Green River Marina, LLC v. Meredith et al

Filing 19

MEMORANDUM OPINION AND ORDER by Judge Greg N. Stivers on 3/18/2015. For the forgoing reasons, Bank of America, N.A. has a preferred mortgage in Copacetic that is superior to any lien or claim that Green River Marina, LLC may have on the proceeds from the sale of the watercraft. Accordingly, IT IS HEREBY ORDERED THAT Defendant Bank of America's Motion for Partial Summary Judgment (DN 11 ) is GRANTED. cc: Counsel, Don Meredith (CDR)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
BOWLING GREEN DIVISION
CIVIL ACTION NO. 1:14-CV-00074-GNS-HBB

GREEN RIVER MARINA, LLC

PLAINTIFF

V.

DON MEREDITH, and
BANK OF AMERICA CORPORATION

DEFENDANTS

MEMORANDUM OPINION AND ORDER
This matter is before the Court on the Motion for Partial Summary Judgment filed by
Defendant Bank of America, N.A., erroneously designated as Bank of America Corporation,
(“Bank of America”). (DN 11). The motion has been fully briefed and is ripe for a decision. For
the reasons stated below, the Court GRANTS the motion.
I. SUMMARY OF FACTS AND CLAIMS
On July 12, 2006, Defendant Don Meredith (“Meredith”) entered into a First Preferred
Ship Mortgage with Defendant Bank of America for the watercraft “Copacetic.” On May 6,
2014, Plaintiff Green River Marina, LLC filed a complaint in Taylor Circuit Court against
Meredith and Bank of America asserting that Meredith owns a watercraft named Copacetic that
at one point was, and apparently continues to be, moored at the Green River Marina. The suit
further alleged that Meredith “has failed and refused to pay for moorage fees, fees for electrical
services, and other fees and expenses associated with mooring the vessel in accordance with his
agreement with the Plaintiff.” (Compl. 6-7, DN 1-1). Plaintiff alleges that Meredith owes
Plaintiff $27,673.89, that Plaintiff has a lien on the vessel accordingly, and that while Bank of

America may have a security interest in the vessel, it is inferior to Plaintiff’s lien. (Compl. 7).
Plaintiff requests judgment against Meredith for the sums owed, an order directing the sale of the
vessel in order to satisfy the sums owed, a reasonable attorney’s fee, and any and all other
appropriate relief. (Compl. 7).
On June 11, 2014, Bank of America filed a notice of removal to the United States District
Court for the Western District of Kentucky. (DN 1). On November 17, 2014, Bank of America
filed a Motion for Partial Summary Judgment alleging that Plaintiff’s lien is inferior to Bank of
America’s lien pursuant to the Federal Maritime Liens Act (“FMLA”), 46 U.S.C. §§ 3130131343. (DN 11). Plaintiff filed its Response on December 15, 2014. (DN 17). Defendant Bank of
America did not file a reply.
II. JURISDICTION
This case involves the priority of a lien arising under the FMLA. This Court has original
jurisdiction over “[a]ny civil case of admiralty or maritime jurisdiction . . . .” 28 U.S.C. §
1333(1).
III. STANDARD OF REVIEW
Federal Rule of Civil Procedure 56 provides that: “The court shall grant summary
judgment if the movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). There is no genuine
issue of material fact when “looking to the record as a whole, a reasonable mind could come to
only one conclusion.” Mickler v. Nimishillen & Tuscarawas Ry. Co., 13 F.3d 184, 186 (6th Cir.
1993). “When moving for summary judgment the movant has the initial burden of showing the
absence of a genuine dispute as to a material fact.” Automated Solutions Corp. v. Paragon Data
Sys., Inc., 756 F.3d 504, 520 (6th Cir. 2014) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323

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(1986)). “The burden then shifts to the nonmovant, who must put forth enough evidence to show
that there exists ‘a genuine issue for trial.’” Id. (citing Horton v. Potter, 369 F.3d 906, 909 (6th
Cir. 2004)).
IV. DISCUSSION
Under the FMLA, a preferred mortgage is a mortgage that fulfills three criteria: i) it
includes the whole of the vessel; ii) it is filed in substantial compliance with 46 U.S.C. § 31321;
and iii) it covers a documented vessel. 46 U.S.C. § 31322. Section 31321(b) lists the six pieces of
information that an instrument must contain to be properly registered. It provides:
To be filed, a bill of sale, conveyance, mortgage, assignment, or related
instrument must—
(1)
(2)
(3)

(4)
(5)
(6)

identify the vessel;
state the name and address of each party to the instrument;
state, if a mortgage, the amount of the direct or contingent
obligations (in one or more units of account as agreed to by the
parties) that is or may become secured by the mortgage, excluding
interest, expenses, and fees;
state the interest of the grantor, mortgagor, or assignor in the
vessel;
state the interest sold, conveyed, mortgaged, or assigned; and
be signed and acknowledged.

46 U.S.C. § 31321(b). The mortgage held by Bank of America meets all of these requirements.
(DN 11-7 at 2-6). It is, therefore, a preferred mortgage.
Upon sale of the vessel by a district court, a preferred mortgage has priority over all
claims “except for expense and fees allowed by the court, costs imposed by the court, and
preferred maritime liens.” 46 U.S.C. § 31326(b)(1). A preferred maritime lien is, inter alia, “a
maritime lien on a vessel . . . arising before a preferred mortgage was filed under section 31321
of this title.” 46 U.S.C. § 31301(5)(A). The definition of preferred maritime lien does not include
maritime liens arising from non-payment of necessary expenses. To the contrary, 46 U.S.C. §

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31342 states that: “a person providing necessaries to a vessel on the order of the owner or a
person authorized by the owner . . . has a maritime lien on the vessel.” 46 U.S.C. § 31342. While
Congress could have declared such a lien to be a preferred maritime lien, it did not.
Plaintiff has not alleged that its lien arose prior to Bank of America’s preferred mortgage;
it would be surprising indeed if Meredith had incurred a lien for necessities prior to financing the
purchase of the vessel. Therefore, Plaintiff’s lien for necessities arose after Bank of America
registered its preferred mortgage in accordance with 46 U.S.C. § 31321. Under federal law, a
non-preferred maritime lien for necessities arising after a preferred mortgage is inferior to a
preferred mortgage. See 46 U.S.C. § 31326(b)(1); Midlantic Nat’l Bank v. Sheldon, 751 F. Supp.
26, 28-29 (E.D.N.Y. 1990). Plaintiff concurs and admits in its response that its lien is inferior to
that held by Bank of America. (DN 17).
V. CONCLUSION
For the forgoing reasons, Bank of America, N.A. has a preferred mortgage in Copacetic
that is superior to any lien or claim that Green River Marina, LLC may have on the proceeds
from the sale of the watercraft. Accordingly, IT IS HEREBY ORDERED THAT Defendant
Bank of America’s Motion for Partial Summary Judgment (DN 11) is GRANTED.

cc:

counsel of record

March 18, 2015

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