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

Filing 75

ORDER OF CONFIRMATION OF SALE as outlined in the body of this Order and including instructions to the United States Marshal and the Clerk of Court, etc. Signed by Judge J. Randal Hall on 8/16/2016. (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

The

Court,

pleadings,

prior

before the Court,

sitting

in

orders,

findings

complaint,
warrant

furniture,

other

considered

the

matters

properly

2016,

Plaintiffs'

verified

BACKGROUND

upon the filing of

the Court entered orders directing the issuance of a

for

CASTELLANO,

and

having

rules as follows:
I,

On April 19,

admiralty,

the

maritime

IMO

NO.

9686338,

appurtenances,

issuance of

process

the Vessel.

(Docs.

arrest

her

etc.,

for maritime
1,

8,

of

the

Defendant

engines,
in

rem

tackle,
("Vessel")/

attachment

and 10.)

M/V

On May

NEWLEAD

equipment,
and

the

and garnishment of
3,

2 016,

Defendant

NewLead

Castellano

attachment
Court

of

Ltd.

the

filed a

Vessel.

Motion

(Doc.

entered an order vacating

to Vacate

15.)
the

the

arrest

and

2016,

the

the Vessel,

but

On July

arrest

of

14,

denying the vacatur of the attachment of the Vessel.
On

August

15,

2 016,

Reconsideration

(Doc.

49.)

seeking to

On August 4,

of the Vessel.

On

May

July

United

(Doc.

26,

inter alia,

On

reinstate

2016,

the

the

Marshal

Division

an

Emergency

the arrest

of

Motion

the Vessel.

Plaintiff

Court
for

filed

of

entered

the

the

("Marshal")

to

motion

Vessel.

an

Southern

a

order

subsequently

August 4, 2016,

amended

Doc.

65

in

part

by

(as amended,

the

an

of

the

being

Vessel

incurred

deteriorating
creditors);

crew

was

to

(Doc. 48.)

to

its

and

prevent

warranted because

keep

value

(2)

the

as

the

interlocutory

Court's

(1)

Vessel
for

the

and

Order

dated

other

As

great

expense

seaworthy

(thereby

Plaintiff

and other

limited tools available

corrosion

(Doc. 48,

the interlocutory sale

of:

collateral

the

Georgia,

the "Order for Sale").)

set forth in the Court's Order for Sale,

of

28.)

directing

District

conduct

seeking,

(Doc.

admiralty sale of the Vessel on Monday August 8, 2 016.
as

for

the Court reinstated the arrest

interlocutory sale

2016,

States

filed

64.)

2016,

the

14,

Savannah

Plaintiffs

(Doc. 47.)

physical

to the Vessel's

deterioration.

See Fed. R. Civ. P., Supp. Adm. R. E(9)(a).

Notice

of the sale of the Vessel was duly published by

the Marshal pursuant to Local Admiralty Rule 4.
August

8,

2016 at

10:00 a.m.,

the sale of

(Doc.

70.)

On

the Vessel was duly

conducted in accordance with the Court's Order for Sale by the
Marshal

at

District

the

premises

Court,

Strategic

Savannah,

Shipping,

$7,400,000.00 USD
gas

oil

delivery

Price")
auction.

the

the

entrance

Georgia.

Inc.

to

(Doc.

("Strategic")

the

70.)

United

At

presented

States

the

a

sale,

bid

of

(plus the current market price of any fuel or

remaining

to

of

on

board

successful

the

Vessel

bidder)

at

the

time

(collectively,

the

of

its

"Sale

and was the highest bidder capable of performing at the
(Doc.

66.)

On

August

8,

2016,

Strategic

presented

$1,000,000.00 USD to the Marshal as security for payment of the
remainder of its bid.

On August 11, 2016, Strategic made a wire

transfer

to

of

USD

be

to

the

applied

confirmation of
2016,

Clerk

Court

towards

in

its

the

bid

amount

of

upon

the sale held on August 8, 2 016.

$6,400,000.00

the

successful

On August 9,

Plaintiffs requested a hearing to confirm the sale of

Vessel to Strategic.

(Doc.

68.)

the

II.

