Fluence Energy, LLC v. M/V/BBC Finland

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UNITED STATES DISTRICT COURT

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9 SOUTHERN DISTRICT OF CALIFORNIA

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11 FLUENCE ENERGY, LLC, a Delaware ) Case No.: 3:21-cv-01239-BEN-JLB

limited liability company, )

12 ) ORDER:

Plaintiff,

13 )

v. ) (1) AUTHORIZING ISSUANCE OF

14 ) WARRANT FOR ARREST OF

M/V BBC FINLAND, bearing

15 International Maritime Organization No. ) VESSEL PURSUANT TO

) SUPPLEMENTAL RULE C;

16 9593684 (the “Vessel”), its cargo, )

apparel, tackle, and appurtenances, etc. in

17 rem, ) (2) DENYING PLAINTIFF’S

) REQUEST FOR APPOINTMENT

18 Defendant. ) OF A SUBSTITUTE CUSTODIAN;

19 ) and

)

20 ) (3) GRANTING PLAINTIFF’S

21 ) REQUEST FOR AN ORDER

) PERMITTING NORMAL

22 ) OPERATIONS OF DEFENDANT

23 ) VESSEL WHILE UNDER

) ARREST

24 )

[ECF Nos. 5, 6]

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26 I. INTRODUCTION

27 Plaintiff FLUENCE ENERGY, LLC, a Delaware limited liability company

28 (“Plaintiff”) brings this verified complaint, in rem, against Defendant M/V BBC

1 FINLAND, bearing International Maritime Organization No. 9593684 (the “Vessel”), its

2 cargo, apparel, tackle, and appurtenances, etc., in rem, for breach of a maritime contract

3 and negligence, seeking arrest and money damages. See Complaint, ECF No. 1

4 (“Compl.”).

5 Before the Court are Plaintiff’S Ex Parte Applications for an Order (1) Authorizing

6 Issuance of Warrant for Arrest of Defendant Vessel, ECF No. 5, and (2) Appointing

7 Substitute Custodian and Permitting Normal Operations of Vessel While Under Arrest,

8 ECF No. 6 (collectively, the “Applications”). After considering the papers submitted,

9 supporting documentation, and applicable law, the Court (1) GRANTS Plaintiff’s Ex Parte

10 Application for an Order Issuing a Warrant for the Arrest of the Vessel, ECF No. 5; (2)

11 DENIES Plaintiff’s Ex Parte Application for an Order Appointing a Substitute Custodian,

12 ECF No. 6; and (3) GRANTS-IN-PART Plaintiff’s Ex Parte Application for an Order

13 Permitting Normal Operations While Under Arrest, ECF No. 6.

14 II. BACKGROUND

15 This is a case of marine cargo damage and short delivery resulting from breach of

16 the Vessel’s contractual duties under the maritime contract of carriage, affreightment,

17 bailment and other contract. Compl. at 3, ¶ 8.

18 A. Statement of Facts1

19 Plaintiff is a world-leading global energy storage technology and services provider

20 that provides grid-scale, industrial-strength energy storage by lithium batteries, referred to

21 as Gen6 Cubes (“Cubes”). Compl. at 2,2 ¶ 5. Plaintiff’s Cubes are modular factory-built,

22 standardized storage systems that deliver safe, scalable, cost-effective systems built to

23 customer specifications and configurations in Vietnam, which are then, assembled into

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25 1 The majority of the facts set forth herein are taken from the operative complaint, and

for purposes of ruling on the instant Applications, the Court assumes the truth of the

26 allegations pled and liberally construes all allegations in favor of the non-moving party.

27 Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).

2 Unless otherwise indicated, all page number references are to the ECF-generated

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1 Cubes, packed into containers three Cubes at a time, and transshipped by vessel to United

2 States (“U.S.”) customers and end users. Compl. at 2-3, ¶ 5.

3 The Vessel at issue in this case is a 24,964 deadweight ton Antigua & Barbuda-

4 flagged general cargo ship built in 2012, 161.33 meters in length, bearing IMO Number

5 9593684, owned by Briese Schiffahrts GmbH & Co. KG MS “Filsum,” located at 26789

6 Leer, Hafenstr. 12, Germany. Compl. at 3, ¶¶ 6-7. It was bareboat chartered to Anger

7 Shipping Company Ltd. Located at 69, Nevis Street, St. John’s, Antigua, West Indies

8 and was time-chartered to BBC Chartering, located at 26789 Leer, Hafenstr., 10b,

9 Germany. Id. at 3, ¶ 7.

10 On or about June 24, 2020, Plaintiff, as the purchaser, entered into a Master

11 Supply Agreement (“MSA”) with Ace Engineering & Co., Ltd. (“ACE”) to manufacture

12 Cubes by supplying various items of equipment, parts, materials, supplies, and services.

13 Compl. at 4, ¶ 11. Once the Cubes were assembled, three Cubes were loaded, secured, and

14 packed into 318 40-foot high-cube (“HC”) containers for trans-Pacific shipment, pursuant

15 to a manual provided by Plaintiff detailing the packing and loading procedures. Id. at 4, ¶

16 12. Of the HC Containers originally on the Vessel, a limited number were packed and

17 loaded with accessory equipment, rather than Cubes. Id. ACE Vietnam, an affiliate of

18 ACE, was responsible for loading and packing the HC containers and placed a seal or lock

19 on the containers once the Cubes were loaded into the containers. Id. at 4, ¶ 13.

