Bank of Am., N.A. v. M/V Marine Princess
| Decision Date | 27 April 2022 |
| Docket Number | CIVIL ACTION NO: 21-559 |
| Citation | 600 F.Supp.3d 663 |
| Parties | BANK OF AMERICA, N.A. v. M/V MARINE PRINCESS, her engines, tackle, appurtenances, etc., in rem, and Sunset Shipping Ltd., in personam |
| Court | U.S. District Court — Eastern District of Louisiana |
Kevin J. LaVie, Magdalini Galitou, Phelps Dunbar, LLP, New Orleans, LA, Marcus Grant Matthews, Pro Hac Vice, Phelps Dunbar LLP, Houston, TX, for Bank of America, N.A.
Robert Hugh Murphy, Peter B. Tompkins, Timothy David DePaula, Murphy, Rogers, Sloss & Gambel, New Orleans, LA, for Sunset Shipping Ltd.
SECTION: "A" (3)
ORDER AND REASONS
The following motions are before the Court: Motion for Summary Judgment (Rec. Doc. 72) ("First Motion for Summary Judgment") and Motion for Summary Judgment to Enforce Preferred Ship Mortgage (Rec. Doc. 73) ("Second Motion for Summary Judgment") filed by Plaintiff Bank of America, N.A. ("BOA"). Intervenor-Plaintiff AMS Ameropa & Sales AG ("AMS") opposes the First Motion for Summary Judgment. (Rec. Doc. 74). The Second Motion for Summary Judgment is unopposed. The motions, submitted for consideration on March 16, 2022, are before the Court on the briefs without oral argument. For the following reasons, the First Motion for Summary Judgment (Rec. Doc. 72) is GRANTED IN PART AND DENIED IN PART and the Second Motion for Summary Judgment (Rec. Doc. 73) is GRANTED.
This is a mortgage foreclosure action which arises out of a dispute over a loan, and the subsequent arrest and sale of the vessel secured by that loan. At all material times the M/V MARINE PRINCESS was owned by Sunset Shipping Ltd. ("Sunset Shipping" or "Defendant" or "Borrower" or "Owner").
On April 15, 2014, Sunset Shipping entered into a loan agreement with Plaintiff BOA's predecessor-in-interest, Crédit Agricole Corporate and Investment Bank ("Crédit Agricole"), under which a secured loan facility in the amount of $27,700,000 was made available to Sunset Shipping Ltd. and Dawn Shipping Ltd. as borrowers to be divided into two tranches of $13,850,000 each, for the purpose of permitting borrowers to refinance their indebtedness with respect to the M/V MARINE PRINCESS and her sister vessel the M/V MARINE PRINCE. (Rec. Doc. 21 at ¶ 7). The borrowers’ liability under the loan agreement for the indebtedness is joint and several.
On May 12, 2014, a First Preferred Marshall Islands Mortgage was entered into between Crédit Agricole and Sunset Shipping as security for the indebtedness that Sunset Shipping assumed under the loan agreement. (Rec. Doc. 21-2). The mortgage was recorded that same day. (Id. at p. 28).
On March 4, 2021, Crédit Agricole assigned all rights and obligations arising from the loan agreement together with the first preferred mortgage to Plaintiff BOA. (Rec. Docs. 21-2 & 21-3). That day, the assignments were duly registered with the Office of the Maritime Administrator of the Republic of the Marshall Islands. (Rec. Doc. 21-5).
Sunset Shipping admittedly breached the loan agreement secured by the preferred ship mortgage by not making timely payments of principal as required by Clause 6.1 of the loan. (Rec. Doc. 75 at p. 1; Rec. Doc. 21 at p. 4). BOA and/or Crédit Agricole sent notices of default and reservation of rights to Sunset Shipping. (Rec. Doc. 21-6). Sunset Shipping failed to remedy its material breaches of the loan, which constituted continuing events of default under the loan. On April 27, 2021, pursuant to Clause 21.2 of the loan, BOA accelerated the loan. (Rec. Doc. 21-7).
All accrued interest and all other amounts accrued or owing under the financial documents and all other outstanding indebtedness were immediately due and payable as of April 27, 2021. Thus, as of April 27, 2021, Sunset Shipping is in default in the amount of at least $27,355,187.43, inclusive of accrued and default interest due and owing under the loan, and net of contractually agreed offsets.1 BOA claims that it is entitled to exercise the rights afforded to it under the loan agreement and the first preferred mortgage to recover that amount.
BOA filed this action against the MARINE PRINCESS, her engines, tackle, apparel, etc. in rem , and Sunset Shipping in personam , stating an admiralty and maritime claim within the meaning of Rule 9(h) of the Federal Rules of Civil Procedure. (Rec. Doc. 1, Verified Complaint & Rec. Doc. 21, First Supplemental and Amended Verified Complaint). Specifically, BOA sought to enforce its preferred ship mortgage lien in rem against the vessel, to arrest the property of Sunset Shipping pursuant to the mortgage, and for judgment against Sunset Shipping in personam under the mortgage. (Id. ).
