USAll. Fed. Credit Union v. S/V Helicorne II O.N. 1265818

• Docket Number: 24-cv-03530-OEM-TAM
• Decision Date: 16 June 2023
• Parties: USALLIANCE FEDERAL CREDIT UNION, Plaintiff, v. S/V HELICORNE II O.N. 1265818, her engines, tackle, equipment, and appurtenances in rem and CHRISTOPHER LAWRENCE PARACHINI and MOONBEAM GATEWAY MARINA LLC, in personam Defendants
• Court: U.S. District Court — Eastern District of New York

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USALLIANCE FEDERAL CREDIT UNION, Plaintiff, v. S/V HELICORNE II O.N. 1265818, her engines, tackle, equipment, and appurtenances in rem and CHRISTOPHER LAWRENCE PARACHINI and MOONBEAM GATEWAY MARINA LLC, in personamDefendants

No. 24-cv-03530-OEM-TAM

United States District Court, E.D. New York

June 16, 2023

MEMORANDUM & ORDER

ORELIA E. MERCHANT, UNITED STATES DISTRICT JUDGE

Plaintiff USAlliance Federal Credit Union (“USAlliance” or “Plaintiff”) filed a complaint against S/V HELICORNE II (O.N. 1265818), her engines, tackle, equipment and appurtenances (the “Vessel”)in rem and against Christopher Lawrence Parachini(“Parachini”) and Moonbeam Gateway Marina LLC(“Moonbeam Marina,” collectively with Parachini “Defendants”), in personam on May 14 2024.Complaint (“Compl.”), ECF 1.USAlliance brings an action in rem against the Vessel and claims for breach of contract, declaratory judgment, and for a temporary restraining order and a preliminary injunction against Defendants.Id.Before the Court is USAlliance's motion for a preliminary injunction, filed on May 14, 2024.Motion for Order to Show Cause, Temporary Restraining Order, and Preliminary Injunction(the “Motion”), ECF 4.For the reasons that follow USAlliance's motion for a preliminary injunction is GRANTED.

BACKGROUND^[1]

Plaintiff USAlliance is a federally chartered credit union with a principal office in Rye, New York.Compl. at 1.Defendant Moonbeam Marina, a limited liability company, owns or operates the Moonbeam Gateway Marina in Brooklyn, New York.Id. at 2.

On October 14, 2015, Parachini and his now-deceased spouse Jennifer A. Blumin executed and delivered a First Preferred Ship Mortgage (the “Mortgage”) to Plaintiff covering the whole of the Vessel and securing a principal indebtedness of $162,500.00 along with the performance of certain other obligations as set forth in an accompanying Loan and Security Case Agreement.Id. at 14-30, Exs. 1, 2.Plaintiff assigned the Mortgage to Seacoast National Bank on October 24, 2016 but continues to act as the servicer for the Mortgage, inter alia with the power to make collections and participate in any proceedings to enforce the Mortgage.Id. at 3.

From 2021 to 2024, the Vessel was moored at the Moonbeam Marina.Compl. at 3.On April 24, 2024, Moonbeam Marina delivered a “Notice of Lien and Sale” to Plaintiff's principal office, referring to Sections 184and201 of the New York Lien Law.Id. at 34-38, Ex. 4.The Notice of Lien and Sale states that Moonbeam Marina is now in possession of the Vessel and is entitled to a garageperson's lien over the Vessel for $379,616.09 in “winterization & storage” fees.Id.The notice further states that should the lien remain unsatisfied, Moonbeam Marina will advertise the Vessel for sale at an auction at 2:30 PM on May 20, 2024.Id.

USAlliance alleges that Parachini has defaulted under the terms of the Mortgage and the Loan and Security Agreements, having breached several contractual duties enumerated in said agreements.Id. at 4-5.USAlliance asserts that Parachini owes a principal balance of $87,490.19, in addition to accrued interest, collection, recovery costs, attorneys fees and expenses, and any additional indebtedness to accrue until this action is concluded.Id. at 5.

On May 14, 2024, Plaintiff filed this action and moved for an order to show cause for a temporary restraining order and a preliminary injunction preventing Defendant Moonbeam Marina from selling the Vessel.See Compl.;see alsoPlaintiff's Memorandum in Support of Unsigned Order to Show Cause (“MOL”), ECF 5at 2.The Court ordered Defendants to respond to Plaintiff's motion by May 17, 2024.May 15, 2024 Order.On May 17, 2024, Parachini responded to Plaintiff's motion, writing that he does “not oppose the entry of a temporary restraining order and/or preliminary injunction to enjoin the pro se auction currently set for May 20, 2024.”Defendant's Letter in Response to Plaintiff's Motion for TRO(“Def Letter”), ECF 17at 1.Counsel for Defendant Moonbeam Marina has not yet made an appearance in this action or made any filings in opposition.