20 On February 25, 2021, Plaintiff, as the owner of the cargo, contracted with DB

21 Schenker (“DBS”) to serve as a Non-Vessel-Operating Common Carrier in booking the

22 loading, stowage, and carriage of the cargo aboard the Vessel and preparing the necessary

23 shipping contracts with the Vessel interests. Compl. at 4, ¶ 14. Between February and

24 April 2021, ACE transported the Cargo by truck in 333 containers from their Vietnam

25 factory to the Hai Phong, Vietnam port, pursuant to delineated responsibilities in the MSA

26 with Plaintiff. Id. at 4, ¶ 15. The containers were then offloaded from the truck at the Hai

27 Phong port. Compl. at 4, ¶ 15. The cargo was delivered to the Hai Phong port in good

28 condition and order, awaiting the arrival of the Vessel, so it could be loaded aboard.

1 Compl. at 5, ¶ 16. Under the terms of the contract of carriage between Plaintiff and DBC,

2 DBS agreed to ship the cargo under Free on Board (“FOB”)3 transportation or

3 INCOTERMS4 from the port of Hai Phong, Vietnam, to the delivered-at-place (“DAP”)

4 of four different end-customer project locations in California. Id. at 5, ¶ 17. Pursuant to

5 the FOB terms, title to and risk of loss of the cargo passed to Plaintiff when the cargo was

6 loaded onto the Vessel at the port of departure (Hai Phong, Vietnam).5 Id. at 5, ¶ 18.

7 On or about April 15, 2021, DBS entered into four written maritime contracts titled

8 “SCHENKERocean Non-Negotiable SEA WAYBILL for Combined Transport”,

9 VNHAN0000031155, VNHAN0000031169, VNHAN0000031567, and VNHAN00000-

10 31568 (the “Sea Waybills”), pursuant to which DBS agreed to (1) accept and safely load

11 and carry (a) 333 40-foot HC containers containing 954 of Plaintiff’s Cubes, (b) 13 40-

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3 When a delivery term is F.O.B. with no specification, the “goods are delivered at a

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designated location, usually a transportation depot, at which legal title and thus the risk of

14 loss passes from seller to buyer.” Litecubes, LLC v. N. Light Prods., Inc., 523 F.3d 1353,

1358, n.1 (Fed. Cir. 2008). However, where the delivery term is F.O.B. the place of

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destination, also known as a “destination contract,” the seller must bear the risk and

16 expense of transporting the goods to the place of destination and tender delivery along with

documents of title at the destination. C.I.S.G., art. 67(1), 52 Fed. Reg. 6262- 02; see also

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Anzivino at § 7:17; see also U.C.C. § 2509(1)(b); Wheeler Lumber Bridge & Supply Co.

18 of Des Moines, Iowa, v. United States, 281 U.S. 572, 578-79 (1930) (holding that where a

seller “engages to deliver f. o. b. . . . at the place of destination, which is the place of sale

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and delivery[,] [t]here is no delivery, and therefore no sale, until after the transportation is

20 completed”).

4 “Under the Incoterms Ex Works (EXW) commercial term (including Ex Factory and

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Ex Warehouse), the seller needs only to ‘tender’ the goods to the buyer by placing them at

22 the buyer’s disposal at a named place of delivery and notifying the buyer of the time and

23 place where the goods will be at its disposal.” Folsom, Ralph H., 1 International Business

Transactions § 2:25 (3d ed.) (Dec. 2020 Update). “The risk of loss transfers to the buyer

24 at the time the goods are placed at its disposal.” Id.

25 5 Contrary to the allegation risk of lass passed when the cargo was loaded onto the

Vessel, by pleading that the contract was “F.O.B. transportation . . . to the delivered-at-

26 place” and Incoterms, Compl. at 5, ¶ 17, the complaint indicates that the risk of loss passes

27 under the contract at the time of arrival in San Diego. This is irrelevant to the Court’s

analysis of who bears responsibility for the damages goods as well as the viability of a

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1 foot HC containers containing accessories, and (c) 2 40-foot HC Containers containing

2 CRTs (the “Cargo”) aboard the Vessel in Hai Phong, Vietnam as well as (2) discharge the

3 Cargo at San Diego, California on voyage number 1312001. Compl. at 5, ¶ 19. Plaintiff,

4 as the consignee,6 signed the Non-Negotiable Sea Waybill for Combined Transport, which

5 redacts the Shipper/Exporter for reasons not explained to the Court but does show the

6 Vessel as the BBC Finland; the port of loading as Hai Phong, Vietnam; the port of

7 discharge as San Diego, California; and the number of containers received by the Carrier

8 as 179. Exhibit 1 to Compl.,7 ECF No. 1-2 at 2. It provides: “Below Particulars Furnished

9 by Shipper – carrier not responsible – For Merchant’s use only and Part of the Bill of

10 Lading Contract.” Id. It also states that “[d]elivery will be made to the Consignee or his

11 authorized agent on production of reasonable proof of identity” and (2) “[i]n presenting

12 this Waybill or by requesting delivery of the Goods, the Consignee undertakes all liabilities

13 of the Shipper without prejudice to the Shipper’s own liability.” Id. at 2-3.

