Sears v. Sailing Vessel "Smithereens"
REPORT AND RECOMMENDATIONS re 17 MOTION for Default Judgment as to S/V Smithereens & Motion for Decree of Sale filed by Brian Sears Signed by: Judge Magistrate Judge Beth P. Gesner Objections to R&R due by 6/30/2014. Signed by Magistrate Judge Beth P. Gesner on 6/13/14. (apls, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Case No. ELH-13-3389
SAILING VESSEL “SMITHEREENS,”
REPORT AND RECOMMENDATION
The above-referenced case was referred to the undersigned for review of plaintiff’s
motion for default judgment and to make recommendations concerning damages, pursuant to 28
U.S.C. § 301 and Local Rule 301.6. (ECF No. 18.) Plaintiff brings this suit in rem under the
Federal Maritime Lien Act (“FMLA”), 46 U.S.C. § 31301, et seq. to enforce a maritime lien by
foreclosure. Plaintiff asks the court to enter default judgment on its claim for a maritime lien in
the amount of $29,469.91 for the provision of “necessaries” to the defendant vessel for the
period from February 1, 2011 until November 15, 2013, when the vessel was arrested. Plaintiff
also seeks $7,480.00 in attorney’s fees. Plaintiff separately requests a lien for custodia legis
expenses in the amount of $3,494.41 incurred by plaintiff after he was appointed substitute
custodian on November 15, 2013, following the vessel’s arrest. Plaintiff further asks this court
to order a judicial sale of the vessel in order to allow him to recover those costs. This court has
admiralty jurisdiction pursuant to 28 U.S.C. § 1333, and may enter default judgment in rem
pursuant to Local Admiralty Rule (c)(4). This court may order the sale of the vessel pursuant to
Currently pending is plaintiff’s Motion for Entry of Default Judgment and Judicial Sale
of Vessel (“Motion”). (ECF No. 17.) No response was filed. No hearing is deemed necessary.
See Fed. R. Civ. P. 55(b)(2); Loc. R. 105.6. For the reasons discussed herein, I respectfully
recommend that plaintiff’s Motion (ECF No. 17) be GRANTED IN PART AND DENIED IN
PART and that relief be awarded as set forth herein.
A. Standard for Entry of Default Judgment
In reviewing a motion for default judgment, the court accepts as true the well-pleaded
factual allegations in the complaint as to liability. Ryan v. Homecomings Fin. Network, 253
F.3d 778, 780-81 (4th Cir. 2001). It remains for the court, however, to determine whether these
unchallenged factual allegations constitute a legitimate cause of action. Id. In order to grant
default judgment in in rem admiralty proceedings, the court must also find that the notice
requirements of the Local Admiralty Rules have been complied with. (LAR (c)(3).) If the court
determines that liability is established, the court must then determine the appropriate amount of
damages. Id. The court does not accept factual allegations regarding damages as true, but rather
must make an independent determination regarding such allegations. See, e.g., Credit Lyonnais
Secs. (USA), Inc. v. Alcantara, 183 F.3d 151, 154 (2d Cir. 1999). The court may make a
determination of damages without a hearing, so long as there is adequate evidence in the record,
such as detailed affidavits or documentary evidence, for the award. See, e.g., Adkins v. Teseo,
180 F. Supp. 2d 15, 17 (D.D.C. 2001).
B. Defendant’s Liability
I have reviewed plaintiff’s First Amended Verified Complaint in Rem to Foreclose a
Maritime Lien (“First Amended Complaint”) (ECF No. 5), and find that plaintiff has stated a
cause of action under the FMLA based on his provision of “necessaries” from February 1, 2011
until November 15, 2013, when the defendant vessel was arrested. Further, I find that plaintiff
has complied with the procedural requirements of the Local Admiralty Rule (c)(3) for the entry
of default judgment.
On November 14, 2013, plaintiff filed his First Amended Complaint to enforce a
maritime lien against the vessel in rem. (ECF No. 5.) According to the First Amended
Complaint, on or about December 2010, Tom Vanhuben made an oral agreement with plaintiff
for the storage of defendant sailing vessel “Smithereens,” HIN# HUN45248E001 (“vessel”) at
plaintiff’s marina located at 721 Chester Ave., Annapolis, MD 21403 for a rate of $475.00 per
month. (ECF No. 5, at ¶ 8.) The vessel is a 44.5’ 2000 Hunter sailboat. (ECF No. 5.) The title
owner of the vessel is Lyn A. Vanhuben, Mr. Vanhuben’s wife. (ECF Nos. 5, at ¶7, 14-2.)
