Marquette Transportation Company, LLC v. A Cargo of Industrial Sand Shipped Aboard MTC0148B, MTC214B, MTC2210, MTC0118, and MTC281B, In Rem
Filing
34
OPINION AND ORDER granting 32 Motion for Summary Judgment.(Signed by Judge Melinda Harmon) Parties notified.(rhawkins)
United States District Court
Southern District of Texas
ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
MARQUETTE TRANSPORTATION
COMPANY, LLC,
Plaintiff,
VS.
A CARGO OF INDUSTRIAL SAND
SHIPPED ABOARD THE MTC 0148B,
MTC 214B, MTC 2210, MTC 0118,
and MTC 281B, in rem,
Defendants.
§
§
§
§
§
§
§
§
§
§
§
§
§
November 19, 2015
David J. Bradley, Clerk
Civ. A. H-15-494
Admiralty Rule 9(h)
OPINION AND ORDER
Pending before the Court in the above referenced action
pursuant to Supplemental Rule D of the Federal Rules of Civil
Procedure,1 to enforce a maritime lien in rem for the possession
of maritime property, shipped pursuant to a maritime contract, to
which
Plaintiff
(“Marquette”)
Marquette
claims
it
is
Transportation
allegedly
entitled
Company,
of
right,
LLC
is
Marquette’s motion for summary judgment (instrument # 32). In rem
1
Supplemental Rule D for Certain Admiralty and Maritime
Claims provides in relevant part,
In all actions for possession, partition, and
to try title maintainable according to the
course of the admiralty practice with respect
to a vessel [and] in all actions so
maintainable with respect to the possession
of cargo or other maritime property . . . the
process shall be by a warrant of arrest of
the vessel, cargo, or other property, and by
notice in the manner provided by Rule B(2) to
the adverse party.
An “arrest” is the formal procedure by which the object of a
maritime lien is brought within the in rem jurisdiction of the
admiralty court by compliance with the requirements of
Supplemental Rule C(3). Nuta v. M/V FOUNTAS FOUR, 753 F. Supp.
352, 353-54 (S.D. Fla. 1990).
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Defendant Cargo, although served (#7, 8, 9), has failed to file a
response.
Defendant Cargo is comprised of the following:
1,747
tons of wet industrial sand aboard the barge MTC 0148b; 1,710 tons
of wet industrial sand aboard the barge MTC 214b; 1,741 tons of
dry industrials and aboard the barge MTC 2210; 1,605 tons of wet
industrial sand aboard the barge MTC 0118; and 1,735 tons of wet
industrial sand aboard the barge MTC 281b (collectively, the
“Cargo”).
Marquette is the owner and operator of the barges,
while FracXchange is the shipper of the Cargo.
At the time this
action was commenced and the Verified Original Complaint (#1) in
rem was filed to enforce maritime lien, the Cargo was located
within this District and within this Court’s jurisdiction at Kirby
Greens Bayou Fleet, 3100 Penn City Road, Houston, Texas 77015.2
The procedural history of the case is reflected on the
docket sheet and in the filed instruments, so the Court does not
summarize it, but lets the record speak for itself.
Standard of Review
Summary judgment under Federal Rule of Civil Procedure
56(c) is appropriate when, viewing the evidence in the light most
favorable
to
the
nonmovant,
the
court
determines
that
“the
pleadings, depositions, answers to interrogatories and admissions
on file, together with the affidavits, show that there is no
2
Supplemental Rule C(2) requires in an in rem action to
enforce a maritime lien that the complaint be verified, that the
property which is the subject of the suit is described with
reasonable particularity, and that the complaint states that the
property is within the district or will be within the district
while the action is pending.
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genuine issue as to any material fact and that the moving party is
entitled to judgment as a matter of law.”
A dispute of material
fact is “genuine” if the evidence would allow a reasonable jury to
find in favor of the nonmovant. Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986).
Where the nonmovant bears the burden of proof at
trial,
the
movant
must
offer
evidence
that
undermines
the
nonmovant’s claim or point out the absence of evidence supporting
essential elements of the nonmovant’s claim; the movant may, but
does not have to, negate the elements of the nonmovant’s case to
prevail on summary judgment.”
Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986); Lujan v. National Wildlife Federation, 497 U.S.
871, 885 (1990); Edwards v. Your Credit, Inc., 148 F.3d 427, 431
(5th Cir. 1998).
“A complete failure of proof concerning an
essential
of
element
the
nonmoving
renders all other facts immaterial.”
party’s
case
necessarily
Celotex, 477 U.S. at 323.
If the movant meets its burden and points out an absence
of evidence to prove an essential element of the nonmovant’s case
on which the nonmovant bears the burden of proof at trial, the
nonmovant must then present competent summary judgment evidence to
support the essential elements of its claim and to demonstrate
that there is a genuine issue of material fact for trial.
National Ass’n of Gov’t Employees v. City Pub. Serv. Board, 40
F.3d 698, 712 (5th Cir. 1994).
“[A] complete failure of proof
concerning an essential element of the nonmoving party’s case
renders all other facts immaterial.”
Celotex, 477 U.S. at 323.
The nonmovant may not rely merely on allegations, denials in a
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pleading or unsubstantiated assertions that a fact issue exists,
but must set forth specific facts showing the existence of a
genuine issue of material fact concerning every element of its
cause(s) of action.
Morris v. Covan World Wide Moving, Inc,, 144
F.3d 377, 380 (5th Cir. 1998).
Conclusory allegations unsupported by evidence will not
preclude summary judgment.
National Ass’n of Gov’t Employees v.
City Pub. Serv. Board, 40 F.3d at 713; Eason v. Thaler, 73 F.3d
1322, 1325 (5th Cir. 1996). “‘[T]he mere existence of some alleged
factual dispute between the parties will not defeat an otherwise
properly supported motion for summary judgment . . . .’”
State
Farm Life Ins. Co. v. Gutterman, 896 F.2d 116, 118 (5th Cir. 1990),
quoting Anderson v. Liberty Lobby, Inc.. 477 U.S. 242, 247-48
(1986).
“Nor is the ‘mere scintilla of evidence’ sufficient;
‘there must be evidence on which the jury could reasonably find
for the plaintiff.’” Id., quoting Liberty Lobby, 477 U.S. at 252.
The Fifth Circuit requires the nonmovant to submit “‘significant
probative evidence.’” Id., quoting In re Municipal Bond Reporting
Antitrust Litig., 672 F.2d 436, 440 (5th Cir. 1978), and citing
Fischbach & Moore, Inc. v. Cajun Electric Power Co-Op., 799 F.2d
194, 197 (5th Cir. 1986).
“If the evidence is merely colorable,
or
probative,
is
not
granted.”
significantly
summary
judgment
may
be
Thomas v. Barton Lodge II, Ltd., 174 F.3d 636, 644 (5th
Cir. 1999), citing Celotex, 477 U.S.
at 322, and Liberty Lobby,
477 U.S. at 249-50.
Allegations in a plaintiff’s complaint are not evidence.
Wallace
v.
Texas
Tech
Univ.,
80
-4-
F.3d
1042,
1047
(5th
Cir.
1996)(“[P]leadings are not summary judgment evidence.”); Johnston
v. City of Houston, Tex., 14 F.3d 1056, 1060 (5th Cir. 1995)(for
the
party
opposing
the
motion
for
summary
judgment,
“only
evidence-–not argument, not facts in the complaint--will satisfy’
the burden.”), citing Solo Serve Corp. v. Westown Assoc., 929 F.2d
160, 164 (5th Cir. 1991).
The nonmovant must “go beyond the
pleadings and by [his] own affidavits, or by depositions, answers
to interrogatories and admissions on file, designate specific
facts showing that there is a genuine issue of material fact for
trial.”
Giles v. General Elec. Co., 245 F.3d 474, 493 (5th Cir.
2001), citing Celotex, 477 U.S. at 324.
The court must consider all evidence and draw all
inferences from the factual record in the light most favorable to
the nonmovant.
Matsushita Elec. Indus. Co. v. Zenith Radio, 475
U.S. 574, 587 (1986); National Ass’n of Gov’t Employees v. City
Pub. Serv. Board, 40 F.3d at 712-13.
