Ray Capital Inc et al v. M/V Newlead Castellano et al

Filing 64

ORDER granting Plaintiffs' 49 Emergency Motion for Reconsideration re 47 Order on Motion to Vacate; vacating its 47 July 14, 2016 Order to the extent it addresses the arrest of the Vessel; reinstating Plaintiffs' arrest of the Vessel; and denying Defendants' 59 Cross-Motion for Reconsideration. Signed by Judge J. Randal Hall on 8/4/2016. (jah)

IN THE UNITED
FOR THE

STATES

DISTRICT

COURT

SOUTHERN DISTRICT OF GEORGIA
SAVANNAH DIVISION
IN ADMIRALTY

RAY CAPITAL INC.;

OPPENHEIM

*

CAPITAL LTD.; CHEYENNE HOLDINGS *
LTD.; and LABROY SHIPTRADE
*
LIMITED,

*
*

Plaintiffs,

*
*

v.

*

M/V NEWLEAD CASTELLANO, IMO NO.
9686338, her engines, tackle,
equipment, furniture,
appurtenances, etc., in rem,

*
*
*
*

and NEWLEAD CASTELLANO LTD.,

CV 416-093

*
•

Defendants.

*

ORDER

Presently before the Court is Plaintiffs'
for

reconsideration

reconsideration

(Doc.

(Doc.

49)

59) .

and Defendants7

For the reasons

motion is GRANTED and Defendants'

I,

On

July

Defendants'

Defendant

14,

2016,

motion

to

M/V Newlead

and denying Defendants'
of the Vessel.

(Doc.

emergency motion
cross-motion

below,

for

Plaintiffs'

motion is DENIED.

BACKGROUND

the Court

vacate

as

Castellano,

entered an

it

related

IMO

No.

to

order
the

9686338

granting
arrest

of

("Vessel"),

motion as it related to the attachment
47.)

Regarding the Vessel's arrest,

the

Court
nor

found

their

lien.

that

neither

post-arrest

Consequently,

arguments

decision,

27,

Plaintiffs,

asking
the

2016,

the

Defendants

motions,

Defendants

Plaintiffs'

in

motion

opposition

Accordingly,

have
(Doc.

to

2016,

(Doc.

6.)

its

49.)

59.)

filed a

In

filed

an

Order

to

of

asking

extent

the

it upholds

this

emergency

Thereafter,

cross-motion

since

it

on July

Court

to

Plaintiffs'

In response to these
brief

in opposition

to

and Plaintiffs have filed a brief

Defendants'

the parties'

they have a maritime

light

(Doc.

62),

other

at

the extent that

attachment of the Vessel.1

any

the arrest of

reconsider

filed a

"without

maritime

15,

July

to

a

(Id.

arrest.

reconsider the Order to

that

to

liens

motion to vacate

granted.

on

mortgage

rise

indicating that

Court

Vessel's

gave

ruled

Defendants'

should be

preferred

payments

Court

from Plaintiffs

the Vessel

vacated

wage

the

lien on the Vessel,"

motion

Plaintiffs'

motions

cross-motion

(Doc.

for reconsideration are

63).
now

ripe for the Court's consideration.
II,

A.

DISCUSSION

Arrest

Having evaluated the arguments set forth by both parties,
the

Court

remains

steadfast

in

its

conclusion

that

Plaintiffs

have not met their burden of establishing that they are entitled
to
1

a

"maritime

lien."

See

46

U.S.C.

§

31301(5)

(defining

Defendants were unrepresented by counsel in this matter from July 7, 2016,

to July 18, 2016.

(Docs. 42, 50.)

"preferred

maritime

"maritime lien");
1244

(11th Cir.

Trope z,

524

F.

Galehead,

2d

Supp.

1308,

Mortgage
vessel,'

Servs.,

(S.D.

deems

46 U.S.C.

lien.'").

the

U.S.C.
v.

§

31342

(defining

183

F.3d 1242,

M/V Angila,

Cruise

1380

Servs. ,

(S.D.

Inc.

Fla.

v.

M/V

2007);

see

Inc. v. M/V Wilbur R. Clark,

Ala.

