United States District Court, S.D. Texas, Galveston Division
MEMORANDUM OPINION AND ORDER
C. Hanks Jr. United States District Judge
the Court is the Plaintiff, Allegiance Bank's
(“Allegiance”), Motion for Summary Judgment
Against Ashley Ryann Caldwell (“Caldwell”). Dkt.
178. After reviewing the motion, the response, and the
applicable law, the motion is GRANTED IN
PART and DENIED IN PART.
background and Prior Proceedings
entered in to various loan agreements with MVR Star Fleet, L.L.C.
(“Star Fleet”), which gave Allegiance preferred
ship mortgages over the Motor Vessel (“M/V”) Star
Gazer, the M/V Star Cruiser, the M/V Lake Limo, and a
security interest in an Office Barge and a set of Floating
Docks (collectively, “the Collateral”).
See Dkt. 1-1; Dkt. 1-2; Dkt. 179-1; 46 U.S.C.
§§ 31301 et seq. Caldwell agreed to be jointly and
severally liable as a guarantor for the loan agreements. Dkt.
178-2. Later, Star Fleet defaulted on its obligations under
the agreements. Dkt. 1 at 4.
filed this action against Star Fleet, its guarantors, and the
Collateral in rem, for the outstanding balance on
the loans. Dkt. 1. The Court entered an unopposed default
judgment in rem against the Collateral for the
outstanding balance on the loan and ordered the seizure of
the Collateral. Pursuant to the Court's order, the
Collateral was then sold to third-parties at auction for
$167, 000. See Dkt. 47; Dkt. 48; Dkt. 49; Dkt. 179
filed a motion to have the Collateral sale set aside on the
grounds that the sales prices were lower than the fair market
value of the Collateral before seizure. Dkt. 51. Following an
evidentiary hearing the Court denied the motion, specifically
finding that there was “no evidence of fraud in
connection with the judicial sale[s], collusion, or gross
inadequacy of price.” Dkt. 79; Dkt. 85. The Court also
found as a matter of law that Caldwell was a guarantor on the
loans entered into between Allegiance and Star Fleet. Dkt.
142. The Court's decision was affirmed by the Fifth
Circuit Court of Appeals and the Clerk of the Court disbursed
the proceeds from the auction in partial satisfaction of the
loans. Dkt. 161; Dkt. 171.
has now moved for summary judgment seeking a deficiency
judgment against Caldwell for the outstanding balance on the
loans, pre and post judgment interest on the loans, and
attorney's fees. For the reasons below, the Court grants
Allegiance's motion for summary judgment in part and
denies it in part.
judgment is appropriate where “the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). A genuine dispute of material fact exists
where the “‘evidence is such that a reasonable
jury could return a verdict for the nonmoving
party.'” Nola Spice Designs, L.L.C. v. Haydel
Enters., 783 F.3d 527, 536 (5th Cir. 2015) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986)). Initially, the moving party bears the burden
“of informing the district court of the basis for its
motion, and identifying those portions of the record which it
believes demonstrate the absence of a genuine issue of
material fact.” E.E.O.C. v. LHC Grp., Inc.,
773 F.3d 688, 694 (5th Cir. 2014) (internal quotation marks
omitted). If the moving party fulfills this responsibility,
the non-moving party must then “go beyond the pleadings
and by her own affidavits, or by the depositions, answers to
interrogatories, and admissions on file, designate specific
facts showing that there is a genuine issue for trial.”
Celtic Marine Corp. v. James C. Justice Cos., 760
F.3d 477, 481 (5th Cir. 2014) (internal quotation marks
omitted). Conclusory statements, speculation, and
unsubstantiated assertions will not suffice to meet the
non-movant's summary judgment burden. Douglass v.
United Servs. Auto. Ass'n, 79 F.3d 1415, 1429 (5th
Cir. 1996). However, all evidence will be reviewed in the
light most favorable to the non-moving party and all
reasonable inferences will be drawn in the non-moving
party's favor. Adickes v. S.H. Kress, 398 U.S.
144, 157 (1970).
Federal law, United States district courts are empowered to
enter judgments against the guarantors of a preferred ship
mortgage “for any deficiency in the amount of the
indebtedness secured by [a] vessel.” J. Ray
McDermott & Co. v. Vessel Morning Star, 457 F.2d
815, 818 (5th Cir. 1972); 46 U.S.C. § 31325(b). A
well-established process, a deficiency judgment is calculated
by determining “the difference between the total
outstanding obligation” on a mortgage and the
“fair value” offset of any collateral sold in
partial satisfaction of that loan. Bollinger & Boyd
Barge Serv., Inc. v. The Motor Vessel, Captain Claude
Bass, 576 F.2d 595, 598 (5th Cir. 1978) (quotations
omitted). Ordinarily, “the amount realized on sale [at
auction] is an automatic determination of the [fair
value]” figure that is used for an offset calculation.
See Walter E. Heller & Co. v. O/S Sonny V, 595
F.2d 968, 971 (5th Cir. 1979). However, this is a
determination that is ultimately “left to the equitable
discretion of the district court.” See id.;
see J. Ray McDermott & Co., Inc., 457 F.2d at
819. Where a showing is made that there is a “probable
significant disparity between the [auction] price of [any
collateral sold] and its fair [market] value, ” a
district court “must use the latter to determine the
[deficiency].” EnSerCo, L.L.C. v. Drilling Rig
Noram 253, 126 F.Supp.2d 443, 446 (S.D. Tex. 2000)
(citing Walter E. Heller & Co., 595 F.2d at
971). The guiding principle being that no party should
experience a “windfall” as a result of the
foreclosure process. Bollinger & Boyd Barge Serv.,
Inc., 576 F.2d at 598. In the event a district court
finds that such a disparity exists, the question of the
collateral's fair market value is a genuine issue of
material fact better left for trial. See EnSerCo,
L.L.C., 126 F.Supp.2d at 447.
Ms. Caldwell argues that there is a significant disparity
between the auction price of the Collateral and its fair
market value and only the latter should be used to calculate
whether any deficiency exists under this mortgage. Dkt. 179
at 10. Ms. Caldwell points out that while the Collateral sold
at auction for a combined amount of $167, 000, her husband,
President of Star Fleet Mark Caldwell, stated by affidavit
that the Collateral had a fair-market value of “$786,
500 on the low end and $936, 500.00 on the high end”
before auction. Id. at 9. The Court is unconvinced
by Ms. Caldwell's arguments and finds that there is no
significant disparity between the auction price of the
Collateral and its fair market value. Accordingly, no genuine
issues of material fact exist as to the Collateral's fair
value and the Court will use the auction price of the
Collateral to calculate any deficiency under this mortgage.
Caldwell's arguments against using the auction price to
calculate the deficiency judgment are a reformulation of
identical arguments that she made two years ago.
Specifically, in 2017 Ms. Caldwell motioned the Court to set
the auction sales aside because they “were not
commercially reasonable” and “were structured by
Plaintiff to create an artificial deficiency.” Dkt. 51
at 1. In support of this motion, Ms. Caldwell provided
identical evidence of a disparity between the sales prices of
the Collateral at auction and its fair market value at the
time of sale. Dkt. 51 at 3-5. In response to Ms.
Caldwell's concerns, the Court held two hearings to
determine the legitimacy of the auction sales. Dkt. 58; Dkt.
78. At the hearing, evidence was admitted and testimony was
taken concerning the validity of the auctions from Mark
Caldwell and Bill Holbert, Senior Vice President of
Allegiance. Dkt. 58. After due consideration of the live
testimony and the evidence in the record, the Court ...