The Court may not make
credibility determinations. Deville v. Marcantel, 567 F.3d 156,
164 (5th Cir. 2009), citing Turner v. Baylor Richardson Medical
Center, 476 F.3d 337, 343 (5th Cir. 2007).
The Court has no obligation to “sift through the record
in search of evidence” to support the nonmovant’s opposition to
the motion for summary judgment. Forsyth v. Barr, 19 F.3d 1527,
1533 (5th Cir. 1994). Rather the nonmovant must identify evidence
in the record and demonstrate how it supports his claim. Ragas v.
Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998).
It is well established in the Fifth Circuit that “[a]
federal court may not grant a ‘default’ summary judgment where no
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response has been filed.”
Bradley v. Chevron U.S.A., Inc., No.
Civ. A. 204CV092J, 2004 WL 2847463, *1 (N.D. Tex. Dec. 10, 2004),
citing Eversley v. MBank of Dallas, 843 F.2d 172, 174 (5th Cir.
1988);
Hibernia
Nat.
Bank
v.
Administracion
Anonima, 776 F.2d 1277, 1279 (5th Cir. 1985).
Cent.
Sociedad
Nevertheless, if
no response to the motion for summary judgment has been filed,
the court may find as undisputed the statement of facts in the
motion for summary judgment.
Id. at *1 and n. 2, citing id.; see
also Thompson v. Eason, 258 F. Supp. 2d 508, 515 (N.D. Tex.
2003)(where no opposition is filed, the nonmovant’s unsworn
pleadings
are
not
competent
summary
judgment
movant’s evidence may be accepted as undisputed).
evidence
and
See also Unum
Life Ins. Co. of America v. Long, 227 F. Supp. 2d 609 (N.D. Tex.
2002)(“Although the court may not enter a ‘default’ summary
judgment,
it
may
accept
evidence
submitted
by
[movant]
as
undisputed.”); Bookman v. Shubzda, 945 F. Supp. 999, 1002 (N.D.
Tex. 1996)(“A summary judgment nonmovant who does not respond to
the motion is relegated to [his] unsworn pleadings, which do not
constitute summary judgment evidence.”).
Relevant Law
Maritime liens are established by operation of law,
from
the
usages
of
commerce,
independent
of
agreement, and not from statutory regulations.
the
parties’
The Bird of
Paradise 72 U.S. (5 Wall.) 545, 555 (1866). As a “non-consensual
and unrecorded special property interest” in a vessel or other
res, a “[m]aritime lien [is a] privileged claim[] upon maritime
property, designed to be carried into effect by the in rem legal
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process available in admiralty.” Thomas J. Schoenbaum, Admiralty
and Maritime Law § 8-1, at pp. 252, 247 (West 1987).
lien
serves
nineteenth
as
a
“rough
century
to
security
keep
ships
device
moving
A maritime
invented
in
in
commerce
while
preventing them from escaping their debts by sailing away.”
at 247.
the
Id.
Such a lien, which is “a right to retain cargo until
freight3 (or charter hire) is paid,” may be placed on cargo for
freight due from the cargo owner to the ship or its operator.
Id. at p. 251.
See also Arochem Corp. v. Wilomic, Inc., 962 F.2d
496, 499 (5th Cir. 1991)(“Under United States law it has been
settled for over a century that we presume a maritime lien exists
in favor of a shipowner on cargo for charges incurred during the
course of its carriage.”).
Because shipowners have a lien upon
the cargo for freight, they may retain the goods after the
arrival of the ship at the port of destination until the payment
is made.
(1866).
vessel
The Bird of Paradise, 72 U.S. (5 Wall.) 545, 554
Indeed unlike an ordinary maritime lien, because a
owner’s
lien
on
the
cargo
for
unpaid
freight
is
“possessory,” i.e., it “continues only so long as the cargo
remains in the owner’s actual or constructive possession,” to
preserve the lien the carrier must withhold the cargo.
Hills
Nat’l
Bank
&
Trust
Co.
3
v.
Compagnia
De
Beverly
Navegacione
“[F]reight is the reward payable to the carrier for
the safe carriage and delivery of the goods. Under the so-called
American rule, a shipper is not liable for freight for carriage of
goods until the goods have been delivered to the final agreed
destination. . . . [The American rule] can be varied by
agreement.” Schoenbaum, Admiralty and Maritime Law § 9-2 at p.
