Wells Fargo Equipment Finance, Inc. v. Cross Maritime, Inc. et al
ORDER & REASONS granting 25 Motion for Summary Judgment. Signed by Judge Jane Triche Milazzo on 9/29/2017. (caa)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
WELLS FARGO EQUIPMENT
CROSS MARITIME INC., ET AL.
ORDER AND REASONS
Before the Court is Plaintiff’s Motion for Summary Judgment (Doc. 25).
For the foregoing reasons, the Motion is GRANTED.
Plaintiff Wells Fargo Equipment Finance, Inc. (“Wells Fargo”) seeks
confirmation of the validity of a preferred ship mortgage on the DB
CROSSMAR 21 and money judgments against Defendants Cross Maritime
Inc., Cross Holdings Inc., and The Investment Group Inc. (“TIG”). Wells Fargo
contends that Defendants are indebted to it pursuant to a Loan and Security
Agreement (“Loan Agreement”). The Loan Agreement is evidenced by two
separate promissory notes executed on June 25, 2014. The first was executed
by Cross Maritime payable to Wells Fargo in the amount of $12,462,399.30 (the
“First Note”). The second was executed by Cross Maritime and TIG, on a joint
and several basis, payable to Wells Fargo in the amount of $2,096,423.89 (the
“Second Note”). Each note was guaranteed by Cross Holdings and secured by
a First Preferred Ship Mortgage in the DB CROSSMAR 21. In addition, Wells
Fargo alleges that it is the beneficiary of other security instruments, including
1) an Assignment of Charter Parties, Charter Hire and Earnings relating to
earnings of the vessel (the “Charter Assignment”); 2) an Assignment of
Insurances relating to policies of insurance covering the vessel (the “Insurance
Assignment”); and 3) a security interest in TIG’s right to Accommodation Units
and an Accommodation Lease, as set forth in Section 10.4 of the Loan
Agreement (the “TIG Security Agreement”).
Wells Fargo alleges that Cross Maritime and TIG failed to pay
installments on the Notes beginning in April 2016 and are in default. After
notifying the Defendants of the amounts due, the parties entered into a
forbearance agreement, which expired by its terms on June 1, 2017. Cross
Maritime made payments in the amount of $350,000.00 during the period of
Plaintiff has moved for summary judgment seeking a money judgment
against the Defendants and confirmation of the validity and enforceability of
its preferred ship mortgage covering the vessel DB CROSSMAR 21, as well as
reimbursement of attorneys’ fees and costs. Defendants responded that they
“respectfully defer to this Court’s determination of whether to grant or deny
Wells Fargo’s Motion for Summary Judgment.” 1 They also requested, however,
a “reservation of the right to dispute the awarding and calculation of attorney’s
fees, if granted, and the final calculations to ensure that all lawful credits and
offsets have been applied to Cross Maritime’s amount owed, and to put forth
available defenses on these limited matters, if necessary.” 2
Summary judgment is appropriate “if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with affidavits, if
any, show that there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.” 3 A genuine issue
of fact exists only “if the evidence is such that a reasonable jury could return a
verdict for the nonmoving party.” 4
In determining whether the movant is entitled to summary judgment,
the Court views facts in the light most favorable to the non-movant and draws
all reasonable inferences in his favor. 5 “If the moving party meets the initial
burden of showing that there is no genuine issue of material fact, the burden
shifts to the non-moving party to produce evidence or designate specific facts
showing the existence of a genuine issue for trial.” 6 Summary judgment is
appropriate if the non-movant “fails to make a showing sufficient to establish
3 Sherman v. Hallbauer, 455 F.2d 1236, 1241 (5th Cir. 1972).
4 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
5 Coleman v. Houston Indep. Sch. Dist., 113 F.3d 528, 532 (5th Cir. 1997).
6 Engstrom v. First Nat’l Bank of Eagle Lake, 47 F.3d 1459, 1462 (5th Cir. 1995).
the existence of an element essential to that party’s case.” 7 “In response to a
properly supported motion for summary judgment, the non-movant must
identify specific evidence in the record and articulate the manner in which that
evidence supports that party’s claim, and such evidence must be sufficient to
sustain a finding in favor of the non-movant on all issues as to which the nonmovant would bear the burden of proof at trial.” 8 “We do not . . . in the absence
of any proof, assume that the nonmoving party could or would prove the
necessary facts.” 9 Additionally, “[t]he mere argued existence of a factual
dispute will not defeat an otherwise properly supported motion.” 10
LAW AND ANALYSIS
Despite Defendants’ failure to raise any argument or fact contesting the
merits of this motion, the Court may not simply grant the instant Motion as
unopposed. The Fifth Circuit approaches the automatic grant of dispositive
motions with considerable aversion. 11
Instead, the proper inquiry to an
unopposed motion for summary judgment is to determine whether the facts
Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986).
John v. Deep E. Tex. Reg. Narcotics Trafficking Task Force, 379 F.3d 293, 301 (5th
Cir. 2004) (internal citations omitted).