DISCUSSION

A. The Order for Sale has been obeyed and the Sale Price is
not grossly inadequate.

Until confirmation,
any

time,

Ghezzi v.

but

extreme

a sale in admiralty may be set aside at
caution

should be

Foss Launch & Tug Co.,

used

in

321 F.2d 421

such actions.

(9th Cir.

1963) .

The grounds recognized as justifying setting aside an admiralty
sale

include

fraud,

collusion,

and

gross

Wong Shing v. M/V Mardina Trader,

564

(citing 2 C.J.S.

Admiralty

§ 247

(1972)).

allegations

evidence

of

inadequacy of

or

interlocutory

sale

of

the

F.2d 1183

fraud

Vessel

and

(5th Cir.

Here,

or

the

1977)

there are no

collusion

so

price.

Court

in

the

need

only

determine if the Order for Sale was obeyed and if the Sale Price
was not grossly inadequate.

The

Order

publication

of

for
the

Sale

required

notice

Local Admiralty Rule 4.

of

the

Plaintiffs
auction

(Doc. 48, at 2.)

in

to

Order

for

Sale

further

independent ship brokers,

and Jacq.

Plaintiffs have filed

at

Plaintiffs

Compass Maritime,

with

Inc.,

to

of

(Doc.

70.)

appoint

two

New Jersey

Pierot Jr. & Sons of New York to value the Vessel (the

"Valuations")

48,

required

the

accordance

proof of publication of such notice with the Court.
The

cause

2-3.)

and to file such valuations with the Court.

(Doc.

Plaintiffs have obtained and filed the Valuations

with the Court.

(Doc.

61.)

The Court

further ordered that the

opening

bid

for

seventy-five

the

(75%)

(Doc. 48, at 3.)

Vessel

should

percent

of

be

by

the

Marshal

average

the

set

at

of

the

Valuations.

The Valuations provided estimated fair market

values of $7,250,000.00 USD and $7,000,000.00 USD, respectively.
(Docs.

61-1

and

61-2.)

Seventy-five

average

of

these

Bid").

The Marshal has filed a Marshal's Report of Sale which

figures

is

(75%)

$5,343,750.00

percent

USD

(the

of

the

"Minimum

shows that the Sale Price was greater than the Minimum Bid and
exceeded

further
sale.
cost

the

recommended

(Id.)
of

highest

that

the

(Doc.

Court

Strategic has paid the

the

fuel

until physical

or gas

oil

66.)

approve

$1,000,000.00

security by the Marshal,

the

been obeyed and that
and confirms

the

Court

finds

that

the Sale Price

sale of

and

Sale Price,

the Vessel

is
to

Marshal

confirm

has

this

except for the
be

calculated

presented to

and

into the registry of

See Docket Entry dated August 11,

Accordingly,

The

aboard which cannot

delivery and the

presently held as
the Court.

Valuation.

the

2016.

Order

of

Sale

has

not grossly inadequate,
Strategic

for the

Sale

Price.

B. Local Admiralty Rule 15 limits claims made after the date
of sale.

Pursuant to Local Admiralty Rule 15, additional claims upon

the

proceeds

of

sale

from

the

Vessel

shall

be

limited

to

remnants and surplus remaining after distribution to lienors who

filed

their

otherwise

claims

before

ordered.

This

date of the sale of

the

sale

requires

of

the

the

Court

Vessel,
to

determine

by

First

National

Lightning Power,

the

Fifth

776

Circuit

Bank

F.2d 1258

described

auction sale in the

of

Id.

to

at

the

the

1261.

not

v.

M/V

In this case,

of

"The bid at

an

admiralty

the Marshal's

It is the equivalent of an

accepted until

judicially confirmed."

The auction held August 8, 2016 therefore was an

offer to purchase the Vessel,
Instead,

the Court is

Parish

1985).

confirmation

following terms:

court,

Jefferson

(5th Cir.

auction does not consummate a sale.
offer

the

the Vessel.

In determining the date of sale of the Vessel,

guided

unless

not the actual sale of the Vessel.

the actual sale of the Vessel does not occur until,

if, the sale is confirmed by the Court.

and

In light of the Court's

finding herein that the sale of the Vessel for the Sale Price is
confirmed,
claims

the

made

sale

after

date
this

of

the Vessel

Order

is

is

entered

the

date

shall

be

hereof,

and

treated

in

accordance with Local Admiralty Rule 15.
C. The

Vessel

is

sold

free

and

clear

of

liens

and

encumbrances.