Plaintiff also orally agreed to store a 13’ Boston Whaler, the vessel’s tender, for $125.00 per
month. (Id., at ¶ 8.) Plaintiff later reduced the oral agreement to writing in a “Slip Lease
Agreement” and delivered it to Mr. Vanhuben. (Id., at ¶ 9.) The Slip Lease Agreement contained
additional terms, including late fees, interest, court costs, and attorney’s fees in the event of nonpayment and enforcement of the contract. (ECF No. 1-1.)1 Plaintiff began to store the vessel at
his marina on or about February 1, 2011. (ECF No. 5, at ¶ 11.) In March 2011, before he signed
the Slip Lease Agreement, Mr. Vanhuben passed away. (ECF No. 5, at ¶9.) Since February
2011, plaintiff has provided storage for the vessel and expended labor and materials to maintain
the vessel while it remained at plaintiff’s marina. (Id., at ¶ 13.) Plaintiff has made unsuccessful
The undersigned notes that plaintiff attached exhibits A, Slip Lease Agreement, and B, Itemization of Vessel
Expenses, to its Complaint (ECF No. 1) on November 13, 2013. Plaintiff filed his First Amended Complaint on
November 14, 2013. While exhibits A and B were not attached to the First Amended Complaint, plaintiff refers to
those exhibits in the First Amended Complaint.
efforts to settle the debt for his services with Mrs. Vanhuben, who is currently not responding to
Mr. Sears’ phone calls or registered mail. (Id., at ¶ 12.)
Plaintiff filed the First Amended Complaint on November 14, 2013. (ECF No. 5.) After
defendant failed to answer or otherwise defend the First Amended Complaint within twenty-one
days, plaintiff properly moved, pursuant to Federal Rule of Civil Procedure 55(a), for an entry of
default. (ECF No. 14.) The Clerk of this court entered an Order of Default on March 13, 2014.
(ECF No. 15.) On April 15, 2014, plaintiff filed the pending Motion (ECF No. 17), and no
response has been filed. Before granting plaintiff’s Motion for Default Judgment pursuant to
Fed. R. Civ. P. 55(b), the court must find that (1) the plaintiff has stated a legitimate cause of
action; and (2) plaintiff has complied with the procedural requirements of Local Admiralty Rule
1. Legitimate Cause of Action
In order to state a legitimate cause of action giving rise to a maritime lien under the
FMLA, plaintiff must demonstrate that he has (1) provided “necessaries” to a vessel (2) on the
order of the vessel’s owner or a person authorized by the owner. 46 U.S.C. § 31342. The
statutory definition of “necessaries” includes repairs, supplies, towage, and the use of a dry dock
or maritime railway. Id. Courts have further liberally construed the term “necessaries” to
include “what is reasonably needed in the ship’s business”. Board of Comm’rs of the Orleans
Levee District v. M/V Belle of Orleans, 535 F.3d 1299, 1314 (11th Cir. 2008). “Necessaries” has
been interpreted to include dockage and wharfage costs. Ceres Marine Terminals, Inc. v. M/V
Harmen Oldendorf, 913 F. Supp. 919, 927 (D. Md. 1995). As more fully discussed below, the
term “necessaries” also includes maintenance, insurance, and prejudgment interest. 46 U.S.C.
§31301(4); Loginter S.A. y Parque Industrial Agua Profunda S.A. UTE v. M/V Nobility, 177 F.
Supp. 2d 411, 421 (D. Md. 2001); Flagship Grp., Ltd. v. Peninsula Cruise, Inc., 771 F. Supp.
756, 759 (E.D. Va. 1991). Plaintiff’s First Amended Complaint demonstrates that plaintiff has
provided necessaries to the defendant vessel on the order of its owner. First, according to
plaintiff’s First Amended Complaint (ECF No. 5), plaintiff has provided dockage to defendant
vessel and its tender since February 1, 2011. (ECF No. 5, ¶ 11.) During this time, plaintiff has
expended labor and materials for defendant vessel’s upkeep, including installing new batteries
and pumping the vessel’s bilge. (ECF No. 5, ¶ 13.) The dockage and maintenance services
provided to defendant by plaintiff are clearly “necessaries” within the meaning of the FMLA.
