St. Clair Marine Salvage, Inc. v. M/Y Blue Marlin, MC No. 5937 RL et al

Filing 36

ORDER granting in part and denying in part 32 Motion for Bond. Signed by District Judge Patrick J. Duggan. (MOre)

UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
ST. CLAIR MARINE SALVAGE, INC.,
Plaintiff and Counter-Defendant,
Case No. 13-14714
v.
Hon. Patrick J. Duggan
M/Y BLUE MARLIN, MC No. 5937 RL,
in rem, and STEVEN J. LEBOWSKI, in
personam,
Defendants and Counter-Plaintiffs,
and
STEVEN J. LEBOWSKI, and M/Y BLUE
MARLIN, MC No. 5937 RL,
Third-Party Plaintiffs,
v.
BOATUS, BOAT AMERICA, WEST MARINE
PRODUCTS CORPORATION, and BOAT/US,
Third-Party Defendants.
/
ORDER GRANTING IN PART AND DENYING IN PART LEBOWSKI’S
MOTION FOR BOND OR OTHER SECURITY
This is an admiralty case arising out of Plaintiff and Counter-Defendant St.
Clair Marine Salvage, Inc.’s (“St. Clair”) salvage of a recreational boat. St. Clair
instituted this action against Defendant and Counter-Plaintiff M/Y Blue Marlin,

No. 5937 RL (the “Vessel”) in rem and against its owner, Defendant, CounterPlaintiff, and Third-Party Plaintiff Steven J. Lebowski, in personam to enforce a
maritime lien in connection with the salvage, claiming that Lebowski owes in
excess of $16,200 in labor costs and other damages. The following day, the Court
issued a Warrant of Arrest and Notice In Rem pursuant to Rule C of the
Supplemental Rules of Civil Procedure for Admiralty or Maritime Claims and
Asset Forfeiture Actions (hereinafter, “Admiralty Rules”). Despite the passage of
time since the issuance of the warrant, the warrant has not yet been executed and
the Vessel, therefore, has not been arrested. Defendants subsequently brought in
personam counterclaims against St. Clair, alleging a variety of claims in
connection with the salvage including fraud and innocent misrepresentation.1
Presently before the Court is Defendant and Counter-Plaintiff Lebowski’s
Motion for Bond or Other Security. In this motion, which has been fully briefed
and was the subject of a motion hearing conducted on May 19, 2014, Lebowski
seeks an order staying the execution of the Warrant of Arrest and Notice In Rem
issued by this Court on November 15, 2013. Lebowski also asks that the Court
require St. Clair to post countersecurity in light of the counterclaims that he has

1

Defendants also filed a Third-Party Complaint. The allegations contained
in the Third-Party Complaint have no bearing on the instant decision and are
therefore not addressed herein.
2

asserted against it. As stated on the record at the motion hearing, the Court grants
in part and denies in part Lebowski’s Motion for Bond.
I.
A.

MOTION FOR BOND OR OTHER SECURITY

Admiralty Rule E(5): Security to Stay Execution of Arrest
Admiralty Rule E(5) governs the release of property in actions in rem. This

rule, in pertinent part, provides:
(a) Special Bond. Whenever process of maritime attachment and
garnishment or process in rem is issued the execution of such process
shall be stayed, or the property released, on the giving of security, to
be approved by the court or clerk, or by stipulation of the parties,
conditioned to answer the judgment of the court, or of any appellate
court. The parties may stipulate the amount and nature of such
security. In the event of the inability or refusal of the parties so to
stipulate the court shall fix the principal sum of the bond or stipulation
at an amount sufficient to cover the amount of the plaintiff’s claim
fairly stated with accrued interest and costs; but the principal sum
shall in no event exceed (i) twice the amount of the plaintiff’s claim or
(ii) the value of the property due appraisement, whichever is smaller.
The bond or stipulation shall be conditioned for the payment of the
principal sum and interest thereon at 6 per cent per annum.
Admiralty R. E(5)(a).
In his Motion for Bond, Lebowski appears to make an offer to stipulate.
Lebowski indicates that he received a check in the amount of $11,200 for damage
to the Vessel and that he has been holding this “sum in an attorney’s trust account
for disposition on resolution of the action.” (Def.’s Br. 3; Def.’s Mot. Ex. A.)
Lebowski proposes that the parties enter into a stipulation pursuant to Admiralty
Rule E(5)(a) and that he will continue to hold “the insurance proceeds in an
3

attorney’s trust account for dispersal to plaintiff or return to the insurer depending
on the outcome of the action.”2 (Def.’s Br. 5.) St. Clair did not respond to this
proposed stipulation; as a result, the Court must determine the proper amount of
the bond. Admiralty R. E(5)(a).
Contrary to Lebowski’s assertion that “Plaintiff[’s] claim is for the sum
certain of $16,200[,]” (Def.’s Br. 6), St. Clair’s Complaint clearly indicates that the
purported Salvage Agreement provided that Lebowski would cover attorney’s fees,
which have continued to accrue since the filing of the underlying complaint,
(Compl. ¶ 18). Therefore, and despite Lebowski’s desire to post security in an
amount less than St. Clair’s claims, the proposed $11,200 security is insufficient to
stay the execution of the arrest warrant. Admiralty Rule E(5)(a) clearly directs
courts to “fix the principal sum of the bond or stipulation at an amount sufficient to
cover the amount of the plaintiff’s claim fairly stated with accrued interest and
costs[.]” Because St. Clair has undoubtedly incurred additional attorney’s fees
since the filing of its Complaint by way of responding to the present motion, the
Court orders Lebowski to post bond in the amount of $20,000. This bond is
subject to the conditions set forth in Admiralty Rule E(5)(a). Admiralty R. E(5)(a)
(“The bond or stipulation shall be conditioned for the payment of the principal sum
and interest thereon at 6 per cent per annum.”). If, and only if, Lebowski posts
2

According to Lebowski’s Response, St. Clair “submitted a claim to the
insurer, which cut [him] a check[.]” (Def.’s Resp. 4.)
4

bond in a manner to be worked out by the parties, execution of the Court’s
November 15, 2013 arrest warrant shall be stayed.
B.

Admiralty Rule E(7): Posting of Countersecurity
Where, as here, counterclaims have been filed against the party instituting

the action, Admiralty Rule E(7)(a) governs. This rule addresses the posting of
countersecurity and provides as follows:
When a person who has given security for damages in the original
action asserts a counterclaim that arises from the transaction or
occurrence that is the subject of the original action, a plaintiff for
whose benefit the security has been given must give security for
damages demanded in the counterclaim unless the court for cause
shown, directs otherwise. Proceedings on the original claim must be
stayed until this security is given unless the court directs otherwise.
Admiralty R. E(7)(a).
Lebowski contends that because he has alleged counterclaims against St.
Clair, St. Clair should be required to post bond. Having reviewed the briefs and
having heard the arguments of the counsel, the Court is not persuaded that St. Clair
should be required to post bond.
II.

CONCLUSION AND ORDER

For the reasons set forth above, the Court GRANTS IN PART and
DENIES IN PART Lebowski’s Motion for Bond or Other Security. The Court
ORDERS Lebowski to post bond in the amount of $20,000 should he wish to stay

5

execution of the arrest warrant. The details of the posting of bond are to be worked
out between the parties.
IT IS SO ORDERED.
Date: May 21, 2014
s/PATRICK J. DUGGAN
UNITED STATES DISTRICT JUDGE
Copies to:
Brandon John Wilson, Esq.
Kenneth B. Vance, Esq.
Brian J. Miles, Esq.

6