National Liability & Fire Insurance Co. v. Rick's Marine Corp. et al

MOTION for Summary Judgment

E.D.N.Y.February 27, 2017

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ----------------------------------------------------------------------- X NATIONAL LIABILITY & FIRE INSURANCE CO., : Civil Action No. : 15-CV-6352 Plaintiff, : : - against - : : RICK’S MARINE CORP. and : ADAM WEINSTEIN, : : Defendants. : : ----------------------------------------------------------------------- X NOTICE OF PLAINTIFF NATIONAL LIABILITY & FIRE INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT PLEASE TAKE NOTICE that, upon the accompanying Memorandum of Law and the accompanying Local Rule 56.1 Statement of Undisputed Facts, together with all other pleadings and proceedings heretofore had herein, Plaintiff National Liability & Fire Insurance Co., by its counsel, Nicoletti Horning & Sweeney, will move this Court before the Honorable Denis R. Hurley, on February 27, 2017, or as soon thereafter as counsel may be heard, at the United States Courthouse, 100 Federal Plaza, Central Islip, New York 11722-4451, for an Order, pursuant to Rule 56 of the Federal Rules of Civil Procedure, granting Plaintiff National Liability & Fire Insurance Co. summary judgment on its third cause of action for conversion as stated in its Amended Complaint against Defendant Rick’s Marine Corp., and further directing Defendant Rick’s Marine Corp. to release the vessel M/V PELAGIC, and for such other and further relief as the Court deems just and proper. Case 2:15-cv-06352-DRH-ARL Document 27 Filed 02/27/17 Page 1 of 2 PageID #: 255 2 Dated: January 6, 2017 New York, New York Respectfully submitted, NICOLETTI HORNIG & SWEENEY Attorneys for Plaintiff National Liability & Fire Insurance Co. By: s/William M. Fennell William M. Fennell, Esq. Wall Street Plaza 88 Pine Street, Seventh Floor New York, New York 10005 Tel: 212-220-3830 E-mail: WFennell@NicolettiHornig.com Reference No.: 00001195 TO (via first class mail): ROSENBERG & PITTINSKY, LLP Attorneys for Defendant Adam Weinstein, Esq. Laurence D. Pittinsky, Esq. 232 Madison Avenue, Suite 906 New York, New York 10016 Tel: 212-286-6100 Email: larry@rpllplaw.com KENNEDY LILLIS SCHMIDT & ENGLISH Craig S. English, Esq. 75 Maiden Lane - Suite 402 New York, New York 10038-4816 Tel: 212-430-0803 Email: CEnglish@klselaw.com X:\Public Word Files\0\1195\LEGAL\MSJ -- By National -- Against Ricks Marine -- Notice (1-6-17) wmf.s.mm.doc Case 2:15-cv-06352-DRH-ARL Document 27 Filed 02/27/17 Page 2 of 2 PageID #: 256 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ----------------------------------------------------------------------- X NATIONAL LIABILITY & FIRE INSURANCE CO., : Civil Action No. : 15-CV-6352 Plaintiff, : : - against - : : RICK’S MARINE CORP. and : ADAM WEINSTEIN, : : Defendants. : : ----------------------------------------------------------------------- X RULE 56.1 STATEMENT OF UNDISPUTED MATERIAL FACTS Plaintiff National Liability & Fire Insurance Company (“National”) respectfully submits, pursuant to Rule 56.1 of the Local Rules of the United State District Court for the Southern and Eastern Districts of New York, the following statements of undisputed material facts: 1. Prior to May 8, 2014, Defendant Adam Weinstein purchased the M/V PELAGIC, a 2007 model Tiara 3900 Convertible pleasure craft (the “Vessel”). See R. Doc. 9 ¶ 11; R. Doc. 13 ¶ 5. 2. Plaintiff National insured Mr. Weinstein for the Vessel pursuant to policy number 3763804-14, in effect from June 19, 2014, through June 19, 2015. See R. Doc. 9-1; see also R. Doc. 9 ¶ 13; R. Doc. 13 ¶ 7. 3. On or about May 8, 2015, Defendant Rick’s Marine Corp. (“RMC”) commissioned the Vessel for the 2015 season and launched the M/V PELAGIC during the afternoon of May 8, 2015. See R. Doc. 9 ¶¶ 16-17; R. Doc. 10 ¶ 17. Case 2:15-cv-06352-DRH-ARL Document 27-1 Filed 02/27/17 Page 1 of 3 PageID #: 257 2 4. Subsequent to RMC launching the Vessel, the Vessel sank alongside a dock at RMC’s premises on May 8, 2015. See R. Doc. 9 ¶ 17; R. Doc. 10 ¶¶ 16-17. 5. The M/V PELAGIC was refloated and, thereafter, the Vessel was brought ashore and placed in the shipyard of Defendant Rick’s Marine Corp. See R. Doc. 9 ¶18; R. Doc. 10 ¶ 18. 6. National acquired title to the Vessel when, on or about June 29, 2015, Mr. Weinstein sent a bill of sale with “National Liability & Fire Insurance Company” as the purchaser and recorded the sale with the U.S.C.G.’s National Vessel Documentation Center. See R. Doc. 9 ¶ 20; R. Doc. 10 ¶ 20; R. Doc. 13 ¶ 13; see also R. Doc. 9-2. 7. RMC does not own the M/V PELAGIC. See R. Doc. 9 ¶ 20; R. Doc. 10 ¶ 20. 8. National made several requests to RMC to take possession of the Vessel. See R. Doc. 9 ¶ 23; R. Doc. 10 ¶ 23; see also R. Doc. 15 ¶ 10. 9. RMC refused, and continues to refuse, to allow National to take possession of the Vessel. See R. Doc. 9 ¶ 23; R. Doc. 10 ¶ 23; R. Doc. 15 ¶ 10. 10. RMC is still currently in possession of the Vessel. See R. Doc. 9 ¶ 23; R. Doc. 10 ¶ 23; R. Doc. 15 ¶ 10. 11. RMC did not commence a civil action against the Vessel prior to seizing it. See generally R. Doc. 15. 12. RMC has not recorded notice of its purported lien against the Vessel with the Secretary of the Department of Homeland Security. See generally, R. Doc. 15. 13. RMC has not filed a declaration with the Secretary of the Department of Homeland Security attesting to the validity of RMC’s purported lien against the Vessel. See generally, R. Doc. 15. Case 2:15-cv-06352-DRH-ARL Document 27-1 Filed 02/27/17 Page 2 of 3 PageID #: 258 3 Dated: January 6, 2017 New York, New York Respectfully submitted, NICOLETTI HORNIG & SWEENEY Attorneys for Plaintiff National Liability & Fire Insurance Co. By: s/William M. Fennell William M. Fennell, Esq. Wall Street Plaza 88 Pine Street, Seventh Floor New York, New York 10005 Tel: 212-220-3830 E-mail: WFennell@NicolettiHornig.com Reference No.: 00001195 TO (via first class mail): ROSENBERG & PITTINSKY, LLP Attorneys for Defendant Adam Weinstein, Esq. Laurence D. Pittinsky, Esq. 232 Madison Avenue, Suite 906 New York, New York 10016 Tel: 212-286-6100 Email: larry@rpllplaw.com KENNEDY LILLIS SCHMIDT & ENGLISH Craig S. English, Esq. 75 Maiden Lane - Suite 402 New York, New York 10038-4816 Tel: 212-430-0803 Email: CEnglish@klselaw.com X:\Public Word Files\0\1195\LEGAL\MSJ -- By National -- Against Ricks Marine -- SOF (FINAL) 1-6-17 wmf.s.mm.doc Case 2:15-cv-06352-DRH-ARL Document 27-1 Filed 02/27/17 Page 3 of 3 PageID #: 259 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ----------------------------------------------------------------------- X NATIONAL LIABILITY & FIRE INSURANCE CO., : Civil Action No. : 15-CV-6352 Plaintiff, : : - against - : : RICK’S MARINE CORP. and : ADAM WEINSTEIN, : : Defendants. : : ----------------------------------------------------------------------- X PLAINTIFF NATIONAL LIABILITY & FIRE INSURANCE COMPANY’S MEMORANDUM OF LAW IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT NICOLETTI HORNIG & SWEENEY Attorneys for Plaintiff National Liability & Fire Insurance Company Wall Street Plaza 88 Pine Street, Seventh Floor New York, New York 10005 OF COUNSEL: John A.V. Nicoletti, Esq. William M. Fennell, Esq. Cali L. Eckler, Esq. Case 2:15-cv-06352-DRH-ARL Document 27-2 Filed 02/27/17 Page 1 of 16 PageID #: 260 i TABLE OF CONTENTS TABLE OF AUTHORITIES .......................................................................................................... ii PRELIMINARY STATEMENT .....................................................................................................1 FACTUAL BACKGROUND ..........................................................................................................2 LEGAL ARGUMENT .....................................................................................................................5 POINT I LEGAL STANDARD FOR SUMMARY JUDGMENT MOTION ....................................5 POINT II IF RMC EVEN HAS ANY LIEN RIGHTS AT ALL, THEN RMC HAS FAILED TO PROPERLY ENFORCE ITS LIEN AND HAS IMPROPERLY EXERCISED SELF-HELP .....................................................6 A. To The Extent RMC Has A Lien Under Federal Maritime Lien Act, The Prerequisites To Enforcement Have Not Been Satisfied And, In Any Event, The Act Does Not Permit Self-Help Seizure ...........................6 B. The New York Lien Law Is Preempted By The Federal Maritime Lien Act ...................................................................................................................7 CONCLUSION ..............................................................................................................................11 Case 2:15-cv-06352-DRH-ARL Document 27-2 Filed 02/27/17 Page 2 of 16 PageID #: 261 ii TABLE OF AUTHORITIES Cases Ajubita v. S/S Peik, 313 F. Supp. 1238 (E.D. La. 1969), aff’d, 428 F.2d 1345, 1970 A.M.C. 1463 (5th Cir. 1970)...................................................... 10 Brown v. Eli Lilly & Co., 654 F.3d 347 (2d Cir. 2011) .................................................................................................... 6 Farwest Steel Corp. v. DeSantis, 687 P.2d 207, 1985 A.M.C. 412 (1984) ................................................................................ 10 FDIC v. Great Am. Ins. Co., 607 F.3d 288 (2d Cir. 2010) .................................................................................................... 5 Lih v. Wagner, 316 N.Y.S.2d 497, 1971 A.M.C. 768 (N.Y. Sup. Ct. Cortland County 1970) ........................ 9 McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184 (2d Cir. 2007) .................................................................................................... 5 Midlantic Nat’l Bank v. Sheldon, 751 F. Supp. 26 (E.D.N.Y. 1990) .............................................................................. 2, 8, 9, 11 Rosano v. Manhasset Bay Marina, Ltd., 870 F. Supp. 2d 322 (E.D.N.Y. 2012) ..................................................................................... 6 The Robert W. Parsons, 191 U.S. 17, 24 S. Ct. 8, 48 L. Ed. 73 (1903) .......................................................................... 9 United States v. The ZARCO, 187 F. Supp. 371, 1961 A.M.C. 78 (S.D. Cal. 1960) ........................................................ 9, 10 York Hunter Const., Inc. v. Avalon Properties, Inc., 104 F. Supp. 2d 211 (S.D.N.Y. 2000) ................................................................................... 10 Rules and Statutes Fed. R. Civ. P. 4 .............................................................................................................................. 7 Fed. R. Civ. P. 12 ............................................................................................................................ 6 Fed. R. Civ. P. 56 ............................................................................................................................ 5 Case 2:15-cv-06352-DRH-ARL Document 27-2 Filed 02/27/17 Page 3 of 16 PageID #: 262 iii Federal Maritime Lien Act, 46 U.S.C. § 31301 .......................................................................... 2, 6 Federal Maritime Lien Act, 46 U.S.C. § 31307 .............................................................................. 8 Federal Maritime Lien Act, 42 U.S.C. § 31322 .............................................................................. 8 Federal Maritime Lien Act, 46 U.S.C. § 31341 .............................................................................. 1 Federal Maritime Lien Act, 46 U.S.C. § 31342 .............................................................................. 6 Federal Maritime Lien Act, 46 U.S.C. § 31343 .............................................................................. 7 New York Lien Law § 80 ............................................................................................................... 9 New York Lien Law § 184 ............................................................................................. 1, 2, 7, 8, 9 New York Lien Law § 206 ........................................................................................................... 10 Secondary Sources John S. Rogers, Enforcement of Maritime Lines and Mortgages, 47 Tul. L. Rev. 767(1973) ....................................................................................................... 