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X-Drill Holdings Inc. v. Jack-Up Drilling Rig Se 83

United States District Court, S.D. Texas, Corpus Christi Division

April 3, 2017

X-DRILL HOLDINGS INC., et al, Plaintiffs,
v.
JACK-UP DRILLING RIG SE 83, et al, Defendants.

          ORDER GRANTING MOTIONS TO INTERVENE

          Janis Graham Jack Senior United States District Judge.

         On this day came to be considered Max Shipping, Inc.'s (“Max Shipping”) Opposed Motion to Intervene (D.E. 79) and Signet Maritime Corporation's (“Signet”) Opposed Motion to Intervene (D.E. 80). For the reasons stated below, the Motions are GRANTED.

         I. JURISDICTION

         This action is within the admiralty jurisdiction of this Court and is an admiralty or maritime claim within the meaning of Rule 9(h) of the Federal Rules of Civil Procedure. The Court has jurisdiction pursuant to 28 U.S.C. § 1333. Venue is proper in this Court because the vessel was present in the district and is presently in the district as represented by the proceeds from the sale. 28 U.S.C. § 1391(b); In re McDonnell-Douglas Corp., 647 F.2d 515, 516 (5th Cir. 1981).

         II. FACTUAL AND PROCEDURAL BACKGROUND

         X-Drill Holdings Inc. (“X-Drill”) brought this action on September 20, 2016 against Defendants Jack-Up Drilling Rig SE 83 (“SE 83”) and her engines, tackle etc. in rem; Supreme Excellence 1 (HK) Ltd.; Supreme Excellence 2 (HK) Ltd.; Supreme Excellence 3 (HK) Ltd.; and Supreme Excellence 4 (HK) Ltd., (collectively “Supreme”) in personam. X-Drill sought to obtain security pending a judgment of the Court and/or an award in foreign arbitration relating to its maritime lien for necessaries under the United States Commercial Instruments and Maritime Lien Act (“CIMLA”). (D.E. 21, Pages 1-2). X-Drill alleged Supreme failed to pay for contracted services including offshore maintenance operations, crewing services, materials, parts, repairs, and other services required by SE 83 while in Corpus Christi, Texas. (D.E. 21, Page 2). X-Drill requested the arrest of Supreme's property within this jurisdiction under Rules B and C of the Federal Rules of Civil Procedure, Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions. (D.E. 21, Page 3). On September 21, 2016, United States Magistrate Judge Jason Libby issued a writ of attachment to X-Drill against SE 83 and a warrant to attach SE 83. (D.E. 6 and D.E. 9). On November 18, 2016, United Overseas Bank Limited (“United Overseas”) filed a Notice of Claim, Lien, and Statement of Interest. (D.E. 13). On December 5, 2016, United Overseas filed an intervening verified complaint claiming it had issued a first preferred maritime mortgage to Supreme in the amount of $45, 018, 750.00 which is in default. (D.E. 31, Page 3). United Overseas also claims a breach of the mortgage contract based on Supreme's failure to pay. (D.E. 31, Page 5).

         On December 15, 2016, SE 83 was sold at judicial sale for one million dollars ($1, 000, 000.00) to Dixstone Holdings, Ltd. of the Bahamas. (D.E. 58). On December 30, 2016, this sale was confirmed and ownership of SE 83 was transferred as is with no warranties, and free and clear of all liens, claims, and encumbrances. (D.E. 58). On February 9, 2017, the agreed upon payments owed for certain custodial fees were paid out of the registry of the court. (D.E. 73). At issue is the disbursement of the remaining proceeds. On March 24, 2017, Max Shipping filed the pending Opposed Motion to Intervene. (D.E. 79). On March 28, 2017, Signet filed its Opposed Motion to Intervene. (D.E. 80).

         III. DISCUSSION

         An intervention based on a maritime lien against the res is an intervention of right governed by Federal Rule of Civil Procedure 24(a). See DnB Holdings, Ltd. v. M/V Hermitage, 1995 WL 529853, at *1 (E.D. La. Sept. 7, 1995) (citing Banco de Credito Indus. v. Tesoreria Gen., 990 F.2d 827 (5th Cir. 1993)). Rule 24(a) provides that on timely motion, the Court must permit anyone to intervene who:

(1) is given an unconditional right to intervene by federal statute; or
(2) claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest.

Fed. R. Civ. P. 24(a)(1)-(2). Based upon this rule, the Fifth Circuit has developed a four factor test for evaluating a motion to intervene under Rule 24(a)(2):

(1) the applicant must file a timely application;
(2) the applicant must claim an interest in the subject matter ...

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