# Paradise Family, LLC v. Unknown Claimant(s)

> District Court, M.D. Florida · June 29, 2020

URL: https://www.frixlaw.com/law-library/cases/10105378

## Case

- **Court:** District Court, M.D. Florida
- **Decided:** June 29, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION

IN ADMIRALTY

IN THE MATTER OF:

THE COMPLAINT OF PARADISE
FAMILY, LLC, AS OWNER, AND
ANOTHER DAY IN PARADISE BOAT Case No. 8:20cv-1452-T-02CPT
CLUB, LLC AND SARAH ZIELKE,
AS OWNERS PRO HAC VICE, OF THE
M/V JUST ADD MIST (HIN: STR51255D818)
IN A CAUSE OF EXONERATION FROM
OR LIMITATION OF LIABILITY
_______________________________________/

O R D E R

Before the Court is the Motion to Approve Ad Interim Stipulation and Enter
Monition and Injunction filed by Paradise Family, LLC, as Owner, as well as by Another
Day In Paradise Boat Club, LLC and Sarah Zielke, as Owners Pro Hac Vice
(collectively, Petitioners). (Doc. 2). For the reasons discussed below, the
Petitioners’ motion is denied without prejudice.
I.
As alleged in their complaint, the Petitioners are the owners of the M/V JUST
ADD MIST (the Vessel) that was involved in a maritime incident on or about January
12, 2020, in the territorial waters in or near Hillsborough County, Florida (the
Incident). (Doc. 1 at 1-2). One or more passengers on board the Vessel were
allegedly injured during the Incident. Id.
Seeking to minimize, if not eliminate, their exposure for the Incident, the
Petitioners filed their complaint on June 25, 2020, pursuant to the Limitation of
Liability Act, 46 U.S.C. § 30501, et seq. (the Act), as well as Rule F of the Supplemental
Rules for Admiralty and Maritime Claims of the Federal Rules of Civil Procedure
(Supplemental Rule F). (Doc. 1). The Petitioners assert that their complaint was
filed within six months of their receipt of the first written notice of a possible claim
against them arising from the Incident. Id. at 2.

Contemporaneously with the filing of their complaint, the Petitioners also
submitted an Ad Interim Stipulation for Costs and Value (Ad Interim Stipulation) as
security for any claims stemming from the Incident. (Doc. 3). The Petitioners
represent in that filing that the Vessel and its freight at the time of the Incident were
valued at $17,641.39. Id. at 2; see also (Doc. 1-1).
By way of the instant motion, the Petitioners request that the Court: (1) approve
the Ad Interim Stipulation; (2) issue a monition directing all potential claimants to join
in this action; and (3) impose an injunction staying prosecution of any claim related to
the Incident in any other forum. (Doc. 2).

II.
The Act grants a vessel owner the right to confine its liability for damages or
injuries arising from a maritime accident to the vessel’s value or the owner’s interest
in the vessel and pending freight, provided that the accident occurred without the
owner’s privity or knowledge. 46 U.S.C. § 30505; Beiswenger Enters. Corp. v. Carletta,
86 F.3d 1032, 1036 (11th Cir. 1996). Federal courts have “exclusive admiralty
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jurisdiction” to determine whether a vessel owner is entitled to such a limitation of
liability. Beiswenger, 86 F.3d at 1036-37 (citations omitted).
Both the Act and Supplemental Rule F set forth the procedures for limitation
actions. Pursuant to those provisions, a vessel owner seeking to invoke the Act’s
protections must file a complaint in federal court for limitation of liability no later than
six months after receiving written notice of a claim. 46 U.S.C. § 30511; Fed. R. Civ.
P. Supp. F(1).

For the benefit of claimants, the owner must also deposit with the court (1) a
sum equal to the amount or value of the owner’s interest in the vessel and pending
freight, or (2) approved security therefor.1 Id. “The posting of proper and adequate
security is a condition precedent to obtaining the benefits of [the Act], and [a] district
court [has] discretion to require the [owners] to post security in one of the approved
forms.” New York Marine Managers, Inc. v. Helena Marine Serv., 758 F.2d 313, 317 (8th
Cir. 1985) (internal citation omitted); see also Luhr Bros. Inc. v. Gagnard, 765 F. Supp.
1264, 1268 n.4 (W.D. La. 1991) (“The court possesses great discretion in determining
just what constitutes appropriate security.”) (citing Complaint of Kingston Shipping Co.,

Inc., 1982 A.M.C. 134 (M.D. Fla. 1981)); Karim v. Finch Shipping Co., 1998 WL
713396, at *1 (E.D. La. Oct. 6, 1998) (“The Court has an absolute right to determine
what constitutes approved security.”) (internal quotation marks and citation omitted).

