United States District Court, D. Massachusetts
Coastal Marine Management, LLC d/b/a Boston Harbor Shipyard and Marina, Plaintiff,
Additional Return, LLC, Intervenor.
MEMORANDUM & ORDER
Nathaniel M. Gorton United States District Judge
case arises out of a dispute over custodia legis
expenses that Boston Harbor Shipyard and Marina has incurred
as the custodian of an abandoned vessel under foreclosure.
The plaintiff is seeking to enforce an award of custodia
legis expenses and claims that it is 1) entitled to the
proceeds of the sale of the vessel and 2) that one of the
mortgagees, Additional Return, LLC (“Additional
Return” or “the intervenor”) is required to
pay its pro rata share of expenses as an intervenor in this
2008, the purported owners of an abandoned vessel moored at
Boston Harbor Shipyard and Marina (“the Shipyard”
or “the plaintiff”) failed to make payments to
the Shipyard for the storage of the vessel and related fees.
In August, 2016, the Shipyard filed a complaint against the
owners of the vessel for 1) enforcement of its maritime lien
for necessaries against the subject vessel and 2) breach of
maritime contract. That month, the United States Marshals
served an in rem warrant on the vessel and arrested
it. This Court subsequently appointed the Shipyard as
custodian of the vessel and, on August 16, 2016 (Docket No.
9), ordered that expenses incurred by the Shipyard as
custodian would be subject to the following provisions:
all reasonable expenditures which may be incurred by BHS as
substitute custodian, or any party advancing funds to BHS as
substitute custodian, in safekeeping or maintaining the
vessel while she is in custodia legis, shall be
deemed administrative expenses and the first charge on the
[v]essel herein, to [be] paid prior to the release of the
[v]essel or distribution of the proceeds of its sale;
any intervenor shall owe debt to any party that has
previously advanced funds to cover the expenses of the United
States Marshals Service and/or substitute custodian,
enforceable on motion, consisting of the intervenor's
share of such fees and expenses in the proportion that the
intervenor's claim bears to the sum of all claims.
that order, Additional Return filed a statement of claim or
interest with respect to the vessel for $430, 000 (Docket No.
33). Additional Return submitted that it was filing the claim
to inform the Court that 1) it had a duly perfected mortgage
on the vessel, 2) it had no intention of waiving its rights
and 3) it did not agree to contribute to payment of fees or
expenses incurred by the plaintiff. Additional Return further
noted that it was not seeking to foreclose its mortgage on
the vessel at that time.
January, 2017, the Shipyard moved for interlocutory sale of
the vessel and for the right to credit bid up to the amount
of the indebtedness of the vessel at such sale. Additional
Return filed an objection to the sale, whereupon this Court
entered an order that allowed plaintiff's motion for
interlocutory sale but, at the same time, 1) required an
appraisal of the vessel prior to the sale and 2) instructed
Additional Return to show cause why the Court should not
dismiss its claim of interest in the vessel. Shortly
thereafter, in its response, Additional Return asserted that
it did not need to intervene in this matter to have standing
to object to the sale but then, in a separate pleading on the
same day, moved to intervene, provisionally, so that it would
have standing to object to the interlocutory sale of the
vessel (See Docket No. 66).
the initial sale of the vessel, this Court held a
confirmation hearing with respect to the sale during which it
allowed Additional Return's motion to intervene on
condition that the mortgagee share in the custodia
legis expenses (See Docket No. 78 and
transcript from the hearing). Despite receiving notice of the
hearing, counsel for Additional Return did not appear nor did
it object to the Court's subsequent ruling.
one week of the confirmation hearing, the plaintiff filed an
emergency motion to reopen the sale at foreclosure because a
third party had filed an upset bid on the vessel. This Court
allowed that motion but spelled out in detail the procedure
to be followed with respect to the re-sale (See
Docket No. 86). The vessel was eventually sold for $100, 000
and the proceeds of the sale, less the costs incurred by the
U.S. Marshals, is currently held in escrow by the Court ($98,
the final sale of the vessel, the plaintiff filed a motion
for the disbursement of sale proceeds and apportionment of
custodia legis expenses, which is pending before
incurred with respect to custodia legis are afforded
administrative priority because they are necessary to
preserve the res. See The Poznan, 274 U.S.
117, 121 (1927). Interested parties, including the preferred
ship mortgagee, were clearly informed about that priority
when this Court ...