Fluence Energy, LLC v. M/V/BBC Finland

Opinion

7 UNITED STATES DISTRICT COURT 8 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 FLUENCE ENERGY, LLC, a Delaware ) Case No.: 3:21-cv-01239-BEN-JLB limited liability company, ) 12 ) ORDER GRANTING JOINT Plaintiff, 13 ) MOTION TO RELEASE VESSEL v. ) 14 ) [ECF No. 19] M/V BBC FINLAND, bearing 15 International Maritime Organization No. ) ) 16 9593684 (the “Vessel”), its cargo, ) apparel, tackle, and appurtenances, etc. in 17 rem, ) ) 18 Defendant. ) 19 20 I. INTRODUCTION 21 Plaintiff FLUENCE ENERGY, LLC, a Delaware limited liability company 22 (“Plaintiff”) brings this verified complaint, in rem, against Defendant M/V BBC 23 FINLAND, bearing International Maritime Organization No. 9593684 (the “Vessel”), its 24 cargo, apparel, tackle, and appurtenances, etc., for breach of a maritime contract and 25 negligence, seeking arrest and money damages. See Complaint, ECF No. 1 (“Compl.”). 26 Before the Court is the Joint Motion brought by Plaintiff and Defendant1 for an Order 27 1 As was the case with their previous appearances in this matter, Defendant’s 28 1 to release the Vessel from Arrest. ECF No. 19 (the “Joint Motion”). After considering the 2 papers submitted, supporting documentation, and applicable law, the Court GRANTS the 3 Joint Motion. ECF No. 19. 4 II. BACKGROUND 5 The Court previously set forth a detailed recitation of the facts of this case, which it 6 incorporates herein by reference. See Fluence Energy, LLC v. M/V BBC Finland, bearing 7 Int'l Mar. Org. No. 9593684, 2021 WL 2895722, at *1-4 (S.D. Cal. July 9, 2021). Since 8 the Court’s order earlier today granting the Joint Motion to Appoint Alan Swimmer of 9 National Marine Services as Substitute Custodian, ECF No. 18, the parties have submitted 10 the instant Joint Motion to Release the Vessel from arrest, ECF No. 19. The Joint Motion 11 is based on the Stipulation of Counsel of both parties and is brought pursuant to Rule E(5) 12 of the Supplemental Rules of the Federal Rules of Civil Procedure governing admiralty or 13 maritime claims. ECF No. 19 at 2-3. The grounds for the Joint Motion are that security 14 agreeable to the parties has been provided, and the fees of the United States (“U.S.”) 15 Marshals Service have been paid. Id. at 3. 16 III. LEGAL STANDARD 17 Federal courts possess exclusive jurisdiction over admiralty and maritime claims. 18 U.S. CONST. art. III, § 2; 28 U.S.C. § 1333(1); Ventura Packers, Inc. v. F/V Jeanine 19 Kathleen, 305 F.3d 913, 918 (9th Cir. 2002). The Federal Maritime Lien Act, 46 U.S.C. § 20 31342, entitles “a person providing necessaries to a vessel on the order of the owner or a 21 person authorized by the owner,” to (1) a maritime lien on the vessel; (2) bring a civil action 22 in rem to enforce the lien; and (3) to pursue those rights without alleging or proving in the 23 limited to a special/restricted appearance pursuant to Rule E(8) of the Supplemental 24 Federal Rules of Civil Procedure and does not constitute a general appearance, consent to 25 service, or consent the jurisdiction of this Court. See, e.g., Fed. R. Civ. P. Supp. Adm. & Mar. Cl. R. E(8) (providing that “[a]n appearance to defend against an admiralty and 26 maritime claim with respect to which there has issued process in rem, or process of 27 attachment and garnishment, may be expressly restricted to the defense of such claim, and in that event is not an appearance for the purposes of any other claim with respect to which 28 1 action that credit was given to the vessel. 46 U.S.C. § 31342(a); see also Ventura, 305 2 F.3d at 919. “To commence an action in rem against a vessel, the plaintiff must file a 3 verified complaint that describes the vessel ‘with reasonable particularity’ and states that 4 the vessel ‘is within the district’ or will be so ‘while the action is pending.’” Barnes v. Sea 5 Hawaii Rafting, LLC, 889 F.3d 517, 529 (9th Cir. 2018). “If the plaintiff meets these 6 conditions, the district court must take the boat into custody—unless the plaintiff requests 7 otherwise—by issuing an arrest warrant to be served by the marshal.” Id. (citing Fed. R. 8 Civ. P. Supp. Adm. & Mar. Cl. R. C(3)(a)–(b), E(3)(b)). 9 IV. DISCUSSION 10 The Southern District of California’s Local Rules governing in rem actions provide 11 that once a Vessel is arrested pursuant to process issued by the Court, “the marshal must 12 place one or more keepers thereon who must remain aboard until the vessel is released or 13 disposed of pursuant to Rule E, unless otherwise ordered.” S.D. Cal. Civ. R. E.1(c)(2). 14 Accordingly, on Monday, July 12, 2021, the U.S. Marshals Service confirmed to Plaintiff 15 that the Warrant of Arrest was executed on the Vessel over the weekend. See ECF No. 10. 16 Due to safety issues with the Vessel, the U.S. Marshals Service was unable to take control 17 of the Vessel, but in accordance with the Court’s order, posted the Arrest Warrant, 18 Complaint, and Order of the Court on the Vessel and has ensured the Vessel does not depart 19 from its port without having to take over control of the Vessel. 