9 Badon v. R J R Nabisco, Inc., 224 F.3d 382, 394 (5th Cir. 2000) (quoting Little v.
Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994)).
10 Boudreaux v. Banctec, Inc., 366 F. Supp. 2d 425, 430 (E.D. La. 2005).
11 See, e.g., Servicios Azucareros de Venezuela, C.A. v. John Deere Thibodeaux, Inc.,
702 F.3d 794, 806 (5th Cir. 2012); Johnson v. Pettiford, 442 F.3d 917, 918 (5th Cir. 2006) (per
curiam); John v. State of Louisiana (Bd. of Trs. for State Colls. and Univs.), 757 F.2d 698,
709 (5th Cir. 1985).
advanced in the motion and supported by appropriate evidence make out a
prima facie case that the movant is entitled to judgment. 12
A. Cross Holdings’ Guaranty
Plaintiff first asks for a judgment finding the guaranty of Cross Holdings
to be valid and enforceable. The guaranty states that it shall be governed by
the laws of New York, which provide that in order for a guaranty to be valid, it
“must be a written instrument guaranteeing payment of another’s debt,
describing with precision the obligation to which the person is bound.” 13 In
addition, “[c]onsideration for the guaranty must be expressly or impliedly
stated in the instrument, and the instrument must be delivered to, and
accepted by, the guarantor.” 14 Here, the guaranty of Cross Holdings expressly
guarantees the indebtedness of Cross Maritime and TIG incurred in the Loan
Agreement. The document is a written agreement signed by the CEO of Cross
Holdings. There are no issues of material fact concerning the validity and
enforceability of the guaranty by Cross Holdings.
B. First Preferred Ship Mortgage on the DB CROSSMAR 21
In order to be an enforceable preferred ship mortgage, a mortgage must
comply with the requirements of the Ship Mortgage Act. The Ship Mortgage
Act defines a preferred ship mortgage as one that “(1) includes the whole of the
vessel; (2) is filed in substantial compliance with [46 U.S.C. § 31321]; [and] (3)
See Adams v. Travelers Indem. Co. of Connecticut, 465 F.3d 156, 164 (5th Cir. 2006);
Eversley v. MBank Dallas, 843 F.2d 172, 174 (5th Cir. 1988).
13 Exp.-Imp. Bank of U.S. v. Agricola Del Mar BCS, 536 F. Supp. 2d 345, 350 (S.D.N.Y.
2008), aff’d, 334 F. App’x 353 (2d Cir. 2009).
covers a documented vessel.” 15 Section 31321 requires that a preferred ship
(1) identify the vessel;
(2) state the name and address of each party to the instrument;
(3) state, if a mortgage, the amount of the direct or contingent
obligations . . . that is or may become secured by the mortgage,
excluding interest, expenses, and fees;
(4) state the interest of the grantor, mortgagor, or assignor to the
(5) state the interest sold, conveyed, mortgaged, or assigned; and
(6) be signed and acknowledged. 16
The mortgage at issue here was executed by Cross Maritime as owner of
the CROSSMAR 21 to secure the indebtedness of Cross Maritime and TIG
incurred in the Loan Agreement. It covers 100% of the CROSSMAR 21, which
is a U.S. flagged vessel documented under the laws of the United States. The
mortgage document meets each of the requirements set forth by the Ship
Mortgage Act and was properly recorded. There is no material issue of fact as
to the validity and enforceability of the preferred ship mortgage on the
C. The Charter Assignment, Insurance Assignment, and TIG
By their terms, the Charter Assignment, Insurance Assignment, and
TIG Security Agreement are governed by New York law. Under New York law,
“a security interest is enforceable against the debtor and third parties with
respect to the collateral only if: (1) value has been given; (2) the debtor has
46 U.S.C. § 31322.
46 U.S.C. § 31321(b).
rights in the collateral or the power to transfer rights in the collateral to a
secured party; and . . . [(3)] the debtor has authenticated a security agreement
that provides a description of the collateral.” 17 Each of the aforementioned
security instruments satisfy these requirements.
Each acknowledge that
valuable consideration was given and that security interests were granted to
secure the obligations of Cross Maritime and TIG under the Loan Agreement.
The agreements describe the collateral in detail and were signed and
acknowledged. In addition, each was properly perfected by the filing of a UCC1 financing statement. There is no material issue of fact as to the validity and
enforceability of the Charter Assignment, Insurance Assignment, and TIG
D. Entitlement to Money Judgments
Plaintiff has established that Cross Maritime and TIG are in default
under the Loan Agreement and the Notes for failing to make payments of
principal and interest due on April 30, 2016; May 30, 2016; June 30, 2016; and
July 31, 2016. Wells Fargo sent a demand to Cross Maritime, TIG, and Cross
Holdings on August 15, 2016 accelerating the indebtedness and notifying them
of the imposition of the default interest rate of 12.35% on the principal balance.