14 The Complaint alleges that also on April 15, 2021, the Cubes were loaded in

15 apparent good order and condition at the port of Hai Phong, Vietnam for carriage to San

16 Diego, California. Compl. at 3, ¶ 10, 7, ¶ 39. Additionally, the only cargo carried onboard

17 the Vessel for that voyage was Plaintiff’s Cargo. Id. at 5, ¶ 20. Plaintiff alleges that the

18 total value of the Cargo aboard the Vessel was $109,677,308.50. Id. at 5, ¶ 22.

19 On April 28, 2021, the crew or master aboard the Vessel reported that it was

20 experiencing rolling, pitching, and pounding with persistent heavy sea spray over the

21 deck, in response to which the Vessel made various course and speed changes to

22 minimize heavy rolling, pitching, and pounding. Compl. at 6, ¶ 23. Because of a

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6 With respect to bill of ladings, a “consignee” is “[t]he person named in a bill to

24 whom or to whose order the bill promises delivery.” Garner, Brian A., Black’s Law

25 Dictionary, CONSIGNEE, (11th ed. 2019). In laymen’s terms, the consignee is the entity

financially responsible for the receipt of the shipment, and usually, is also the recipient of

26 the goods.

27 7 Plaintiff alleges that Exhibit 1 is “an exemplar Sea Waybill for one of the damaged

containers,” and “[a]ll of the waybills related to this incident are in the same form.”

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1 subsequent report of smoke in the cargo holds, the Vessel initially diverted towards

2 Petropavlovsk–Kamchatskiy, Russia, but then, made its way to Aomori, Japan instead to

3 assess any damage to the Cargo and Vessel in port. Id. at 6, ¶ 24.

4 On May 8, 2021, the Vessel arrived in Aomori, Japan. Compl. at 6, ¶ 25. Upon

5 arrival at the pier, the Vessel’s interests and surveyors, along with the Japanese Coast

6 Guard and local fire department (as a safety precaution when opening the hatches),

7 attended to the Vessel to investigate the scope of damage to the Cargo. Id. at 6, ¶ 25. All

8 containers were discharged from the holds for inspection on the pier in order to assess

9 any damage to the containers and/or potential need for salvage, repacking, and continued

10 transshipment. Id. at 6, ¶ 27. Plaintiff alleges “that the attending surveyors indicated that

11 a cause of the collapsed and damaged containers in the Vessel’s holds was due to improper

12 usage of twist locks and insufficient lashing to the containers, in particular as full-auto

13 type twist locks were set incorrectly in an ‘upside down’ position when the Cargo was

14 loaded by the Vessel interests.” Id. at 6, ¶ 28.

15 As a result of the onboard survey, inspection, and investigation, Plaintiff estimates

16 that approximately 179 containers containing its Cargo suffered some damage, with

17 another estimated 87 containers deemed by surveyors to be damaged to an extent that they

18 were not safe for reloading on the Vessel and transshipment to San Diego. Compl. at 6, ¶

19 29. Consequently, 84 forty-foot HC containers with a total 252 Cubes, and three forty-

20 foot HC containers with accessories, remain in Japan for further inspection and possible

21 salvage. Id. at 7, ¶ 30. Owing to limited port capacity at the Aomori port in Japan to conduct

22 the necessary surveys of the damaged containers and their contents, including unpacking,

23 inspecting, and repacking the Cubes, the 87 damaged containers must be transferred

24 by barge to Hakodate, Japan in several voyage segments for further inspection and

25 transshipment or salvage depending on the results of those inspections. Id. at 7, ¶ 31.

26 On June 16, 2021, Plaintiff paid ACE in full for all the Cargo pursuant to the

27 prevailing purchase orders. Compl. at 7, ¶ 32.

28 On June 18, 2021, the Vessel departed Aomori, Japan to continue the Voyage to

1 San Diego, California, but the Vessel was only partly loaded with 246 containers and short

2 the number of containers contracted for in the Sea Waybills. Compl. at 7, ¶ 33. The Cargo

3 in those 246 containers will be inspected in San Diego, California. Compl. at 7, ¶ 34.

4 Plaintiff estimates its current losses due to the damage to the Cargo caused by the Vessel,

5 and depending on the results of the inspection, is no less than $30 million. Id. at 7, ¶ 35.

6 On or about July 8, 2021, at approximately 5:04 a.m., the Vessel moored starboard

7 side to Pier 105 at the SSA Marine Terminal in the Port of San Diego, California. ECF

8 No. 6 at 7:9-11 (citing Declaration of Matthew P. Vafidis, ECF No. 6-1 (“Vafidis Decl.”)

9 at 2, ¶ 2).