2009)

preferred

§ 31325(a),

However,

Plaintiffs'

Inc.

2d 1378,

1319

Act

46

1999) ; Admiral

TransMontaigne Prod.

Supp.

lien");

this

("For

example,

mortgage

a

does

not

ability to prevail on their motion.

Ship

on

but does not call it a
conclusion

also

679 F.

the

'lien

St.

the

'maritime
foreclose

Rule

C(l)

of

the Supplemental Rules for Certain Admiralty and Maritime Claims
of the Federal Rules of Civil Procedure provides that an action

in rem may be brought not only
lien"

but

also

(b)

(a)

" [w] henever

a

" [t] o enforce any maritime

statute

of

the

United

States

provides for a maritime action in rem or a proceeding analogous
thereto."

In

this

31325(b)(1)

P.

a

- permits

action and to

Civ.

case,

Supp.

United

States

statute

-.

46

U.S.C.

§

Plaintiffs to bring the instant in rem

seek an arrest

C(3) (a) (i)

of

("If

the Vessel.

See

the conditions

also

for

an

Fed.

R.

in rem

action appear to exist, the court must issue an order directing
the

clerk

to

issue

a

warrant

for

the

arrest

of

the

other property that is the subject of the action.").
to this statute,

vessel

or

Pursuant

Plaintiffs may bring a civil action in rem if

(1)
on

they have a preferred mortgage and a preferred mortgage lien
the

has

Vessel

and

defaulted

U.S.C.

the

lien in a

civil

has

Defendant

term

been

of

the

NewLead

may[]

action in

[they]

[its]

rem for a

documented

(1)

("NC")

See

[a]

46

preferred

preferred mortgage

.

foreign vessel.").

that

in Liberia

Ltd.

mortgage.

any term of

enforce

have pled

Castellano

preferred

("On default of

mortgagee

"because

Vessel

a

§ 31325(b)(1)

mortgage,

Here,

on

(2)

the

and

ownership of

(2)

that

the

Plaintiffs7

mortgages in the Vessel were registered in Liberia and governed
by Liberian law,"

Plaintiffs have adequately alleged that

have preferred mortgages,
the Vessel.

(Doc.

and thus preferred mortgage liens, on

4 7 at 7.)

See id.

§ 31301(6)

a "preferred mortgage" is "a mortgage . . .
as

a

security on a

they

foreign vessel

if

the

(providing that

that is established
mortgage

.

.

. was

executed under the laws of the foreign country under whose laws

the

ownership

of

the

vessel

is

documented

and

has

been

registered under those laws in a public register at the port of

registry of the vessel or at a central public office");
31325(a)

id.

§

(providing that one has a "preferred mortgage lien" on

a vessel

when

Moreover,

by alleging that Defendant NC failed to fulfill its

financial

one

has

obligation

a preferred mortgage

to

Plaintiff

Ray,

on

that vessel).

Plaintiffs

have

adequately alleged that Defendant NC has defaulted on at least

one

of

the

preferred

allegations,

mortgages.2

Consequently,

v.

(S.D.

1,800 Metric

Ala.

these

Plaintiffs have shown that they have a reasonable

basis for bringing this in rem action.3
S.L.

given

Apr.

Tons,

29,

No.

2009)

09-0027,

("The

See Barna Conshipping,
2009 WL

post-arrest

1203923,

hearing

at

is

*3

not

intended to resolve definitely the dispute between the parties,
but only to make a preliminary determination whether there were

reasonable

grounds

added)).

For

reconsideration
Order,

(Doc.

for

issuing

that

(Doc.

the

reason,

49)

is GRANTED;

arrest

warrant."

Plaintiffs7

(emphasis

motion

the Court's July 14,

for

2016

to the extent that it addresses the arrest of the Vessel

47),

is VACATED;

and the initial arrest of

the Vessel is

REINSTATED.4

2 Defendant's obligation to pay Defendant NC arose on or about January 8,
2016. (Am. Compl., Doc. 18, M 33, 35, 39, 41, 56.)

