Coastal Marine Management, v. M/V SEA HUNTER (O.N. 598425), et al

Filing 86

Judge Nathaniel M. Gorton: ENDORSED ORDER entered granting in part and denying in part 82 Emergency MOTION to Set Aside 80 Notice (Other), 78 Order on Motion to InterveneIn an effort to be fair to all interested parties and to provide a proc edure that will elicit the highest price for the vessel, plaintiffs motion to set aside the auction sale, consider upset bid and reopen bidding (Docket No. 82) is ALLOWED, in part, and DENIED, in part, and the following procedure is her eby adopted:- Counsel for plaintiff is to advertise the reopened sale of the M/V Sea Hunter in Boats and Harbors and gcaptain.com and submit the proposed advertisements to those publishers no later than close of business, Thursday, October 26, 201 7.- Counsel for plaintiff shall give notice of the sale, and of this order, to (i) the owner of the M/V Sea Hunter and to all lien and mortgage claimants of record (ii) the potential bidders who provided contact information at the October 4, 2017, auction and (iii) Linden Holdings, Inc. - Bidding will be re-opened until the close of business Friday, November 3, 2017, during which time bidders other than the upset bidder, Custom Marine, Inc., may submit sealed bids in increments of not less than $10,000 above the current upset bid of $100,000.- Sealed bids shall be delivered or sent to:United States Marshals Servicevia email at:[e-mail]; ORvia mail at:United States Marshals ServiceDistrict of Massachuset tsAttn: John D. Wickham, Supervisory Deputy U.S. MarshalJohn J. Moakley US Courthouse1 Courthouse Way, Suite #1-500Boston, MA 02210- All bids must be received by the close of business on Friday, November 3, 2017.- If no such bids are received w ithin the prescribed time, the sale to Custom Marine, Inc. will be confirmed on Monday, November 6, 2017 for $100,000.- If sealed bids are received within the prescribed time, a hearing before the Court will be convened on Tuesday, November 7 , at 11:00 a.m. in Courtroom #4, Moakley Courthouse, at which time the sealed bids will be opened and verified.- Parties submitting sealed bids at the hearing held on Tuesday, November 7, 2017, shall be prepared to present at that hearing a certif ied check for ten percent (10%) of their bid price payable to United States Marshal for the District of Massachusetts.- Thereafter, the upset bidder, Custom Marine, Inc., will be afforded the opportunity to trump the highest competing bid by an increment of not less than $10,000 in which event, upon prompt receipt of the full amount of the purchase price, the sale to Custom Marine, Inc., will be confirmed.- In default of any bid in excess of the highest sealed bid and provided th e entire purchase price in certified funds is received within two business days after the hearing, the sale to the highest bidder will be confirmed.- If the entire purchase price is not received within the prescribed time, the vessel will be sold to the next highest bidder, provided that bidder delivers the requisite funds within two business days thereafter.- The vessel will be sold free and clear of all liens and encumbrances in its current as is, where is condition, without any representation and warranty, express or implied, as to its merchantability or fitness, except as to title.So ordered.(Caruso, Stephanie)

United States District Court
District of Massachusetts
)
Coastal Marine Management, LLC )
d/b/a Boston Harbor Shipyard and )
Marina,
)
)
Plaintiff,
)
)
v.
)
)
M/V Sea Hunter (O.N. 598425),
)
her engines, tackle, apparel,
)
appurtenances, etc., in rem,
)
)
Defendant.
)

Civil Action No.
16-11616-NMG

ORDER
GORTON, J.
This case involves the public auction sale of a sea vessel,
the M/V Sea Hunter (O.N. 598425).

On August 8, 2016, Coastal

Marine Management, LLC (“plaintiff” or “Coastal Marine”) filed
an in rem action against the M/V SEA HUNTER (O.N. 598425) (“the
Sea Hunter”).

The complaint alleges that plaintiff has not

received payment for the necessary services it provided to the
Sea Hunter and that plaintiff has the right to enforce its lien
against the vessel.

After this Court allowed plaintiff’s motion

for the issuance of a warrant in rem against the vessel and
entered a default judgment in favor of plaintiff, it authorized
an interlocutory sale of the vessel.

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The Sea Hunter was appraised at $2,000,000 but at the
public auction on October 4, 2017 brought only two bids.

One,

for $30,000 and the winning bid of $50,000, from Linden
Holdings, Inc.

The Court held a confirmation hearing on October

10, 2017, to determine whether the sale of the vessel should be
confirmed.

Although the various intervenors and debt holders

were notified of the hearing, and some appeared at the public
auction, only counsel for plaintiff Costal Marine Management
attended the hearing.

The Court took the matter under

advisement.
On Tuesday, October 17, 2017, plaintiff filed an emergency
motion to set aside the auction sale, consider upset bidding and
reopen the bidding.