10 B. Procedural History

11 On July 8, 2021, Plaintiff filed suit alleging two claims for relief for (1) breach of

12 maritime contract of carriage and (2) negligence. Complaint, ECF No. 1. The summons

13 issued that day but has not yet been served on Defendant. ECF No. 2. That same day,

14 Plaintiff also filed the instant Ex Parte Applications. ECF Nos. 5, 6.

15 III. LEGAL STANDARD

16 The Constitution extends the jurisdiction of federal courts “to all Cases of admiralty

17 and maritime Jurisdiction.” U.S. CONST. art. III, § 2. Congress, in turn, embodied that

18 judicial power into a statute vesting federal courts with exclusive jurisdiction over

19 admiralty and maritime claims. 28 U.S.C. § 1333(1); Ventura Packers, Inc. v. F/V Jeanine

20 Kathleen, 305 F.3d 913, 918 (9th Cir. 2002).

21 A vessel need not be engaged in commerce to be subject to admiralty law. Goodman

22 v. 1973 Foot Trojan Vessel, Arkansas Registration No. AT1439SN, 859 F.2d 71, 73 (8th

23 Cir. 1988) (providing that the term “vessel” includes “every description of watercraft or

24 other artificial contrivance used, or capable of being used, as a means of transportation on

25 water”) (citing 3 U.S.C. § 3). The Federal Maritime Lien Act, 46 U.S.C. § 31342, entitles

26 “a person providing necessaries to a vessel on the order of the owner or a person authorized

27 by the owner,” to (1) a maritime lien on the vessel; (2) bring a civil action in rem to enforce

28 the lien; and (3) to pursue those rights without alleging or proving in the action that credit

1 was given to the vessel. 46 U.S.C. § 31342(a); see also Ventura, 305 F.3d at 919 (providing

2 that a plaintiff demonstrating that the plaintiff provided necessaries to a vessel “may invoke

3 the admiralty jurisdiction of the federal courts to enforce a necessaries lien in rem”). The

4 Act defines “necessaries” as “repairs, supplies, towage, and the use of a dry dock or marine

5 railway.” 46 U.S.C. § 31301(4). However, this definition is not exhaustive, and courts

6 have broadly construed the term to refer to “anything that facilitates or enables a vessel to

7 perform its mission or occupation.” Ventura Packers, 305 F.3d at 923. Further, a maritime

8 contract is not needed to invoke the admiralty jurisdiction pursuant to the Maritime Lien

9 Act. Id. at 919-922.

10 IV. DISCUSSION

11 “To commence an action in rem against a vessel, the plaintiff must file a verified

12 complaint that describes the vessel ‘with reasonable particularity’ and states that the vessel

13 ‘is within the district’ or will be so ‘while the action is pending.’” Barnes v. Sea Hawaii

14 Rafting, LLC, 889 F.3d 517, 529 (9th Cir. 2018) (citing Fed. R. Civ. P. Supp. Adm. & Mar.

15 Cl. R. C(2); see Madeja v. Olympic Packers, LLC, 310 F.3d 628, 637 (9th Cir. 2002)). “If

16 the plaintiff meets these conditions, the district court must take the boat into custody—

17 unless the plaintiff requests otherwise—by issuing an arrest warrant to be served by the

18 marshal.” Barnes, 889 F.3d at 529 (citing Fed. R. Civ. P. Supp. Adm. & Mar. Cl. R.

19 C(3)(a)–(b), E(3)(b)).

20 “Once the district court issues warrants for the arrest of the vessels pursuant to Rule

21 C, and the warrants are successfully served, jurisdiction is complete.” Barnes, 889 F.3d at

22 529 (internal quotations omitted). “After the vessel is arrested, the owner is entitled to ‘a

23 prompt post-seizure hearing at which he can attack the verified complaint, the arrest, the

24 security demanded, or any other alleged deficiency in the proceedings up to that point.’”

25 Id. at 531 (citing, inter alia, Fed. R. Civ. P. Supp. Adm. & Mar. Cl. R. E(4)(f)). “Once the

26 owner has appeared, whether due to the vessel’s arrest or because the owner learned of the

27 proceeding through some other means, no further procedural purpose is served by requiring

28 the verification of amended pleadings.” Id. “To the extent the verification provides

1 evidentiary value, the original complaint ‘does not lose its character as the equivalent of an

2 affidavit just because a later, amended complaint, is filed.’” Id.

3 In this case, the Court finds it proper to institute an in rem action, in admiralty law,

4 to enforce a maritime lien against the Vessel, seeing as the requirements of 46 U.S.C. §

5 31342 have been met. Plaintiff has provided the Court with a verified complaint sufficient

6 to create in rem jurisdiction and arrest the Vessel. Further, the contract provides for

7 necessaries to a vessel. See Exhibit 1 to Compl. Thus, the Court GRANTS Plaintiff’s Ex

8 Parte Application for an Order Issuing a Warrant for the Arrest of the Vessel. ECF No. 5.

9 However, as detailed below, the Court DENIES Plaintiff’s Ex Parte Application for an

10 Order Appointing a Substitute Custodian, ECF No. 6, finding that Plaintiff has not provided

11 the Court with adequate information to allow it to grant this request. Finally, the Court

12 GRANTS-IN-PART Plaintiff’s Ex Parte Application for an Order Permitting Normal

13 Operations While Under Arrest. See id.

14 A. Arrest Warrant

15 Rule C of the Supplemental Federal Rules of Civil Procedure (“Rule C”) expressly

16 allows an in rem8 action to be brought (1) to enforce any maritime lien or (2) “[w]henever

17 a statute of the United States provides for a maritime action in rem or a proceeding

