Rybovich Boat Co. v. Southern Cross Boatworks, Inc.

• Decision Date: 29 November 2021
• Docket Number: 20-80136-CIV-ALTMAN
• Parties: RYBOVICH BOAT COMPANY, LLC, Plaintiff, v. SOUTHERN CROSS BOATWORKS, INC., Intervening Plaintiff, DAVID THORNBURN, et al., Intervening Plaintiffs, v. MEGA YACHT REFINISHING, LLC, Intervening Plaintiff, YACHT CHANDLERS, INC., Intervening Plaintiff, v. M/Y BLUE STAR, a 1993 model 37.12 meter Keith Marine motor yacht bearing hull identification No. PLK00027F293 and registered with the Cayman Islands Shipping Registry as Official No. 723333, her engines, tackle, furniture, furnishings, apparel, appurtenances, personal watercraft, and tenders in rem, VLADIMIR GUSINSKY a/k/a VLADIMIR GUSINSKI, and SHAKRA HOLDINGS LIMITED, in personam, Defendants.
• Court: U.S. District Court — Southern District of Florida

RYBOVICH BOAT COMPANY, LLC, Plaintiff,
v.
SOUTHERN CROSS BOATWORKS, INC., Intervening Plaintiff,

DAVID THORNBURN, et al., Intervening Plaintiffs,
v.
MEGA YACHT REFINISHING, LLC, Intervening Plaintiff,

YACHT CHANDLERS, INC., Intervening Plaintiff,
v.
M/Y BLUE STAR, a 1993 model 37.12 meter Keith Marine motor yacht bearing hull identification No. PLK00027F293 and registered with the Cayman Islands Shipping Registry as Official No. 723333, her engines, tackle, furniture, furnishings, apparel, appurtenances, personal watercraft, and tenders in rem, VLADIMIR GUSINSKY a/k/a VLADIMIR GUSINSKI, and SHAKRA HOLDINGS LIMITED, in personam, Defendants.

No. 20-80136-CIV-ALTMAN

United States District Court, S.D. Florida

November 29, 2021

ORDER

ROY K. ALTMAN, UNITED STATES DISTRICT JUDGE.

In this in rem admiralty action, the parties agreed to sell the M/Y Blue Star (the “Yacht” or the “Vessel”) and to use the proceeds of that sale to pay the Plaintiffs back for certain monies and services the Plaintiffs had advanced on the Yacht's behalf. After three auctions, the Yacht finally sold. But the

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Plaintiffs still hold hundreds of thousands of dollars in maritime liens. To recover some portion of those liens, the Plaintiffs have asked us to sell three tenders and 14 paintings that, for years, had been kept on the Yacht.

The in personam Defendants, Vladimir Gusinski^[1] and Shakra Holdings Limited, concede that the tenders should be sold-but they disagree about the art. In their Motion to Separate the Artwork as a Non-Appurtenance to the Yacht (the “Motion”) [ECF No. 187], they contend that the paintings are the personal property of Gusinski, one of the Yacht's quondam owners.^[2] After a careful review of the record, we DENY the Motion. The artwork-which has been fastened to the walls of the Yacht for as long as anyone can remember-was essential to the Vessel's mission as a luxury pleasure yacht. It's, therefore, an appurtenance of the Vessel and is subject to the Plaintiffs' maritime liens.

Background

For years, Gusinski and Shakra owned the Vessel-a 143-foot luxury Yacht. In early 2020, Rybovich Boat Company-the operator of a boat-repair, storage, and marine facility-sued the M/Y Blue Star, Gusinski, and Shakra for unpaid fees and other necessaries. See generally Complaint [ECF No. 1]. The Yacht's crew intervened in the lawsuit, seeking wages, repatriation expenses, and reimbursement for monies they'd advanced on the Yacht's behalf. See Intervening Crew Complaint (“Crew Complaint”) [ECF No. 56]. We arrested the Vessel, see Warrant for Arrest In Rem Returned Executed [ECF No. 11], and appointed Rybovich as substitute custodian for the Yacht, its jet skis, its tenders, and its artwork. See Order Permitting Credit Bidding [ECF No. 190] at 4 (recognizing that Rybovich was entitled to custodia legis fees through July 1, 2021).

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On three separate occasions, we ordered the U.S. Marshal to auction off the Yacht and its jet skis. See Order Approving First Sale [ECF No. 124]; Order Approving Second Sale [ECF No. 157]; Paperless Minute Entry for July 12, 2021 Hearing [ECF No. 180]. During the first two auctions, no one offered the minimum bid. See U.S. Marshal Return on Order of Sale for the First Auction [ECF No. 133]; U.S. Marshal Return on Order of Sale for the Second Auction [ECF No. 172]. In the first, one bidder initially offered a below-minimum bid, see Order Approving the Vessel Sale [ECF No. 129] at 2 (describing the terms of the offer), but then, after the inspection, rescinded his offer, see Second Motion for Sale of Vessel [ECF No. 135] at 2 (“Ultimately, the purchaser backed out after the survey[.]”). In the second, no one bid at all.

As the months passed, it became clear that the M/Y Blue Star's sale would never cover its swelling debts. Before the third auction, therefore, we granted Rybovich's request to credit bid its custodia legis fees against the price of the Vessel. See generally Order Permitting Credit Bidding. At that third auction, Rybovich entered the winning (and, as it turned out, the only) bid-a $75, 000 cash offer. See U.S. Marshal Return on Order of Sale for the Third Auction [ECF No. 194]. After conferring with the Court, see Paperless Minute Entry for August 12, 2021 Hearing [ECF No. 205], Rybovich withdrew its $75, 000 cash bid and offered, instead, a credit bid of $450, 000. See Order Confirming the Sale of M/Y Blue Star (the “Order Confirming Sale”) [ECF No. 212] at 2-3. Without objection from any party, we approved the sale, id.-though most of the maritime liens remain.

