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Gulf Copper & Manufacturing Corp. v. Lewek Express

United States District Court, S.D. Texas, Galveston Division

June 18, 2019

GULF COPPER & MANUFACTURING CORPORATION Plaintiff.
v.
M/V LEWEK EXPRESS, her apparel, equipment, engines, freights, tackle, etc., in rem Defendant.

          MEMORANDUM AND ORDER

          ANDREW M. EDISON UNITED STATES MAGISTRATE JUDGE.

         Before the Court is Plaintiff Gulf Copper & Manufacturing Corporation ("Gulf Copper") and Intervening Plaintiff Gulf Marine Fabricators, LP's ("Gulf Marine") Opposed Joint Motion for Interlocutory Sale ("Motion for Interlocutory Sale"), which seeks to force the sale of the M/V LEWEK EXPRESS (the "Vessel"). See Dkt. 47. After reviewing the motion, responses, and reply, as well as the applicable law, the Court concludes that the Motion for Interlocutory Sale should be GRANTED.

         BACKGROUND

         Gulf Copper filed this lawsuit on January 29, 2019, seeking to recover $442, 255.00 for berthing, mooring, and related services it provided to the Vessel, a pipe-lay ship, through the end of January 2019. At Gulf Copper's request, the Court arrested the Vessel and appointed Gulf Copper substitute custodian.

         Following notice of the Vessel's arrest in the Galveston Daily News, Gulf Marine and Trevaskis Limited ("Trevaskis") intervened in the lawsuit to assert their respective claims against the Vessel. Gulf Marine asserted a claim for $578, 743.76 arising from unpaid dockage, mooring, and towage fees. Trevaskis asserted a claim to three pieces of pipe-lay equipment currently onboard the Vessel. The pipe-lay equipment-Reel System IV, 60 MT 3 track tensioner, and 200 MT PLET Launch Frame-is all specifically designed to assist the Vessel in furtherance of its pipe-laying operations.

         After Gulf Marine and Trevaskis appeared in the suit, "the purported owner of the Vessel, Ocean Lion Shipping Ltd. ('Ocean Lion'), made a limited appearance ... and filed its Verified Statement of Right or Interest, claiming to be the 'true and bona fide owner of the Vessel." Dkt. 47 at 3 (internal quotation marks and citation omitted). Ocean Lion has represented to the parties and the Court its desire and continuing efforts to secure release of the Vessel. However, suitable progress has not occurred; thus, Gulf Copper and Gulf Marine filed the Motion for Interlocutory Sale, seeking to sell the Vessel pursuant to Rule E(9) of the Supplemental Rules for Certain Admiralty and Maritime Claims ("Admiralty Rules").

         As grounds for interlocutory sale, Gulf Copper and Gulf Marine contend: (1) the Vessel is already in a deteriorated condition (i.e., it is unmanned, laid up, and suffers from water intrusion) and it is likely to worsen if it continues to be held in detention; (2) the Vessel has incurred excessive custodial care expenses to date and is expected to incur additional expenses in the future (i.e., custodial fees accrue at a rate $4, 114.00 per day); and (3) Ocean Lion has unreasonably delayed securing release of the Vessel, whether by bond or otherwise (i.e., the Vessel has been under arrest for more than four months). See Dkt. 47.

         In response to the Motion for Interlocutory Sale, Ocean Lion does not contend that a sale is inappropriate under Rule E(9) of the Admiralty Rules. Rather, Ocean Lion merely argues that any sale should be delayed for 45 days to allow it additional time to try and secure the Vessel's release. See Dkt. 51. Similarly, Trevaskis does not oppose Gulf Copper's and Gulf Marine's right to seek the sale of the Vessel. Instead, Trevaskis specifically argues that the Vessel should not be sold while its pipe-lay equipment is still affixed to the ship because, in Trevaskis's opinion, its pipe-lay equipment is not an appurtenance to the Vessel. See Dkt. 50.

         The Court addresses the sale and appurtenance issues in turn.

         INTERLOCUTORY SALE

         The Admiralty Rules provide the methods by which the owner of an arrested vessel may exercise its due process rights to vacate the arrest or to substitute some other security in the place of the property. While the property is arrested, there are three scenarios listed in the Admiralty Rules that justify an interlocutory sale of the property:

(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 ...

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