Naval Logistic, Inc. v. M/V FAMILY TIME

United States District Court

for the

Southern District of Florida

Naval Logistic, Inc., doing business )

as Middle Point Marina, Plaintiff ) Civil Action No. 23-22379-Civ-

) Scola

v. )

)

M/V Family Time, in rem, and ) In Admiralty

Andrew Vilenchik, in personam, )

Defendants. )

Order on Motion for Interlocutory Sale

This matter is before the Court on the Plaintiff’s motion for interlocutory

sale of the Defendant vessel in this admiralty action, the M/V Family Time.

(ECF No. 41.) The owner of the vessel, Commercial Holdings Group, Inc., and

the named in personam Defendant, Andrew Vilenchik, have responded in

opposition1 (ECF No. 45), and the Plaintiff has filed a reply (ECF No. 47.) The

Court has carefully reviewed the record, the parties’ briefing, and the

applicable law, and is otherwise fully advised. The Court grants the Plaintiff’s

motion for the reasons described below. (ECF No. 41.)

1. Background

The Plaintiff, Naval Logistics, Inc., doing business as Middle Point

Marina, filed this action on June 27, 2023 to enforce a maritime lien for repairs

made to the vessel M/V Family Time, a 34’ Rinker owned by Commercial

Holdings Group Inc. (“CHG”), whose principal is Defendant Andrew Vilenchik.

(See Compl., ECF No. 1.) Specifically, the complaint sought $2,326.18 plus

interest for necessaries provided to the vessel, or alternatively, for a salvage

award of $20,000 for preventing the vessel from sinking. (Id.)

The Plaintiff has possessed the vessel since May 22, 2023, when

Vilenchik brought it to the marina for repairs. According to the Plaintiff, the

vessel’s condition was significantly worse than the Defendant had disclosed

and therefore required additional repairs. (Id. ¶¶ 17-28.) Defendant Vilenchik

filed an answer and affirmative defenses, arguing in large part that the Plaintiff

should be barred from recovery because Plaintiff’s negligence exacerbated the

damage to the vessel. (See generally ECF No. 9.) On September 1, 2023, the

1 The Court refers to Commercial Holdings Group, Inc. and Vilenchik collectively as “CHG”

herein.

Court granted the Plaintiff’s motions for issuance of a warrant in rem and to

appoint Middle Point Marina as the substitute custodian of M/V Family Time.

(ECF Nos. 12-14.) The vessel was arrested on September 7, 2023. (ECF No. 15.)

M/V Family Time remains at Middle Point Marina, and the vessel has been

accruing storage charges of $135 per day. According to the Plaintiff, the total

amount of costs accrued as of February 2, 2024 was $23,704.79, excluding the

salvage award claim for “saving the Vessel from a maritime peril.” (Reply, ECF

No. 47 at 3.) The total as of the date of this order is easily over $25,000.

Middle Point Marina now moves for interlocutory sale of the vessel

because the costs of daily storage and any maintenance needed are

disproportionate to the vessel’s value and the owner has unreasonably delayed

in securing the vessel’s release. (Id.)

2. Legal Standard

Pursuant to Supplemental Rule for Admiralty or Maritime Claims

E(9)(a)(i), on a party’s application, “the court may order all or part of the

property sold—with the sales proceeds, or as much of them as will satisfy the

judgment, paid into court to await further orders of the court—if:

(A) the attached or arrested property is perishable, or liable to

deterioration, decay, or injury by being detained in custody pending the

action;

(B) the expense of keeping the property is excessive or disproportionate;

or

(C) there is an unreasonable delay in securing release of the property.”

“A party need only demonstrate that one of these conditions is present to

justify an interlocutory sale of the vessel.” Moore v. M/V Sunny USA, No. 18-cv-

81181, 2019 WL 10784577, at *1 (S.D. Fla. Feb. 21, 2019) (Bloom, J.) (quoting

20th Century Fox Film Corp. v. M/V Ship Agencies, 992 F. Supp. 1434, 1437

(M.D. Fla. 1997) (cleaned up)). “[T]he Rule focuses entirely on avoiding the

recognized complications associated with maintaining a vessel under arrest.”

