/s/ Kristi K. DuBose
KRISTI K. DuBOSE
UNITED STATES DISTRICT JUDGE

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