279.
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Almirante S.A., 437 F.2d 301, 304 (9th Cir. 1971).
may
The creditor
also appropriate the vessel, have it sold, and then have the
proceeds
used
to
repay
the
debt
owed
to
the
creditor.
Schoenbaum, Admiralty and Maritime Law § 8-1, at p. 252.
After a carrier asserts a maritime lien against cargo
that has been carried on its vessel, the carrier can file a claim
in rem against the cargo and a claim in personam against the
shipper to recover unpaid freight. Hawkespere Shipping Co., Ltd.
v. Intamex, S.A., 330 F.3d 225 (4th Cir. 2002).
If after foreclosure and sale of a vessel there is
insufficient
money
to
pay
all
claims,
the
liens
must
be
classified and prioritized, i.e., ranked and classified, to
determine which should come first.
Schoenbaum, Admiralty and
Maritime Law §8-6 at p. 263.
In New York Dock Co. v. The Poznan, 274 U.S. 117, 121
(1927), the Supreme court held that although expenses and costs
incurred while the vessel is under arrest (in custodia legis),4
including wharfage5 and goods and services provided during this
period to preserve and maintain the vessel, cannot be subject to
4
See Gen. Elec. Credit & Leasing Corp. v. Drill Ship
Mission Exploration, 668 F.2d 811, 816 (5th Cir. 19882)(recoverable
custodia legis expenses against the vessel usually include
“services or property advanced to preserve and maintain the vessel
under seizure, furnished upon authority of the court”). For a
more extensive discussion of custodia legis expenses, see
Louisiana Intern. Marine, LLC v. Drilling Rig Atlas Century, C.A.
No. C-11-186, 2012 WL 2121401 (S.D. Tex. May 15, 2012), report and
recommendation adopted, 2012 WL 2317541 (S.D. Tex. June 18, 2012).
5
“Wharfage” is “[t]he money paid for landing goods
upon, or loading them from, a wharf” or the “[c]harge for use of
[a] wharf by way of rent or compensation.” Black’s Law Dictionary
(6th ed. West 1990).
-8-
a maritime lien, a court exercising its equitable authority over
the proceeds of the sale of the vessel may grant them priority
status over maritime liens even though the are incurred without
prior court order; “[t]he most elementary notion of justice would
seem to require that services or property furnished upon the
authority
of
the
court
or
its
officer,
acting
within
his
authority, for the common benefit of those interested in a fund
administered by the court, should be paid from the funds as an
‘expense of justice.’”6
Id.; Gen. Elec. Credit & Leasing Corp.
v. Drill Ship Mission Exploration, 668 F.2d 811, 816 (5th Cir.
1882).
A district court, sitting in admiralty, has inherent
equitable power to give priority to claims arising out of the
administration of property within its jurisdiction where “equity
and good conscience so require.”
Id.
Under Supplemental Rule C (1)(a), “an action in rem may
be brought to enforce any maritime lien.”
Rule C1(a) further
6
The Supreme Court further explained that these
“expenses of justice,” 274 U.S. at 121,
Such preferential payments are mere incidents
to the judicial administration of a fund.
They are not to be explained in terms of
equitable liens in the technical sense, such
as the case with agreements that particular
property shall be applied as security for the
satisfaction of particular obligations or
vendors’ liens and the like, which are
enforced by plenary suits in equity. They
result rather from the self-imposed duty of
the court, in the exercise of its accustomed
jurisdiction, to require that expenses which
have contributed either to the preservation
or creation of the fund in its custody shall
be paid before a general distribution among
those entitled to receive it.
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provides, “Except as otherwise provided by law a party who may
proceed in rem may also, or in the alternative, proceed in
personam against any person who may be liable.”
Marquette’s Motion for Summary Judgment (#32)
Marquette states the following uncontested facts.
December
9,
2014,
On
Marquette and FracXchange.com, LLC
(“FracXchange”) entered into a private contract of carriage for
FracXchange to ship and Marquette to carry industrial sand to
Corpus Christi.
