Versilia Supply Serv. SRL v. M/Y Waku

• Decision Date: 16 April 2019
• Docket Number: CASE NO. 18-62975-CIV-COHN/SELTZER
• Parties: VERSILIA SUPPLY SERVICE SRL, Plaintiff, v. M/Y WAKU, a 2016 model 209-foot Azimut Benetti motor yacht, which is Registered in the Cayman Islands as Official Number 747107, her boiler, engines, tackle, furniture, furnishings, apparel, equipment, machinery, appurtenances, tenders, etc., in rem, Defendant. Blue Water Alliance USA, LLC, et al., Intervening Plaintiffs, v. M/Y WAKU, a 2016 model 209-foot Azimut Benetti motor yacht, which is Registered in the Cayman Islands as Official Number 747107, her boiler, engines, tackle, furniture, furnishings, apparel, equipment, machinery, appurtenances, tenders, etc., in rem, Defendant. Alastair Andrew, et al., Intervening Plaintiffs, v. M/Y WAKU, a 2016 model 209-foot Azimut Benetti motor yacht, which is Registered in the Cayman Islands as Official Number 747107, her boiler, engines, tackle, furniture, furnishings, apparel, equipment, machinery, appurtenances, tenders, etc., in rem, and Nautical Corp., Defendants.
• Court: U.S. District Court — Southern District of Florida

371 F.Supp.3d 1143

VERSILIA SUPPLY SERVICE SRL, Plaintiff,

v.M/Y WAKU, a 2016 model 209-foot Azimut Benetti motor yacht, which is Registered in the Cayman Islands as Official Number 747107, her boiler, engines, tackle, furniture, furnishings, apparel, equipment, machinery, appurtenances, tenders, etc., in rem, Defendant.

Blue Water Alliance USA, LLC, et al., Intervening Plaintiffs,

v.M/Y WAKU, a 2016 model 209-foot Azimut Benetti motor yacht, which is Registered in the Cayman Islands as Official Number 747107, her boiler, engines, tackle, furniture, furnishings, apparel, equipment, machinery, appurtenances, tenders, etc., in rem, Defendant.

Alastair Andrew, et al., Intervening Plaintiffs,

v.

M/Y WAKU, a 2016 model 209-foot Azimut Benetti motor yacht, which is Registered in the Cayman Islands as Official Number 747107, her boiler, engines, tackle, furniture, furnishings, apparel, equipment, machinery, appurtenances, tenders, etc., in rem, and Nautical Corp., Defendants.

CASE NO. 18-62975-CIV-COHN/SELTZER

United States District Court, S.D. Florida.

Signed April 16, 2019

Clay Michael Naughton, Christopher Robin Jaramillo, Anny Marie Martin, Moore & Company, P.A., Coral Gables, FL, for Plaintiff.

OMNIBUS ORDER GRANTING MOTIONS TO DISMISS

JAMES I. COHN, United States District Judge

THIS CAUSE is before the Court on the Motions to Dismiss [DE 63-83] (the "Motions") filed by Nautical Corp. ("Nautical"), a Defendant and claimant of the Defendant vessel, the M/Y WAKU ("Vessel"). The Court has considered the Motions, Plaintiff's and Intervening Plaintiffs' (collectively, "Plaintiffs") Responses [DE 93-112], Nautical's Replies [DE 113-121; 123-133], and the record in this case, and is otherwise advised in the premises. For the reasons stated herein, the Court will grant the Motions.

I. Background

On December 6, 2018, Plaintiff Versilia Supply Service SRL ("Versilia") commenced this action by asserting an in rem claim to enforce a maritime lien against the Vessel, a 2016 model 209-foot Azimut Benetti motor yacht. DE 1. Versilia, a yacht supply and support company, alleged that it was owed $ 48,376.45 for services and necessaries that it provided to the Vessel. Id. ¶¶ 7, 9-10. Subsequently, the Court permitted numerous other companies and individuals with in rem liens against the Vessel to intervene in this action. See DE 5, 14, 21, 25, 35, 50, and 122. Intervening Plaintiffs include: (1) other yacht supply companies with maritime liens against the Vessel for allegedly unpaid necessaries (collectively with Versilia, the "Supply Companies"), DE 6, 15-18, and 22-23;¹ and (2) seamen who worked aboard the Vessel and are allegedly owed unpaid wages (the "Crew Members"). DE 26, 37-40, 42-43, 45, 47, 51-54. In addition to their in rem claims against the Vessel, the Crew Members also assert in personam claims against Nautical for breaches of maritime employment contracts and breaches of oral agreements. Nautical is a Cayman Islands corporation that owns and operates the Vessel.

Nautical has moved to dismiss Versilia's Complaint and the Intervening Complaints of the Supply Companies and the Crew Members. Nautical raises two arguments.

First, Nautical asserts that the Foreign Narcotics Kingpin Designation Act ("Kingpin Act"), 21 U.S.C. §§ 1901 - 1908, and the Foreign Narcotics Kingpin Sanctions Regulations ("Kingpin Regulations"), 31 C.F.R. §§ 598.001- .901, preclude Plaintiffs from seeking to arrest the Vessel to enforce their alleged liens. Second, Nautical claims that it is not subject to in personam jurisdiction in Florida.

II. Discussion

A. The Kingpin Act and Regulations

Congress enacted the Kingpin Act in 1999. The purpose of the Kingpin Act is "to provide authority for the identification of, and application of sanctions on a worldwide basis to, significant foreign narcotics traffickers, their organizations, and the foreign persons who provide support to those significant foreign narcotics traffickers and their organizations, whose activities threaten the national security, foreign policy, and economy of the United States." 21 U.S.C. § 1902.

