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

Filing 94

ORDER denying DHL Project & Chartering Limited's 80 Motion to Intervene; and denying as moot DHL Project & Chartering Limited's 90 Motion to Authorize 'in custodia legis expenses'. Signed by Judge J. Randal Hall on 10/4/2016. (jah)

IN THE UNITED

FOR THE

STATES DISTRICT

COURT

SOUTHERN DISTRICT OF GEORGIA
SAVANNAH DIVISION
IN ADMIRALTY

RAY CAPITAL INC.;
LTD.;

OPPENHEIM

*

CHEYENNE HOLDINGS

CAPITAL LTD.;

*

and LABROY SHIPTRADE

*

LIMITED,

*
*

Plaintiffs,

*
*

v.

*

CV

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

*
*
*
*

and NEWLEAD CASTELLANO LTD.,

416-093

*
*

Defendants.

*

ORDER

This

by

intervenor

80.)

DHL

matter

comes

DHL

Plaintiffs

filed

motion

a

has

review.
intervene

Project

For

the

Court

in

fully

the

on

a

motion

& Chartering Limited

filed a response

reply
been

before

support
briefed

reasons

and

stated

89).
is

intervene

("DHL").

in opposition

(doc.

to

(doc.

85),

Accordingly,

ripe

herein,

for
DHL's

the

(Doc.
and

DHL's
Court's

motion

to

is DENIED.
I.

On April 19,

BACKGROUND

2016, Plaintiffs instituted the instant action

by filing a verified complaint with this Court alleging a number
of claims

against

M/V Newlead

Castellano,

IMO No.

9686338,

in

rem

("Vessel")

Thereafter,

now

and

Newlead

Plaintiffs

assert

the

Castellano

amended

following

their

claims:

Ltd.

complaint

(1)

a

(Doc.

1.)

that

they

such

foreclosure

claim

pursuant to Ray Capital's promissory note and the Maritime Lien
Act

and

the

("Act");

Ship

(2)

preferred

(4)

preferred

a

Act,

foreclosure

mortgages

pursuant to
and

a

Mortgage

and

46

U.S.C.

claim

the

§

pursuant

Act;

(3)

a

of

mortgages.

contract

(Am.

claim

to

of

Doc.

seq.

Plaintiffs'

claim

seamen's wages;

pursuant

Compl.,

et

foreclosure

Plaintiff Ray Capital's payment
breach

31301,

to

Plaintiffs'

18.)

The

Court

subsequently entered orders directing the issuance of a warrant
for the maritime arrest - as well as the issuance of process of

maritime attachment and garnishment - of the Vessel.1

(Docs. 8,

10. )

On May 25, 2016, DHL instituted an independent action, Case
No.
Ltd.

4:16-CV-123 (S.D. Ga.), against Defendant Newlead Castellano
as well

as Newlead Holdings

Ltd.,

Newlead

Shipping

S.A.,

Newlead Bulkers S.A., Grand Venetico Inc., and Newlead Venetico

Ltd ("DHL Action").2

(DHL Action,

Compl.,

Doc.

1,

11 21-69.)

1 On May 3, 2016, Defendant Newlead Castellano Ltd. filed a Motion to Vacate
Plaintiffs'

2016,

arrest

and attachment

of the

Vessel.

(Doc.

the Court entered an order vacating Plaintiffs'

15.)

On

July 14,

arrest of the Vessel,

but denying the vacatur of Plaintiffs' attachment of the Vessel.
(Doc. 47.)
On August 15, 2016, Plaintiffs filed an Emergency Motion for Reconsideration

seeking to reinstate their arrest of the Vessel.

(Doc. 49.)

2016, the Court reinstated Plaintiffs' arrest of the Vessel.

On August 4,

(Doc. 64.)

2 DHL's complaint in the DHL Action alleges: (1) a breach of contract claim
against Newlead Shipping S.A., Newlead Bulkers S.A., and Grand Venetico Inc.;
and (2) an alter ego claim against Newlead Holdings Ltd. for its control of

The

Court

directing

subsequently
the

entered

issuance

of

an

order

process

of

Court

July

14,

entered

sale

of

the

an

2016,

on

order

directing

Vessel

the

to

DHL

attachment

motion

(doc.

