United States District Court, D. Massachusetts
Coastal Marine Management, LLC d/b/a Boston Harbor Shipyard and Marina, Plaintiff,
M/V Sea Hunter (O.N. 598425), her engines, tackle, apparel, appurtenances, etc., in rem, Defendant.
Nathaniel M. Gorton, United States District Judge.
case involves the public auction sale of a sea vessel, the
M/V Sea Hunter (O.N. 598425). On August 8, 2016, Coastal
Marine Management, LLC (“plaintiff” or
“Coastal Marine”) filed an in rem action against
the M/V SEA HUNTER (O.N. 598425) (“the Sea
Hunter”). The complaint alleges that plaintiff has not
received payment for the necessary services it provided to
the Sea Hunter and that plaintiff has the right to enforce
its lien against the vessel. After this Court allowed
plaintiff's motion for the issuance of a warrant in rem
against the vessel and entered a default judgment in favor of
plaintiff, it authorized an interlocutory sale of the vessel.
Hunter was appraised at $2, 000, 000 but at the public
auction on October 4, 2017 brought only two bids. One, for
$30, 000 and the winning bid of $50, 000, from Linden
Holdings, Inc. The Court held a confirmation hearing on
October 10, 2017, to determine whether the sale of the vessel
should be confirmed. Although the various intervenors and
debt holders were notified of the hearing, and some appeared
at the public auction, only counsel for plaintiff Costal
Marine Management attended the hearing. The Court took the
matter under advisement.
Tuesday, October 17, 2017, plaintiff filed an emergency
motion to set aside the auction sale, consider upset bidding
and reopen the bidding. The motion was consented to by all
parties represented in this action after an “upset
bid” for the vessel in the amount of $100, 000 was
received from Custom Marine, Inc., of Dobbs Ferry, New York.
The upset bidder submitted a bank check in the amount of
$100, 000 to plaintiff's counsel, who then delivered the
check to the United States Marshal who had been appointed to
supervise the sale. Because of the upset bid, the represented
parties now request that the court set aside the public
auction sale for $50, 000 and re-open bidding for the vessel.
Court will allow that motion, in part, and deny it, in part.
policy of ensuring public confidence in sales under the
supervision of the court favors confirmation of a sale made
to the highest bidder at a fairly conducted public auction.
Munro Drydock, Inc. v. M/V Heron, 585 F.2d 13, 15
(1st Cir. 1978). Nonetheless, an interested party may
“raise a claim prior to a confirmation that [a] sale
should be disapproved" because the sale price is
"grossly inadequate". Id. “Gross
inadequacy” exists when, apart from situations
involving fraud or unfairness, there is a substantial
disparity between the highest bid and the appraised fair
market value, and “there is a reasonable degree of
probability that a substantially better price will be
obtained by a resale.” Gowen, Inc. v. F/V Quality
One, 2000 WL 893402 (D. Me. June 14, 2000), aff'd,
244 F.3d 64 (1st Cir. 2001).
present case, there is a substantial disparity between the
$50, 000 bid at auction and the $2, 000, 000 appraisal of the
vessel. Furthermore, a substantially higher price is now
apparently available. The “upset bidder”, Custom
Marine, Inc., has deposited $100, 000 in certified funds with
the United States Marshal. Accordingly, the Court finds that
the $50, 000 public auction price is grossly inadequate and
declines to confirm the sale at public auction.
effort to be fair to all interested parties and to provide a
procedure that will elicit the highest price for the vessel,
plaintiff's motion to set aside the auction sale,
consider upset bid and reopen bidding (Docket No. 82) is
ALLOWED, in part, and
DENIED, in part, and the following procedure
is hereby adopted:
- Counsel for plaintiff is to advertise the reopened sale of
the M/V Sea Hunter in Boats and Harbors and
gcaptain.com and submit the proposed advertisements to those
publishers no later than close of business, Thursday, October
- Counsel for plaintiff shall give notice of the sale, and of
this order, to (i) the owner of the M/V Sea Hunter and to all
lien and mortgage claimants of record (ii) the potential
bidders who provided contact information at the October 4,
2017, auction and (iii) Linden Holdings, Inc.
- Bidding will be re-opened until the close of business
Friday, November 3, 2017, during which time bidders other
than the upset bidder, Custom Marine, Inc., may submit sealed
bids in increments of not less than $10, 000 above the
current upset bid of $100, 000.
- Sealed bids shall be delivered or sent to:
United States Marshals Service
via email at: John.Wickham@usdoj.go ...