“Contract”).
Barge Transportation Agreement, Ex. A (the
In December 2014, FracXchange delivered to
Marquette 1,747 tons of wet sand aboard the barge MTC 014b, 1,710
tons of wet industrial sand aboard the barge MTC 214b, 1,741 tons
of dry industrial sand aboard the barge MTC 2210, 1,605 tons of
wet industrial sand aboard the barge MTC 0118, and 1,735 tons of
wet industrial sand aboard the barge MTC 281b for shipment to
Corpus Christi, Texas.
Ex. B, Affid. of Tom Vorholt, p.1 ¶ 2.
Under the Contract, fifty percent of the freight charges was to
be paid before the Cargo was loaded, and the remainder, before
the Cargo arrived at its final destination.
Ex. A, Part I, p.2.
After FracXchange prepaid Marquette $162,500.00 as approximately
half of the freight charges, Marquette began the carriage of the
Cargo.
Ex. B, Vorholt Affid., p. 1 ¶ 3.
On December 31, 2014
Marquette invoiced FracXchange for the remaining freight charge
in the amount of $170,482.00.
Exhibit C.
Marquette also issued
an invoice to FracXchange for origin demurrage7 of $600.00 and
7
“Demurrage” is defined in Black’s Law Dictionary (6th
ed. West 1990) as follows: “In maritime law, the sum which is
-10-
for the “first tow” payment of $22,000.8
DO14-026855 and Invoice No. MI15-029106.
in
Corpus
Id. at Invoice No.
Thus before the arrival
Christi, FracXchange owed Marquette a total of
$198,082.00, due before the Cargo could be unloaded.
Affid., Ex. B, pp. 1-2 ¶ 4.
Vorholt
On January 5, 2015 Marquette emailed
FracXchange that the Cargo would soon arrive in Corpus Christi
and that Marquette needed payment of the outstanding amount.
Ex.
D, E-mails dated January 5, 2015.
The Cargo arrived in Corpus Christi at 10:00 a.m. on
January 11, 2015.
Vorholt Affid., Ex. B, p. 2 ¶ 5.
Because
FracXchange had not paid the outstanding freight and demurrage
charges nor executed a contract to use the destination dock,
Marquette could not offload the Cargo.
Ex. E, E-mails among
FracXchange, Marquette, and Bay Ltd., dated January 8-9, 2015;
Vorholt Affid., Ex. B, p. 2 ¶ 5.
Subsequently Marquette learned from FracXchange that
the party which was to purchase the Cargo had backed out of the
agreement and FracXchange was looking for an alternate buyer, but
FracXchange promised to pay shortly.
Vorholt Affid., Ex. B, p.2 ¶ 6.
Ex F, E-mail exchange;
Meanwhile destination demurrage
fixed by the contract of carriage, or which is allowed, as
remuneration to the owner of a ship for the detention of his
vessel beyond the number of days allowed by the charter-party for
loading and unloading or for sailing.”
8
Under the Contract, FracXchange agreed to ship a
minimum of 10,000 tons of industrial sand a month at the base rate
of $39.00 per ton, with 50% to be paid before loading, and the
other fifty percent plus an additional $22,000.00 on the first
shipment to be paid prior to arrival at the destination port.
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charges of $300 per hour per barge continued to mount.
Ex. A at Part I, p.1.
that
the
barges
Contract,
The Contract stated, id. at Part II, ¶ 3,
would
not
be “released” for purposes of
calculating destination demurrage until the “barge is unloaded
and ready to be returned to Carrier.”
FracXchange never paid the outstanding freight and
demurrage, so the Cargo was never unloaded.
B, p. 2 ¶ 7.
Vorholt Affid., Ex.
By the time this suit was filed, additional
demurrage charges of $130,205.00, calculated from the time the
Cargo reached Corpus Christi until 24:00 hours on January 31,
2015, less sixty free hours (12 hours per barge)(494.02 hours
less 60 = 434.02 billable hours) had been incurred and been
invoiced. Ex. C; Vorholt Affid., Ex. B, pp. 2-3 ¶ 8; Contract,
Ex. A at Part I, p.1.
