Essex Crane Rental Corp v. DB CROSSMAR 14, et al
ORDER AND REASONS: IT IS ORDERED that the 77 motion for summary judgment is GRANTED as set forth in document.Signed by Judge Ivan L.R. Lemelle on 3/13/2017. (mmv)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ESSEX CRANE RENTAL CORP.
DB CROSSMAR 14, ET AL.
ORDER AND REASONS
Before the Court is the “Motion for Summary Judgment of Wells
Fargo Equipment Finance, Inc.” Rec. Doc. 77. The motion was set
for submission on March 1, 2017. Pursuant to Local Rule 7.5, any
opposition memorandum was due on or before February 21, 2017. No
opposition was filed. Instead, on March 1, 2017, Cross Maritime,
Inc. and Cross Holdings, Inc. (collectively “Cross”) filed a motion
for an extension of time within which to respond. Rec. Doc. 82.
For reasons given in a separate Order and Reasons, that motion for
an extension was denied.1 It appearing to the Court that Wells
Fargo’s motion for summary judgment has merit,
IT IS ORDERED that the motion for summary judgment (Rec. Doc.
77) is GRANTED.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
This cases arises out of the rental of a Manitowoc, 4100W-I,
230 Ton Lift Crane, Serial Number LC-M-41348 (the “Crane”) from
It is also worth noting that, pursuant to this Court’s Scheduling Order, the
parties were to file into the record “a list of all witnesses who may or will
be called to testify at trial and all exhibits that may or will be used at trial
no later than FEBRUARY 20, 2017.” Rec. Doc. 42 at 2 (emphasis in original).
While Wells Fargo timely submitted its lists to the Court, Cross Maritime, Inc.
and Cross Holdings, Inc. have yet to file theirs.
former Plaintiff Essex Crane Rental Corp. (“Essex”) to Cross, the
purported owner of the DB CROSSMAR 14, bearing Official Number
1025224, (the “Vessel”). Rec. Doc. 1 at ¶ VI.2 Essex alleged that,
pursuant to a rental agreement dated January 2, 2008, the owner
and operator of the Vessel was provided the Crane and various
services and/or personnel in exchange for a monthly rental in the
amount of $14,000.00. Id. at ¶¶ VI-VII. The agreement further
provided that the owner of the Vessel was obligated to pay for the
transportation of the Crane at the agreed price of $18,000.00 and
that the failure to pay invoices when due entitled Essex to
terminate the agreement, take possession of the Crane, recover
(including attorneys’ fees), and impose a finance charge of 1.5%
per month (18% per annum) for payments that were past due. Id. at
¶¶ VIII-XI. Essex invoiced Cross “in the amount of approximately
$213,000 for Crane Rental through May 2, 2016,” which Cross
subsequently failed to pay. Id. at ¶ XII.
On June 3, 2016, Essex filed a verified complaint, naming as
defendants the Vessel, in rem, the Crane, in rem, and Cross, in
personam. Rec. Doc. 1. On June 6, 2016, this Court granted Essex’s
Essex’s verified complaint avers that it entered into the rental agreement
with “Cross Group, as owner and operator of the defendant Vessel.” Rec. Doc. 1
at ¶ VI. Defendant Cross Maritime, Inc. answered the complaint, however, and
denied that Cross Group owns or operates the Vessel. Rec. Doc. 20 at ¶ 6. It
appears that both Cross Group and Cross Maritime, Inc. are wholly owned
subsidiaries of Cross Holdings, Inc. Rec. Docs. 23, 24. For the purposes of
this Order and Reasons, Cross Maritime, Inc. and Cross Holdings, Inc. will be
referred to collectively as “Cross,” unless otherwise specifically identified.
motion for issuance of arrest warrants for the Vessel and the
Crane. Rec. Doc. 5. On August 3, 2016, the Cross entities filed
answers to Essex’s verified complaint. Rec. Docs. 19, 20.
On September 2, 2016, Essex filed a motion for order noting
default (Rec. Doc. 26) and a motion to set sale of the Vessel (Rec.
Doc. 27). Two weeks later, on September 16, 2016, Wells Fargo
Equipment Finance, Inc. (“Wells Fargo” or “Intervenor”) filed an
ex parte/consent motion to intervene, asserting an interest in the
Vessel by virtue of a promissory note by Cross Maritime, Inc. in
favor of General Electric Capital Corporation (“GECC”), now owned
by Wells Fargo. Rec. Docs. 29, 32 at ¶ IV. Wells Fargo claims
payment of the promissory note was secured by a preferred ship
mortgage encumbering 100% of the Vessel (Rec. Doc. 32 at ¶ IV) and
that Cross Holdings, Inc. acted as a guarantor (Rec. Doc. 77-3 at
2). On September 20, 2016, after allowing Wells Fargo to intervene,
this Court granted Wells Fargo’s ex parte/consent motion for
issuance of an arrest warrant for the Vessel. Rec. Doc. 40.