Ceres, at 927; 46 U.S.C. §31301(4). The First Amended Complaint also adequately states the
second requirement for establishing a legitimate cause of action under the FMLA. (ECF No. 5, ¶
8.) According to plaintiff’s First Amended Complaint, defendant vessel was owned by Lyn A.
Vanhuben and Tom Vanhuben, with Ms. Vanhuben as the owner of record. (ECF No. 5, ¶ 7.)
Plaintiff entered into an oral contract with Mr. Vanhuben for the dockage of defendant vessel.
Therefore, plaintiff provided “necessaries” on the order of Mr. Vanhuben, an owner of the
vessel. Accordingly, accepting plaintiff’s well-pleaded factual allegations, I find that plaintiff
has stated a legitimate cause of action for a maritime lien pursuant to 46 U.S.C. § 31342. Ryan,
253 F.3d at 780-81.
2. Procedural Requirements of the Local Admiralty Rules
Local Admiralty Rule (c)(3)(a)(i) details additional procedural requirements that must be
satisfied prior to the entry of default judgment in an action in rem. A party seeking default
judgment in rem must satisfy the court that due notice of the action and arrest of the property has
been given by (1) publication in accordance with LAR(c)(2); (2) service of the complaint and
warrant of arrest upon the Marshal, substitute custodian, master, or other person having custody
of the property; and (3) by mailing notice to every person who has not appeared in this action
and is known to the party seeking the default judgment to have an ownership interest in the
property. Here, as required, plaintiff has published notice of the arrest in the Daily Record in
accordance with LAR(c)(2). (ECF No. 14-1.) Plaintiff has served the complaint and warrant of
arrest upon the Marshal and the vessel. (ECF No. 13.) Plaintiff has mailed notice to Lyn
Vanhuben, the owner of record of the vessel, at all of Mrs. Vanhuben’s known addresses (ECF
No. 17-1.) Finally, plaintiff has given notice to Onset Bay II, Corp. and Community National
Bank, who are shown to have recorded liens on the vessel. (ECF Nos. 14-2, 14-3.) I find that
plaintiff has satisfied Local Admiralty Rule (c)(3)(a)(i). In sum, plaintiff has demonstrated that
he is entitled to a default judgment against defendant vessel for the provision of “necessaries”
from February 1, 2011 until November 15, 2013.
Having determined that plaintiff has proven liability, the undersigned now undertakes an
independent determination of the damages to which plaintiff is entitled. See Credit Lyonnais,
183 F.3d at 154 (2d Cir. 1999). I have reviewed the facts alleged in plaintiff’s First Amended
Complaint, verified by plaintiff, as well as the “Itemization of Vessel Expenses” (ECF No. 1-2),
referred to in the First Amended Complaint, which lists costs incurred by plaintiff from February
2011 until November 1, 2011. Plaintiff seeks damages for the following: (1) dockage; (2)
maintenance; (3) insurance; (4) legal costs; and (5) prejudgment interest.
Plaintiff is entitled to a maritime lien against the defendant vessel to recover the cost of
“necessaries” provided to the vessel. 46 U.S.C. § 31342. As to the first item of damages sought,
dockage fees have been found to be a “necessary.” Ceres, at 927. Plaintiff provided dockage to
defendant vessel at a rate of $475.00 per month from February 2011 until November 2013, when
plaintiff was appointed substitute custodian. (ECF Nos. 5, at ¶ 8, 10.) Accordingly, plaintiff is
entitled to damages in the amount of $16,150.00 for this 34-month period. Plaintiff also seeks an
additional $125.00 per month for a 31-month period from February 1, 2011 through August 2013
as compensation for storage of the defendant vessel’s tender, a 13’ Boston Whaler. (ECF No. 5 ¶
8.) The undersigned concludes that the tender is “reasonably needed in the ship’s business”
because a tender enables the passengers of the vessel, a 44.5’ sailboat, to reach land after being
moored. Accordingly, plaintiff is entitled to damages in the amount of $3,875.00 for storage of
the Boston Whaler.
Second, plaintiff requests a maritime lien for maintenance and upkeep costs, including
$2500.00 for cleaning and debris removal, $350.00 for estimated electric charges, $150.00 for
new battery installation, $150.00 for a pump to remove water and maintenance, and a $600.00
yearly upkeep fee. (ECF No. 1-2.) The FMLA definition of “necessaries” includes repairs and
supplies. 46 U.S.C. § 31301(4). Therefore, plaintiff is entitled to damages in the amount of
$3,450.00 for maintenance costs and fees.