The motion was consented to by all parties

represented in this action after an “upset bid” for the vessel
in the amount of $100,000 was received from Custom Marine, Inc.,
of Dobbs Ferry, New York.

The upset bidder submitted a bank

check in the amount of $100,000 to plaintiff’s counsel, who then
delivered the check to the United States Marshal who had been
appointed to supervise the sale.

Because of the upset bid, the

represented parties now request that the court set aside the
public auction sale for $50,000 and re-open bidding for the
vessel.
The Court will allow that motion, in part, and deny it, in
part.
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The policy of ensuring public confidence in sales under the
supervision of the court favors confirmation of a sale made to
the highest bidder at a fairly conducted public auction. Munro
Drydock, Inc. v. M/V Heron, 585 F.2d 13, 15 (1st Cir. 1978).
Nonetheless, an interested party may “raise a claim prior to a
confirmation that [a] sale should be disapproved" because the
sale price is "grossly inadequate". Id. “Gross inadequacy”
exists when, apart from situations involving fraud or
unfairness, there is a substantial disparity between the highest
bid and the appraised fair market value, and “there is a
reasonable degree of probability that a substantially better
price will be obtained by a resale.” Gowen, Inc. v. F/V Quality
One, 2000 WL 893402 (D. Me. June 14, 2000), aff’d, 244 F.3d 64
(1st Cir. 2001).
In the present case, there is a substantial disparity
between the $50,000 bid at auction and the $2,000,000 appraisal
of the vessel.

Furthermore, a substantially higher price is now

apparently available.

The “upset bidder”, Custom Marine, Inc.,

has deposited $100,000 in certified funds with the United States
Marshal.

Accordingly, the Court finds that the $50,000 public

auction price is grossly inadequate and declines to confirm the
sale at public auction.
In an effort to be fair to all interested parties and to
provide a procedure that will elicit the highest price for the
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vessel, plaintiff’s motion to set aside the auction sale,
consider upset bid and reopen bidding (Docket No. 82) is
ALLOWED, in part, and DENIED, in part, and the following
procedure is hereby adopted:
- Counsel for plaintiff is to advertise the reopened sale
of the M/V Sea Hunter in Boats and Harbors and
gcaptain.com and submit the proposed advertisements to
those publishers no later than close of business,
Thursday, October 26, 2017.
- Counsel for plaintiff shall give notice of the sale, and
of this order, to (i) the owner of the M/V Sea Hunter and
to all lien and mortgage claimants of record (ii) the
potential bidders who provided contact information at the
October 4, 2017, auction and (iii) Linden Holdings, Inc.
- Bidding will be re-opened until the close of business
Friday, November 3, 2017, during which time bidders other
than the upset bidder, Custom Marine, Inc., may submit
sealed bids in increments of not less than $10,000 above
the current upset bid of $100,000.
- Sealed bids shall be delivered or sent to:
United States Marshals Service
via email at:
[e-mail]; OR
via mail at:
United States Marshals Service
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District of Massachusetts
Attn: John D. Wickham, Supervisory Deputy U.S. Marshal
John J. Moakley US Courthouse
1 Courthouse Way, Suite #1-500
Boston, MA 02210
- All bids must be received by the close of business on
Friday, November 3, 2017.
- If no such bids are received within the prescribed time,
the sale to Custom Marine, Inc. will be confirmed on
Monday, November 6, 2017 for $100,000.
- If sealed bids are received within the prescribed time, a
hearing before the Court will be convened on Tuesday,
November 7, at 11:00 a.m. in Courtroom #4, Moakley
Courthouse, at which time the sealed bids will be opened
and verified.
- Parties submitting sealed bids at the hearing held on
Tuesday, November 7, 2017, shall be prepared to present
at that hearing a certified check for ten percent (10%)
of their bid price payable to “United States Marshal for
the District of Massachusetts”.
- Thereafter, the upset bidder, Custom Marine, Inc., will
be afforded the opportunity to trump the highest
competing bid by an increment of not less than $10,000 in
which event, upon prompt receipt of the full amount of
the purchase price, the sale to Custom Marine, Inc., will
be confirmed.
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- In default of any bid in excess of the highest sealed bid
and provided the entire purchase price in certified funds
is received within two business days after the hearing,
the sale to the highest bidder will be confirmed.
- If the entire purchase price is not received within the
prescribed time, the vessel will be sold to the next
highest bidder, provided that bidder delivers the
requisite funds within two business days thereafter.
- The vessel will be sold free and clear of all liens and
encumbrances in its current “as is, where is” condition,
without any representation and warranty, express or
implied, as to its merchantability or fitness, except as
to title.

So ordered.
/s/ Nathaniel M. Gorton_____
Nathaniel M. Gorton
United States District Judge
Dated October 25, 2017

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