18 analogous thereto.” FED. R. CIV. P., Supp. R. C(1). However, a complaint for such an in

19 rem action must (1) be verified; (2) describe the property that is the subject of the action

20 with reasonable particularity; and (3) “state that the property is within the district or will

21 be within the district while the action is pending.” FED. R. CIV. P., Supp. R. C(2). If upon

22 review of the complaint and supporting papers, “the conditions for an in rem action appear

23 to exist, the court must issue an order directing the clerk to issue a warrant for the arrest of

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25 8 Jurisdiction of courts falls into one of three categories: (1) in personam jurisdiction;

(2) in rem jurisdiction; or (3) quasi in rem jurisdiction. Shaffer v. Heitner, 433 U.S. 186,

26 199 n.3 (1977). In the case of in rem jurisdiction, the Court asserts authority over property

27 within its territory, which may be used to satisfy the judgment, but the property owner will

not be held personally liable. Id. In this case, Plaintiff asks the Court to assert jurisdiction

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1 the vessel or other property that is the subject of the action.” FED. R. CIV. P., Supp. R.

2 C(3)(a)(i). “According to the Advisory Committee’s Note for Rule C, ‘the rule envisions

3 that the (arrest) order will issue upon a prima facie showing that the plaintiff has an action

4 in rem against the defendant in the amount sued for and that the property is within the

5 district.’” Cahuenga Assocs. II v. S/V MAKO, 256 F. Supp. 3d 1092, 1095 (S.D. Cal. 2017)

6 (Curiel, J.). “A simple order with conclusory findings is contemplated.” Id. That being

7 said, “Rule C(3) has been amended to provide for judicial scrutiny before the issuance of

8 any warrant of arrest” in order “to eliminate any doubt as to the rule’s constitutionality.”

9 FED. R. CIV. P., Supp. R. C, advisory committee’s note to 1985 amendment.

10 Where “the plaintiff or the plaintiff’s attorney certifies that exigent circumstances

11 make court review impracticable, the clerk must promptly issue a summons and a warrant

12 for the arrest of the vessel or other property that is the subject of the action.” FED. R. CIV.

13 P., Supp. R. C(3)(a)(ii). “If the property that is the subject of the action is a vessel or

14 tangible property on board a vessel, the warrant and any supplemental process must be

15 delivered to the marshal for service.” FED. R. CIV. P., Supp. R. C(3)(b)(i). “If the property

16 that is the subject of the action consists in whole or in part of freight, . . . the clerk must

17 issue—in addition to the warrant—a summons directing any person controlling the property

18 to show cause why it should not be deposited in court to abide the judgment.” FED. R. CIV.

19 P., Supp. R. C(3)(c).

20 In this case, Plaintiff has satisfied the requirements of Rule C. Plaintiff alleges that

21 it is the owner and consignee of the Cargo, that was damaged while aboard the Vessel,

22 Compl. at 7, ¶ 38, but also attaches the relevant Bill of Lading Contract to the Complaint,

23 indicating that the port of discharge is San Diego, California, and “[d]elivery will be made

24 to the Consignee . . . on production of reasonable proof of identity.” Exhibit 1 to Compl.,9

25 ECF No. 1-2 at 2. Plaintiff also describes the Vessel. Compl. at 3, ¶ 6. Plaintiff’s counsel

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27 9 Plaintiff alleges that Exhibit 1 is “an exemplar Sea Waybill for one of the damaged

containers,” and “[a]ll of the waybills related to this incident are in the same form.”

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1 also submits a declaration, see ECF No. 1 at 13, declaring under penalty of perjury that the

2 facts laid out in the complaint are true and correct; however, the Court has concern over

3 whether a declaration by counsel is adequate in this case. Compare Schroeder v.

4 McDonald, 55 F.3d 454, 460 n.10 (9th Cir. 1995) (stating that to verify a complaint, the

5 plaintiff must swear or affirm that the facts in the complaint are true “under the pains and

6 penalties” of perjury) with Indian Hills Holdings, LLC v. Frye, 337 F.R.D. 293, 304-05

7 (S.D. Cal. 2020) (describing, in the analogous situation of the California Code of Civil

8 Procedure’s requirement that a motion for service by publication must be supported by a

9 declaration as to the cause of action against the defendant, how a declaration of counsel as

10 counsel is insufficient as the attorney lacks personal knowledge as to the facts at issue); but

11 see Cahuenga, 256 F. Supp. 3d at 1096 (accepting a declaration by counsel under penalty

12 of perjury in granting the application for arrest of a vessel). Further, according to the

13 evidence presented to the Court, Plaintiff should be entitled and able to take possession of

14 the Cargo once it arrives in San Diego. Nonetheless, Plaintiff seeks an order authorizing

15 issuance of a warrant for arrest of the Vessel, and sets for the legal authority regarding

16 maritime liens and in rem liability without detailing any facts as to (1) when the Vessel

17 will depart from San Diego, California and/or (2) why Plaintiff would be unable to take

18 possession of the Cargo without court intervention. See ECF No. 5. However, Plaintiff

19 (1) filed a verified complaint on July 8, 2021, see Compl.; (2) described the property that

20 is the subject of the action with reasonable particularity (i.e., the Cubes/Cargo); and (3)

21 stated that the Cargo is within the district (i.e., at the port in San Diego) while the action is

22 pending, on July 8, 2021. See FED. R. CIV. P., Supp. R. C(2); see also ECF No. 6 at 7:9-

23 11 (citing Vafidis Decl. at 2, ¶ 2). Thus, the conditions for an in rem action appearing to

24 exist, the Court issues an order for the clerk to issue a warrant for the arrest of the Vessel.