8 Case 2:15-cv-06352-DRH-ARL Document 27-2 Filed 02/27/17 Page 4 of 16 PageID #: 263 1 PRELIMINARY STATEMENT Plaintiff National Liability & Fire Insurance Company (“National”) respectfully submits this memorandum of law in support of its motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure on National’s third cause of action for conversion as stated in its Amended Complaint (R. Doc. 9).1 The captioned action arises out of the sinking of the pleasure craft the M/V PELAGIC (the “Vessel”) immediately after launching and, after it was refloated, the continuing detention of the Vessel by Defendant Rick’s Marine Corp. (“RMC”). Defendant Adam Weinstein was the owner of the M/V PELAGIC at the time it sank at RMC’s dock within hours after RMC launched the Vessel on May 8, 2015. The instant motion concerns only Defendant RMC’s wrongful conversion and continued detention of the Vessel after it sunk (and not RMC’s liability for causing the sinking). RMC asserts, in its affirmative defenses, that its self-help detention of the Vessel is justified because it purportedly has a lien against the M/V PELAGIC pursuant to the Federal Maritime Lien Act, 46 U.S.C. § 31341, et seq. and New York Lien Law § 184 for the “repair costs and other charges owing” with respect to the Vessel. For purposes of the instant motion, the Court may assume (without deciding) that Defendant Weinstein owed Defendant RMC for repairs the latter allegedly performed at Defendant Weinstein’s request prior to the sinking.2 Nonetheless, there is no legal justification for Defendant RMC’s self-help detention of the Vessel based upon a purported lien. First, in order to avail itself of the maritime law remedies such as a warrant of arrest for the Vessel under Admiralty Rule C, Defendant RMC must perfect a lien under the Federal 1 Citations to “R. Doc. __” reference the entries in the civil docket by the Clerk of Court for the proceedings before this Court. 2 Defendant Weinstein disputes that any repair costs and other charges are owed. Case 2:15-cv-06352-DRH-ARL Document 27-2 Filed 02/27/17 Page 5 of 16 PageID #: 264 2 Maritime Lien Act, 46 U.S.C. §§ 31301 et seq., but has failed to do so. Second, RMC may not avail itself of self-help under New York Lien Law § 184 because “the provisions of 46 U.S.C. §§ 31301 et seq. preempt the New York Lien Law.” Midlantic Nat’l Bank v. Sheldon, 751 F. Supp. 26, 28 (E.D.N.Y. 1990). Thus, Defendant RMC has improperly attempted to enforce its unperfected maritime lien through self-help. As explained more thoroughly below, Defendant RMC has no valid basis for seizing and refusing to release the Vessel. Accordingly, National seeks summary judgment on its cause of action for conversion and a corresponding Order directing Defendant RMC to release the Vessel and awarding to Plaintiff National any damages resulting from RMC’s wrongful conversion (to be determined once Plaintiff National has been permitted access to the Vessel) in an amount to be determined at trial. FACTUAL BACKGROUND Although not necessary for purposes of the present motion - the relevant facts being straightforward, wholly contained within the pleadings, and undisputed - Plaintiff National sets forth the following facts to provide a background for the Court. In June 2014, Defendant Weinstein purchased a 2007-model Tiara 3900 Convertible pleasure craft designated the M/V PELAGIC (i.e., the Vessel). See R. Doc. 9 ¶ 11; R. Doc. 13 ¶ 5. Mr. Weinstein procured insurance in the amount of $290,000.003 from National. National issued a hull policy to Mr. Weinstein for the Vessel, which was assigned policy number 3763804-14, and effective from June 19, 2014, through June 19, 2015. See generally R. Doc. 9- 1; see also R. Doc. 9 ¶ 13; R. Doc. 13 ¶ 7. 3 The estimated replacement cost of the Vessel was allegedly $1,150,000.00. Case 2:15-cv-06352-DRH-ARL Document 27-2 Filed 02/27/17 Page 6 of 16 PageID #: 265 3 On or about November 22, 2014, Mr. Weinstein brought the Vessel to Defendant RMC in Freeport, New York for repairs, and winterization and storage during the 2014-2015 winter season. See R. Doc. 9 ¶ 14; R. Doc. 13 ¶ 8; R. Doc. 15 ¶¶ 9-10. Following the winter season, RMC performed repairs to the Vessel and launched it on May 8, 2015. See R. Doc. 9 ¶¶ 16-17; R. Doc. 13 ¶¶ 10-11; R. Doc. 15 ¶ 22. Within hours after RMC launched the Vessel it sank at RMC’s dock in fair weather and while in RMC’s exclusive care. See R. Doc. 13 ¶ 11; R. Doc. 10 ¶ 16. The Vessel was refloated the next day by a salvor and returned to RMC’s care, where it has remained. See R. Doc. 9 ¶ 18; R. Doc. 10 ¶ 18. On May 20, 2015, National notified RMC of a potential claim against it for its failure to exercise due care in preparing the Vessel for launch. In response, RMC advised National of its purported claims arising from the sinking of the Vessel, consisting of: (1) $1,682.94 for emergency haul/sidetrack services; (2) $6,794.49 for machinery salvage; (3) $3,244.90 for interior salvage; (4) $337 for a replacement sling; and (5) $845 to repair/restore RMC’s docks. See generally R. Doc. 15. National paid RMC in full for the emergency haul, machinery salvage, the interior salvage, and replacement sling.4 See R. Doc. 9 ¶ 30. National determined the Vessel was a total loss (R. Doc. 9 ¶ 19; R. Doc. 13 ¶ 12), but nonetheless has a residual salvage value. National advised Mr. Weinstein of its determination and that National would settle Mr. Weinstein’s insurance claim in the amount of $290,000.00 (i.e., the insured value). See R. Doc. 9 ¶ 19; R. Doc. 13 ¶ 12. In exchanged for the settlement, Mr. Weinstein returned an executed sworn proof of loss, bill of sale, and power of attorney conferring upon National (through its agents) the right to sign, register or transfer the Certificate 4 National contends that RMC’s negligence caused the Vessel to sink and, therefore, the alleged damage to RMC’s dock caused by the sinking is a result of RMC’s own fault. Case 2:15-cv-06352-DRH-ARL Document 27-2 Filed 02/27/17 Page 7 of 16 PageID #: 266 4 of Title to the Vessel. National issued a check to Mr. Weinstein for $290,000.00 in full settlement of the insurance claim. See R. Doc. 9 ¶ 19; R. Doc. 13 ¶ 12. On June 29, 2015, Mr. Weinstein prepared a bill of sale and recorded the sale with the U.S.C.G.’s National Vessel Documentation Center. See R. Doc. 9 ¶ 20; R. Doc. 10 ¶ 20; R. Doc. 13 ¶ 13; see also R. Doc. 9-2. The bill of sale warranted that “the vessel is free and clear of all liens, mortgages, taxes or encumbrances of any nature or kind.” R. Doc. 9-2. When National sought to claim possession of the Vessel, RMC alleged that it maintained a lien on the Vessel, in an unspecified amount, for services Mr. Weinstein had allegedly requested over the winter. See R. Doc. 9 ¶¶ 22-23; R. Doc. 10 ¶¶ 22-23 & p.11; see also R. Doc. 15 ¶¶ 39, 41 & 49. The dispute over the invoices and claimed damages between RMC and Mr. Weinstein is ongoing, and will be resolved in the course of this litigation. However, National is not a party to that dispute. In the meantime, RMC continues to refuse to allow National to take possession of the Vessel. See R. Doc. 9 ¶ 23; R. Doc. 10 ¶ 23; R. Doc. 15 ¶ 10. Relevant to the instant motion is the undisputed fact that National made several requests to RMC to take possession of the Vessel to which it had acquired title. See R. Doc. 9 ¶ 23; R. Doc. 10 ¶ 23; see also R. Doc. 15 ¶ 10. Despite these requests RMC would not permit National’s representatives to remove the Vessel from RMC’s marina without being paid for the allegedly outstanding charges. R. Doc. 10 ¶ 23; see generally R. Doc. 15. The only issue in dispute as to the rightful possession of the Vessel is a legal issue, namely whether RMC has any lien rights in the Vessel that would allow RMC to retain possession of the Vessel. As set forth below, RMC has no such rights. Case 2:15-cv-06352-DRH-ARL Document 27-2 Filed 02/27/17 Page 8 of 16 PageID #: 267 5 LEGAL ARGUMENT As explained below, under well-settled federal admiralty law and New York Lien Law, RMC has no legal basis to maintain possession of the Vessel and refuse to allow National to remove the Vessel from the marina. Therefore, National is entitled to summary judgment on its claim for conversation and respectfully requests that RMC be directed to return the boat to National immediately, irrespective of RMC’s financial disputes with Mr. Weinstein. POINT I LEGAL STANDARD FOR SUMMARY JUDGMENT MOTION A motion for summary judgment is appropriately granted when “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 fact is ‘material’ when it might affect the outcome of the suit under governing law,” and “[a]n issue of fact is ‘genuine’ if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 202 (2d Cir. 2007) (internal quotation marks and citations omitted). “The moving party bears the initial burden of demonstrating ‘the absence of a genuine issue of material fact.’” FDIC v. Great Am. Ins. Co., 607 F.3d 288, 292 (2d Cir. 2010) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986)). Where that burden is carried, the nonmoving party “must come forward with specific evidence demonstrating the existence of a genuine dispute of material fact” (id.), which is “more than simply show[ing] that there is some metaphysical doubt as to the material facts, and may not rely on conclusory Case 2:15-cv-06352-DRH-ARL Document 27-2 Filed 02/27/17 Page 9 of 16 PageID #: 268 6 allegations or unsubstantiated speculation.” Brown v. Eli Lilly & Co., 654 F.3d 347, 358 (2d Cir. 2011) (internal quotation marks and citations omitted).5 POINT II IF RMC EVEN HAS ANY LIEN RIGHTS AT ALL, THEN RMC HAS FAILED TO PROPERLY ENFORCE ITS LIEN AND HAS IMPROPERLY EXERCISED SELF-HELP A. To The Extent RMC Has A Lien Under Federal Maritime Lien Act, The Prerequisites To Enforcement Have Not Been Satisfied And, In Any Event, The Act Does Not Permit Self- Help Seizure Under the Federal Maritime Lien Act, 46 U.S.C. §§ 31301 to 31343, a non-possessory maritime lien upon a vessel arises when “a person provid[es] necessaries to a vessel on the order of the owner or a person authorized by the owner.” 46 U.S.C. § 31342(a)(1). “Necessaries” are defined under 46 U.S.C. § 31301(4) as “repairs, supplies, towage, and the use of a drydock or marine railway.” The definition has been interpreted broadly to include “any goods and services ‘reasonably needed’ in a ship’s business for a vessel’s continued operation.” Rosano v. Manhasset Bay Marina, Ltd., 870 F. Supp. 2d 322, 325 (E.D.N.Y. 2012)(citing Barwil ASCA v. M/V SAVA, 44 F. Supp. 2d 484, 487 (E.D.N.Y. 1999)). For purposes of the instant motion only, the Court may assume that RMC provided “necessaries” to Mr. Weinstein for which Mr. Weinstein has not paid RMC. Nonetheless, even if RMC has a maritime lien, the Maritime Lien Act does not confer upon RMC the right of self- help enforcement. Rather, the Maritime Lien Act permits the lien holder to “bring a civil action in rem to enforce the lien.” 46 U.S.C. § 31342(a)(2). It is undisputed that RMC did not commence a civil action against the Vessel prior to seizing it. See generally R. Doc. 15. 5 Because National relies entirely upon the pleadings, its motion may also be decided under Rule 12(c). Case 2:15-cv-06352-DRH-ARL Document 27-2 Filed 02/27/17 Page 10 of 16 PageID #: 269 7 Additionally, in order to enforce a maritime lien under the Maritime Lien Act, the lien- holder must record notice of the lien claimed on the vessel. See 46 U.S.C. § 31343(a). Finally, to perfect the maritime lien, a declaration attesting to the validity of the lien must accompany the notice to be recorded by the Secretary of the Department of Homeland Security. See 46 U.S.C. § 31343(b). RMC has not alleged, nor presented any evidence, that it recorded notice or submitted the required declaration. See generally, R. Doc. 15. The remedies under federal the Maritime Lien Act and admiralty law are unavailable to a lien-holder until the maritime lien has been perfected. See 46 U.S.C. § 31343. Therefore, a failure to perfect a maritime lien prevents the lien-holder from utilizing any of the remedies available under federal admiralty law (such as obtaining a warrant of arrest), which in any event did not include self-help enforcement by means of seizure as was utilized by RMC in this case. Accordingly, RMC has no legal basis under the Federal Maritime Lien Act to have seized the Vessel in the first instance or any basis for the continued detention of the Vessel. B. The New York Lien Law Is Preempted By The Federal Maritime Lien Act With no right to self-help seizure under the Federal Maritime Lien Act, RMC relies upon the New York Lien Law § 184 to justify RMC’s seizure and continuing detention of the M/V PELAGIC. Foremost, RMC has commenced a suit against the Vessel and failed to assert a cause of action based upon the New York Lien Law. RMC’s time to amend its Complaint has expired (see R. Doc. 21), and so too has RMC’s time to effectuate service of its in rem Complaint against the Vessel (see Fed. R. Civ. P. 4(m)). Thus, RMC should be precluded from now justifying its actions based upon the state statutes (and, for that matter, the Federal Maritime Lien Act). Case 2:15-cv-06352-DRH-ARL Document 27-2 Filed 02/27/17 Page 11 of 16 PageID #: 270 8 In any event, RMC’s reliance upon New York Lien Law § 184 is entirely misplaced because the New York Lien Law, as it applies to RMC’s purported lien against the M/V PELAGIC is preempted by the Federal Maritime Lien Act. The Federal Maritime Lien Act provides: “This chapter supersedes any State statute conferring a lien on a vessel to the extent the statute establishes a claim to be enforced by a civil action in rem against the vessel for necessaries.” 