Regions Bank v. M/Y Royal Indulgence, No. 3:10cv100, 2010 WL 4595792, *3

(N.D. Fla. Oct. 3, 2010).

3. Analysis

Middle Point Marina argues that the interlocutory sale of M/V Family

Time is justified because two of the three grounds for sale under Supplemental

Rule E(9) are satisfied.

First, Middle Point contends that CHG has unreasonably delayed the

release of M/V Family Time because almost six months have passed since its

arrest on September 7, 2023, which is well past the four months that courts

generally consider sufficient for interlocutory sale, and CHG has not made an

effort to post security. (Mot., ECF No. 41 at 5-6.) In response, CHG claims that

Middle Point inaccurately characterizes the caselaw, relying in large part on a

2008 case where a three-month delay was found insufficient to justify an

interlocutory sale. See Gyasi v. M/V ANDRE, No. 07-23282-CIV, 2008 WL

906761, at *2 (S.D. Fla. Apr. 1, 2008) (Torres, Mag. J.).

But as CHG acknowledges by the cases it cites (Resp., ECF No. 45 at 4),

courts do treat four months as the rule of thumb for unreasonable delay in

securing a defendant vessel, unless unique factual circumstances justify the

delay. See Bartell Hotels v. S/L Talus, 445 F. Supp. 3d 983, 988 (S.D. Cal.

2020). CHG offers no factual circumstances that would allow the Court to

conclude that a sale is unjustified as we approach the six-month mark of the

vessel’s arrest. See id. (collecting cases and concluding that nearly six months

without an attempt to secure the vessel was unreasonable delay); E.N. Bisso &

Son, Inc. v. M/V BOUCHARD GIRLS, 482 F. Supp. 3d 527, 532-33 (E.D. La.

2020) (“Generally, defendants are given at least four months to post security for

a vessel to ensure its release. . . . It would strain credulity for the Court to

ignore the fact that the Vessels have been under arrest [for approximately eight

months].”) Here, almost six months have passed since arrest (and over eight

months since the vessel has been in Middle Point’s custody) without sign of

CHG securing the M/V Family Time or explanation for the delay. Interlocutory

sale is therefore appropriate due to unreasonable delay in the owner securing

the M/V Family Time.

Interlocutory sale is warranted by the establishment of just one of the

conditions laid out in Supplemental Rule E(9), but the Court will address

Middle Point’s second argument in the interest of thoroughness. Middle Point

argues that in addition to the unreasonable delay, the expense of keeping M/V

Family Time at the marina is excessive and disproportionate because the vessel

is estimated to be worth between $50,000 and $99,000 based on online listings

of similar boats and is in a “state of disintegration and disrepair” that is likely

to continue to worsen. (Mot., ECF No. 41 at 3.) Allowing additional accrual of

costs in addition to the approximately $25,000 that has already accrued would

be disproportionate, according to Middle Point. CHG disagrees, claiming that

Middle Point has not provided sufficient evidence of the vessel’s value and

therefore cannot establish that the continuing costs associated with storing the

vessel are disproportionate. (Resp., ECF No. 45.)

“When considering whether costs are excessive or disproportionate,

Courts often weigh the costs against the value of the vessel or the amount of

the claims against the vessel.” E.N. Bisso & Son, Inc., 482 F. Supp. 3d at 532.

Here, the monthly cost of maintaining the vessel is at least $4,000, and Middle

Point claims that the vessel’s value is between $50,000 and $99,000 based on

online sales listings. (Reply, ECF No. 47 at 3.) CHG disputes the sufficiency of

Middle Point’s evidence but does not argue that the vessel is worth over

$100,000 (the maximum supported by the research conducted by Middle

Point), nor does it provide its own evidence that the vessel is worth more.

