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 (“the
Shipyard” or “plaintiff”) has incurred as
the Court-appointed custodian of an abandoned vessel under
foreclosure. Pending before the Court is the motion of
plaintiff for entry of judgment against intervenor Additional
Return, LLC (“Additional Return” or
“defendant”) for its pro rata share of expenses
amounting to $64, 865.64 plus interest.
facts of this case are outlined in detail in a prior order of
this Court allowing plaintiff's motion for the
disbursement of sale proceeds and apportionment of custodia
legis expenses (Docket No. 106) (“the February 20, 2019
Order”). In that Order, the Court held that
“Additional Return, as an intervenor, is subject to
this Court's initial order concerning the pro rata
sharing of custodia legis expenses” (Docket No. 106).
now seeks entry of judgment in its favor in the amount of
$64, 865.64, plus interest, due to it from Additional Return
for unpaid custodia legis expenses pursuant to the February
20, 2019 Order. Additional Return objects, reciting verbatim
arguments previously rejected by this Court. So as not to
re-bake the cake, the Court will address only the single new
argument proffered by Additional Return: that a mortgagee
which was effectively required to intervene did not benefit
on a pro rata basis, or at all for that matter, by the arrest
and forced sale of the mortgaged vessel and should not be
liable for custodia legis expenses.
Return's argument is unavailing. The logic of pro rata
apportionment among intervenors for custodia legis expenses
is that the first party to arrest a vessel and arrange for a
substitute custodian should not be burdened by expenses
intended to benefit all interested parties. Donald D.
Forsht Associates, Inc. v. Transamerica ICS, Inc., 821
F.2d 1556, 1561 (11th Cir. 1987). Pro rata apportionment is
not, as Additional Return suggests, dependent upon whether an
intervenor is entitled to a pro rata share of the sale
proceeds. Indeed, a Court has broad discretion in
apportioning the payment of custodia legis expenses and may
choose to require intervenors to pay a per capita share
rather than a pro rata share. See, e.g., Mullane v.
Chambers, 438 F.3d 132, 138 (1st Cir. 2006) (explaining
that admiralty courts have “flexible and
equitable” authority to award custodial expenses); see
also Beauregard, Inc. v. Sword Services, LLC, 107
F.3d 351, 353-54 (5th Cir. 1997) (“[T]he district court
enjoys broad equitable authority over the administration of
maritime seizures.”); Gulf Copper &
Manufacturing Corporation v. M/V Lewek Express, No.
19-cv-00034, 2019 WL 2435848, *3 (S.D. Tex. June 11, 2019)
(explaining that, where reasonable, a court may order per
capita apportionment of custodia legis expenses).
Additional Return argues to the contrary, the Shipyard
provided a benefit to all claimants by arresting the vessel
and moving to appoint a substitute custodian to provide for
safekeeping at a cost lower than that charged by the United
States Marshall's office. See Id. The
Shipyard's actions served to protect the value of the
vessel and, thereby, was a benefit to all interested parties,
including Additional Return.
respect to Additional Return's contention that it was
forced to intervene and, therefore, should not be required to
pay a pro rata share of expenses, it was “forced”
to intervene only to the extent it sought to recover proceeds
from the sale of the vessel. It was no more required to
intervene than any other interested creditor. In any event,
Additional Return failed to object to its status as an
intervenor after this Court granted its motion to intervene
provisionally and after the sale was finalized.
Court has twice found that Additional Return is responsible
for its pro rata share of custodia legis expenses. Additional
Return has repeatedly claimed that such a ruling is unfair.
The possibility of recovery on its promissory note from the
sale proceeds was, however, a sufficient incentive to cause
Additional Return to file a claim in this action and,
subsequently, to intervene rather than to allow its claim to
be dismissed. Along with the possibility of recovery comes an
“attendant responsibility to preserve the property,
” because recovery is only possible if the property is
preserved. See Donald D. Forsht Associates, Inc., 821 F.2d at
1562 n. 8. Accordingly, plaintiff's motion for entry of
judgment will be allowed.
seeks prejudgment interest on its claim for expenses.
Prejudgment interest in admiralty claims may be awarded as
compensation for the use of funds to which the plaintiff was
entitled but of which the defendant had the use prior to
judgment. Borges v. Our Lady of the Sea Corp., 935
F.2d 436, 444 (1st Cir. 1991). No. “exceptional
circumstances” exist here justifying a refusal of
prejudgment interest. Nevor v. Moneypenny Holdings,
LLC, 842 F.3d 113, 124 (1st Cir. 2016). The Court will
therefore award prejudgment interest from December 4, 2017,
the date on which the Shipyard first requested payment for
custodia legis expenses from Additional Return, compounded
quarterly at the prevailing Treasury bill rate.
foregoing reasons, the motion of plaintiff for entry of
judgment in its favor (Docket No. 107) is
ALLOWED. Funds plus interest shall be paid
to: Hollbrook & Murphy as attorneys for Costal Marine
Management, LLC d/b/a Boston Harbor Shipyard and Marina.