Since this suit was filed, additional
demurrage at $300.00 per hour accrued from February 1, 2015 at
0:00 hours to February 6, 2015 at 22:00 hours, when the barges
arrived
in
fleet,
for
a total of $42,702.00 in additional
demurrage (142.34 hours X 300).
Exc. C, Invoice No. MI15-030721;
Vorholt Affid., Ex. B, p. 3 ¶ 9.
Marquette was unable to find
any place to store the Cargo other than on the barges themselves
and the only location it could find to float the barges while the
Cargo was stored on them was in Houston.
at p.3 ¶ 9.
Vorhold Affid., Ex. B
Thus the total of $401,686.50 in freight, demurrage,
and fees related to the carriage of the Cargo pursuant to the
Contract is due and owing to Marquette.
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Id. at p. 3 ¶ 10.
Furthermore, as substitute custodian (#6), Marquette
incurred
custodia
legis expenses
9
related
to
seizure,
maintenance, and sale of the Cargo, including the following:
$537.82 charged to Marquette by the U.S. Marshal’s Service to
seize the Cargo; $49,478.00 to fleet the barges; $37,993.40 for
miscellaneous fleeting and maintenance expenses incurred when
heavy rains required Marquette to pump water off the barges, hire
a crane to move sand to redistribute its weight between barges,
and provide tows to move barges between fleets; $11,110.00 for
insurance required by the U.S. Marshal while the Cargo was under
arrest; $31,690.00 for a tow to transfer the barges back to
Corpus Christi for unloading on May 10, 2014 at 9:00 a.m. to
carry out the interlocutory sale ordered by the Court.
Ex. G,
Invoices; Vorholt Affid., Ex. B at p. 3 ¶ 11, p.4 ¶ 12.
The sale
took place on May 26, 2015 and Marquette deposited the proceeds,
$221,988.00, in the Registry of the Court.
Id.
Marquette seeks an order granting it summary judgment,
foreclosing on Marquette’s maritime lien for unpaid freight and
demurrage, and awarding Marquette proceeds for the sale of the
Cargo without prejudice to Marquette’s seeking the deficiency in
9
“No maritime lien can arise against a vessel while
under arrest unless the arrest is colorable, and neither the
master, owner, nor marshal can ordinarily affix a maritime lien to
any vessel after seizure under legal process.” 46 C.J.S. (“Effect
of seizure of vessel under legal process” (database updated June
2015). “While in custodia legis expenses do not constitute a
maritime lien, they are paid first in priority from the proceeds
of a vessel sale, as an administrative cost.” 56 C.J.S. “Claims
for expenses in custodia legis” (database updated June 2015).
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the amount of $312,347.14, owed to it from FracXchange LLC,
in
personam.10
Court’s Decision
Marquette has met its burden as movant on summary
judgment to support its claim that it is entitled as a matter of
law to recover from the sale proceeds money first for
custodia
legis expenses and then for its maritime lien for unpaid freight
and demurrage, an amount which exceeds the sum in the Registry of
the Court.
Neither the vessels nor the Cargo nor shipper
FracXchange has filed a response and raised a genuine issue of
material fact for trial or a legal issue relating to
MARQUETTE’s
claim.
Accordingly, the Court
ORDERS that Marquette’s motion for summary judgment
(#32) is GRANTED, without prejudice to Marquette’s subsequent
right to seek any unsatisfied deficiency from FracXchange.com,
10
The value of the Cargo (the sale proceeds of
$221,988.00, now in the Court’s Registry) was less than the total
of the custodia legis expenses ($132,648.64) and the maritime lien
for unpaid freight, demurrage, and fees related to the carriage of
Cargo ($401,686.50). Besides the expenses listed in this Opinion
and Order, FracXcange is also responsible for overdue charges,
attorneys’ fees and expenses for collection of the overdue
freight, demurrage and arrest charges and any other costs related
to transportation of the Cargo, so Marquette reserves the right to
seek these damages against FracXchange after the maritime lien is
resolved against the res.
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LLC
in
personam..
Final judgment will issue by separate
instrument.
SIGNED at Houston, Texas, this 19th day of November,
2015.
___________________________
MELINDA HARMON
UNITED STATES DISTRICT JUDGE
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