46 U.S.C. § 31307. Federal maritime law, not New York State law, is the exclusive remedy to enforce liens and preempts New York state law. See Midlantic Nat’l Bank v. Sheldon, 751 F. Supp. 26, 28 (E.D.N.Y. 1990). “Execution of a maritime lien may be accomplished only under the federal court’s admiralty and maritime jurisdiction, and only through a proceeding in rem, i.e., against the property itself as defendant. The in rem proceeding depends, in turn, on the court’s acquiring physical custody of the property (the res).” John S. Rogers, Enforcement of Maritime Lines and Mortgages, 47 Tul. L. Rev. 767, 768 (1973). This District Court has expressly held that “it is clear that this Court’s admiralty jurisdiction and the provisions of 46 U.S.C. §§ 31301 et seq. preempt the New York Lien Law.” Midlantic Nat’l Bank, 751 F. Supp. at 28. RMC contended (in its pre-motion submission) that Midlantic “did not involve a conflict between the Maritime Lien Act and a lien arising under N.Y. Line L. § 184.” R. Doc. 24 at p3. That contention is simply incorrect: the marina asserted a lien against the subject vessel for unpaid storage fees under New York Lien Law § 184, while the plaintiff-bank asserted a lien under the Maritime Lien Act, 42 U.S.C. § 31322. See Midlantic Nat’l Bank, 751 F. Supp. at 28. The court clearly and unequivocally determined that the Maritime Lien Act preempted New York Lien Law § 184. After making that determination, the court recognized that the marina also had a valid lien under the Maritime Lien Act, but one Case 2:15-cv-06352-DRH-ARL Document 27-2 Filed 02/27/17 Page 12 of 16 PageID #: 271 9 which was inferior to the preferred ship mortgage lien. See Midlantic Nat’l Bank, 751 F. Supp. at 29. That does not change this District Court’s holding that the Federal Maritime Lien Act preempt New York Lien Law § 184. According to RMC, National’s argument is both “novel” and “unprecedented.” R. Doc. 24 at p.3. It is neither, foremost because of this District Court’s holding in Midlantic National Bank, 751 F. Supp. at 28. Further, it is not novel because at least one New York State Court has recognized that the Federal Maritime Lien Act preempted state liens against vessels under New York Lien Law § 80. It has been a longstanding rule that a lien for repairs against the vessel under New York Lien Law § 80 is a maritime lien, and the foreclosure of which is a proceeding in rem, of which the admiralty courts of the United States have exclusive jurisdiction. See Lih v. Wagner, 316 N.Y.S.2d 497, 499, 1971 A.M.C. 768, 769 (N.Y. Sup. Ct. Cortland County 1970)(citing The Glide, 167 U.S. 606, 17 S. Ct. 930, 42 L. Ed. 296 (1897); The Robert W. Parsons, 191 U.S. 17, 24 S. Ct. 8, 48 L. Ed. 73 (1903)). This District Court’s decision in Midlantic National Bank is merely the local extension of Lih and its predecessors to New York Lien Law § 184 as it applies to vessels. As for RMC’s contention that National’s argument is “unprecedented,” National refers RMC (and the Court) - apart, of course, from any consideration of Midlantic National Bank - to the decision in United States v. The ZARCO, 187 F. Supp. 371, 1961 A.M.C. 78 (S.D. Cal. 1960). Like Midlantic National Bank, the dispute in The ZARCO involved a claim of lien by a repairman under state law and a preferred ship mortgage lien under the Federal Maritime Lien Act. See The ZARCO, 187 F. Supp. at 372, 1961 A.M.C. at 81. The court held that the preemption provision in the Federal Maritime Lien Act was controlling. Id. Significantly, the court recognized that “the State statute does not purport to confer ‘rights of action to be enforced Case 2:15-cv-06352-DRH-ARL Document 27-2 Filed 02/27/17 Page 13 of 16 PageID #: 272 10 by suits in rem in admiralty,” but the court looked to the results of the state statute. In holding that the state lien was preempted, the court quoting prior state precedent, and explained: Call the action what we may - quasi in rem, if that be the proper designation of an action in which both the person and the rem itself are proceeded against - it cannot be denied that, since by such action it is sought to make the property or thing itself liable for the debt growing out of a contract for the repair thereof, the action involves a proceeding in rem in the sense and to the extent that jurisdiction to enforce the lien is, under the terms of the federal statute in question, entirely and solely in the federal courts of admiralty . . . . The ZARCO, 187 F. Supp. at 373-74, 1961 A.M.C. at 81 (quoting Stephens v. Weyl-Zuckerman & Co., 167 P. 171, 173 (Cal. Ct. App. 1917)); see also Ajubita v. S/S Peik, 313 F. Supp. 1238, 1241 (E.D. La. 1969) (holding that Louisiana State lien for pilotage, which is also a “necessary” within the meaning of the Federal Maritime Lien Act, is superseded by Federal Maritime Lien Act), aff’d, 428 F.2d 1345, 1970 A.M.C. 1463 (5th Cir. 1970); Farwest Steel Corp. v. DeSantis, 687 P.2d 207, 210, 1985 A.M.C. 412, 415 (1984) (“Whether asserting its claim under the boat lien or chattel lien statutes [the plaintiff-supplier] is proceeding in rem against the barge to impose a lien for steel used in its repair. Federal maritime law clearly preempts the application of state statutes in this area.”). RMC contended (again in its pre-motion submission) that the New York Lien Law is not preempted because it does not create an in rem action. See R. Doc. 24 at p.3. This contention may be quickly dispensed with: the New York law provides that a lien holder may bring an action to foreclose a lien upon a chattel. See N.Y. Lien Law § 206. “Actions to foreclose mechanic’s liens are in rem in nature.” York Hunter Const., Inc. v. Avalon Properties, Inc., 104 F. Supp. 2d 211, 214 (S.D.N.Y. 2000)(citing United States v. Certified Industries Inc., 361 Case 2:15-cv-06352-DRH-ARL Document 27-2 Filed 02/27/17 Page 14 of 16 PageID #: 273 11 F.2d 857, 860 (“There can be little doubt that the initial foreclosure proceeding in the state court was a proceeding in rem.”)). Finally, it is entirely improper for RMC to state that the Vessel “will not be accessible until the Spring” merely because it “is packed in tight quarters with other boats similarly stored for the winter.” R. Doc. 24 at p.1. RMC continues to improperly deprive National of access to the Vessel and difficulty accessing said Vessel is certainly not a valid excuse for conversion. In sum, it is improper for RMC to utilize any other remedies, including self-help, because federal admiralty law provides the exclusive remedy for maritime liens. See Midlantic Nat’l Bank, 751 F. Supp. at 28. RMC has improperly seized the Vessel and has no valid basis to continue to detain property it does not own. Thus, RMC has converted the Vessel. RMC may not continue to engage in unlawful self-help and should be directed to return the Vessel to National. National’s right to seek compensation for any damage to the Vessel while in RMC’s custody should be fully preserved until National has regained custody of the Vessel and had an opportunity to inspect it. After which, the extent of National’s damages for RMC’s wrongful conversion - including any physical damage caused by RMC as well as diminution in value - should be submitted to the jury for a factual determination. CONCLUSION In light of the foregoing, Plaintiff National Liability & Fire Insurance Company respectfully requests an order granting it summary judgment on its third cause of action against Defendant Rick’s Marine Corp. for wrongful conversion of the vessel the M/V PELAGIC and directing Defendant Rick’s Marine Corp. to release the vessel to Plaintiff National Liability & Fire Insurance Company (or its agents) forthwith. Additionally, Plaintiff National Liability & Case 2:15-cv-06352-DRH-ARL Document 27-2 Filed 02/27/17 Page 15 of 16 PageID #: 274 12 Fire Insurance Company requests such other and further relief as the Court deems just and proper. Dated: January 6, 2017 New York, New York Respectfully submitted, NICOLETTI HORNIG & SWEENEY Attorneys for Plaintiff National Liability & Fire Insurance Co. By: s/William M. Fennell William M. Fennell, Esq. Wall Street Plaza 88 Pine Street, Seventh Floor New York, New York 10005 Tel: 212-220-3830 E-mail: WFennell@NicolettiHornig.com Reference No.: 00001195 TO (via first class mail): ROSENBERG & PITTINSKY, LLP Attorneys for Defendant Adam Weinstein, Esq. Laurence D. Pittinsky, Esq. 232 Madison Avenue, Suite 906 New York, New York 10016 Tel: 212-286-6100 Email: larry@rpllplaw.com KENNEDY LILLIS SCHMIDT & ENGLISH Craig S. English, Esq. 75 Maiden Lane - Suite 402 New York, New York 10038-4816 Tel: 212-430-0803 Email: CEnglish@klselaw.com X:\Public Word Files\0\1195\LEGAL\MSJ -- By National -- Against Ricks Marine -- MOL (FINAL) 1-5-17 wmf.s.mm.doc Case 2:15-cv-06352-DRH-ARL Document 27-2 Filed 02/27/17 Page 16 of 16 PageID #: 275 Case 2:15-cv-06352-DRH-ARL Document 27-3 Filed 02/27/17 Page 1 of 2 PageID #: 276 Case 2:15-cv-06352-DRH-ARL Document 27-3 Filed 02/27/17 Page 2 of 2 PageID #: 277 1 KENNEDY LILLIS SCHMIDT & ENGLISH Craig S. English, Esq. CEnglish@klselaw.com 75 Maiden Lane - Suite 402 New York, N.Y. 10038-4816 Telephone: 212-430-0800 Telecopier: 212-430-0810 Attorneys for Defendant / Third-Party Plaintiff RICK’S MARINE CORP. UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK NATIONAL LIABILITY & FIRE INSURANCE CO., Plaintiff, - v. - RICK’S MARINE CORP. and ADAM WEINSTEIN, Defendants. ____________________________________________ RICK’S MARINE CORP., Third-Party Plaintiff, - v. - The Motor Vessel PELAGIC, its engines, tackle, appurtenances, etc., in rem, Third-Party Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Civil Action No. 15-CV-6352 (DRH)(ARL) LOCAL RULE 56.1 RESPONSE STATEMENT OF MATERIAL FACTS OF DEFENDANT RICK’S MARINE CORP. In accordance with Local Civil Rule 56.1(b) of the Eastern District of New York, defendant and third-party plaintiff Rick’s Marine Corp. (hereinafter “RMC”) hereby submits its Case 2:15-cv-06352-DRH-ARL Document 27-4 Filed 02/27/17 Page 1 of 5 PageID #: 278 2 responses to the Rule 56.1 Statement of moving plaintiff National Liability & Fire Insurance Co. (“National”). 1. Denied. According to documents produced by the parties, the purchase agree- ment by which defendant Adam Weinstein purchased the Vessel was dated in June 2014, i.e., after the date specified in paragraph 1 of plaintiff’s Rule 56.1 Statement. 2. RMC is not in position to admit or dispute this enumerated fact. 3. RMC admits that it performed certain work and repairs on the Vessel at the in- struction of defendant Adam Weinstein, and admits that RMC launched the Vessel during the afternoon of May 8, 2015. See, RMC’s Answer to the First Amended Complaint, Doc. 10, at ¶¶ 15-17. 4. Admit the Vessel partially sank at the place and on the date specified in paragraph 4 of plaintiff’s Rule 56.1 Statement. 5. Admit that the Vessel was brought ashore at RMC’s marina, not shipyard. 6. RMC is not in position to admit or dispute this enumerated fact. 7. Admitted. 8. Admitted. 9. Admitted. 10. Admitted. 11. Denied in part, admitted in part. RMC did commence a third-party civil action Case 2:15-cv-06352-DRH-ARL Document 27-4 Filed 02/27/17 Page 2 of 5 PageID #: 279 3 against the Vessel on March 4, 2016 (Docket No. 15). RMC has not effected an arrest of the Vessel pursuant to Rules C and E of the Supplemental Rules for Admiralty or Maritime Claims. 12. Denied. While RMC admits that it has not filed a federal notice of lien against the Vessel, paragraph 12 of plaintiff’s Rule 56.1 Statement incorrectly assumes that RMC could file a notice of lien against the Vessel, and further incorrectly assumes that the filing of such a notice of lien is required. Pursuant to the Commercial Instruments and Maritime Liens Act, a person claiming a maritime lien on a documented vessel (i.e., registered with the U.S. Coast Guard) may record a notice of lien. 46 U.S.C. § 31343(a). According to the U.S. Coast Guard, the Vessel’s documentation expired on October 31, 2015 and has not been renewed. This infor- mation is sourced from the United States NOAA website at: http://www.st.nmfs.noaa.gov/st1/CoastGuard/VesselByID.html, and by entering the Vessel’s Official Number, 1205925, into the search field. Because the Ves- sel is no longer a Documented Vessel, a federal maritime notice of lien can no longer be filed against the Vessel. Moreover, the filing of a notice of lien is permissible, not mandatory. 46 U.S.C. § 31343(a). RMC also notes that the sole item in the record cited by plaintiff as support for the contents of this paragraph is RMC’s Third-Party Complaint, which in no way supports the assertion made by plaintiff in paragraph 12 of plaintiff’s Rule 56.1 Statement. Paragraph 12 of plaintiff’s Rule 56.1 Statement is therefore without required support in the record. See, E.D.N.Y. Loc.Civ.R. 56.1(d). 