25 Plaintiff’s complaint also asks for “the Vessel [to] be condemned and sold and the

26 proceeds of the Vessel be applied to costs and expenses associated with this action, and

27 then applied to payment of the amounts owing, plus interest, to [Plaintiff].” ECF No. 6 at

28 6:3-10. However, Plaintiff provides no affidavits, declarations, or evidence indicating that

1 the Vessel or its owners would otherwise be unable or unwilling to satisfy any judgment in

2 this case sufficient for the Court to order the sale of the Vessel.

3 Rule E of the Supplemental Rules also applies to actions in rem. FED. R. CIV. P.,

4 Supp. R. E(1). It requires that “[i]n admiralty and maritime proceedings process in rem . .

5 . may be served only within the district” and may “be held in abeyance if the plaintiff so

6 requests.” FED. R. CIV. P., Supp. R. E(3)(a). Where “tangible property is to be . . . arrested,

7 the marshal or other person . . . having the warrant shall take it into the marshal’s possession

8 for safe custody.” FED. R. CIV. P., Supp. R. E(4)(b). “In furtherance of the marshal’s

9 custody of any vessel the marshal is authorized to make a written request to the collector

10 of customs not to grant clearance to such vessel until notified by the marshal or deputy

11 marshal or by the clerk that the vessel has been released in accordance with these rules.”

12 Id. “Whenever property is arrested or attached, any person claiming an interest in it shall

13 be entitled to a prompt hearing at which the plaintiff shall be required to show why the

14 arrest or attachment should not be vacated or other relief granted consistent with these

15 rules.” FED. R. CIV. P., Supp. R. E(f).

16 While the Court will issue the arrest warrant for the Vessel, the Court finds that a

17 hearing is appropriate to determine whether the Vessel should be sold. Further, “[a]ny

18 vessel, cargo, or other property in the custody of the marshal or other person or organization

19 having the warrant may be released . . . upon the marshal’s acceptance and approval of a

20 stipulation, bond, or other security, signed by the party on whose behalf the property is

21 detained or the party’s attorney . . . if all costs and charges of the court and its officers shall

22 have first been paid.” FED. R. CIV. P., Supp. R. E(c). Unless such costs and charges of the

23 Court and its officer have first been paid, “no property in the custody of the . . . person or

24 organization having the warrant. . . shall be released without an order of the court.” Id.

25 As detailed in further detail below, Plaintiff provides no information regarding

26 having paid any expenses or a willingness to post a pond sufficient to ensure the Court that

27 if the Vessel is permitted to depart San Diego, the interests of the Vessel or its owner,

28 neither of which have appeared in this case, will be adequately protected. Thus, the request

1 to issue a warrant is GRANTED but Plaintiff’s request that the Vessel be sold is DENIED.

2 B. Substitution of Custodian

3 Plaintiff has moved the Court to appoint Alan Schwimmer of National Maritime

4 Services as the Substitute Custodian of the Vessel. See ECF No. 6 at 7:19-9:11. Generally,

5 once the warrant for arrest of a vessel issues, the U.S. Marshal Service will seize the Vessel.

6 The Southern District of California’s Local Rules governing in rem actions provides that

7 once a Vessel is arrested pursuant to process issued by the Court, “the marshal must place

8 one or more keepers thereon who must remain aboard until the vessel is released or

9 disposed of pursuant to Rule E, unless otherwise ordered.” S.D. Cal. Civ. R. E.1(c)(2).

10 However, “[o]n motion of any party, made after notice to the marshal and all parties who

11 have appeared, a judge may order that custody of the vessel be given to the operator of a

12 marina or similar facility, repair yard, or company regularly carrying on the business of

13 ship’s agent,” upon a finding “that such firm or person can and will safely keep the vessel

14 and has in effect adequate insurance to cover any liability for failure to do so.” Id. Further,

15 “[i]f the vessel must be moved to the place where custody will be maintained, a judge may

16 also require insurance or other security to protect those having an interest in the vessel, as

17 well as those claiming against her, from loss of or damage to the res, or liability of the

18 vessel, incurred during the movement.” Id. This “order allowing such custody must fix

19 fees to be charged therefor and for any other services to be rendered the vessel and must

20 provide for their payment to the marshal in advance.” Id.

21 Plaintiff notes that “[c]ustody by the U.S. Marshal requires the services of one or

22 more keepers and does not include charges for wharfage and the other services usually

23 associated with safekeeping vessels similar to the Defendant Vessel.” ECF No. 6 at

24 7:22-26. It argues that “[t]he fees charged by National Maritime Services are less than

25 those charged by the U.S. Marshal,” so it asks the Court to transfer custody of the Vessel

26 to a substitute custodian: Alan Swimmer (“Mr. Schwimmer”) of National Maritime

27 Services, Inc. (“NMS”) with offices at 1560 Sawgrass Corporate Parkway, 4th Floor, Fort

28 Lauderdale, Florida, 33323. Id. at 7:25-8:2 (citing Affidavit of Alan Swimmer, ECF No.

1 6-2 (“Swimmer Aff.”), at 1-2, ¶ 1). Plaintiff advises that NMS “is a global leader in the

2 seizure, recovery, arrest, and custody of marine vessels and has successfully administered

3 hundreds of seizure, arrest and custody cases related to marine vessels.” Id. at 8:2-5.