The Kingpin Act authorizes the designation of foreign persons that "play[ ] a significant role in international narcotics trafficking,"id. § 1907(7), as "significant foreign narcotics traffickers." Id. § 1903(b). In addition, it permits the designation of foreign persons who "materially assist[ ] in ... the international narcotics trafficking activities" of significant foreign narcotics traffickers or are "owned, controlled, or directed by" those traffickers as "specially designated narcotics traffickers." 21 U.S.C. § 1904(b)(2)–(4) ; 31 C.F.R. § 598.314. Persons and entities designated under the Kingpin Act "are added to the ‘Specially Designated Nationals and Blocked Persons List,’ 31 C.F.R. § 501.807(a), and all their assets in the United States or under the control of any person who is in the United States are ‘block[ed],’ 21 U.S.C. § 1904(b), or effectively frozen." Zevallos v. Obama, 793 F.3d 106, 110 (D.C. Cir. 2015) (alteration in original).

"The Kingpin Act ... according to its text and accompanying regulations, requires the procurement of a government-issued license before private individuals may execute against assets frozen under the Act." Stansell v. Revolutionary Armed Forces of Colombia, 704 F.3d 910, 916 (11th Cir. 2013). United States citizens and residents are prohibited from transacting or dealing in blocked property "[e]xcept to the extent provided in ... licenses, or directives issued pursuant to [the Kingpin Act.]" 21 U.S.C. § 1904(c). The Kingpin Regulations also render "null and void" any "transfer" that violates the Regulations and "involves any property or interest in property of a specially designated narcotics trafficker." 31 C.F.R. § 598.205(a). "Transfer" is defined broadly to mean "any actual or purported act or transaction ... the purpose, intent, or effect of which is to create, surrender, release, convey, transfer, or alter, directly or indirectly, any right, remedy, power, privilege, or interest with respect to any property." Id. § 598.316. The term "transfer" also specifically includes "the creation or transfer of any lien; the issuance, docketing, filing, or levy of or under any judgment, decree, attachment, injunction, execution, or other judicial or administrative process or order." Id.

B. The Kingpin Act Bars Plaintiffs' in rem Claims Against the Vessel

Nautical is ultimately owned by Mr. Samark Lopez Bello, a citizen of Venezuela. On February 13, 2017, the Office of Foreign Assets Control ("OFAC")—the Treasury Department agency that implements and administers the Kingpin Regulations—designated Mr. Lopez as a specially designated narcotics trafficker ("SDNT") under the Kingpin Act and Regulations. Notice of this designation was published in the Federal Register on February 17, 2017. 82 Fed. Reg. 11101-01. Mr. Lopez's SDNT designation rendered his property and property interests in the U.S., including the Vessel, see DE 62-1, "blocked property" under the Kingpin Act and Regulations. Nautical thus argues that because Plaintiffs have failed to secure a license from the OFAC,² Plaintiffs' in rem claims against the Vessel should be dismissed because they are barred by the Kingpin Act and because any Court orders enforcing their alleged maritime liens against the Vessel would be null and void.

Plaintiffs argue that it would be "improper and unjust" to dismiss their in rem claims because: (1) their maritime liens pre-date Mr. Lopez's SDNT designation, see, e.g., DE 93 at 11 ("ANDREW's maritime lien attached to the Vessel upon his employment aboard the M/Y WAKU, pursuant to his Crew Agreement and previous to the establishment of any OFAC block."); (2) they were "without knowledge as to the allegations faced by Mr. Lopez or his designation as an SDNT," id.; and (3) because Nautical cannot "use the Kingpin Act as a shield" to prevent the sale of the Vessel. Id. at 4. Plaintiffs also appear to suggest that their in rem claims should be allowed to proceed because in October of 2018, the OFAC granted a license to the law firm of Archer & Greiner, P.C. (attorneys apparently representing Mr. Lopez in other matters) and Mr. Eric Castillo, former Yacht Manager of the Vessel, to "pay the expenses, including past due amounts, ordinarily incident to the maintenance and limited operation of [the Vessel.]" Id. at 5-6.

Were the Court simply adjudicating, in a vacuum, what was fair in this case, then Plaintiffs' arguments would carry significant weight. But the Court cannot disregard the Kingpin Act and Regulations merely because Plaintiffs believe that they lead to an "improper and unjust" result here. Plaintiffs do not dispute that the Vessel is blocked property under the Kingpin Act and that they have failed to obtain a license from the OFAC to execute against the Vessel. That ends the inquiry. See, e.g., Stansell, 704 F.3d at 916 ("The Kingpin Act ... according to its text and accompanying regulations, requires the procurement of a government-issued license before private individuals may execute against assets frozen under the Act.").

Plaintiffs offer no authority suggesting that their claims should be permitted to proceed despite their failure to obtain a license from the OFAC. It is irrelevant whether or not Plaintiffs' alleged maritime liens attached prior to Mr. Lopez's SDNT designation. The Kingpin Act and Regulations preclude "transfers" after "the date on which actual or constructive notice of [that] designation is received." See 31 C.F.R. § 598.302. Plaintiffs do not dispute that they are charged with constructive notice of Mr. Lopez's SDNT designation at least since February 17, 2017. Even assuming that Plaintiffs' maritime liens all attached prior to that date, what matters is that now, over two years after Mr. Lopez's SDNT designation, Plaintiffs are prohibited from enforcing those liens and "any judgment, decree, attachment, injunction, execution, or other judicial or...