The

Court,

having

accepted

the

Sale

Price having been received by the Court

the

fuel

physical

or

gas

delivery

oil
and

aboard
the

which

and

the

Sale

(except for the cost of

cannot

$1,000,000.00

Price,

be
USD

calculated
presented

until
to

and

presently held as
deliver

the

security by

Vessel

to

the Marshal) , has

Strategic

free

and

the

clear

of

power

all

to

liens,

encumbrances or claims against the Vessel pursuant to 46 U.S.C.
§ 31326.

The Vessel was sold pursuant to the Court's Order for

Sale, which was entered in this in rem action brought to enforce
preferred mortgage

liens.

(Doc. 48.)

Accordingly,

any claims

in the Vessel existing on the date hereof are terminated and the

Vessel

is

sold

free

of

such

claims

pursuant

to

46

U.S.C.

§

31326(a).

Those claims terminated pursuant to this Order shall attach

in the

same

amount

the

proceeds

and

shall

U.S.C.

and

with

of

the

sale as provided in

have

the

priority

§ 31326(b)(1)

NOW THEREFORE,

(1)

in accordance

and

established

46

their priorities

U.S.C.

under

furniture,

IMO

§ 31326(b),

subsections

46

(2).

it is hereby ORDERED:

That the interlocutory sale of the Vessel,

CASTELLANO,

to

NO.

9686338,

appurtenances,

her

etc.,

engines,

and

all

tackle,

M/V NEWLEAD
equipment,

necessaries

thereto

appertaining,

to Strategic for the Sale Price, plus the current

market

of

price

any

fuel

or

gas

oil

remaining

Vessel at the time of her delivery to Strategic,

on

board

the

free and clear

of all liens and encumbrances be and hereby is CONFIRMED.

(2)

That, pursuant to Local Admiralty Rule 15, claims upon

the proceeds of sale of the Vessel,

except for seaman's wages,

shall be

limited to any remnants and surplus of

remaining after distribution to
before

the

(3)

date

lienors

who

the Sale Price

filed their claims

hereof.

That,

pursuant to 46 U.S.C.

§ 31326,

any claims in the

Vessel existing on the date hereof are terminated and the Vessel
is

sold

free

31326(a),
shall

of

but

attach

all

those
in

those

claims

the

same

claims

pursuant

terminated

amount

and

to

46

pursuant

U.S.C.

§

this

Order

accordance

in

to

with

their

priorities to the proceeds of the sale as provided in 46 U.S.C.
§

31326(b),

U.S.C.

§

and

shall

31326(b)(1)

have

and

the

(2),

priority

subject

to

established
further

under

order of

46
the

Court.

(4)

That

the

Marshal's bills of

of

the

Vessel

encumbrances

to

of

Marshal

three

(3)

duplicate

original

sale to Strategic transferring the ownership

Strategic,

any

kind

possession of the Vessel,
and acceptance,

issue

free

and

wherever

clear

they

of

may

all

be

evidenced by a protocol

to Strategic to occur no later

liens

held,

and

with

of delivery

than seven

(7)

days after the date hereof;

(5)

sale

to

That, upon the issuance of the aforementioned bills of

Strategic,

the

Marshal

and

the

court-appointed

substitute custodian are hereby relieved of any and all

duties

previously imposed by Order of this Court with respect to the

Vessel,

and are

ordered to

turn over possession,

custody,

and

control of the Vessel forthwith to Strategic.
(6)

That

the Marshal

shall

transfer

to

the

Clerk

of

Court

the funds remaining from the $1,000,000.00 USD presented to the
Marshal by Strategic as security for payment of the remainder of

its

bid,

less

any

costs

and/or

rules and customs of this Court.

expenses
The

allowable

under

the

Clerk shall deposit this

amount in the same interest-bearing account as the $6,400,000.00

USD received by the Court from Strategic on August 11, 2016.

ORDER ENTERED at Savannah,
August,

Georgia,

this _j[_6>_ day of

2016.

HONORABLE • . RANDAL HALL
J
UNITED

STATES

DISTRICT

JUDGE

SOUTJffiRN DISTRICT OF GEORGIA