CGI Finance, Inc. v. M/V Coach
Filing
27
Judge Nathaniel M. Gorton: ORDER entered. MEMORANDUM AND ORDER granting 11 MOTION filed by Frederick V. McMenimen, III. "According to the foregoing, defendants motion for emergencyrelease of the vessel (Docket No. 11) is ALLOWED. NationalMaritime Services shall forthwith return custody of the vessel todefendant and plaintiff shall accept payment from defendant inaccordance with the loan modification agreement."(Patch, Christine)
United States District Court
District of Massachusetts
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v.
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M/Y COACH
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Defendant,
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FREDERICK V. McMENIMEN, III,
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Interested Party.
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CGI FINANCE, INC.,
Plaintiff,
Civil Case No.
12-12417-NMG
MEMORANDUM & ORDER
GORTON, J.
Frederick V. McMenimen, III (“McMenimen”) has moved the
Court to release the vessel M/Y Coach into his custody after it
was seized in accordance with a motion to attach filed by
plaintiff CGI Finance, Inc (“plaintiff” or “CGI”) which alleged
he had defaulted on a loan.
I.
Background
On May 26, 2004 “McMenimen”, entered into a Marine Note and
Security Agreement (“the Note”) for a loan on the subject vessel
M/Y Coach.
The Note was subsequently assigned to CGI.
On March 6, 2012, McMenimen filed for Chapter 13 bankruptcy.
Because McMenimen was unable to engage in reaffirmation or
redemption under the Bankruptcy Code counsel for McMenimen and
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CGI entered into negotiations to modify the loan agreement for
the supposed purpose of allowing McMenimen to remain in
possession of the vessel.
McMeninmen was residing on the vessel
as a live-aboard owner at the Constitution Marina in Charlestown,
Massachusetts.
The parties dispute whether a modification agreement was
ever entered into.
McMenimen asserts that counsel for CGI
drafted a Loan Modification Agreement (“the Agreement”) and sent
a copy to counsel for McMenimen.
The copy of the Agreement
provided to McMenimen was already signed by an authorized
representative of CGI and dated September 17, 2012.
Under the
terms of the Agreement the first monthly payment of $1,000 was
due on or before September 25, 2012.
Default was to occur if
payment was “ever 31 days past due or more.” In his affidavit
McMenimen avers that he signed the Agreement on October 11, 2012,
and mailed it directly to CGI along with the first payment of
$1,000.
At that time he had received no communication from CGI
that the offer had been revoked.
On the morning of October 18, 2012, counsel for McMenimen
sent a copy of the Agreement signed by McMenimen to counsel for
CGI.
Several hours later, counsel for CGI sent an email to
McMenimen’s counsel in which he indicated that he had received
nothing in writing and that “there is no agreement with Mr.
McMenimen.”
CGI contends that this email served as a valid
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revocation of its offer.
On the same day, McMenimen contacted CGI by telephone and
spoke with an individual named “Terry” who confirmed that the
Agreement was in effect.
In reliance on that communication
McMenimen mailed additional payments of $1,000 on November 11 and
during the first week of December.
CGI did not accept or cash
any of those checks.
CGI sent McMenimen a “Notice of Intention to Repossess
Vessel” dated October 31, 2012.
That letter was sent to
McMenimen’s former address and, as a result, he did not receive
the Notice until December 4, 2012.
The following day he
contacted Geoff Kreller (“Kreller”) at CGI to inquire why his
payments had not been deposited.
Kreller indicated that CGI had
received the payments but that “issues” in McMenimen’s background
had “changed the deal.”
Presumably Kreller was referring to the
fact that McMenimen had been indicted in the District of New
Hampshire in October, 2012.
On December 14, 2012, CGI sent a
letter to McMenimen and his counsel indicating that the
“modification agreement...is null and void.”
II.
Procedural History
Plaintiff filed its Complaint seeking foreclosure and the
balance due under the Note which was in default on December 28,
2012 (Docket No. 1) pursuant to the Court’s Admiralty
jurisdiction.
On January 7, 2013, in response to plaintiff’s
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motion, the Court ordered the issuance of a maritime warrant for
arrest and appointed National Maritime Services as custodian for
the vessel (Docket Nos. 9 and 10).
On January 11, 2013, after the vessel had been seized,
defendant filed an Answer to the Complaint and an emergency
demand for release of the vessel (Docket No. 11).
The Court
treated that demand as an emergency motion (Docket No. 12).
It
held a hearing on January 14, 2013, took the matter under
advisement and directed the parties to brief the issue of whether
they had entered into a valid loan modification agreement.
The
Court also ordered plaintiff to file a $50,000 bond with the
Court as security for potential cross claims by defendant for
wrongful eviction or damages.
III. Motion to Release Vessel
McMenimen seeks to have the Court order the release of the
vessel and return custody to him on the ground that he had
entered into and complied with a valid loan modification
agreement which CGI violated when it seized the vessel.
“Until a contract comes into existence the [offeror] can
withdraw the offer.”
Elliott v. Kazajian, 255 Mass. 459, 461
(1926)(collecting cases).
Revocation of an offer is, however,
effective only when that revocation is made known to the offeree.
Brauer v. Shaw, 168 Mass. 198, 200, 46 N.E. 617 (1897)(“to
disable the plaintiffs from accepting their offer, the defendants
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should bring home to them actual notice that it has been
revoked.”)
Thus, if the offeree accepts the offer before he
receives notice of the revocation, a valid contract is formed.
Id.
Here CGI sent McMenimen a signed draft agreement, thereby
constituting an offer.
On October 11, 2012, McMeninmen signed
the Agreement and mailed it to CGI along with the first $1,000
due under the Agreement.
Furthermore, on the morning of October
18, 2012, counsel for McMenimen sent a fully executed copy of the
Agreement to CGI.
CGI did not attempt to revoke the offer until
the afternoon of October 18.
Thus, McMenimen had clearly
accepted CGI’s offer prior to receiving notice of CGI’s intent to
revoke.
As a result, the Agreement was not revoked and is in
full force and effect.
McMeninmen performed under the terms of
the Agreement when he mailed his monthly payments.
Because he
had complied with the terms of the Agreement he was not in
default and CGI did not have grounds to have the boat seized.
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ORDER
According to the foregoing, defendant’s motion for emergency
release of the vessel (Docket No. 11) is ALLOWED.
National
Maritime Services shall forthwith return custody of the vessel to
defendant and plaintiff shall accept payment from defendant in
accordance with the loan modification agreement.
So ordered.
/s/ Nathaniel M. Gorton
Nathaniel M. Gorton
United States District Judge
Dated February
, 2013
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