Third, Plaintiff requests $530.41 for the cost of “insurance on the vessel” incurred prior
to November 1, 2013. (ECF No. 1-2.) Insurance is a “necessary” under 46 U.S.C. § 31342.
Flagship Grp., 771 F. Supp. at 759. Therefore, plaintiff is entitled to a lien in the amount of
$530.41 to recover insurance costs.
Fourth, plaintiff requests amounts attributable to legal costs. Plaintiff seeks $7,480.00 in
contractual legal fees and $1,120.03 in costs. (ECF No. 17, ¶ 8.)
Plaintiff also seeks $752.00
for “taxes paid to Maryland for title transfer.” (ECF No. 1-2.) According to the Itemization of
Vessel Expenses, the taxes were paid prior to November 1, 2013. (Id.) Plaintiff’s claim for
these costs relies on the theory that attorney’s fees and costs were part of the contract for
dockage of defendant vessel. This theory fails, however, because Mr. Vanhuben did not sign the
Slip Lease Agreement, which contained the additional terms not previously agreed upon. Even
assuming that those terms were part of the contract for dockage, plaintiff has made a claim for a
maritime lien, not breach of contract. “Terms in the underlying contract for necessaries are not
automatically covered by the resulting lien. Rather… a maritime lien under the FMLA appears
to only cover the price of necessaries themselves plus interest.” Triton Marine Fuels, Ltd. v.
M/V Pacific Chukota, 671 F. Supp.2d 753, 760–61 (D.Md. 2009).
Attorneys’ fees are not a “necessary” giving rise to a maritime lien because they are not
reasonably needed in the ship’s business. Id., at 761. Attorneys’ services are provided to, and
fees are incurred by, the plaintiff, not the vessel. Id. Therefore, plaintiff is not entitled to a lien
for attorney’s fees and costs incurred in this action. Title transfer taxes are costs incurred during
the transfer of legal ownership status of a vessel. Plaintiff has not offered any authority to
support his request for these costs. Accordingly, the undersigned concludes that a transfer of
ownership of a vessel, and the taxes associated with transfer are not “reasonably needed in the
ship’s business,” nor do they further the functioning of the vessel. Accordingly, plaintiff’s
request for a lien for those costs should be denied.
Finally, plaintiff requests a lien for prejudgment interest in the amount of $3,562.50 and
late fees in the amount of $850.2 (ECF Nos. 17, 1-2.) The Slip Lease Agreement, which was
never signed by Mr. Vanhuben, contained a $25.00 per month late fee and a 1% monthly interest
charge. (ECF No. 1-1.) A maritime lien covers some pre-judgment interest, but not necessarily
the contractual pre-judgment interest rate. Triton, at 764. An award of prejudgment interest is
almost automatic, and should be denied only under exceptional circumstances. Loginter S.A. y
Plaintiff requests interest on unpaid dockage for the vessel and its tender, but makes no request for prejudgment
interest on maintenance or insurance.
Parque Industrial Agua Profunda S.A. UTE v. M/V Nobility, 177 F. Supp.2d 411, 421 (D. Md.
2001). The rate of interest used is within the discretion of the court in order to insure that
providers of necessaries are fully compensated for their loss. Id.; Triton, at 764. Although the
court does not find that the parties are bound by the terms of the Slip Lease Agreement,
including the monthly late fee, the 1% interest rate requested by plaintiff nonetheless fairly
compensates plaintiff for his loss.
(See ECF No. 1-2.) Accordingly, the plaintiff is entitled to
pre-judgment interest assessed monthly on the outstanding balance of unpaid dockage fees at a
rate of 1%, totaling $3,562.50.
For the foregoing reasons, the undersigned recommends that plaintiff be awarded a
maritime lien for: (1) $20,025.00 for dockage of the vessel, (2) $3,450.00 for maintenance and
supplies, (3) $530.41 for insurance, and (4) $3,562.50 for prejudgment interest for a total lien of
Custodia legis expenses
Plaintiff also requests a lien in the amount of $3,494.11 for custodia legis expenses.