On October 7, 2016, we granted Essex’s motion to set sale of
the Vessel. Rec. Doc. 53. On October 20, 2016, we granted Wells
Fargo’s unopposed motion for partial summary judgment and thereby
recognized the mortgage held by Wells Fargo and its authority to
credit bid at the sale. Rec. Doc. 66. We also recognized that, as
$7,119,195.22. Id. at ¶ 2. The Vessel was subsequently sold to
Wells Fargo on October 28, 2016 for $2,497,500.00, three quarters
of the appraised value of the Vessel. Rec. Docs. 68; 77-3 at 4.
commission and $118,529.98 for custodia legis charges (see Rec.
Doc. 77-1 at 3) and giving Cross an opportunity to object to the
sale, this Court confirmed the sale on November 9, 2016 (Rec. Doc.
70). A bill of sale was filed on November 14, 2016. Rec. Doc. 71.
On January 3, 2017, after settling with Wells Fargo for
$165,000, Essex moved to dismiss all of its claims. Rec. DocS. 72;
77-3 at 5; 77-1 at 3. Accordingly, the only claims remaining are
those asserted by Wells Fargo against the Vessel, Cross Maritime,
Inc. and Cross Holdings, Inc. Rec. Doc. 32.
THE PARTIES’ CONTENTIONS
Wells Fargo seeks money judgments against Cross Maritime,
Inc., the obligor, and Cross Holdings, Inc., the guarantor, for
the remaining balance due, “including the deficiency following the
U.S. Marshal’s sale of the [Vessel], costs and expenses related to
the vessel sale, and reimbursement of its reasonable attorneys’
fees and costs of collection.” Rec. Doc. 77-3 at 1.
III. LAW AND ANALYSIS
Under Federal Rule of Civil Procedure 56, summary judgment is
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as
a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986) (quoting FED. R. CIV. P. 56(c)); see also TIG Ins. Co. v.
Sedgwick James of Washington, 276 F.3d 754, 759 (5th Cir. 2002).
A genuine issue exists if the evidence would allow a reasonable
jury to return a verdict for the nonmoving party. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The movant must
point to “portions of ‘the pleadings, depositions, answers to
affidavits, if any,’ which it believes demonstrate the absence of
a genuine issue of material fact.” Celotex, 477 U.S. at 323. If
and when the movant carries this burden, the non-movant must then
go beyond the pleadings and present other evidence to establish a
genuine issue. Matsushita Elec. Indus. Co., Ltd. V. Zenith Radio
Corp., 475 U.S. 574, 586 (1986).
However, “where the non-movant bears the burden of proof at
trial, the movant may merely point to an absence of evidence, thus
shifting to the non-movant the burden of demonstrating by competent
summary judgment proof that there is an issue of material fact
warranting trial.” Lindsey v. Sears Roebuck & Co., 16 F.3d 616,
618 (5th Cir. 1994). Conclusory rebuttals of the pleadings are
insufficient to avoid summary judgment. Travelers Ins. Co. v.
Liljeberg Enter., Inc., 7 F.3d 1203, 1207 (5th Cir. 1993).
Wells Fargo claims that, as of November 24, 2016, Cross
interest at 12%, (2) accrued interest at the federal judicial rate,
and (3) reimbursement of reasonable attorneys’ fees and costs of
collection. Rec. Doc. 77-3 at 6-7, n.25. Specifically, Wells Fargo
claims that Cross Maritime, Inc. was informed on August 15, 2016
that Wells Fargo was accelerating the debt and imposing the default
rate of 12% per annum on the principal balance. Id. at 7 (citing
Rec. Doc. 77-1 at ¶ 11, 4, 76-77). The price of the Vessel at the
sale, $2,497,500, was credited to the accrued interest as of
November 14, 2016 (the date the Bill of Sale was provided) and
then to reduce the principal amount. Id. at 7-8 (citing LA. CIV.
CODE ANN. art. 1866 (“An obligor of a debt that bears interest may
not, without the obligee’s consent, impute a payment to principal
when interest is due. A payment made on principal and interest
must be imputed first to interest.”).
Significantly, Wells Fargo’s winning bid mirrored the minimum
bid set by the Marshal, or three quarters of the appraised value
of the Vessel. Id. at 8. Thus, the price paid by Wells Fargo was
not “grossly inadequate.” See Latvian Shipping Co. v. Baltic
Shipping Co., 99 F.3d 690, 693-94 (5th Cir. 1996) (noting that a
sale price equal to 42.5% of the suggested fair market value was
greater than those found in cases in which the sales price was
determined to be inadequate) (citing First Nat’l Bank of Jefferson
Par. v. M/V Lightning Power, 776 F.2d 1258 (5th Cir. 1985) (denying
confirmation of the sale where the vessel was sold for 1% of the
fair market value); Jefferson Bank & Trust Co. v. Van Niman, 722
F.2d 251 (5th Cir. 1984) (remanding to the district court where
the vessel was sold for 0.25-0.5% of the fair market value)).
