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Portland Pilots Inc. v. Star

United States District Court, D. Maine

April 12, 2018

PORTLAND PILOTS, INC., et al., Plaintiffs
v.
M/V NOVA STAR in rem, et al., Defendants

          ORDER ON MOTION TO APPORTION CUSTODIAL COSTS

          D. Brock Hornby United States District Judge.

         This dispute is over the allocation of custodial expenses while a vessel was under arrest in Portland harbor before it was released in exchange for a bond from the owner. The owner settled all but two claims against the vessel. After a bench trial, I awarded judgment against one claimant and awarded the other claimant a small portion of what it claimed, a decision affirmed on appeal. Portland Pilots, Inc. v. NOVA STAR M/V, 875 F.3d 38 (1st Cir. 2017). The owner now seeks to have these two claimants pay a “fair share” of the custodial expenses accrued by the vessel during its arrest. Both claimants argue that they should pay nothing, largely[1] on arguments of waiver. None of the parties has requested a hearing. I conclude that the two claimants should share in some of the custodial expenses and announce applicable principles, but I do not have the necessary evidence to order specific dollar amounts.

         Facts

         On October 30, 2015 Portland Pilots, Inc. (Portland Pilots) filed a verified complaint in rem against the M/V Nova Star (the vessel) seeking, among other things, to have it arrested. Pilot's Compl. (ECF No. 1). The M/V Nova Star had been operated as a ferry service between Portland Maine and Yarmouth Nova Scotia. The United States Marshal arrested the vessel that same day and, on Portland Pilots' motion, it was placed under the care of substitute custodian National Maritime Services (NMS). Warrant in Rem (ECF No. 12); Order Appointing Substitute Custodian (ECF No. 10). The vessel remained in the custody of NMS until it was released on November 30, 2015. Oral Order Releasing Vessel (ECF No. 148).

         After appearing on November 13, 2015, see Verified Statement of Right (ECF No. 52), the vessel's Owner paid the custodial expenses. Ultimately the Owner settled with Portland Pilots and others claiming against the vessel, as a result of which it no longer has a claim against those parties for their pro rata share of custodial expenses. Owners' Renewed Mot. 2 (ECF No. 349). The Owner was unable to settle with two parties: Portland Development Corp. (PDC) and Maine Uniform, Inc. (MUR).

         Lawyers for PDC first entered their appearance in the action on November 6, 2015. Notices (ECF Nos. 28-29). PDC filed its Verified Claim on November 9 (ECF No. 36), claiming a lien for $151, 398.68 and interest, attorney fees, and costs, but did not move to intervene until November 23. Emergency Mot. (ECF No. 88). MUR first appeared in the lawsuit on November 17, when it filed a Motion to Intervene (ECF No. 64) claiming a lien of $262, 001.50 and interest, attorney fees, and costs.

         Both claimants' motions to intervene were granted on November 24. Orders (ECF Nos. 90, 101). They filed intervenor complaints the same day, reflecting the amounts I have already listed (for MUR, see Compl. ¶¶ 18, 24, 29 (ECF No. 99); for PDC, see Compl. ¶ 19 (ECF No. 103)). PDC also moved to arrest the vessel, Emergency Mot. (ECF No. 96); Order for Arrest (ECF No. 110), but ultimately did not execute the arrest. Both parties supported the release of the vessel on a substitute bond on November 25. Responses (ECF Nos. 112, 116).

         Analysis

         Waiver

         I reject both claimants' arguments that the Owner waived any claim for allocation of custodial expenses against them. The Owner made clear at the November 30, 2015 hearing (principally on the bond substitution) that it was not waiving the allocation of costs as against PDC and MUR. Tr. of Proceedings (11/30/15) at 17-18, 23-24 (ECF No. 337). The December 14 hearing focused on other parties, but Magistrate Judge Rich clearly stated then that the allocation issue remained. Tr. of Proceedings (12/14/15) at 31 (ECF No. 336). It is true that MUR stated that its consent to release of the vessel on November 25 (ECF No. 116) was contingent on its having no liability for arrest costs. But the record does not reflect that the Owner (or any other party) accepted that condition, and arguably it was directed only at World Fuel Services (WFS). See MUR's Status Update (ECF No. 135) (stating the condition as a requirement for WFS's dismissal from the case); Tr. (11/30) at 30-31 (ECF No. 337) (MUR's lawyer stating that his concern was WFS and it was resolved). MUR made no reference to the issue in its “Issues Update” filed December 10 (ECF No. 160). The Owner's “Issues Update” filed December 11 (ECF No. 162), says that it will seek to allocate custodial charges to Century Resorts International LTD (Century) after November 25; it also says that the PDC's and MUR's claims present “similar issues, ” albeit without further specificity. On that record, there is no basis to conclude that the Owner waived its argument that these claimants should participate in the custodial expenses.

         Allocation

         Allocating custodial costs is based upon general principles of fairness, and is clearly committed to the discretion of the trial court. See Mullane v. Chambers, 438 F.3d 132, 138 (1st Cir. 2006) (admiralty courts have “flexible and equitable” authority to award custodial expenses (citing The Poznan, 274 U.S. 117, 120-23 (1927)); accord Beauregard, Inc. v. Sword Servs. LLC, 107 F.3d 351, 354 (5th Cir. 1997) (“T]he district court enjoys broad equitable authority over the administration of maritime seizures.”); Donald D. Forsht Assocs., Inc. v. Transamerica ICS, Inc., 821 F.2d 1556, 1559-60 (11th Cir. 1987) (lienholders and claimants in in rem action potentially liable for “proportionate share” of custodial costs).

         In this case, the Owner has proposed no standard for allocation other than a “fair share, ” Reply to PDC 7 (ECF No. 353); Reply to MUR 6 (ECF No. 355); the claimants have proposed no standard at all, arguing only that they should pay nothing. Nevertheless, certain principles have been established by Judge Rich's earlier rulings in this long-running case.

         First, Judge Rich ruled that all custodial charges for the arrest period after November 25, 2015, until the vessel's release on November 30, 2015, were the sole responsibility of Century. Century, unlike all other claimants, refused to let the vessel be released in exchange for the Owner's bond on November 25. Order on Costs to Century (ECF No. 296). (Century had casino equipment on board the vessel that it first wanted unloaded in accordance with specified procedures, delaying the release.) I conclude therefore that these two claimants have no responsibility for custodial costs during that period. (After Judge ...


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