13. Denied. While RMC admits that it has not filed a federal notice of lien against the Vessel, as noted in response to paragraph 12 above, the Vessel is as of October 31, 2015 no longer a Documented Vessel, making the declaration referenced in this paragraph unnecessary Case 2:15-cv-06352-DRH-ARL Document 27-4 Filed 02/27/17 Page 3 of 5 PageID #: 280 4 and/or impossible. See, 46 U.S.C. §31343(a) and (b). Because the filing of the notice of lien it- self is merely permissive and not mandatory per § 31343(a), the filing of a declaration attesting to the contents of the notice of lien is likewise not mandatory. RMC also notes that the sole item in the record cited by plaintiff as support for the contents of this paragraph is RMC’s Third-Party Complaint, which in no way supports the assertion made by plaintiff in paragraph 13 of plain- tiff’s Rule 56.1 Statement. Paragraph 13 of plaintiff’s Rule 56.1 Statement is therefore without required support in the record. See, E.D.N.Y. Loc.Civ.R. 56.1(d). Dated: New York, New York February 10, 2017 KENNEDY LILLIS SCHMIDT & ENGLISH Attorneys for Defendant / Third-Party Plaintiff RICK’S MARINE CORP. By: s/Craig S. English Craig S. English, Esq. CEnglish@klselaw.com 75 Maiden Lane - Suite 402 New York, New York 10038-4816 Telephone: (212) 430-0800 TO: NICOLETTI HORNIG & SWEENEY Attorneys for Plaintiff 88 Pine Street, 7th Floor New York, New York 10005 (212) 220-3830 Attention: William M. Fennell, Esq. WFennell@NicolettiHornig.com (Your File: 00001195) Case 2:15-cv-06352-DRH-ARL Document 27-4 Filed 02/27/17 Page 4 of 5 PageID #: 281 5 TO: ROSENBERG & PITTINSKY, LLP Attorneys for Defendant Adam Weinstein, Esq. 232 Madison Avenue, Suite 906 New York, New York 10016 (212) 286-6100 Attention: Laurence D. Pittinsky, Esq. Case 2:15-cv-06352-DRH-ARL Document 27-4 Filed 02/27/17 Page 5 of 5 PageID #: 282 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK NATIONAL LIABILITY & FIRE INSURANCE CO., Plaintiff, - v. - RICK’S MARINE CORP. and ADAM WEINSTEIN, Defendants. ____________________________________________ RICK’S MARINE CORP., Third-Party Plaintiff, - v. - The Motor Vessel PELAGIC, its engines, tackle, appurtenances, etc., in rem, Third-Party Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Civil Action No. 15-CV-6352 (DRH)(ARL) MEMORANDUM OF LAW OF DEFENDANT RICK’S MARINE CORP. IN OPPOSITION TO PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT KENNEDY LILLIS SCHMIDT & ENGLISH Craig S. English., Esq. CEnglish@klselaw.com 75 Maiden Lane, Suite 402 New York, New York 10038 Telephone: (212) 430-0800 Facsimile: (212) 430-0810 Attorneys for Defendant / Third-Party Plaintiff RICK’S MARINE CORP. February 10, 2017 Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 1 of 23 PageID #: 283 i TABLE OF CONTENTS Page Background Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Plaintiff’s Contentions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 RMC’s Contentions in Opposition to Summary Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 POINT I CONTRARY TO PLAINTIFF’S ASSERTION, RMC HAS RAISED A CLAIM IN THIS ACTION UNDER THE NEW YORK LIEN LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 POINT II THE FEDERAL SHIP MORTGAGE ACT DOES NOT INVALIDATE STATE LAW POSSESSORY LIENS A. Plaintiff’s assertion that the New York Lien Law is totally pre-empted by the federal Ship Mortgage Act is without merit. . . . . . . . . . . . . . . . . . . . . . . . . . . 5 B. Plaintiff’s primary cited authority stands only for the proposition that, as between a federal preferred ship mortgage and a state law possessory lien, the former should have priority over the latter . . . . . . . . . . . . . . . . . . . . . . . . . 11 C. Plaintiff’s other cited authorities are inapposite . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 D. Plaintiff’s assertion that state lien law is totally pre-empted because a sale of property under state lien law is necessarily “in rem” is baseless . . . . . . . . . . . . 14 E. References to alleged conversion of the Vessel in plaintiff’s motion are unsupported, and moot given RMC’s lawful retention of the Vessel . . . . . . . . . 16 POINT III PLAINTIFF’S CONTENTION CONCERNING THE RECORDING AND ATTESTATION OF MARITIME LIENS IS IRRELEVANT AND INCORRECT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 2 of 23 PageID #: 284 ii TABLE OF AUTHORITIES Cases Pages Ajubita v. S/S Peik, 313 F.Supp. 1238 (E.D. La. 1969), aff’d, 428 F.2d 1345 (5th Cir. 1970) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13-14 Cipollone v. Liggett Grp., Inc., 505 U.S. 504, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992) . . . . . . . 6 Dietrich v. Key Bank, N.A., 72 F.3d 1509 (11th Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . 8-10, 12 Faneuil Advisors v. O/S Sea Hawk, 50 F.3d 88 (1st Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . 13 Farwest Steel Corp. v. DeSantis, 102 Wn.2d 487, 687 P.2d 207 (1984), cert. denied, 471 U.S. 1018, 105 S.Ct. 2024, 85 L.Ed.2d 305 (1985) . . . . . . . . . . . . . . . 14 Industrial Nat’l Bank v. Butler Aviation Int’l, Inc., 370 F.Supp. 1012 (E.D.N.Y. 1974) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 13 Marlen C. Robb & Son Boatyard & Marina, Inc. v. Vessel Bristol, 893 F.Supp. 526 (E.D.N.C. 1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 12 Merchants & Marine Bank v. The T. E. Welles, 289 F.2d 188 (5th Cir. 1961). . . . . . . . . . . . 9, 12 Midlantic Nat’l Bank v. Sheldon, 751 F.Supp. 26 (E.D.N.Y. 1990) . . . . . . . . . . . . . 11, 12, 13, 16 Native Village of Naknek v. Jones Pac. Mar., LLC, 141 F.Supp.3d 1157 (W.D. Wash. 2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 9, 12 Pirrello v. Gateway Marina, 2011 U.S. Dist. LEXIS 113632 (E.D.N.Y. 2011) . . . . . . . .. 7, 16, 17 U.S. v. Certified Industries, Inc., 361 F.2d 857 (2d Cir. 1966) . . . . . . . . . . . . . . . . . . . . . . . . . . 15 U.S. v. The Zarco, 187 F.Supp. 371 (S.D. Cal. 1960) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 York Hunter Constr., Inc. v. Avalon Props., Inc., 104 F.Supp.2d 211 (S.D.N.Y. 2000) . . . . . . 15 YS Consulting Group, Ltd. v. Knutson’s Marina, Inc., 134 A.D.2d 587, 522 N.Y.S.2d 2 (2d Dept. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 17 Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 3 of 23 PageID #: 285 iii Statutes and Rules Pages U.S. Commercial Instruments and Maritime Liens Act, 46 U.S.C. §§ 31301-31343: 46 U.S.C. § 31303 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 46 U.S.C. § 31307 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-8, 13, 15-16 42 U.S.C. § 31322 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 46 U.S.C. § 31343 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 46 U.S.C. § 31343(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18-19 46 U.S.C. § 31343(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 New York Lien Law § 184 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-5, 7-8, 10, 12-13, 16-18 NY Lien L. § 200 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 NY Lien L. § 206 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 NY U.C.C. § 9-310 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 NY U.C.C. § 9-104(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Rule C, Supplemental Rules for Admiralty or Maritime Claims, etc. . . . . . . . . . . . . . . . . . . . . . . 6 E.D.N.Y. Loc.Civ.R. 56.1(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Other Sources Page Gilmore & Black, Admiralty and Maritime Law (2d ed. 1975) . . . . . . . . . . . . . . . . . . . . 6, 10, 19 Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 4 of 23 PageID #: 286 1 Defendant and third-party plaintiff Rick’s Marine Corp. (hereinafter “RMC”) re- spectfully submits the within memorandum in opposition to the motion for summary judgment of plaintiff National Liability & Fire Insurance Co. RMC also respectfully refers the Court to its Response Statement of Material Facts pursuant to E.D.N.Y. Loc.Civ.R. 56.1(b). BACKGROUND FACTS This action arises out of the sinking of a motor yacht, the M/V PELAGIC (“the Vessel”), on or about May 8, 2015. The Vessel partially sank at a marina operated by RMC in Freeport, New York. The Vessel had been stored on land at RMC’s marina over the winter of 2014-2015, during which time RMC performed repair work on the Vessel at the request and di- rection of its owner, defendant Adam Weinstein. Investigation of the Vessel’s sinking by repre- sentatives of both plaintiff and RMC revealed that the casualty was caused by the failure of a connection between a water hose and a sea valve, which was defectively designed and/or manu- factured. Specifically, the hose slipped off its connection to the sea valve because the hose was sized too large for the valve, and was only held in place by one hose clamp, which failed, instead of two clamps. The failure of this connection allowed seawater to enter the boat. The subject hose connection was not part of RMC’s work aboard the Vessel, and RMC bears no responsibility for the failure of that connection or the resulting sinking of the Vessel. At the time the Vessel sank, RMC had not been fully paid for the repair work it performed on the Vessel. These charges remain outstanding. When the Vessel sank, it contacted and caused physical damage to RMC’s docks and Travel-Lift totaling in the neighborhood of $18,000. RMC has not been compensated by defendant Weinstein for the damages done to RMC’s facilities. After the Vessel was refloated, it was again stored on land at RMC’s marina, where it Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 5 of 23 PageID #: 287 2 remains to this day. During the time following the sinking, the Vessel has accrued storage charges at RMC’s marina, which charges have not been paid. As a result, plaintiff’s subrogor owes RMC $20,633.28 for repairs to the Vessel, plus on-land storage charges of $4,405.64 for the period April 15, 2016 through April 15, 2017, totaling $25,038.92. At some time after the sinking of the Vessel, plaintiff apparently succeeded to the ownership of the Vessel by means of contractual subrogation. Neither plaintiff nor defend- ant Weinstein have offered to satisfy the outstanding charges on the Vessel, or RMC’s damages, despite due demand by RMC. RMC has declined to release the Vessel to plaintiff’s custody due to the non-payment of the outstanding repair and storage charges. In its Answer (Doc. 10) to plaintiff’s First Amended Complaint (Doc. 9), RMC asserted a Cross-claim to recover the outstanding charges owed on the Vessel as well as for the physical damage to RMC’s facility caused by the Vessel’s sinking. RMC’s Cross-claim is based on section 184 of the New York Lien Law. RMC also filed a Third-Party Complaint (Doc. 15) against the Vessel in rem to protect RMC’s maritime lien rights. Plaintiff, and its subrogor Mr. Weinstein, have consistently refused to pay the out- standing charges due and owing to RMC, and plaintiff has further refused to provide a letter of undertaking guaranteeing payment of RMC’s outstanding charges pending the outcome of this litigation. Nowhere in its motion did plaintiff challenge the basis for, or amounts of, the outstand- ing charges owed to RMC in respect of the Vessel. Instead, plaintiff seeks by way of its summary judgment motion simply to avoid responsibility with respect to such charges. Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 6 of 23 PageID #: 288 3 PLAINTIFF’S CONTENTIONS In its motion, plaintiff contends (Pl. Br. at 8-11) that New York’s Lien Law is pre- empted in its entirety by the federal Commercial Instruments and Maritime Liens Act, 46 U.S.C. §§ 31301-31343, also known as and referred to hereinafter as the “Ship Mortgage Act.” Plaintiff argues that no state law possessory lien, such as that prescribed by NY Lien Law § 184, can exist because of the pre-emptive effect of the federal Act. Plaintiff then argues (Pl. Br. at 6-7) that, because no state law lien can exist, RMC cannot assert any lien on the Vessel because RMC did not satisfy recording and filing requirements allegedly mandated by the federal Ship Mortgage Act. Despite the contents of RMC’s Cross-claim under NY Lien Law § 184, plaintiff also asserts that RMC has failed to raise any claim under the New York Lien Law in its pleadings. RMC’S CONTENTIONS IN OPPOSITION TO SUMMARY JUDGMENT Plaintiff’s summary judgment motion, depending as it does on an assertion of com- prehensive federal pre-emption of New York State lien laws, is legally baseless. Specifically, RMC contends as follows in opposition to plaintiff’s motion:  RMC’s assertion, in its Cross-claim, of a state law possessory lien on the Vessel under NY Lien Law § 184 moots plaintiff’s assertion that RMC did not raise a NY Lien Law claim in this action.  The existence of a federal mechanism by which a lienholder may perfect and assert a mar- itime lien against a vessel in rem does not invalidate a state law possessory lien on the same vessel. Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 7 of 23 PageID #: 289 4  The pre-emption language of the federal Ship Mortgage Act (found in 46 U.S.C. § 31307) is strictly and expressly limited only to prevent state laws from creating actions against vessels as juridical persons in rem.  The possessory lien created by NY Lien Law § 184, also known as a garageman’s lien, is a land-based lien which does not create an action in rem against a vessel for purposes of the federal pre-emption language in 46 U.S.C. § 31307.  The pre-emption language of the federal Ship Mortgage Act does not invalidate state law possessory liens such as that prescribed by NY Lien Law § 184; rather, the federal Act merely gives federal maritime liens priority over state possessory liens in the hierarchy of security interests.  