Wells Fargo also argues that Cross Maritime, Inc. is liable
charges, the amount to secure release of Essex’s lien claims, and
reasonable attorneys’ fees and costs of collection. Rec. Doc. 773 at 8 (citing Rec. Doc. 77-1 at 29 (providing that the proceeds
of any sale of the Vessel shall be applied to pay (1) all reasonable
costs, including attorneys’ fees and expenses, of the mortgagee;
(2) amounts due under the mortgage and note; and (3) the mortgagor,
if there is a surplus; however, if the proceeds are insufficient,
then the mortgagee “shall have the right to collect and to receive
from Mortgagor . . . such amount as will fully pay any remaining
deficiency”)). Further, Wells Fargo maintains that Cross Maritime,
Inc. owes interest on all of these charges at the federal judicial
rate from the date of judgment until paid. Id. at 9-10.
Finally, Wells Fargo claims that it is entitled to reasonable
attorneys’ fees. Id. at 10 (citing Rec. Doc. 77-1 at 6 (providing
that “Maker hereby . . . agrees to pay (if permitted by law) all
attorneys’ fees”)). It asks this Court to include a provision in
the judgment “reciting that Wells Fargo is also entitled to its
reasonable attorneys’ fees and costs of collection to be liquidated
and quantified pursuant to separate motion therefor to be filed by
Wells Fargo in accordance with Rule 54(d) of the Federal Rules of
Civil Procedure.” Id.3
As to Cross Holdings, Inc., Wells Fargo argues that, as
guarantor, Cross Holdings, Inc. is solidarily liable for all of
Cross Maritime, Inc.’s indebtedness to Wells Fargo. Id. Under
Louisiana law, “[s]uretyship is an accessory contract by which a
person binds himself to a creditor to fulfill the obligation of
another upon the failure of the latter to do so.” LA. CIV. CODE ANN.
art. 3035. Notably, “[a] contract is accessory when it is made to
provide security for the performance of an obligation.” LA. CIV.
CODE ANN. art. 1913. Further “[a] surety . . . is liable to the
creditor . . . for the full performance of the obligation of the
principal obligor, without benefit of division or discussion, even
in the absence of an express agreement of solidarity.” LA. CIV. CODE
suretyship contract and thereby bound itself to satisfy Cross
Maritime, Inc.’s obligations to GECC or GECC’s assignee(s). See
Notably, Rule 54(d)(2) provides that a motion for attorneys’ fees must be
filed no later than 14 days after the entry of judgment.
Rec. Doc. 77-1 at 9-13.4 When the note was assigned by GECC to
Wells Fargo, the suretyship contract was also assigned. Rec. Doc.
77-3 at 11 (citing LA. CIV. CODE ANN. art. 2645 (“The assignment of
a right includes its accessories such as security rights”)).
Wells Fargo also asks the Court to confirm the validity of
the Security Agreement. Rec. Doc. 77-3 at 12. This agreement
provides a security interest in the property related to the Vessel
to Wells Fargo. Id. It was an accessory contract to the note and
thus was automatically assigned to Wells Fargo, like the suretyship
contract. Id. It was subsequently perfected when Wells Fargo filed
a UCC-1 Financing Statement in Terrebone Parish on July 22, 2014.
Id. (citing Rec. Doc. 77-1 at 2, 64-69).
After reviewing the motion for summary judgment, accompanying
documents, and cited law, it appears to the Court that Wells Fargo
is entitled to summary judgment.
The contract specifically provides that “the term ‘Beneficiary’ shall mean
[GECC] and . . . assigns . . . .” Rec. Doc. 77-1 at 9. Further, “[i]f more than
one Guarantor has entered into this Guaranty, the obligations of each Guarantor
under this Guaranty shall be joint and several and any reference below to
‘Guarantor’ shall mean each such Guarantor. To induce Beneficiary [GECC and its
assigns] to extend credit to . . . purchase or otherwise acquire . . . any loan
agreements . . . relating to . . . Cross Maritime, Inc. . . . Guarantor . . .
does hereby absolutely, unconditionally and irrevocably guarantee, as primary
obligor and not merely as surety . . . payment of any sum or sums of money which
Customer may owe to Beneficiary now or at any time hereafter . . . . Guarantor
does hereby further guarantee to pay upon demand all losses, costs, attorneys’
fees and expenses which may be suffered by Beneficiary by reason of Customer’s
default or default of Guarantor.”
IT IS ORDERED that the motion for summary judgment (Rec. Doc.
77) is GRANTED. Accordingly,
IT IS ORDERED that judgment is entered in favor of Wells Fargo
Equipment Finance, Inc. against Cross Maritime, Inc. and Cross
Holdings, Inc. in solido as follows:
1. In the principal amount of $4,839,375.40, plus interest at
the default rate of 12% per annum, accruing after November
14, 2016 until paid in full;
2. In the principal amount of $335,621.17, plus interest at
the federal judicial rate accruing from the date of this
judgment until paid in full;
3. In the amount of the reasonable attorneys’ fees and costs
of collection of Wells Fargo to be set by the Court on
separate motion of Wells Fargo; and
4. This Court recognizes, confirms, and maintains the validity
Collateral Schedule 001 affecting the properties described
New Orleans, Louisiana, this 13th day of March, 2017.
SENIOR UNITED STATES DISTRICT JUDGE
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