Under the terms of the Guaranty, Cross Holdings is liable as a primary obligor
for the indebtedness of Cross Maritime and TIG under the Loan Agreement.
Plaintiff calculates that Cross Maritime, TIG, and Cross Holdings owe
$11,365,630.63 on the First Note, inclusive of the principal, interest, and
default interest, and $1,920,802.49 on the Second Note, inclusive of the
N.Y. U.C.C. Law § 9-203.
principal, interest, and default interest. In addition, Plaintiff claims that it is
entitled to late fees on the Notes in the amounts of $72,614.40 and $12,215.19,
respectively. Defendants have not disputed these calculations or raised any
argument contesting their accuracy. Instead, Defendants ask to reserve their
right to dispute “the final calculations to ensure that all lawful credits and
offsets have been applied to Cross Maritime’s amount owed, and to put forth
available defenses on these limited matters, if necessary.” The time to raise
such defenses, however, was in response to Plaintiff’s request for summary
judgment. Defendants’ failure to raise any arguments in opposition to
Plaintiff’s summary judgment regarding the final calculation of liability
constitutes a waiver of that issue for summary judgment purposes. 18
Accordingly, there is no material issue of fact as to Plaintiff’s calculation of the
amounts owed on the Notes.
E. Attorneys’ Fees
The Loan Agreement and Notes provide that Cross Maritime and TIG
agree to pay all reasonable attorneys’ fees and costs incurred in the collection
or enforcement of any obligations or rights under the Loan Agreement or
While Defendants “request reservation of the right to dispute the
See Ledet v. Fleetwood Enterprises, Inc., 245 F.3d 791 (5th Cir. 2000) (“Ledet’s
failure to raise the issue in front of the district court in Opposition to Fleetwood’s Motion for
Summary Judgment constitutes a waiver of the issue for summary judgment purposes,
regardless of whether the issue was raised in Ledet’s Complaint. ‘[W]e have specifically
refused to overturn a summary judgment motion on a theory not advanced in opposition to
the motion in the district court.’”).
awarding and calculation of attorney’s fees,” they again do not raise any
argument calling into question Plaintiff’s entitlement to an award of attorneys’
fees. Accordingly, they have waived the opportunity to do so. The amount of
attorneys’ fees will be determined on separate motion pursuant to Federal Rule
of Civil Procedure 54(d).
For the foregoing reasons, Plaintiff’s Motion for Summary Judgment is
GRANTED, and Plaintiff is entitled to a judgment as follows:
1. Against Cross Maritime, Inc. (“Cross Maritime”) and Cross Holdings,
Inc., (“Cross Holdings”) in solido in the amount of $11,365,630.63 plus interest
at the rate of 12.35% per annum, accruing after June 30, 2017 on the principal
balance of $10,281,479.37 until paid in full;
2. Against Cross Maritime and Cross Holdings, in solido for outstanding
late charges in the amount of $72,614.40 plus interest at the judicial rate,
accruing from the date of this judgment until paid in full;
3. Against Cross Maritime, The Investment Group, Inc. (“TIG”), and
Cross Holdings, in solido in the amount of $1,920,802.49 plus interest at the
rate of 12.35% per annum, accruing after June 30, 2017 on the principal
balance of $1,729,549.69 until paid in full;
4. Against Cross Maritime, TIG, and Cross Holdings, in solido for
outstanding late charges in the amount of $12,215.19 plus interest at the
judicial rate, accruing from the date of this judgment until paid in full;
5. Against Cross Maritime, TIG, and Cross Holdings, in solido for
reimbursement of Wells Fargo’s reasonable attorneys’ fees and costs of
collection to be determined by separate motion in accordance with Rule 54(d)
of the Federal Rules of Civil Procedure;
6. Confirming that the First Preferred Ship Mortgage on the DB
CROSSMAR 21 (Official Number 643889) granted by Cross Maritime to Wells
Fargo and recorded with the United States Coast Guard, National Vessel
Documentation Center on June 25, 2014 under Batch 20738800, Document ID
No. 5 is properly executed and perfected under the laws of the United States
and secures the indebtedness of Cross Maritime and TIG to Wells Fargo;
7. Confirming that the Assignment of Charter Parties, Charter Hire and
Earnings and the Assignment of Insurances granted by Cross Maritime to
Wells Fargo and included in the UCC-1 Financing Statement recorded on July
7, 2014 in Terrebonne Parish under Instrument No. 1457607 create valid and
perfected security interests in the collateral described therein and secure the
indebtedness of Cross Maritime and TIG to Wells Fargo; and
8. Confirming that the TIG Security Agreement granted by TIG in favor
of Wells Fargo and included in the UCC-1 Financing Statement recorded on
June 16, 2016 in Orleans Parish under Instrument No. 2016-24645 creates a
valid and perfected security interest in the collateral described therein and
secures the indebtedness of TIG to Wells Fargo.
New Orleans, Louisiana this 29th day of September, 2017.
JANE TRICHE MILAZZO
UNITED STATES DISTRICT JUDGE
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