Rule

(Doc.

48,

sold on August

8,

2016,

Doc.

2016,4 and the Court
2016.

(Docs.

75.)

On July 28,
DHL

Procedure,

as subsequently

entered an order confirming the sale on August 16,
65,

the

admiralty

of

amended in part by the Court's Order dated August 4,

The Vessel was

and

28),

interlocutory

Federal

Supplemental Admiralty Rule E(9)(a).

65.)

Action

(DHL Action, Doc. 2.)

Plaintiffs'

pursuant

the

maritime

garnishment for seizure of the Vessel.3
On

in

filed

a

2016,

motion

instant action.

to

shortly before the
consolidate

(DHL Action,

Doc.

the

11.)

sale of the Vessel,
DHL

Action

with

the

On August 25,

2016,

the

Court denied DHL's motion to consolidate on the grounds that the

two

actions

(DHL Action,

did

not

present

Doc. 13, at 3-4.)

common

questions

On September 8,

the instant motion to intervene in this case.

of

law

2016,

(Doc.

or

fact.

DHL filed

80.)

Newlead Shipping S.A., Newlead Bulkers S.A., Defendant Newlead Castellano
Limited, Grand Venetico Inc., and Newlead Venetico Ltd.
(DHL Action, Compl.,
Doc.

1,

II 21-69. )

3 Notably, DHL states that the dispute underlying the DHL Action "is based on
an indemnity claim for an arbitration award which may be issued against DHL
in Hong Kong arbitration.
Thereafter, DHL will pursue recovery against
Newlead Shipping and/or Grand Venetico Inc. in London.
[DHL] brings this
action solely to obtain quasi in rem jurisdiction over [the defendants in the
DHL Action] and security for its claims." (DHL Action, Compl. I 71.)
4 The Vessel was sold to non-party Strategic Shipping, Inc. for a sale price
of $7,400,000.00 USD plus the current market price of any fuel or gas oil

remaining on board the Vessel at the time of its delivery to Strategic
Shipping,

Inc.

(Doc. 75.)

II.

A party wishing to
avenues:

(1)

intervene may do

intervention as of right;

permission of the court.
of

right

DISCUSSION

requires

so

or

through one of

(2)

intervention with

See Fed. R. Civ. P. 24.

courts

to

"permit

anyone

two

Intervention as
intervene

to

who[]

. . . claims an interest relating to the property or transaction
that

is

the

disposing

impede

Civ.

of

the

existing
P.

subject

the

of

the

action,

action

may

as

a

ability

to

protect

movant's

parties

adequately

24(a)(2).

and

practical

represent

Intervention

is

its

that

with

so

situated

matter

impair

interest,

interest."

permission

that

of

or

unless
Fed.

the

R.

court

allows courts to "permit anyone to intervene who [] . . . has a
claim

or

defense

that

shares

question of law or fact."

with

the

party

seeking

establish that:

(1)

to

action

Fed. R. Civ. P. 24(b)(1)(B).

intervene

as

a

common

Here, DHL

(Doc. 80 1 7.)

seeks to intervene as a matter of right.5
A

main

a matter

of

right

its application to intervene is timely;

must
(2)

it has an interest relating to the property or transaction which

is

the

subject

of

the

action;

(3)

it

is

so

situated

that

disposition of the action, as a practical matter, may impede or

5 While DHL does not explicitly seek in the alternative to intervene with
permission of the court, the Court notes that this avenue is foreclosed to
DHL based on the Court's prior finding that the DHL Action and the instant
action do not share a commonality of questions of law or fact.
(See DHL
Action,

Doc.

13,

at 3-4.)

impair

its

ability

interest is
the suit.

1989)

to

protect

that

interest;

and

(4)

its

represented inadequately by the existing parties to
Chiles v.