20 “Once the district court issues warrants for the arrest of the vessels pursuant to Rule 21 C, and the warrants are successfully served, jurisdiction is complete.” Barnes, 889 F.3d at 22 529 (internal quotations omitted). “After the vessel is arrested, the owner is entitled to ‘a 23 prompt post-seizure hearing at which he can attack the verified complaint, the arrest, the 24 security demanded, or any other alleged deficiency in the proceedings up to that point.’” 25 Id. at 531 (citing, inter alia, Fed. R. Civ. P. Supp. Adm. & Mar. Cl. R. E(4)(f)). This 26 hearing took place on Wednesday, July 14, 2021. See ECF No. 15. 27 “On motion of any party, made after notice to the marshal and all parties who have 28 appeared, a judge may order that custody of the vessel be given to the operator of a marina 1 or similar facility, repair yard, or company regularly carrying on the business of ship’s 2 agent,” upon a finding “that such firm or person can and will safely keep the vessel and has 3 in effect adequate insurance to cover any liability for failure to do so.” Id. Thus, on Friday, 4 July 16, 2021, pursuant to the Joint Motion of the parties, ECF No. 16, the Court ordered 5 appointment of such a substitute custodian, see Order, ECF No. 18. 6 “Any vessel, cargo, or other property in the custody of the marshal or other person 7 or organization having the warrant may be released . . . upon . . . acceptance and approval 8 of a stipulation, bond, or other security, signed by the party on whose behalf the property 9 is detained or the party’s attorney . . . if all costs and charges of the court and its officers 10 shall have first been paid.” FED. R. CIV. P., Supp. R. E(c). In admiralty cases, the Supreme 11 Court has approved alternative forms of security as opposed to depositing the funds or 12 transferring the vessel interest by allowing the parties to stipulate to the value of the vessel. 13 Hartford Acc. & Indem. Co. of Hartford v. S. Pac. Co., 273 U.S. 207, 218-19 (1927). “[A] 14 stipulation is generally accepted as security if backed up by insurance covering the vessel’s 15 potential liabilities.” 29-708 Moore’s Fed. Prac.—Civ. § 708; see also 3 Benedict on 16 Admiralty § 14, at 2–12 (7th ed. 2008). Such a stipulation coupled with a letter of 17 undertaking qualifies as sufficient security. See, e.g., Chan v. Soc’y Expeditions, Inc., 123 18 F.3d 1287, 1294, n. 4 (9th Cir. 1997) (holding the defendants’ “of undertaking, which 19 remains in effect, is sufficient to perfect in rem jurisdiction in the absence of the ship’s 20 arrest”); Complaint of Dammers & Vanderheide & Scheepvaart Maats Christina B.V., 836 21 F.2d 750, 753 (2d Cir. 1988) (approving use of a letter of undertaking from an insurer, 22 “agreeing to assume any liability of the shipowners up to the stipulated amount” as 23 security). Thus, “[i]f, . . . after commencement of suit, plaintiff accepts any written 24 undertaking to respond on behalf of the vessel . . . sued in return for foregoing the arrest or 25 stipulating to the release of such vessel . . . , the undertaking will become a defendant in 26 place of the vessel . . . sued and be deemed referred to under the name of the vessel . . . in 27 any pleading, order or judgment in the action referred to in the undertaking.” S.D. Cal. 28 Civ. R. C.1(a). l In this case, the parties stipulate to the following: 2 1. The claimant to the Vessel has provided security for the Vessel to Plaintiff, 3 || which Plaintiff has agreed to with respect to form and sufficiency. 4 2. The said form of security provided by the claimant to the Vessel to Plaintiff 5 || includes an obligation that the claimant will, upon demand by Plaintiff, file a claim to the 6 || Vessel and a restricted appearance in this action to defend the Vessel. 7 3. Plaintiff has paid the U.S. Marshals an amount to cover their fees in 8 || conducting the arrest and serving all required papers herein. 9 4. Plaintiff will serve a copy of this Order upon the U.S. Marshals. 10 || ECF No. 19-1 at 2, 4¥ 1-6. 11 Concurrently with their Joint Motion, the parties have submitted a Vessel Release 12 ||Bond (the “Bond”’) to the Court in substitution for the Vessel, to secure the Vessel’s 13 || liability, if any, in order to obtain the release of the Vessel from arrest and prevent the 14 || Vessel from being subject to any further attachment or arrest by Plaintiff. Thus, the Vessel, 15 || as principal, and United States Fire Insurance Company, a Delaware corporation authorized 16 || by the Secretary of Treasury of the United States to act as a security on official bonds under 17 ||31 U.S.C. §§ 9301-9306, as surety, post the Bond and bind themselves to pay any final 18 || judgment (after appeal, if any) that may entered against the Vessel, in rem, in favor of 19 || Plaintiff, or an agreed settlement amount, not to exceed the sum of $8,850,000.00, inclusive 20 || of interest and costs. Given the parties agree to the Bond, the Court grants the Joint Motion. CONCLUSION 22 The Court, therefore, ORDERS that the Joint Motion for an Order to Release the 23 || Vessel from Arrest is GRANTED. As the United States Marshals’ fees have been satisfied 24 || from the deposit paid by Plaintiff, the Vessel is released from custody of both or either the 25 || United States Marshals and the substitute custodian. Plaintiff will bear responsibility for 26 || any fees associated with the U.S. Marshals having to serve this order after hours. 27 IT IS SO ORDERED. DATED: July 16, 2021 HON-ROGER T. BENITE