Because RMC’s state law possessory lien on the Vessel is not invalidated by the federal Ship Mortgage Act, the discussion of alleged recording and filing requirements for mari- time liens in plaintiff’s motion is irrelevant.  Plaintiff’s assertions concerning filing notices of maritime liens with the U.S. Department of Homeland Security, and the filing of declarations in support of such notices, are directly contradicted by the language of the governing statute.  Plaintiff’s references to alleged conversion of the Vessel are unsupported by legal discus- sion or citations, and are mooted by RMC’s lawful retention of the Vessel pursuant to the New York Lien Law. Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 8 of 23 PageID #: 290 5 POINT I CONTRARY TO PLAINTIFF’S ASSERTION, RMC HAS RAISED A CLAIM IN THIS ACTION UNDER THE NEW YORK LIEN LAW Plaintiff’s assertion that RMC did not assert a state law possessory lien claim in this action (Pl. Br. at 7) is simply wrong. RMC’s Answer (Doc. 10) to the First Amended Com- plaint (Doc. 9) clearly included a Cross-claim under NY Lien L. § 184 for unpaid repair and storage charges. This Cross-claim was asserted in that document against defendant Weinstein, the owner of the M/V PELAGIC, but is equally applicable to and effective against plaintiff, who now claims ownership of the Vessel by virtue of contractual subrogation. Accord, Industrial Nat’l Bank v. Butler Aviation Int’l, Inc., 370 F.Supp. 1012, 1018 (E.D.N.Y. 1974). POINT II THE FEDERAL SHIP MORTGAGE ACT DOES NOT INVALIDATE STATE LAW POSSESSORY LIENS A. Plaintiff’s assertion that the New York Lien Law is totally pre-empted by the federal Ship Mortgage Act is without merit. Plaintiff incorrectly asserts that federal maritime lien law “pre-empts” state lien law entirely. Plaintiff improperly presumes the word “supersedes” in 46 U.S.C. § 31307 to mean that the existence of a federal in rem maritime lien remedy prevents a marina such as RMC from as- serting a state law possessory lien on a vessel. In so doing, plaintiff grossly overextends the pre- emptive effect of the Ship Mortgage Act. Plaintiff’s contention depends on the language in 46 U.S.C. § 31307, which pro- vides that “This chapter supersedes any State statute conferring a lien on a vessel to the extent the statute establishes a claim to be enforced by a civil action in rem against the vessel for necessaries” Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 9 of 23 PageID #: 291 6 (italics added). Pl. Br. at 8. By its clear language, the pre-emption provided by 46 U.S.C. § 31307 is limited to state lien laws which establish in rem remedies against vessels. “Congress’ enactment of a provision defining the pre-emptive reach of a statute implies that matters beyond that reach are not pre-empted.” Cipollone v. Liggett Grp., Inc., 505 U.S. 504, 517, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992). Certainly there is no language in § 31307 or anywhere else in the federal Ship Mortgage Act by which Congress imposed a global federal pre-emption of all state laws prescribing possessory liens on vessels. Consistent with 46 U.S.C. § 31307, a maritime in rem action in a federal Court is the only permissible vehicle by which to enforce a maritime lien. See, Rule C of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions, and, Gilmore & Black, Admiralty and Maritime Law (2d ed. 1975), § 9-19 at p. 622. A vessel itself is liable in rem for a maritime lien, as a separate juridical person. See, e.g., Gilmore & Black, § 9.1 at pp. 586-589. By contrast, NY Lien Law § 184 does not establish a maritime lien or purport to create an in rem action. It is a land-based garagemen’s-type lien which, as quoted infra, allows a marina such as RMC to detain a boat until repair and storage costs have been paid. Prior to 1910, individual states were entitled to enact statutes giving in rem rights. See, Gilmore and Black, supra, at §§ 9-25, et seq. When Congress enacted the Ship Mortgage Act in 1910, that statute changed existing law to provide that the Act should supersede state laws to the extent those state laws establish maritime in rem liens. See, Gilmore and Black, § 9-30 at p. 653. The New York Lien Law does not by its terms create an in rem maritime lien. Sec- tion 184 of that law, under which RMC has cross-claimed herein, provides in relevant part: Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 10 of 23 PageID #: 292 7 1. A person keeping a garage … or place for the storage, maintenance, keeping or repair of … motor boats … and who in connection therewith tows, stores, maintains, keeps or repairs any … motor boat … or furnishes gasoline or other supplies therefor at the request or with the consent of the owner … whether or not such … motor boat … is subject to a security in- terest, has a lien upon such … motor boat … for the sum due for such tow- ing, storing, maintaining, keeping or repairing of such … motor boat … or for furnishing gasoline or other supplies therefor and may detain such … motor boat … at any time it may be lawfully in his possession until such sum is paid. NY Lien L. § 184 “Lien of bailee of motor vehicles, motor boats or aircraft.” Consistent with the above-quoted New York statute, the Vessel in the case at bar is being detained by RMC because neither plaintiff, nor its subrogor Mr. Weinstein, have offered or agreed to satisfy the outstanding charges on the Vessel. Accord, Pirrello v. Gateway Marina, 2011 U.S. Dist. LEXIS 113632 at *17-19 (E.D.N.Y. 2011) (“[the marina’s] lien pursuant to section 184 of the New York Lien Law, entitles the marina to detain the boat until the storage fees were paid, and if not paid, to secure payment by the sale of the boat”), and, YS Consulting Group, Ltd. v. Knutson’s Marina, Inc., 134 A.D.2d 587, 522 N.Y.S.2d 2 (2d Dept. 1987) (“the Marina, being lawfully in possession of the motorboat, had the right to retain it until the sum due for storage and maintenance had been paid”). Plaintiff at bar nonetheless argues that by means of 46 U.S.C. § 31307, the federal Ship Mortgage Act comprehensively supersedes the NY Lien Law in all respects, such that RMC is prevented from even asserting a state law possessory lien on the Vessel for its unpaid charges. Put another way, plaintiff in effect argues that the existence of a federal maritime lien remedy precludes, by federal law pre-emption, the existence of a state law possessory lien under NY Lien L. § 184. This is not correct. Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 11 of 23 PageID #: 293 8 A recent and instructive discussion of this question by a U.S. District Court may be found in Native Village of Naknek v. Jones Pac. Mar., LLC, 141 F.Supp.3d 1157 (W.D. Wash. 2015), which was decided on facts nearly identical to those presented at bar. The plaintiff in that case argued, as does plaintiff herein, that the use of the word “supersedes” in 46 U.S.C. § 31307 precluded the application of state law chattel lien law. 141 F.Supp.3d at 1160. The District Court in Naknek considered the reach of the superseding effect of the federal Ship Mortgage Act and noted that “[t]he explicit reach of the Lien Act is limited to claims that are to be enforced by a civil action in rem against the vessel,” and “the ‘limited preemption does not affect the self-help remedies at issue here’.” Id., quoting, Dietrich v. Key Bank, N.A., 72 F.3d 1509, 1513 (11th Cir. 1996). In close similarity to the case at bar, the state remedies at issue in Naknek were those created by state chattel lien summary foreclosure statute. The Naknek Court concluded that 46 U.S.C. § 31307 did not expressly effect a comprehensive pre-emption of state law possessory liens. “In other words, ‘[t]he Ship Mortgage Act contains no direct expression of congressional intent to preempt state law allowing for self- help repossession and resale.’” 141 F.Supp.3d at 1160, quoting, Dietrich, supra, 72 F.3d at 1513. Accord, Marlen C. Robb & Son Boatyard & Marina, Inc. v. Vessel Bristol, 893 F.Supp. 526, 539- 540 (E.D.N.C. 1994) (rejecting the pre-emption argument in context of North Carolina possessory lien laws). Having found no expressed pre-emption of state law possessory liens in the federal Act, the Court in Naknek considered whether the federal statute might impliedly pre-empt state law, and concluded that there was no conflict between the two statutes which might give rise to Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 12 of 23 PageID #: 294 9 implied pre-emption. In this respect the Court noted the specific Congressional intent underlying the maritime lien statute: “The passage of the Ship Mortgage Act came about primarily from the ne- cessity of affording substantial security to persons supplying essential fi- nancing to the shipping industry”… “The purpose of Congress was to create a means of enforcing mortgages in admiralty in order to promote ship fi- nancing.” 141 F.Supp.3d at 1161, quoting, Merchants & Marine Bank v. The T. E. Welles, 289 F.2d 188, 193-94 (5th Cir. 1961), and, Dietrich, supra, 72 F.3d at 1514. There being no ship mortgage at issue, the Court concluded that no pre-emption of the state chattel lien summary foreclosure law was warranted. 141 F.Supp.3d at 1161. Finally, the Court in Naknek considered whether in enacting the maritime lien law Congress so completely occupied that area of law as to effectively prevent its supplementation by state lien laws: While maritime issues are usually federal issues, Congress has not occupied the field such that there is no room left for state law to supplement. For example, the Eleventh Circuit has concluded that the Maritime Lien Act is a “limited preemption” of state laws that may be supplemented. Dietrich, 72 F.3d at 1513. Moreover, Congress could have proclaimed that all state statutes conferring a lien on a vessel are pre-empted. Congress did not do so, and Naknek has failed to show that Congress left no room for state sup- plementation. Therefore, the Court concludes that Washington’s chattel lien summary foreclosure procedure is not pre-empted by federal law. 141 F.Supp.3d at 1161 (italics added). Notably in the case at bar, plaintiff has merely presumed a total pre-emption of state lien laws and has offered no conflict analysis to support any express or implied comprehensive federal pre-emption. The analysis and outcome in Naknek are entirely consistent with the significant and material distinctions between maritime liens and so-called “land liens,” which latter kind includes Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 13 of 23 PageID #: 295 10 garagemen’s liens under NY Lien L. § 184. A detailed discussion of these distinctions can be found in Gilmore and Black, supra, §§ 9-1 and 9-2 at pp. 586-589. The material differences be- tween the two types of liens include that the holder of a “dry land lien,” such as RMC in the case at bar, may foreclose on his or her lien by either legal process or by extra-judicial means including repossession and sale to satisfy the debt. Id., § 9-1. The holder of a garageman’s lien, against such as RMC herein, holds what is known as a “status lien,” i.e., a lien based on the lienor’s contractual status. As stated in Gilmore and Black, “the status lienor’s interest will be terminated only by payment, foreclosure or judicial proceedings to which he is a party.” Id., § 9-1 at p. 587. And, as made equally clear in the same treatise, “Not one of the propositions just stated [as to land liens] holds true for the maritime lien.” Gilmore and Black, § 9-2 at p. 587. Finally, contrary to plain- tiff’s assertion, it is widely held that the Ship Mortgage Act does not comprehensively pre-empt state law repossession and sale remedies. See, Dietrich, supra, 72 F.3d at 1515-1516, citing cases. The many and material differences between land-based and maritime liens provide further ground on which this Court should reject the proposition that Congress in enacting the Ship Mortgage Act intended to comprehensively pre-empt all state law possessory liens, as the Court in Naknek rejected that proposition. RMC respectfully submits that plaintiff’s pre-emption argument should be dismissed on the same rational applied by the Court in Naknek to the same argument. Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 14 of 23 PageID #: 296 11 B. Plaintiff’s primary cited authority stands only for the proposition that, as between a federal preferred ship mortgage and a state law possessory lien, the former should have priority over the latter. Plaintiff relies primarily on Midlantic Nat’l Bank v. Sheldon, 751 F.Supp. 26 (E.D.N.Y. 1990). This citation does not support plaintiff’s contention. Indeed, plaintiff misreads Midlantic altogether. Midlantic involved a conflict between a federal statute concerning preferred ship mortgages and NY Lien L. § 200, which permits a sale to satisfy a lien against personal property. The Midlantic Court properly held that, as between a state law possessory lien and a perfected and recorded maritime law lien under 46 U.S.C. § 31303, the latter is to be given priority in the hier- archy of security interests. 751 F.Supp. 26 at 28-29. The Midlantic Court noted that a state-law-created possessory lien normally enjoys priority over statutory security interests, by operation of NY U.C.C. § 9-310. 