3

Within their brief in opposition to Plaintiffs' motion for reconsideration,

Defendants

cite

three

cases

for

the

proposition

that

* [a]

breach

of

an

underlying contract (wthe Ray Note") in this case secured by a preferred
mortgage does not give rise to [a] Section 31325 [in rem action]."
(Defs.'
Br., Doc. 62, at 10.)
However, upon a close reading of these cases, the
Court concludes that none are applicable here.
See S.E.L. Maduro (Fla.),
Inc. v. M/V Antonio de Gastaneta, 833 F.2d 1477, 1482-83 (11th Cir. 1987)
(holding that, for purposes of res judicata, an action for breach of contract
is "altogether different" from an action to enforce a maritime lien in rem

against a vessel); Beluga Holding, Ltd. v. Commerce Capital Corp., 212 F.3d
1199,

1204 (11th Cir.

2000)

(holding that,

for purposes of an interlocutory

appeal of an admiralty claim, a claim for conversion of stock certificates is
not "integrally linked" to a claim for foreclosure of a ship mortgage) ; First
Bank P.R. v. Swift Access Mktg.,

Inc., 697 F. Supp. 2d 259, 261

(D.P.R. 2010)

(providing that a complaint is "devoid of federal law issues" when a
plaintiff seeks only enforcement of a promissory note and not "foreclosure
upon a mortgage or arrest of a vessel").

4

Upon the foregoing,

portion of
60(b)(6).

the Court grants Plaintiffs'

its prior Order pursuant

motion and vacates a

to Federal Rule of

Civil Procedure

B.

Attachment

With their cross-motion,
reconsider

July

its

Plaintiffs'

14th Order to

the

Plaintiffs

have

them.

not
See

plaintiff,

pled
James

at *5

a

valid

v.

M/V

(S.D. Ala.

extent

it upholds
Defendants

issued in error because

prima
Eagle

facie

admiralty

Express,

July 27, 2012)

facie

admiralty

cannot

claim

be

found

(1)

No.

within

the
the

CA12-423,

must show that

* [the plaintiff]

against

claim

(stating that a

in order to obtain Rule B attachment,

all of the following are true:

defendant

that

Specifically,

Court's prior Order was

2012 WL 3068791,

prima

the

attachment of the Vessel.

argue that

against

Defendants request that the Court

has a valid

defendant";

(2)
(3)

district";

"the
"the

defendant's property may be found within the district";

and (4)

"there is no statutory or maritime law bar to the attachment") .
However,

alleged

as

(1)

highlighted

that

they

above,

have

a

Plaintiffs

preferred

have

mortgage,

adequately

and

thus

a

preferred mortgage lien, on the Vessel and (2) that Defendant NC
has

defaulted on a financial obligation within Plaintiff Ray's

preferred mortgage.

Consequently,

Plaintiffs

have

asserted a

prima facie case for the admiralty claim that was created by the
following language from 46 U.S.C. § 31325(b) (2) (A) :
On default of any term of the preferred mortgage,

the

mortgagee may[] enforce a claim for the outstanding
indebtedness secured by the mortgaged vessel in[] a
civil action in personam in admiralty against the
mortgagor . . . for the amount of the outstanding

indebtedness or any deficiency in full payment of that
indebtedness.

As a result,

Plaintiffs'

attachment of the Vessel is proper,

Defendants'

cross-motion

for

reconsideration

(Doc.

and

59)

is

DENIED.

Ill,

For

the

reasons

CONCLUSION

above,

the

Court

GRANTS

Plaintiffs'

emergency motion for reconsideration (Doc. 49); VACATES its July
14,

2016

Vessel
and

Order

(Doc.

DENIES

to

47);

the

extent

REINSTATES

Defendants'

it

addresses

Plaintiffs'

cross-motion

for

the

arrest

arrest

of

the

of

the

Vessel;

reconsideration

(Doc.

59) .

ORDER
August,

ENTERED

at

Augusta,

Georgia,

this

day

of

2 016

MORMttip/J. RA2JDAL HALL

UNITE^STATES DISTRICT JUDGE
SOUTHERN DISTRICT OF GEORGIA