On May 17, 2024, Plaintiff filed a letter informing the Court that Plaintiff learned from email exchanges with Defendants that, on the morning of May 15, 2024, Defendants had entered into an agreement to delay the sale of the Vessel until June 20, 2024.SeePlaintiff's Letter re Status Report and Plaintiff's Motion for TRO and Preliminary Injunction(“Pl. Letter”), ECF 18at 1-2.Plaintiff further asserted that both Defendants confirmed that they would not oppose the temporary restraining order and preliminary injunction.Id. at 2.While Defendant Parachini was willing to stipulate that the Vessel would not be sold without Plaintiff's consent and until the mortgage is satisfied, Defendant Moonbeam Marina refused to so stipulate.Id.

On May 19, 2024, the Court issued a temporary restraining order and ordered Defendant Moonbeam Marina to show cause why it should not be enjoined from selling the Vessel, setting the show cause hearing for May 30, 2024.See Order Granting Temporary Restraining Order and Order to Show Cause, ECF 19 at ¶¶ 1-2.On May 28, 2024, Plaintiff filed another letter updating the Court that Defendant Moonbeam Marina did not intend to make an appearance and would not file any opposition to Plaintiff's motion for a preliminary injunction.SeePlaintiff's Letter re Status Report and Plaintiff's Motion for TRO and Preliminary Injunction(“Pl. Status Letter”), ECF 21at 1.

On May 29, 2024, the Court canceled the May 30, 2024 show cause hearing and extended the temporary restraining order deadline to from May 19, 2024 to June 16, 2024.SeeMay 29, 2024 Order.To provide Defendants a final opportunity to voice any objection to the entry of a preliminary injunction, the Court directed Defendants to file letters confirming their positions regarding the preliminary injunction.On June 14, 2024, Parachini filed a letter confirming that he“does not oppose the entry of a preliminary injunction.”Parachini June 14, 2024 Letter, ECF 24.To date, Moonbeam Marina has not filed a letter in response to the Court's May 29, 2024 Order.

STANDARD OF REVIEW

To justify a preliminary injunction, “a movant must demonstrate (1) irreparable harm absent injunctive relief; [and](2)‘either a likelihood of success on the merits, or a serious question going to the merits to make them a fair ground for trial, with a balance of hardships tipping decidedly in the plaintiff's favor.'”Metro. Taxicab Bd. of Trade v. City of New York, 615 F.3d 152, 156(2d Cir.2010)(quotingAlmontaser v. New York City Dep't of Educ., 519 F.3d 505, 508(2d Cir.2008)).Additionally, the Supreme Court and the Second Circuit have instructed courts to assess the extent that “the injunction serves the public interest.”SAM Party of New York v. Kosinski, 987 F.3d 267, 273-74(2d Cir.2021)(citingWinter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20(2008)).

DISCUSSION

Before addressing whether USAlliance has made the necessary showing to be entitled to a preliminary injunction, the Court must consider whether it can properly issue an asset freeze under the circumstances presented in this case.

In determining the propriety of a prejudgment asset freeze Courts in the Second Circuit apply the seminal casesGrupo Mexicano and Gucci America.SeeGrupo Mexicano de Desarrollo S.A. v. All. Bond Fund, Inc., 527 U.S. 308, 310, 333(1999)(holding that a preliminary injunction preventing a Mexican holding company from disposing of its assets pending adjudication of a contract claim for money damages was not appropriate where there was no lien on the company's assets);see alsoGucci Am., Inc. v. Weixing Li, 768 F.3d 122, 133(2d Cir.2014)(holding that the district court had equitable authority to freeze defendant trademark infringer's assets pending adjudication of plaintiff's accounting action in equity against defendant).“In determining whether a prejudgment asset freeze is permissible, District Courts in this Circuit applying Grupo Mexicano and Gucci America‘examine each count [of a complaint] in turn to determine whether the count seeks equitable relief, considering the basis for the plaintiff's claim and the nature of the underlying remedies sought.'”AKF, Inc. v. AvantGarde Senior Living, No. 1:21-CV-188-BKS-DJS, 2021 WL 2662070, at *5(N.D.N.Y.Apr. 29, 2021)(quotingShamrock Power Sales, LLC v. Scherer, No. 12-cv-8959, 2016 WL 6102370, at *4(S.D.N.Y.Oct. 18, 2016)).“If a count seeks equitable relief, the Court must then determine whether the proposed preliminary injunction would be a reasonable measure to preserve the status quo in aid of the ultimate equitable relief claimed.”Id.(cleaned up).

Where a plaintiff seeks both legal and equitable relief, “a court retains its equitable power to freeze assets,” but the plaintiff seeking an injunction must “demonstrate a nexus between the injunctive relief requested and the equitable relief ultimately sought.”Dong v. Miller, No. 16-cv-5836, 2018 WL 1445573, at *8(E.D.N.Y.Mar. 23, 2018)(cleaned up).

In contrast, where a plaintiff seeks merely legal relief and not equitable relief, an asset freeze injunction may not issue even if that plaintiff asserts that it has a valid security interest in the subject property.SeeAKF, Inc.2021 WL 2662070, at *5(“In arguing that Grupo Mexicano does not forbid the injunction sought here, Plaintiff contends that, in contrast to the unsecured creditor plaintiffs in that case, Plaintiff has (by virtue of the Agreement) a valid and properly perfected security interest in the Receipts it seeks to have encumbered.Defendants dispute the validity of Plaintiff's security interest, [...] but even...