751 F.Supp. 26 at 28. The Court also noted, however, that the priority given possessory state law liens under New York U.C.C. Article 9 “is not applicable to ‘any security interest subject to any statute of the United States to the extent that such statute governs the rights of parties to and third parties affected by transactions in particular types of property.’” Id., quoting, NY U.C.C. § 9-104(a). The parties in Midlantic were contesting the relative priorities of a possessory lien under the New York Lien Law and a federal statutory preferred ship mortgage arising under 42 U.S.C. § 31322; thus, the priority given to state law possessory liens under U.C.C. § 9-310 did not operate. 751 F.Supp. 26 at 28. Contrary to plaintiff’s assertion, Midlantic did not hold that the state law possessory lien in that case was void because of the existence of the maritime lien, rather, the Midlantic Court held only that the perfected federal maritime lien would have priority over the state law lien. There Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 15 of 23 PageID #: 297 12 is nothing whatsoever in the Midlantic holding to suggest that the state law lien at issue in that case ceased to exist, or could not be asserted at all, because of the existence of the federal ship mortgage. Instead, Midlantic stands only for the proposition that the state law lien would be deemed subordinate to the federal law lien in the hierarchy of security interests. Applied to the case at bar, Midlantic would hold only that RMC’s possessory lien on the Vessel under NY Lien L. § 184 would be of subordinate priority to a perfected and recorded federal maritime lien on the Vessel. But there are no federal liens competing for priority with RMC’s state law lien in the case at bar; the only lien at issue on the instant motion is RMC’s state law possessory lien under NY Lien L. § 184. Plaintiff’s citation to U.S. v. The Zarco, 187 F.Supp. 371 (S.D. Cal. 1960) is simi- larly unavailing. Like Midlantic, the Zarco decision concerned a priority contest between a pre- ferred ship mortgage held by the U.S. government and a possessory lien held by a ship repairer. Importantly, the government’s mortgage on the vessel pre-dated the commencement of the ship repairer’s possessory lien. 187 F.Supp. at 372. Applying the statutes of that time, the Zarco Court held not surprisingly that the government’s preferred ship mortgage should have priority over the ship repairer’s possessory lien in the hierarchy of security interests. 187 F.Supp. at 374. Plaintiff cites the Southern District of California’s 1960 Zarco decision for the proposition that the federal Ship Mortgage Act effected a wholesale pre-emption of state possessory lien law in cases involv- ing vessels. Pl. Br. at 9. RMC respectfully submits that this is incorrect, but even if Zarco could be interpreted as so holding, RMC further submits that such decision is unique and inconsistent with the more recent decisions in Naknek, Dietrich, Marlen C. Robb, and, The T. E. Welles, supra. Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 16 of 23 PageID #: 298 13 RMC’s position is further supported by Faneuil Advisors v. O/S Sea Hawk, 50 F.3d 88 (1st Cir. 1995), which noted that 46 U.S.C. § 31307 was intended to protect ship mortgagees against “irresponsible actions by shipowners” which might give rise to state law possessory liens. 50 F.3d at 94 and n. 9. The First Circuit in Faneuil Advisors correctly held that the pre-emption language of 46 U.S.C. § 31307 “entirely foreclosed” “any argument that … a [state law possessory lien] might have priority.” 50 F.3d at 94 (italics added). As did the Midlantic holding, Faneuil Advisors addressed only the priority of federal maritime liens over state law possessory liens on vessels. Neither decision stands for plaintiff’s assertion here, i.e., that 46 U.S.C. § 31307 and the existence of a federal maritime lien mechanism renders a state law possessory lien comprehen- sively null and void. Again, the relative priority as between federal maritime liens and state possessory liens is not at issue in the case at bar. There is no federal maritime lien vying for priority with RMC’s possessory lien here, and there exists no support for plaintiff’s contention that the federal Act voids NY Lien Law § 184 altogether. That RMC did not also choose to record a federal maritime lien is irrelevant to the validity of its rights under NY Lien L. § 184. As there is no competing federal statutory lien which would otherwise enjoy priority over RMC’s lien, RMC may enforce its lien against plaintiff as provided by New York law 1. C. Plaintiff’s other cited authorities are inapposite. Plaintiff’s reliance on Ajubita v. S/S Peik, 313 F.Supp. 1238 (E.D. La. 1969) is misplaced. The decision in Ajubita to deny a lien to a statutory ship’s pilot was grounded in the 1 As plaintiff has apparently succeeded to defendant Weinstein’s interest in the Vessel by contractual subrogation, plaintiff has also assumed Mr. Weinstein’s liability to RMC for unpaid repair and storage charges on the Vessel. Accord, Butler Aviation, supra, 370 F.Supp. at 1018. Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 17 of 23 PageID #: 299 14 lack of authority in the charterer who hired the pilot to engage pilots pursuant to a specific exclu- sion in the ship’s charter contract. 313 F.Supp. at 1241. The Fifth Circuit affirmed Ajubita on the same ground. 428 F.2d 1345, 1348 (5th Cir. 1970). Ajubita is wholly inapposite. Finally, plaintiff’s citation to Farwest Steel Corp. v. DeSantis, 102 Wn.2d 487, 687 P.2d 207 (Wash. 1984), cert. denied, 471 U.S. 1018, 105 S.Ct. 2024, 85 L.Ed.2d 305 (1985), is again no help to plaintiff. The plaintiff in Farwest was a third-party material supplier who had delivered steel to the ship repairer. The steel supplier, which had no contract or relationship with the vessel owner, sued the vessel in rem to enforce its claimed lien for steel for which it had not been paid. The state Court held that, notwithstanding the steel supplier’s assertion that its claim against the vessel arose under the state chattel lien statute, the claim was an in rem claim against the vessel and thus pre-empted under the federal Ship Mortgage Act. 687 P.2d at 210. The Court further found that, because it could not be proven that the steel supplied by the claimant had all been incorporated into the specific vessel in question, the steel supplier “failed to establish any lien against the barge as a matter of law.” 687 P.2d at 211. Farwest is obviously and materially distinguishable from the case at bar. The steel supplier in Farwest was not a ship repairer, had no contract or relationship with the vessel owner, never had possession of the vessel, and could not establish that the “necessaries” it provided to the ship repairer were actually made part of the ves- sel. The material supplier in Farwest had nothing in common with RMC in the case at bar, and the Farwest plaintiff’s claim was necessarily and materially different from RMC’s claim herein. D. Plaintiff’s assertion that state lien law is totally pre-empted because a sale of property under state lien law is necessarily “in rem” is baseless. Plaintiff’s contention concerning the alleged “in rem” nature of a New York pos- sessory garageman’s lien is absurd. Pl. Br. at 10-11. While an action to foreclose the lien might Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 18 of 23 PageID #: 300 15 be characterized as “in rem” because it necessarily involves the sale of an item of property, plaintiff identifies no authority for the proposition that the “in rem” characterization of such a sale would result in the wholesale invalidation of state law possessory liens on motor boats. In particular, plaintiff offers no legal authority for the proposition that, by labeling as “in rem” a sale under NY Lien L. § 206 in a non-maritime case (see, citations at Pl. Br., bottom of p. 10), the lien on which the sale is based is transformed into a maritime lien subject to the pre-emption language of 46 U.S.C. § 31307. On this point, plaintiff’s motion is particularly misleading. In both of its cited de- cisions, the phrase “in rem” was used to describe real property, which is typically subject to a state’s so-called “in rem” jurisdiction. For example, in York Hunter Constr., Inc. v. Avalon Props., Inc., 104 F.Supp.2d 211 (S.D.N.Y. 2000), cited at p. 10 of plaintiff’s brief, the res before the Court was a piece of real property in New York which had been developed by the defendant. 104 F.Supp.2d at 214. The York Hunter Court held that it would be improper for it to retain jurisdiction over the res in question because it was the subject of a prior-filed state Court action. Id. at 214- 215. Plaintiff’s other cited decision, U.S. v. Certified Industries, Inc., 361 F.2d 857 (2d Cir. 1966), held likewise on similar facts. See, 361 F.2d 857 at 860. The use of the term “in rem” in both York Hunter and Certified Industries was in the context of New York’s “in rem” jurisdiction over New York real property in a mechanic’s lien foreclosure, and in that context only. Nowhere in York Hunter or Certified Industries did those Courts suggest (and indeed no party raised the question) that the phrase “in rem” as used in their decisions to describe a state’s jurisdiction over its real property should mean the same as the special maritime in rem rights against a vessel which are the subject of the federal maritime lien law. By conflating the use of the phrase “in rem” in two wholly non-maritime decisions, which essentially Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 19 of 23 PageID #: 301 16 decided comity questions arising out of concurrent state and federal jurisdiction over real estate, with the special and limited maritime context in which in rem is used by 46 U.S.C. § 31307 to describe vessels as juridical persons, plaintiff’s motion in the case at bar is grossly misleading. Furthermore, plaintiff ignores that RMC has not attempted to effect any sale of the Vessel here or to otherwise foreclose on its state law possessory lien. RMC merely continues to hold the Vessel until the unpaid repair and storage charges are paid. This is entirely consistent with NY Lien L. § 184, which unquestionably permits placing such a hold on the debtor’s property. Midlantic, supra, 751 F.Supp. at 28; Pirrello, supra, 2011 U.S. Dist. LEXIS 113632 at *17-19. E. References to alleged conversion of the Vessel in plaintiff’s motion are unsupported, and moot given RMC’s lawful retention of the Vessel. Plaintiff refers several times in its motion to the tort of conversion, and to a cause of action sounding in conversion alleged in plaintiff’s First Amended Complaint. See, Pl. Br. at 1, 2 and 11. Indeed, plaintiff states that it seeks judgment as a matter of law on its conversion cause of action against RMC. Pl. Br. at 2. However, plaintiff offers no discussion of the specific legal elements required to prove conversion, and offers no analysis of how the facts of this case might satisfy those proof elements. Furthermore, plaintiff fails to offer any discussion of whether or not RMC might be legally liable to plaintiff in tort at all, given that the parties’ relationship arose exclusively in contract. At best, plaintiff merely raises its assertion that RMC’s retention of the Vessel is “unlawful” (Pl. Br. at 11) and presumes on that basis that RMC has committed the tort of conversion. Having failed to identify, let alone analyze, the specific proof requirements for con- version, plaintiff cannot be granted judgment as a matter of law on its conversion claim. Further- more, as discussed in detail supra, RMC’s retention of the Vessel on account of the unpaid repair Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 20 of 23 PageID #: 302 17 and storage charges is lawful pursuant to NY Lien L. § 184. It is respectfully submitted on that basis that any conversion claim by plaintiff must fail. POINT III PLAINTIFF’S CONTENTION CONCERNING THE RECORDING AND ATTESTATION OF MARITIME LIENS IS IRRELEVANT AND INCORRECT As explained supra, plaintiff’s contention concerning pre-emption of the New York Lien Law by the federal Ship Mortgage Act is without merit. Furthermore, because plaintiff is wrong in its pre-emption contention, its explication of the filing and recording requirements under the maritime lien law (Pl. Br. at 6-7) is irrelevant. In addition plaintiff’s contentions concerning the enforcement of RMC’s maritime lien rights are incorrect. Plaintiff correctly notes that a maritime lien against a vessel in rem may only be enforced by a civil action against the vessel in federal Court. Pl. Br. at 6. Plaintiff goes on, how- ever, to state inexplicably that “[i]t is undisputed that RMC did not commence a civil action against the Vessel prior to seizing it.” Id. This statement is manifestly incorrect. First of all, RMC cer- tainly did commence a civil action in this Court against the Vessel in rem to protect RMC’s mari- time lien rights. See, RMC’s Third-Party Complaint, Doc. 15. Secondly, RMC has not “seized” the Vessel in any way. What is “undisputed” here is that the Vessel was intentionally, knowingly, and voluntarily delivered to RMC’s marina and custody by the Vessel’s owner, defendant Wein- stein. Thereafter, the Vessel never left RMC’s marina and custody. That the Vessel has not been returned to Weinstein or plaintiff is in no way the result of a “seizure.” Rather, RMC has simply continued its pre-existing lawful custody over the Vessel - detaining the Vessel against the unpaid charges owed by Weinstein and/or plaintiff. Accord, Pirrello, supra, 2011 U.S. Dist. LEXIS 113632 at *17-19, and, YS Consulting, supra, 134 A.D.2d at 587, both citing, NY Lien L. § 184. Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 21 of 23 PageID #: 303 18 Plaintiff further contends that, in order for RMC’s in rem maritime lien to be en- forceable, RMC must file a notice of lien with the U.S. Coast Guard (referred to by plaintiff as the Department of Homeland Security), and must further file a declaration attesting to the accuracy of the notice of lien. Pl. Br. at 7. These assertions are patently contradicted by 46 U.S.C. § 31343, the very statute on which they are based. In the first instance, the lien recording mechanism described in 46 U.S.C. §31343(a) plainly applies only to U.S. Documented vessels. According to publicly-available Coast Guard information, the Vessel PELAGIC ceased to be a U.S. Documented vessel when its documentation expired as of October 31, 2015. See, RMC’s Response Statement of Material Facts at ¶ 12. As the lien recording process described in 46 U.S.C. § 31343(a) applies by its terms to U.S. Docu- mented vessels, that statute, upon which plaintiff’s contention depends, does not apply. Secondly, by the statute’s plain language, the recording of a notice of lien against a vessel is permissive, not mandatory. See, 46 U.S.C. § 31343(a) (“a person claiming a lien on a vessel … may record with the Secretary a notice of that person’s lien claim on the vessel” [em- phasis added]). Plaintiff’s assertion that RMC’s in rem maritime lien rights on the Vessel depend on the filing of a statutory notice of lien is flatly contradicted by the unambiguous language of the statute. Plaintiff’s reliance on 46 U.S.C. § 31343(b) is similarly baseless. This statutory subsection requires the filing, concurrent with a notice of lien, of a declaration attesting to the correctness of the notice of lien. However, because under § 31343(a)the filing of the notice of lien itself is merely permissive and not mandatory, so also is the filing of the declaration attesting to the contents of the notice of lien. Plaintiff’s assertion that RMC is somehow out of compliance Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 22 of 23 PageID #: 304 19 with statutory prerequisites as to its in rem maritime lien rights is wrong in all respects. A maritime lien “depends neither on possession nor … on notice through filing.” Gilmore and Black, supra, § 9-2 at p. 588. CONCLUSION RMC respectfully requests that the Court issue an Order denying the summary judgment motion of plaintiff in all respects, granting RMC the costs and disbursements of this action, and granting RMC such other and further relief as the Court deems just and proper. Dated: New York, New York February 10, 2017 Respectfully submitted, KENNEDY LILLIS SCHMIDT & ENGLISH Attorneys for Defendant / Third-Party Plaintiff RICK’S MARINE CORP. By: s/Craig S. English Craig S. English, Esq. CEnglish@klselaw.com 75 Maiden Lane - Suite 402 New York, New York 10038-4816 Telephone: (212) 430-0800 Case 2:15-cv-06352-DRH-ARL Document 27-5 Filed 02/27/17 Page 23 of 23 PageID #: 305 Weinstem National Liability Weinstein Delenion LDP CertirceLdocx UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ------------------------------------------------------------------){ NATIONAL LIABILITY & FIRE INSURANCE CO., Civil Action No.: Plaintiff, 15-CV-6352 (DRH) (ARL) -against- DECLARATION OF LAURENCE D. PITTINSKY IN RESPONSE TO PLAINTIFF'S RICK'S MARINE CORP. and MOTION FOR SUMMARY ADAM WEINSTEIN, JUDGMENT RELEASING THE VESSEL M/V PELAGIC Defendants. ------------------------------------------------------------------){ Laurence D. Pittinsky declares under penalties of perjury, pursuant to 28 U.S.C. § 1746, as follows: 1. r am a member of the law firm of Rosenberg & Pittinsky, LLP, the attorneys for defendant Adam Weinstein. 2. This declaration is submitted in response to the motion filed by plaintiff National Liability & Fire Insurance Company ("Plaintiff') which seeks an order pursuant to FRCP 56 for summary judgment on Plaintiff's Third Cause of Action in its Amended Complaint dated January 29,2017 against defendant Rick's Marine Corp. ("Defendant Rick's Marine") and directing the release of the vessel M/V PELAGIC to the Plaintiff ("Plaintiff's Motion"). 3. Mr. Weinstein does not take a position for or against Plaintiff's Motion and in doing so specifically does not admit, agree with or concede any factual allegations or legal arguments contained in Plaintiff's Motion or in any opposition or reply papers filed in connection therewith. Without limiting the foregoing, Mr. Weinstein has denied and continues to deny owing Defendant Rick's Marine any monies. Case 2:15-cv-06352-DRH-ARL Document 27-6 Filed 02/27/17 Page 1 of 3 PageID #: 306 4. I declare under penalties of perjury that the foregoing statements are true and correct. Dated: February 10,2017 2 Case 2:15-cv-06352-DRH-ARL Document 27-6 Filed 02/27/17 Page 2 of 3 PageID #: 307 Civil Action No.: 15-CV-6352 (DRH) (ARL) UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ======================================~============= NATIONAL LIABILITY & FIRE INSURANCE CO., Plaintiff, -against- RICK'S MARINE CORP. and ADAM WEINSTEIN, Defendants. ===================================================== ===================~~============================================= DECLARATION OF LAURENCE D. PITTINSKY IN RESPONSE TO PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT RELEASING THE VESSEL MN PELAGIC ROSENBERG & PITTINSKY, LLP COUNSELORS AT LAW Attorneysfor Defendant Adam Weinstein Office and Post Office Address, Telephone 232 MADISON A VENUE, SUITE 906 NEW YORK, NEW YORK 10016 (212) 286-6100 =~==================-- -~ -~~ Service of a copy of the within ;------,-~--_ Signature Pursuant to Section is hereby admitted and acknowledged. 130-l.1a of the Rules ofthe Chief Administrator. Dated: Dated: 02/09/2017, New York, New York Laurence D. PittinskyfEIie Rosenbelg ==================================~-====~==========~============ AFFIRMA TION OF SERVICE , an attorney duly admitted to practice law in the State ofNew York, affirms the following to be true und·e-rt."h-e-pe-n.....,aICOtie~s~o-;;-fp-e-;rj-ury-; that I am a(n) ofRosenberg & Pittinsky, LLP; that I am over eighteen years ofage, am not a party to this action and reside New York; that on , I served a true copy of the within ___________ personally delivering same as indicated below: first class mail by depositing same in a sealed envelope with postage prepaid thereon, in an official depository under the exclusive care and custody ofthe United States Postal Service within the State ofNew York addressed as indicated below: (Attorney(s) for Dated: ________----', New York Laurence D. PittinskyiEr ie R:osenbel g Case 2:15-cv-06352-DRH-ARL Document 27-6 Filed 02/27/17 Page 3 of 3 PageID #: 308 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ----------------------------------------------------------------------- X NATIONAL LIABILITY & FIRE INSURANCE CO., : Civil Action No. : 15-CV-6352 Plaintiff, : : - against - : : RICK’S MARINE CORP. and : ADAM WEINSTEIN, : : Defendants. : : ----------------------------------------------------------------------- X PLAINTIFF NATIONAL LIABILITY & FIRE INSURANCE COMPANY’S REPLY MEMORANDUM OF LAW IN FURTHER SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT NICOLETTI HORNIG & SWEENEY Attorneys for Plaintiff National Liability & Fire Insurance Company Wall Street Plaza 88 Pine Street, Seventh Floor New York, New York 10005 OF COUNSEL: John A.V. Nicoletti, Esq. William M. Fennell, Esq. Cali L. Eckler, Esq. Case 2:15-cv-06352-DRH-ARL Document 27-7 Filed 02/27/17 Page 1 of 13 PageID #: 309 i TABLE OF CONTENTS TABLE OF AUTHORITIES .......................................................................................................... ii PRELIMINARY STATEMENT .....................................................................................................1 LEGAL ARGUMENT .....................................................................................................................2 POINT I DEFENDANT HAS IMPROPERLY UTILIZED SELF-HELP BY SEIZING AND CONTINUING TO DETAIN THE VESSEL............................................2 A. New York State Lien Law Is Preempted As Established By Midatlantic National Bank v. Sheldon .....................................................................3 B. Actions To Foreclose A Mechanic’s Liens Are In Rem In Nature ..........................5 C. RMC’s Reliance Upon Out-of-District Decisions Does Not Offer A Compelling Reason Why New York Lien Law § 80 Is Preempted By The Federal Maritime Lien Act But Section 184 Is Not............................................................................................................................6 POINT II NATIONAL LIABILITY IS NOT RESPONSIBLE FOR ANY OUTSTANDING BALANCE OWED BY ADAM WEINSTEIN TO RMC .....................................................................................................................................7 CONCLUSION ................................................................................................................................8 Case 2:15-cv-06352-DRH-ARL Document 27-7 Filed 02/27/17 Page 2 of 13 PageID #: 310 ii TABLE OF AUTHORITIES CASES Ajubita v. S/S Peik, 313 F. Supp. 1238 (E.D. La. 1969), aff’d, 428 F.2d 1345, 1970 A.M.C. 1463 (5th Cir. 1970) .................................................. 4 & 5 Dietrich v. Key Bank, N.A., 72 F.3d 1509 (11th Cir.1986) ....................................................................................................6 Farwest Steel Corp. v. DeSantis, 687 P.2d 207, 1985 A.M.C. 412 (Wash. 1984) (En Banc) ........................................................4 First Fed. Sav., F.S.B. v. M/Y Sweet Retreat, 844 F. Supp. 99 (D.R.I. 1994)....................................................................................................7 Indus. Nat'l Bank of R.I. v. Butler Aviation Int'l, Inc., 370 F. Supp. 1012 (E.D.N.Y. 1974) .................................................................................. 7 & 8 Lih v. Wagner, 316 N.Y.S.2d 497, 1971 A.M.C. 768 (N.Y. Sup. Ct. Cortland County 1970) ..........................6 LoPresti v. Terwilliger, 126 F.3d 34 (2d Cir. 1997).........................................................................................................2 Midatlantic Nat'l Bank v. Sheldon, 751 F. Supp. 26 (E.D.N.Y. 1990) .......................................................................... 2, 3, 4, 6 & 7 Tuck v. Oil Screw VIKING PRINCE, 1974 A.M.C. 921 (E.D.N.Y. 1974) ............................................................................................7 United States v. Certified Indus. Inc., 361 F.2d 857 (2d Cir. 1966).......................................................................................................5 United States v. The ZARCO, 187 F. Supp. 371, 1961 A.M.C. 78 (S.D. Cal. 1960) .................................................................4 York Hunter Constr., Inc. v. Avalon Props., Inc., 104 F. Supp. 2d 211 (S.D.N.Y. 2000)........................................................................................5 Case 2:15-cv-06352-DRH-ARL Document 27-7 Filed 02/27/17 Page 3 of 13 PageID #: 311 iii STATUTES 46 U.S.C. §§ 31301 et seq................................................................................................ 1, 2, 3 & 7 New York Lien Law § 80 ............................................................................................................2, 6 New York Lien Law § 184 .................................................................................................... passim OTHER AUTHORITIES Black’s Law Dictionary (10th ed. 2014) .................................................................................. 