4 Plaintiff also provides an affidavit from Mr. Swimmer, attesting to NMS’ (1) experience

5 as a vessel owner, operator, and broker; (2) previous service as a U.S. Marshal’s substitute

6 custodian for vessels under arrest within the Southern District of California; (3) familiarity

7 with the Local Admiralty Rules pertaining to the custody of property within this district;

8 (4) non-party status in and lack of interest in the outcome of this case; (5) familiarity with

9 the Vessel to the extent of her size, type, construction, and condition; and (6) access to

10 adequate facilities and supervision for the Vessel during the pendency of this lawsuit. Id.

11 at 8:6-17 (citing Swimmer Aff. at 1-2, ¶¶ 1-2).

12 Finally, Plaintiff informs the Court that NMS will provide insurance for the Vessel

13 as well as provide normal and customary service for the Vessel, including but not limited

14 to “attending mooring lines, bilge pumping as necessary, and providing locks and security

15 during the custodianship at the rates set forth in the Service Rate Schedule attached to the

16 Domestic Commercial Vessel Custody Agreement excluding moorage, plus expenses for

17 materials and services such as locks, welders, etc., as needed for properly maintaining the

18 security of the Vessel and its appurtenances.” ECF No. 6 at 8:18-24 (citing Swimmer Aff.,

19 ¶ 4, Ex. 1). Mr. Swimmer advises that (1) “[t]he total cost for said custody services and

20 keeping expenses, including relocation of vessel to anchorage, should not exceed the sum

21 of $39,750 plus an additional sum of $5,000 per day” and (2) NMS “has liability insurance

22 adequate to respond in damages for loss of, or injury to, the Defendant vessel during said

23 custody.” Swimmer Decl. at 2, ¶¶ 4-5; see also ECF No. 6 at 8:26-28. However, the actual

24 Estimate attached as an exhibit to Mr. Swimmer’s Declaration shows a monthly charge of

25 $38,700.00, and a daily charge of $1,290.00 per day. See ECF No. 6-2 at 10. Plaintiff

26 states that the costs for NMS’ service will be less than those charged by the U.S. Marshall

27 for providing such services through professional keepers. ECF No. 6 at 8:28-9:2 (citing

28 Vafidis Decl., ¶ 5). However, Plaintiff provides no comparison as to what the costs

1 associated with having the U.S. Marshal Service maintain custody of the Vessel would be.

2 Mr. Swimmer provides no discussion as to his specific experience beyond generally

3 stating that his company (as opposed to him personally) “has successfully administered

4 hundreds of seizure, arrest and custody cases related to marine vessels.” Swimmer at 2, ¶

5 1. Further, Mr. Swimmer does not indicate how many insurance policies NMS has; what

6 types of insurance (e.g., commercial general liability, ocean marine, and/or

7 excess/umbrella policies); and the amounts of coverage. In fact, neither Plaintiff nor Mr.

8 Swimmer provides an estimate of the value of the Vessel so as to permit the Court to ensure

9 the value of the Vessel being arrested is adequately secured. Finally, the Court founds that

10 the rate of almost $40,000.00 per day or $1,290.00 seems excessive, especially considering

11 Plaintiff provides no comparison of the costs that would be associated with having the U.S.

12 Marshal Service maintain custody of the Vessel. In Cahuenga Assocs. II v. S/V MAKO, on

13 the other hand, where the Court granted the plaintiff’s order for a substitute custodian, the

14 plaintiff set out the three different types of insurance maintained by the proposed substitute

15 custodian along with the amounts of coverage. 256 F. Supp. 3d at 1096-97. Further, the

16 cost of the custodial services in Cahuenge was a mere $140.00 per day as compared to the

17 almost $40,000.00 per day requested in this case. See id. Thus, the Court, finding that it

18 has been provided with inadequate information to determine whether the proposed

19 substitute custodian “has in effect adequate insurance to cover any liability for failure to”

20 to keep the vessel safe, see S.D. Cal. Civ. R. E.1(c)(2), DENIES Plaintiff’s request that the

21 Court appoint a substitute custodian.

22 C. Maintenance of Operations

23 The Southern District of California’s Local Rules governing in rem actions provides

24 that “[t]he marshal, deputies[,] and keepers of a vessel arrested or attached must not

25 interfere with the conduct of cargo and other operations normal to a vessel in berth, repair

26 work, dry-docking or undry-docking (in the case of a vessel in a shipyard) unless a judge

27 so orders.” S.D. Cal. Civ. R. E.1(c)(3). Additionally, “[u]pon motion of any interested

28 party (which may be made ex parte when the urgency of the matter requires) and for good

1 cause shown, a judge may order the marshal to . . . require the conduct of any operations

2 of a vessel under arrest or attachment.” Id.