(ECF No. 17, at ¶ 10.) Following arrest of the vessel, the court issued an Order Appointing
Substitute Custodian (“Order”) on November 15, 2013, which gave plaintiff responsibility for
the safekeeping of the vessel. (ECF No. 10). The Order allows plaintiff to charge the rate of
$20.00 per day and to receive compensation for insuring the vessel through a policy with Allstate
Property and Casualty Company. (ECF No. 10.) In support of his request for custodia legis
expenses, plaintiff filed an Affidavit of Custodia Legis Expenses (ECF No. 17-2) detailing the
following expenses: $2,880.00 for 144 days of storage at the rate of $20.00 per day; $531.41 for
insurance costs; and $83.00 for maintenance costs. A substitute custodian is entitled to recover
expenses incurred for preservation of the vessel. New York Dock Company v. Steamship
Poznan, 274 U.S. 117, 120–121 (1927). The right of a substitute custodian to recover these
expenses is distinct from a maritime lien; a lien for custodia legis expenses depends “not upon
the existence of a maritime lien, but upon principles of general application which should govern
whenever a court undertakes the administration of property or a fund brought into its custody for
the benefit of suitors.” Id., at 120. A lien for custodia legis expenses has priority over other
claims against the vessel. Id., at 121. Pursuant to the Order, plaintiff insured the vessel at a cost
of $531.41, and provided dockage at a cost of $2,880.00. (ECF No. 17-2, at ¶¶ 3–4.) Plaintiff is
entitled to a lien for those costs because they were specifically instructed by the Order for the
preservation of the vessel. (ECF No. 10.) Plaintiff also incurred $83.00 in costs for a battery
charger and extension cord, used to keep the vessel’s bilge pumps working to prevent the vessel
from filling with water. (ECF No. 17-2.) The plaintiff clearly incurred those maintenance costs
pursuant to the court’s order that he provide routine services for the safekeeping of the vessel.
(ECF Nos. 10, 7, at ¶ 5.) Plaintiff is entitled to recover the $83.00 in maintenance costs that he
incurred while serving as substitute custodian. Accordingly, a priority lien in favor of plaintiff
against defendant vessel in the amount of $3,494.41 is appropriate.
Judicial Sale of Vessel
Plaintiff requests that the court enforce the maritime lien and custodia legis expenses by
ordering a judicial sale of the defendant vessel. (ECF No. 17). A maritime lien arising under the
FMLA “grants the creditor the right to appropriate the vessel, have it sold, and be repaid the debt
from the proceeds.” Triton Marine Fules v. M/V Pacific Chukotka, 504 F. Supp. 2d 68, 72
(D.Md. 2007). Local Admiralty Rule (e)(12) requires the court to set terms and conditions
regarding notice of the sale of the vessel. At the sale, a lienholder may bid at the judicial sale on
credit up to the amount of its in rem judgment without being required to pay that amount in cash.
See Branch Banking & Trust Co. v. Fishing Vessel Topless, 2013 WL 3732734 (D.Md. 2013).
I recommend that a judicial sale of the vessel be ordered. Plaintiff is entitled to enforce
his maritime lien in the amount of $27,567.91 against the vessel by judicial sale. Triton, 504 F.
Supp. 2d at 72. Plaintiff is further entitled to recover custodia legis expenses in the amount of
$3,494.41 at the sale of the vessel. New York Dock Co., 274 U.S. at 120–121.
In sum, I recommend that:
1. Plaintiff’s Motion for Default Judgment (ECF No. 17) be granted in part and denied in
2. Plaintiff’s request for a maritime lien for contractual attorney’s fees and costs be
2. Plaintiff be awarded a maritime lien against defendant vessel in rem in the amount of
3. Plaintiff be awarded a custodia legis priority lien against defendant vessel in rem in
the amount of $3,494.41.
4. The United States Marshal be instructed forthwith to enact a judicial sale of the
Sailing Vessel Smithereens, her riggings, tackle, engines, etc. consistent with Local Admiralty
Rule (e)(12) and the terms outlined in the proposed Decree of Sale, attached hereto as
Attachment 1, in order to satisfy Plaintiff’s judgment.
5. Plaintiff be permitted to bid on the vessel at the Marshal’s sale on credit up to the
amount of $31,062.32, that being the sum of plaintiff’s judgment against the vessel and
plaintiff’s custodia legis fees incurred for storing and maintaining the vessel following arrest.
I also direct the Clerk to mail a copy of this Report and Recommendation to defendant at
the address listed on plaintiff’s First Amended Complaint (ECF No. 5). Any objections to this
Report and Recommendation must be served and filed within fourteen (14) days, pursuant to
Federal Rule of Civil Procedure 72(b) and Local Rule 301.5.b.
Date: June 13, 2014
Beth P. Gesner
United States Magistrate Judge
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