Thornburgh,

865 F.2d 1197,

1213

(11th Cir.

(citing Athens Lumber Co. v. Federal Election Commfn,

F.2d

1364,

1366

(11th

Cir.

1982)).

Also,

the

intervenor

690
must

accompany its motion to intervene with "a pleading that sets out
the claim or defense for which intervention is
Civ. P.

determining

interest,
interest

the
in

the

594

substantial,

proceedings."

Id.

the

least
is

(11th Cir. 1991)

interest;

must

it

Therefore,

legally

interest

a

intervener's

party

subject

the

real

of

in
the

must

be

an

be

(citing Athens Lumber

the intervenor must have a

protectable

and

citations

more

interest

interest

than

"which

omitted).

just
the

in

an

the

The

economic

substantive

law

as belonging to or being owned by the applicant."

Hawley

Ins.

Co.

1311 (11th Cir.

interest

omitted).

at

which

(quotations

intervener's

an

be

of

Worlds v. Pepft of Health & Rehab. Servs., State of

Co. , 690 F.2d at 1366).

recognizes

must

transaction

Fla. , 929 F.2d 591,

"direct,

sufficiency

intervenor
the

proceeding.

1308,

Fed. R.

24(c) .

In

Mt.

sought."

that

v.

Sandy Lake Properties,

2005)

derives

Inc.,

425 F.3d

("A legally protectable interest is
from

a

legal

right.")

(citations

The
Co. ,

425

Co. ,

reasoning
F.3d

an

at

insurer

of

the

Eleventh

Circuit

1311-12,

is

filed

declaratory

a

insured property owners,

or indemnify under the

the

insureds,
who

insurer

Hawley

Ins.

Mt.

Hawley

Ins.

judgment

action

against

claiming that it had no duty to defend

subject insurance policy for

death that occurred on the insureds'
After

Mt.

In

instructive.

in

moved

for

property.

default

Id.

a drowning
at 1309-10.

judgment

against

the

the personal representative of the drowned decedent -

had

filed

a

wrongful

death

action

sought to intervene under both Rule 24(a)

against
& (b)

the

insureds

-

in an attempt to

argue that the insurer's requested relief should be denied.

Id.

The

was

Eleventh

Circuit

held

that

the

applicant's

interest

purely economic and insufficient to support intervention.

Id.

at

the

1311.

applicant's

contingent

The

Eleventh

interest

upon

his

Circuit

was "purely

prevailing

separate wrongful death lawsuit.

further

noted

speculative"

against

the

that

because

insureds

it was

in

the

Id.

Here, DHL's interest in the subject matter of the instant

action is purely economic.

DHL is not a party to the promissory

notes

mortgages

or

Plaintiffs'

preferred
claims,

ship
nor

does

interest in those instruments.

should

Plaintiffs

Defendants,

be

Plaintiffs'

DHL

that

have

Rather,

successful

in

a

form

the

legally

basis

of

protectable

DHL's argument is that,

their

action

against

liens on the proceeds from the sale of

the Vessel

will

there

be

will

recover

on

Castellano

have priority over those

less

its

Mt.

Ltd.

Hawley

no)

money available

unrelated

This

more flawed than in

(or

of

claims

argument

DHL,

from which

DHL can

Defendant

Newlead

against

is

and therefore

near-identical

to

-

if

not

the argument rejected by the Eleventh Circuit

Ins.

expressed therein.

Co.,

and

Moreover,

it

fails

while

for

the

same

reasons

DHL cites non-binding case

law for the proposition that a proposed intervener's interest in
a specific fund is sufficient to entitle intervention in a case

affecting

that

fund,

DHL

conclusory allegation

has

that

a

provided

Rule

no

support

B maritime

for

attachment

its

alone

creates such a property interest.6
DHL's interest is also highly speculative, given that it is

contingent upon:
6 DHL's

(a)

a ruling by a Hong Kong arbitration panel

citation to Gaines

v.

Dixie Carriers,

Inc.,

434

F.2d 52

(5th Cir.