1 The owner may also elect to transfer such interests to a court-appointed trustee. Id.
3
Once the vessel owner complies with the above provisions, the Act authorizes
the court to stay all proceedings against the owner or the owner’s property with respect
to the matter in question, and to direct all potential claimants to file their claims against
the owner in district court within a specified period. Fed. R. Civ. P. Supp. F(3), (4).
In this case, as noted above, the Petitioners request that the Court approve their
Ad Interim Stipulation for the value of their interest in the Vessel and pending freight
as security for all those who may file claims in this action. (Doc. 3). “Security is a

‘term that is usually applied to an obligation, pledge, mortgage, deposit, lien, etc.,
given by a debtor in order to make sure the payment or performance of [its] debt, by
furnishing the creditor with a resource to be used in case of failure in the principal
obligation.’” In re Hollis B. Corp., 2016 WL 8732310, at *5 n.1 (D. V.I. Sept. 30, 2016)
(quoting Black’s Law Dictionary (rev. 4th ed. 1968)). The term “security” “may also
refer ‘to one who becomes surety or guarantor for another.’” Id.
While ad interim stipulations are often deemed adequate to safeguard the
interests of potential claimants, The Ontario No. 1, 80 F. 2d 85, 87 (2d Cir. 1935), the
Petitioners’ stipulation gives the Court pause. In that stipulation, the Petitioners state

they will:
[P]ay and/or deposit a surety bond in the Court’s registry, within
fifteen (15) days after the entry of an Order confirming the report of a
commissioner to be appointed to appraise the amount or value of the
Petitioner’s interest in the Vessel, the amount or value of such interest
is thus ascertained and ordering the posting of said bond, if demanded
by any Claimant, or alternatively will file in this proceeding a Joint
Stipulation for Value in the usual form, and that after giving of the
Joint Stipulation for Value in the usual form, this Ad Interim
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Stipulation shall stand as security for all claims in [this] proceeding in
lieu of said bond, until such time as any Claimant demands the posting
of a bond or the Court so orders.

(Doc. 3 at 2).
“[W]hen a shipowner submits an ad interim stipulation, the stipulation is ‘a
substitute for the vessel itself.’” In re Hollis B. Corp., 2016 WL 8732310, at *5 (quoting
Hartford Accident & Indemnity Co. v. S. Pacific Co., 273 U.S. 207, 218-19 (1927)). To
qualify as “approved security” under Supplemental Rule F sufficient to protect the
interests of claimants, “an ad interim stipulation should [therefore] provide a guarantee
of payment in line with the guarantee afforded by holding the vessel in trust ‘for the
benefit of [the claimants].’” Id. (quoting Fed. R. Civ. P. Supp. F(1)).
The Petitioners’ Ad Interim Stipulation, however, does not identify a surety
that would guarantee payment of any potential obligations in this action. Cf. In re
Everglades Island Boat Tours, LLC, 2013 WL 315468, at *2 (M.D. Fla. Jan. 9, 2013)
(approving ad interim stipulation stating that surety will be executed by International
Fidelity Insurance Company); In re Chambers, 2010 WL 55580, at *1 (M.D. Fla. Jan.
5, 2010) (noting that ad interim stipulation was supported by OneBeacon Insurance
Company as surety).
Nor is the Ad Interim Stipulation accompanied by a letter of undertaking
(LOU) guaranteeing such payment. LOUs are customarily offered by petitioners
who opt to post security in lieu of depositing cash into the court’s registry. See In the
Matter of Carpe Diem 1969 LLC, 2018 WL 1463687, at *2 (D. V.I. Mar. 23, 2018)

(citations omitted) (stating that ad interim stipulations should require “at the very
5
least” an LOU “executed by an appropriate surety” in order to “provide a guarantee
of payment in line with the guarantee afforded by holding the vessel in trust”); In re
Nat. Maint. & Repair, Inc., 2009 WL 3579161, at *1 (S.D. Ill. Oct. 27, 2009) (quoting
Matter of Compania Naviera Marasia S.A., Atlantico, 466 F. Supp. 900, 902 (S.D.N.Y.
1979)) (‘Approved security’ includes letters of undertaking, as ‘it has been the practice
for many years in the maritime industry to accept letters of undertaking given by
underwriters, domestic or foreign, in order to avoid the detention of vessels and the
expense of posting security in other forms.’”).
Absent such assurances, the Court is not persuaded that the Ad Interim
Stipulation will protect claimants in the manner contemplated by the Act and the
Supplemental Rules, even with the Petitioners’ vow to file in the future a “Joint
Stipulation for Value in the usual form.” (Doc. 3 at 2); see, e.g., Matter of Complaint of
Carpe Diem 1969 LLC, 2019 WL 332792 (D. V.I. Jan. 25, 2019) (approving amended
ad interim stipulation that cured initial deficiencies of failing to identify a surety or
provide an LOU guaranteeing surety’s payment).
Accordingly, the Petitioners’ Motion to Approve Ad Interim Stipulation and Enter
Monition and Injunction (Doc. 2) is denied without prejudice.
DONE and ORDERED in Tampa, Florida, this 29th day of June 2020.
Chance eeu Suk.
HONORABLE CHRISTOPHER P. TUITE
United States Magistrate Judge

Copies to:
Counsel of record

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10105378. Public record. Not legal advice.