Weighing the monthly costs of at least $4,000 against the vessel’s value, even if

at the high end of Middle Point’s estimate, the expense of maintaining the

vessel is disproportionate, in particular in light of the costs that have already

accrued since the vessel’s arrest in September. See Caterpillar Fin. Services

Corp. v. Coleman, 99–03821 CM RZX, 1999 WL 33218595, at *2 (C.D. Cal. Aug.

19, 1999) (finding that the “expense of keeping the [Defendant Vessel] in

custody, specifically $1,400.00 per month, . . . appears to be excessive”);

Merchants Nat. Bank of Mobile v. Dredge General G.L. Gillespie, 663 F.2d 1338,

1341-1342 (5th Cir. 1981) (interlocutory sale warranted where vessel accrued

$17,000 per month costs and claimants delayed eight months in attempting to

secure release); see also Ferrous Financial Services Co. v. O/S Arctic Producer,

567 F. Supp. 400, 401 (W.D. Wash. 1983) (finding expense excessive and delay

unreasonable where cost of maintaining the vessel was $166,000 per year and

defendant made no attempt to secure its release for four months). The

interlocutory sale is therefore also justified on the basis of the expense of

storing it.

Finally, the Court agrees with Middle Point in discarding CHG’s

argument that allowing interlocutory sale will prejudice its counterclaim, which

CHG initially failed to file by mistake.2 The proceeds of the sale will be available

for satisfaction of the parties’ claims. “The interlocutory sale of a vessel is not a

deprivation of property but rather a necessary substitution of the proceeds of

the sale, with all of the constitutional safeguards necessitated by the in rem

process.” Ferrous Fin. Servs. Co. v. O/S Arctic Producer, 567 F. Supp. 400, 401

(W.D. Wash. 1983). This is particularly true where the sale of the vessel will

minimize storage costs that may end up exceeding the value of the vessel if

stored with the substitute custodian for the duration of the proceedings. The

Plaintiff has therefore established that interlocutory sale of the M/V Family

2 CHG’s motion for leave to file the counterclaim is currently pending, and nothing herein

should be understood to grant or deny the motion. (ECF No. 46.)

time is justified under Supplemental Rule for Admiralty or Maritime Claims

E(9).

4. Conclusion

For these reasons, the Court grants the Plaintiff’s motion for

interlocutory sale of the M/V Family Time (ECF No. 41) and orders and

adjudges as follows:

1. The United States Marshal is directed to sell, to the highest bidder at

public auction, the M/V Family Time, her engines, tackle, boats,

appurtenances, etc., on or before March 26, 2024.

2. The United States Marshal is directed to prepare and cause to be

published the Notice of Sale of Vessel, in the usual form as used by the

United States Marshal for vessel sales in this District and incorporating

the provisions of this Order.

5. The Notice of Sale shall be published on at least two (2) different days,

the first publication shall be at least fourteen (14) days prior to the date

of sale, and the second at least seven (7) days prior to the date of the

sale, pursuant to Local Admiralty Rule E(16)(b). The cost of publication

shall construe the first charge against the proceeds of any claim.

3. The United States Marshal or the Substitute Custodian appointed by the

Court, at the request of any interested person, shall grant permission to

said person or his representative to visit, board, inspect, examine, and

survey the M/V Family Time at its current location or any other place to

which it may be moved prior to the sale during the daylight hours of any

day up to twenty-four (24) hours before the scheduled sale date, and

provided that the same shall be done at the sole expense and risk of said

interested person or his representative.

4. The Court shall retain jurisdiction over the Parties and subject matter

herein for the purpose of considering confirmation of the expected sale of

the in rem Defendant by the United States Marshal.

5. The Vessel’s sale shall be “as is, where is” and free and clear of all liens

and encumbrances, and pre-existing claims on the vessel, whether

recorded or otherwise.

6. The sale of the Vessel shall be conducted pursuant to Local Admiralty

Rule E(17) of the Southern District of Florida.

7. The Plaintiff is directed to serve a copy of this Order on the United States

Marshal.

Done and ordered at Miami, Florida on SAY / 2

obert N. Scola, Jr.

United States District Judge