The MARINE PRINCESS was arrested on March 19, 2021, pursuant to process issued by this Court. (Rec. Doc. 7, Order). On September 21, 2021, AMS filed an intervening complaint, asserting a claim against Sunset Shipping, in personam , for its alleged breach of the parties’ charter party agreement, and a claim in rem against the MARINE PRINCESS, seeking judgment against the vessel and the arrest thereof under Supplemental Rule C of the Federal Rules of Civil Procedure. (Rec. Doc. 28). According to AMS's complaint, AMS is the time charterer of the MARINE PRINCESS pursuant to a time charter party dated March 15, 2018, entered into with Sunset Shipping. (Rec. Doc. 28). AMS provided the following excerpts from the charter party:
| Line 16 | Charterers to have liberty to sublet the vessel for all or any part of the time covered by this Charter... |
| Clause 3 | Charterers, at the port of delivery, and the Owners, at the port of re-delivery, shall take over and pay for all fuel... |
| Clause 18 | Charterers to have a lien on the Ship for all monies paid in advance and not earned, and any overpaid hire or excess deposit to be repaid at once... |
| Clause 54 | Should the vessel be arrested during the currency of this Charter Party at the suit of any person having or purporting to have a claim against or any interest in the vessel, hire under this Charter Party shall not be payable in respect of any period during which the vessel is not fully at Charterers’ disposal and any expenses directly related to the vessel shall be for Owners’ account.... |
(Id. at p. 3). AMS stated that the charter party agreement is governed by English law and provides for arbitration in London. (Id. at p. 6). AMS further stated that, at the time of filing, AMS had initiated arbitration proceedings in London against Sunset Shipping. (Id. ).
AMS claims that, as a result of Sunset Shipping's actions and inactions, including its failure to make payments, AMS has not been provided with the intended use of the vessel as contemplated by the charter party. Specifically, AMS alleges it suffered financial loss of profit in the amount of $2,910,357.90 under the sub-charter party that AMS entered into on March 11, 2021, prior to the vessel's arrest on March 19, 2021. (Id. at p. 3). According to AMS, AMS was unable to deliver the vessel to the sub-charterers because of Sunset Shipping's actions and inactions, and the sub-charterers canceled the sub-charter party. (Id. ) AMS also claims to have incurred the following losses: the value of the bunkers on board at time of completion of discharge ($274,764.80), overpaid hire and CVE paid to Sunset Shipping ($84,421.16), pilotage fees incurred in connection with the vessel's arrest ($5,307.12), and any further sums that may be claimed later. (Id. at pp. 4–5). AMS argues that the failure of Sunset Shipping to fulfill its obligations set out in the charter party constitutes a breach of a maritime contract, giving rise to a maritime lien on the vessel that AMS is entitled to foreclose upon.
Ultimately, security for the MARINE PRINCESS's release was not posted and on January 5, 2022, the Court ordered the interlocutory sale of the vessel to take place on February 3, 2022. (Rec. Docs. 54 & 56).
On January 28, 2022, prior to the judicial sale of the vessel, AMS filed an Emergency Motion for Order to Amend Warrant and Order of Interlocutory Sale (Rec. Doc. 57) asking the Court to amend its Orders to exclude the bunkers of fuel oil aboard the vessel. The Court denied AMS's motion, reasoning that the complaint in intervention asserts claims against all of the vessel's equipment and that AMS's ownership interest in the bunkers, if any, is sufficiently protected by its intervenor claims. (Rec. Doc. 66). To the extent that AMS has any ownership interest in the fuel bunkers, the Court stated that AMS's share of the proceeds of the sale can be calculated at a later date. (Id. ). The Court also found that the warrant of arrest correctly included the bunkers because BOA filed a verified complaint to enforce a maritime lien and persuasive authority indicates that the lien includes the entire vessel, as well as the equipment that is an integral part of the vessel's navigation and operation, even if owned by someone other than the vessel owner. (Id. ).
On February 3, 2022, the vessel was sold at an auction conducted by the U.S. Marshal's Service, as is where is, with no warranties, free and clear of all liens, encumbrances, and pre-existing claims on the vessel, whether recorded or otherwise, to Clearwater Transport Ltd. C/O Lila Global Liberia for $16.4 million. (Rec. Doc. 67). The Court confirmed the sale on February 17, 2022. (Rec. Doc. 71). The proceeds from the sale of the MARINE PRINCESS, exclusive of the Marshal's fees and commission, are now deposited in the registry of the Court. Notably, the proceeds will not satisfy both BOA's and AMS's interests.
On February 21, 2022, BOA filed its First Motion for Summary Judgment on the issue of whether AMS has valid maritime liens about the MARINE PRINCESS. (Rec. Doc. 72). According to BOA, AMS does not hold a valid maritime lien for breach of a charter party because the charter party in question calls for the application of English law, and English law does not recognize such a lien. BOA adds that...
To continue reading
Request your trial