Now that the Yacht has been sold, we must decide what to do with its tenders and artwork. Although the parties agree that the tenders should be auctioned off, see Plaintiffs' Motion to Sell In Rem Defendant M/Y Blue Star's Tenders Through a U.S. Marshal's Sale [ECF No. 185], they disagree about the artwork, see Plaintiff's Notice Regarding the Court's Order [ECF No. 213] at 2 (“Defendant Shakra Holdings Limited, wants Plaintiffs to stipulate that the Vessel's artwork should be returned to the owner. Plaintiffs will not agree to a stipulation about the artwork because they contend the artwork

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is an appurtenance of the Vessel and subject to a maritime foreclosure sale to satisfy the maritime liens.” (citation omitted)).

In his declaration, Gusinski says that he bought and enjoyed the paintings for years before he brought them onto the Yacht and insists that the Yacht functioned as a pleasure cruise long before the paintings appeared on its walls. See Gusinski's Sworn Statement (“Gusinski Declaration”) [ECF No. 187-1] ¶¶ 6, 7, 13. With this declaration in hand, the Defendants advance two arguments: one, that the artwork isn't essential to the Yacht's ability to navigate, see Motion at 7-8; two, that the Court and the parties have already agreed that the artwork isn't an appurtenance of the Vessel, id. at 8. For this second argument, the Defendants point to (a) the parties' Joint Status Report on the proposed sale, which excluded “the three tenders . . . or artwork (14 paintings), ” and (b) the Court's Order approving the notice of sale, which didn't include the artwork among the items listed for sale. Id.

Rybovich responded by raising several procedural arguments-including standing and equitable estoppel. See Response at 1-7. Alternatively, it maintains that, whoever owned the paintings, those paintings have always been appurtenances of the Yacht, id. at 8. As support, Rybovich relies on the declaration of David Thornburn-the Yacht's longtime captain and manager-who avers that, throughout his many years of service on the Vessel, the paintings-which were specially fastened onto the Yacht's walls-were never removed. See Declaration of David Thornburn Supporting Rybovich's Summary Judgment Motion [ECF No. 116] ¶¶ 2, 6.

The Law

It's hornbook law that “[a] maritime lien is a privileged claim upon maritime property, such as a vessel, arising out of services rendered to . . . that property.” Canaveral Port Auth. v. M/V Liquid Vegas, 2009 WL 3347596, at *4 (M.D. Fla. Oct. 15, 2009) (Baker, Mag. J.) (quoting Thomas J. Schoenbaum, 1 Admiralty and Maritime Law § 9-1 (4th ed. 2004)). It's thus a “fundamental principle” of admiralty law that “the vessel itself, along with all equipment that is essential to the ship's

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navigation and operation, is subject to maritime liens[, ] . . . regardless of who the actual owner of the equipment may be.” Motor-Servs. Hugo Stamp, Inc. v. M/V Regal Empress, 165 Fed.Appx. 837, 840 (11th Cir. 2006) (citations omitted). “This rule balances the interests of keeping ships active and protecting maritime businesses who provide goods and services on credit by making the entire vessel, including all the equipment essential to the completion of the voyage upon which it is embarked, stand as security for the debt.” Id. “The scope of a maritime lien includes the vessel and its apparel, fixtures, and appurtenances, even if they are leased or owned by someone other than the vessel owner.” Liquid Vegas, 2009 WL 3347596, at *4 (citing Sw. Washington Prod. Credit Ass'n v. O/S New San Joseph, 1977 AMC 1123 (N.D. Cal. May 13, 1977)).

“An appurtenance is commonly defined as an item that is essential to the ship's navigation, operation, or mission.” Gonzalez v. M/V Destiny Panama, 102 F.Supp.2d 1352, 1354 (S.D. Fla. 2000) (Jordan, J.). “To determine whether an item is an appurtenance to a vessel, we must look to the relation it bears to the actual service of the vessel.” Anderson v. United States, 317 F.3d 1235, 1238 (11th Cir. 2003) (cleaned up). In assessing whether an item is an appurtenance to a vessel, “[n]either installation, location, nor ownership is dipositive of the matter.” Gonzalez, 102 F.Supp.2d at 1356. “Rather, an appurtenance is any specifically identifiable item that is destined for use aboard a specifically identifiable vessel and is essential to the vessel's navigation, operation, or mission.” Id.; see also Anderson, 317 F.3d at 1238 (citing and applying Gonzalez's definition of appurtenance). “The determination [of whether an item is an appurtenance] is commonly made on a case-by-case basis[.]” Thomas J. Schoenbaum, 1 Admiralty and Maritime Law § 9-1 (6th ed. 2020). “Throughout the years, courts have ruled that radio equipment, uninstalled replacement engines, and even fishing permits were essential to their vessels' purposes and, therefore[, ] were appurtenances subject to maritime liens.” Regal Empress, 165 Fed.Appx. at 840 (citing The Augusta, 15 F.2d 727, 727-28 (E.D. La. 1920) (radio equipment); Gonzalez, 102 F.Supp.2d at 1354-57 (uninstalled engines); Gowen, Inc. v. F/V Quality One,

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244 F.3d 64, 67-70 (1st Cir. 2001) (fishing permits)); see also Schoenbaum, supra, § 9-1 (6th ed. 2020).

Analysis

We start by asking whether the artwork constitutes (1) a “specifically identifiable item, ” (2) “use[d] aboard a specifically...