3 Plaintiff asks the Court to permit the Vessel to continue its normal port operations

4 while under arrest at Pier 105 at the SSA Terminal, including by unloading the Cargo as

5 scheduling and conducting whatever normal port operations are required while she is at the

6 berth. ECF No. 6 at 9:14-17. Plaintiff advises this will minimize the potential disruption

7 to the Terminal and Port caused by the arrest. Id. at 9:17-19 (citing Vafidis Decl. at 2, ¶

8 6). The Court GRANTS Plaintiff’s request to allow the Vessel to continue operations

9 except to the extent such operations might involve leaving the Port of San Diego.

10 V. CONCLUSION

11 The Court, having reviewed the Verified Complaint of the Plaintiff and the

12 Declarations of Matthew P. Vafidis, an attorney acting on its behalf, and upon application

13 of Plaintiff for an Order Authorizing a Warrant of Arrest of the Defendant Vessel, finds

14 that the conditions for an action in rem appear to exist, and it is therefore, ORDERED as

15 follows:

16 1. A warrant for the arrest of the Defendant Vessel M/V BBC FINLAND,

17 bearing International Maritime Organization No. 9593684 (the “Vessel”), a 24,964

18 deadweight ton Antigua & Barbuda-flagged general cargo ship built in 2012, 161.33

19 meters in length, bearing IMO Number 9593684, owned by Briese Schiffahrts GmbH &

20 Co. KG MS “Filsum,” along with its engines, machinery, boilers, tackle, furniture,

21 licenses, masts, bowsprit, boat, anchors, cables, chains, rigging, tackle, apparel, and all

22 other appurtenances shall immediately issue.

23 2. The Clerk of the Court shall immediately prepare the warrant for arrest and

24 deliver it to the U.S. Marshal Service of the Southern District of California for service.

25 3. If the character or situation of the Vessel or other property is such that the

26 taking of actual possession is impracticable, the U.S. Marshal Service shall affix a copy of

27 this warrant in a conspicuous place on the Vessel or other property and leave a copy of the

28 warrant and verified complaint in the action with the person having possession of the

1 Vessel or other property, or his agent.

2 4. Any person claiming an interest in the Defendant Vessel is entitled, upon

3 request, to a prompt hearing, at which time Plaintiff must show why the arrest should not

4 be vacated or other relief granted consistent with the Supplemental Rules for Certain

5 Admiralty and Maritime Claims.

6 5. Until any party requests a hearing sooner, the Court sets a hearing for this

7 matter for Wednesday, July 14, 2021, at 10:30 a.m. Plaintiff is ordered to provide notice

8 of this hearing to the owners of the Vessel by Monday, July 12, 2021, at 10:30 a.m. Notice

9 should be attempted by personal service as well as e-mail with return receipt requested.

10 6. Plaintiff must comply with the notice provisions as outlined in Fed. R. Civ. P.

11 Supp. Admiralty Rule C(4) and Local Civ. R. C.1(b), requiring notice required by Rule

12 C(4) to be published once in the official newspaper of the Court. This notice must contain

13 (1) the title and number of the action or proceeding; (2) date of the arrest; (3) identity of

14 the property arrested; (4) name of the marshal; (5) name and address of the attorney for

15 Plaintiff; and (6) a statement that (a) claims of persons entitled to possession must be filed

16 with the District Court and served upon Plaintiff’s attorney within fourteen (14) days after

17 publication; (b) answers to the complaint must be filed and served within twenty-one (21)

18 days after the filing of the claim, or within such additional time as may be allowed by a

19 judge; (c) in lieu of an answer, default may be noted and condemnation ordered; and (d)

20 applications for intervention under Rule 24, Fed. R. Civ. P., by persons claiming maritime

21 liens or other interests, may be untimely if not filed within the time allowed for claims to

22 possession.

23 7. A copy of this order must be attached to and served with the said Warrant for

24 Arrest in Action in Rem.

25 8. Plaintiff’s counsel is reminded that pursuant to Local Rule 83.9, governing

26 correspondence and communications with the judge, attorneys should refrain from

27 communicating with a judge outside of the presence of opposing counsel (even where the

28 defendant(s) in a case have not yet been served) and especially pertaining to facts that have

1 || not been included in the parties’ briefing.

2 9. Plaintiff's Ex Parte Application for an Order Appointing a Substitute

3 || Custodian is DENIED for failing to provide adequate information to the Court sufficient

4 || to (1) ensure the proposed substitute custodian maintains adequate insurance; (2) determine

5 || the comparison of costs associated with the proposed substitute custodian as opposed to

6 ||the U.S. Marshall Service; or (3) clearly determine the daily costs associated with the

7 || substitute custodian.

8 10. Plaintiff's Ex Parte Application for an Order Permitting Normal

9 ||Operations of the Vessel While Under is GRANTED-IN-PART as follows:

10 || Any ongoing operations may be maintained except to the extent such operations

11 |/involve the Vessel departing from the Port of San Diego. The Vessel may not

12 ||depart from the Port until the hearing in this matter takes place.

13 IT IS SO ORDERED. °

14|| DATED: July 9, 2021 ype

15 HON. ROGER T. BENITEZ

6 United States District Judge

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