1970) is inapposite, as Gaines is easily distinguished on its facts.
Id. at
54 (plaintiff's former attorney, with whom plaintiff had signed a contingency

fee

agreement,

was entitled to

intervene

to protect

claimed interest

in

settlement funds where plaintiff dismissed attorney without cause immediately

prior to settlement). DHL's other citations to cases finding an interest in
"specific funds" sufficient to entitle intervention are also factually
distinguishable.
See Mountain Top Condo. Ass'n v. Dave Stabbert Master
Builder, Inc., 72 F.3d 361, 365-68 (3d Cir. 1995) (condominium owners were
entitled to intervene in suit between condominium board and contractor where

funds at issue were required to be held in express trust for benefit of
condominium owners by Virgin Islands statute and condominium's by-laws);
Hardy-Latham v. Wellons, 415 F.2d 674, 676 (4th Cir. 1968) (in a suit to
recover

a

broker's

commission

on

the

sale

of

a

business,

individuals

who

claimed they were entitled to a "finder's fee" from the broker's commission
were entitled to intervene as they had an interest in both the transaction
and the funds that were the subject of the action); U.S. Commodity Futures

Trading Comm'n v. Giddens, 2012 WL 603592 at *7 (N.D. Ga. Feb. 24, 2012)
(investor was entitled to intervene in suit by United States Commodity
Futures Trading Commission against managers of commodity investment pools

alleged to have misappropriated multiple investor funds where investor sought
return of $80,000.00 he had transferred to managers prior to freezing of
assets held by managers and none of the parties objected to intervention).

that

DHL

is

Materials

Action,

liable

to

Industry

Compl.

Shipping,

its

Fuel

Groups

SIS! 15-20);

S.A.,

Newlead

subcharterer,

(b)

Co.

non-party

Ltd.

Zheijiang

("Zheijiang")

(DHL

a finding that non-parties Newlead

Bulkers

S.A.,

and

Grand

Venetico

Inc.

are contingently obligated to indemnify DHL in connection with
Zheijang's claims against DHL (id. 11 21-26);
Defendant

Newlead

Shipping,

S.A., Newlead Bulkers S.A.

the

alter

egos

Defendant

Castellano

of

Newlead

to Grand Venetico
Newlead

non-party

Castellano

Inc.)

Castellano

to

Ltd.

contingent liability claims
that

DHL's

proper
Each

quasi

based

in

of

protectable
right.

Ltd.

is

Holdings
the

such a degree
liable

(icL

one

of

Newlead

for

Ltd.

that

successor-in-interest

as

to make

DHL's

11 27-69);

Defendant

aforementioned

and (d)

a finding

of the Vessel was

claims

have

(or

yet

(id.
to

11 70-75).

occur,

and

in

As DHL's interest is contingent upon the

pending

interest

least

or Grand Venetico Inc. are

Newlead

aforementioned events

other

at

aforementioned

fact may never occur.
outcome

and

rem Rule B attachment

on DHL's

of these

Ltd.

(c) a finding that

that

litigation,

would

it

support

is

not

a

intervention

legally

as

of

See Mt. Hawley Ins. Co., 425 F.3d at 1311 n. 6.

Because

DHL

has

not

demonstrated

it

has

a

sufficient

interest relating to the property or transaction which is the

subject of this action, the Court need not further analyze DHL's

request

to

intervene.

See

Chiles,

865

F.2d

at

1213.

Accordingly,

DHL's

Because

has

authorize

DHL

in

motion
been

custodia

to

intervene

denied

legis

(doc.

intervention,

expenses

(doc.

80)

is

DHL's

90)

DENIED.

motion

to

DENIED

AS

is

MOOT.7

ORDER ENTERED at Augusta,
October,

Georgia,

this

~H^ day of

2016.

RANDAL
STATES

DISTRICT

7 DHL is not precluded, however,

HALL

DISTRICT
OF

JUDGE

GEORGIA

from pursuing recovery of its in custodia
legis expenses by properly moving for an order authorizing these expenses in

the

DHL Action.