2, 5-6 Case 2:15-cv-06352-DRH-ARL Document 27-7 Filed 02/27/17 Page 4 of 13 PageID #: 312 1 PRELIMINARY STATEMENT Plaintiff National Liability & Fire Insurance Company (“National”) respectfully submits this Reply Memorandum in further support of its motion for partial summary judgment against Defendant Rick’s Marine Corp. (“RMC”) and in response to RMC’s Opposition. Nearly from the outset, RMC misstates National’s contention, which results in a strawman that RMC proceeds to attempt to knock down. Foremost, RMC wrongly contends that National’s argument is that “because no state law lien can exist, RMC cannot assert any lien on the Vessel.” Def.’s Br. at 3. National’s actual contention was and still is: “there is no legal justification for Defendant RMC’s self-help detention of the Vessel based upon a purported lien.” Pl.’s Br. at 1. As National explained, the Court may assume that RMC has a federal or state lien based upon the alleged necessities provided by RMC to Defendant Adam Weinstein (Pl.’s Br. at 6), but that does not justify RMC’s seizure of the M/V PELAGIC (the “Vessel”) without judicial authority. RMC contends that it was not required to record its lien under the Federal Maritime Lien Act, 46 U.S.C. § 31341, et seq. RMC’s contention is another red herring because it concedes that “a maritime in rem action in federal Court is the only permissible vehicle by which to enforce a maritime lien.” Def.’s Br. at 6 (emphasis added). It is undisputed that RMC did not commence an in rem action before it seized the Vessel and still has not sought a warrant of arrest. Therefore, even if RMC is correct that it did not have to record its lien prior to seeking enforcement of its rights, the Federal Maritime Lien Act does not legally justify RMC’s self-help detention of the Vessel. For RMC’s self-help to be justified, therefore, turns on whether RMC may rely upon New York Lien Law § 184. It may not because New York Lien Law § 184 is preempted, just as Case 2:15-cv-06352-DRH-ARL Document 27-7 Filed 02/27/17 Page 5 of 13 PageID #: 313 2 New York Lien Law § 80 is preempted. Notwithstanding RMC’s contentions to the contrary, Midatlantic National Bank v. Sheldon, 751 F. Supp. 26, 28 (E.D.N.Y. 1990), held that “it is clear that this Court’s admiralty jurisdiction and the provisions of 46 U.S.C. §§ 31301 et seq. preempt the New York Lien Law.” As the cases cited below establish, jurisdictions outside of New York have similarly held that state lien laws are preempted and Midatlantic is not “unprecedented.” LEGAL ARGUMENT POINT I DEFENDANT HAS IMPROPERLY UTILIZED SELF-HELP BY SEIZING AND CONTINUING TO DETAIN THE VESSEL Whether RMC unlawfully seized the Vessel turns on whether RMC may avail itself of self-help seizure and detention under New York Lien Law § 184. As a preliminary matter, the Federal Maritime Lien Act provides no justification for RMC’s self-help because, as RMC admits, “a maritime in rem action in federal Court is the only permissible vehicle by which to enforce a maritime lien.” Def.’s Br. at 6 (emphasis added).1 Before turning to New York Lien Law § 184, National disputes RMC’s contention that there is insufficient evidence of conversion. See Def.’s Br. at 16-17. It is axiomatic that conversion is the wrongful possession of another’s property. See Black’s Law Dictionary, Conversion (10th ed. 2014); LoPresti v. Terwilliger, 126 F.3d 34, 41 (2d Cir. 1997)). Here, the 1 Because RMC has misconstrued National’s argument, as noted at the outset, it misapprehends the relevancy of the recording requirements of the Federal Maritime Lien Act. National actually concurs with RMC that “the filing and recording requirements under the maritime lien law is irrelevant” (Def.’s Br. at 17), but for different reasons. First, it is irrelevant because RMC concedes that “a maritime lien against a vessel in rem may only be enforced by a civil action against the vessel in federal [c]ourt.” Def.’s Br. at 17. As such, RMC does not, and cannot, justify its self-help seizure and detention of the Vessel premised upon an alleged maritime lien or the Federal Maritime Lien Act. Second, RMC admits that even after having filed a post-seizure in rem action against the Vessel, it “has not effected an arrest of the Vessel.” SUF ¶ 11. Thus, RMC may not rely upon its belated post-seizure in rem action as a justification under the Federal Maritime Lien Act for its continued detention of the Vessel. Case 2:15-cv-06352-DRH-ARL Document 27-7 Filed 02/27/17 Page 6 of 13 PageID #: 314 3 undisputed facts establish that National owns the Vessel and RMC does not (SUF ¶¶ 6 & 72), RMC has refused to return the Vessel to National (id. ¶¶ 7 & 8), and RMC had not commenced any legal action prior to seizing the Vessel (id. ¶ 11). Thus, Plaintiff has fully put forth and established all elements required for its conversion claim, subject to the validity of RMC’s purported lien under New York law, to which we now turn. A. New York State Lien Law Is Preempted As Established By Midatlantic National Bank v. Sheldon Turning to New York Lien Law § 184, RMC contends that Midatlantic National Bank v. Sheldon, 751 F. Supp. 26, 28 (E.D.N.Y. 1990), “held only that the perfected federal maritime lien would have priority over the state law lien.” Def.’s Br. at 11. RMC simply repeats its faulty assertion made in its pre-motion submission and ignores National’s Memorandum, which clearly explained that the court expressly and unequivocally determined that the Maritime Lien Act preempted New York Lien Law § 184: Here, it is clear that this Court’s admiralty jurisdiction and the provisions of 46 U.S.C. §§ 31301 et seq. preempt the New York Lien Law. Midatlantic Nat’l Bank, 751 F. Supp. at 28. To continue to argue to the contrary, as RMC does, simply ignores the plain language of the court’s decision. Indeed, the court in Midatlantic necessarily had to decide whether the state lien was pre-empted because otherwise such an “unrecorded possessory lien” would ordinarily take priority over the perfected security interest held by the defendant-bank in Midatlantic. See id. Contrary to RMC’s interpretation, the court never decided whether the New York State Lien had priority over a preferred mortgage under the Federal Maritime Lien Act. It did not have 2 Citations to “SUF ¶ __” reference the Rule 56.1 Statement of Undisputed Material Facts filed by Plaintiff and RMC’s “Response” thereto. Case 2:15-cv-06352-DRH-ARL Document 27-7 Filed 02/27/17 Page 7 of 13 PageID #: 315 4 to do so because the state lien was preempted. Instead, having determined that the state lien was preempted, the court had to consider the marina’s lien under the Federal Maritime Lien Act. It noted that “[t]he marina appears to have established a normal ‘maritime lien’ under section 31342 in that it has provided necessities to the vessel . . . .” Midatlantic, 751 F. Supp. at 29. The court ultimately found that such a lien was not a preferred maritime lien “under section 31301(5).” Midatlantic, 751 F. Supp. at 29. RMC simply misreads Midatlantic and ignores the foregoing operative language from the decision that is detrimental to RMC’s contentions. RMC attempts to cast United States v. The ZARCO, 187 F. Supp. 371, 1961 A.M.C. 78 (S.D. Cal. 1960), as solely involving a contest of priorities. Def.’s Br. at 12. In actuality, the court expressly noted that someone might argue that the preemption provisions in the Federal Maritime Lien Act “are not applicable to [the] factual situation” presented by that case. The ZARCO, 187 F. Supp. at 373, 1961 A.M.C. at 81. The court unequivocally held: “We think the section controls” and held that the state possessory lien was preempted. Id. Again, therefore, RMC’s interpretation is flatly contradicted by the plain language of the decision. Relying as it does upon Washington cases, the decision in Farwest Steel Corp. v. DeSantis, 687 P.2d 207, 210, 1985 A.M.C. 412, 415 (Wash. 1984), is significant regardless of RMC’s unavailing attempts to distinguish the case. RMC’s distinction of the case based on the fact that the lien holder was a ship-supplier instead of ship-repairer is not a meaningful distinction. What is meaningful is the court’s holding: “Whether asserting its claim under the boat lien or chattel lien statutes [the plaintiff-supplier] is proceeding in rem against the barge to impose a lien for steel used in its repair. Federal maritime law clearly preempts the application of state statutes in this area.” Id. Case 2:15-cv-06352-DRH-ARL Document 27-7 Filed 02/27/17 Page 8 of 13 PageID #: 316 5 Additionally, the decision in Ajubita v. S/S Peik, 313 F. Supp. 1238, 1241 (E.D. La. 1969), aff’d, 428 F.2d 1345, 1970 A.M.C. 1463 (5th Cir. 1970), is not “wholly inapposite” as RMC contends. Def.’s Br. at 13-14. Rather, the case involved a Louisiana state statute that purported to confer a lien upon a vessel for piloting services, which the court specifically held was superseded by the Federal Maritime Lien Act. Ajubita, 313 F. Supp. at 1241 (“Title 46 U.S.C. § 975 is applicable to pilotage and thereby supersedes Louisiana Revised Statues 34:964.”). In sum, this district has already clearly and unequivocally determined that the Maritime Lien Act preempts New York Lien Law § 184 in its Midatlantic decision. The similar conclusions in The ZARCO, Farwest Steel Corp., and Ajubita bolster the decision. B. Actions To Foreclose A Mechanic’s Liens Are In Rem In Nature RMC appears to acknowledge that any “state lien which establishes in rem remedies against vessels” are preempted. Def.’s Br. at 6. In any event, such is the clear edict of the Federal Maritime Lien Act: “This chapter supersedes any State statute conferring a lien on a vessel to the extent the statute establishes a claim to be enforced by a civil action in rem against the vessel for necessaries.” 46 U.S.C. § 31307. Section 184 and 206 of the New York Lien Law establish that the means by which RMC may execute upon its lien is by foreclosure. Such foreclosure proceedings are in rem. The decisions in York Hunter Construction, Inc. v. Avalon Properties, Inc., 104 F. Supp. 2d 211, 214 (S.D.N.Y. 2000), and United States v. Certified Industries Inc., 361 F.2d 857, 860 (2d Cir. 1966), establish that actions to foreclose mechanic’s liens are in rem in nature. Defendant’s assertion that the use of the term “in rem” in York Hunter Case 2:15-cv-06352-DRH-ARL Document 27-7 Filed 02/27/17 Page 9 of 13 PageID #: 317 6 and Certified Industries is somehow different than the maritime term “in rem” is entirely incorrect and unsupported as there is one universal meaning of the term “in rem” under the law.3 In fact, in this case RMC has filed an in rem suit against the Vessel in order to enforce its purported maritime lien, but did so many months after its unlawful seizure and continued detainment/conversion of the Vessel. See generally R. Doc. 15. Thus, RMC’s initial seizure of the Vessel was improper and it has no basis to continue to detain the Vessel. In short, RMC has converted the Vessel. Accordingly, this Court should order RMC to return the Vessel to its lawful owner. C. RMC’s Reliance Upon Out-of-District Decisions Does Not Offer A Compelling Reason Why New York Lien Law § 80 Is Preempted By The Federal Maritime Lien Act But Section 184 Is Not To counter this District’s holding in Midatlantic National Bank, 751 F. Supp. at 28, RMC turns to cases outside this Circuit. In doing so, however, RMC ignores the fact that New York courts have expressly held that the Federal Maritime Lien Act preempts New York liens against vessels under New York Lien Law § 80. See Lih v. Wagner, 316 N.Y.S.2d 497, 499, 1971 A.M.C. 768, 769 (N.Y. Sup. Ct. Cortland County 1970) (citing The Glide, 167 U.S. 606, 17 S. Ct. 930, 42 L. Ed. 296 (1897); The Robert W. Parsons, 191 U.S. 17, 24 S. Ct. 8, 48 L. Ed. 73 (1903)). RMC has offered no meaningful reason to explain how New York Lien Law § 80 is clearly preempted, but New York Lien Law § 184 should not be similarly preempted. 3 “In rem” (or “against a thing” in Latin) is defined as “[i]nvolving or determining the status of a thing, and therefore the rights of persons generally with respect to that thing.” Black’s Law Dictionary, In Rem (10th ed. 2014). Further, “action in rem” is defined as “[a]n action determining the title to property and the rights of the parties, not merely among themselves, but also against all persons at any time claiming an interest in that property; a real action. Black’s Law Dictionary, Action In Rem (10th ed. 2014). Case 2:15-cv-06352-DRH-ARL Document 27-7 Filed 02/27/17 Page 10 of 13 PageID #: 318 7 At the center of RMC’s opposition is Dietrich v. Key Bank, N.A., 72 F.3d 1509, 1514 (11th Cir.1986), which held that preferred mortgage liens under the Federal Maritime Line Act did not preempt state law remedies. The logic of Dietrich, however is not universally accepted. See, e.g., First Fed. Sav., F.S.B. v. M/Y Sweet Retreat, 844 F. Supp. 99, 101 (D.R.I. 1994) (summarizing cases). Indeed, in line with Midatlantic, this District has held that federal admiralty jurisdiction is exclusive and preempts the field with respect to such preferred mortgages. See Tuck v. Oil Screw VIKING PRINCE, 1974 A.M.C. 921, 922 (E.D.N.Y. 1974). The Midatlantic decision expressly states in its holding that “it is clear that this Court’s admiralty jurisdiction and the provisions of 46 U.S.C. §§ 31301 et seq. preempt the New York Lien Law.” Midatlantic Nat’l Bank, 751 F. Supp. at 28. This Court has already clearly and unequivocally determined that the Maritime Lien Act preempts New York Lien Law § 184. This Court should follow Midatlantic because it is not bound by the decisions of other Circuits and RMC has failed to harmonize those cases with New York law that preempts Lien Law § 80. Midatlantic is the leading case and the mandatory authority on the issues of this motion and should be given credence accordingly. POINT II NATIONAL LIABILITY IS NOT RESPONSIBLE FOR ANY OUTSTANDING BALANCE OWED BY ADAM WEINSTEIN TO RMC In response to Defendant’s vastly incorrect and unsupported assertion found in a footnote (Def.’s Br. at 13 n.1), the Industrial National Bank of R.I. v. Butler Aviation International, Inc., 370 F. Supp. 1012, 1018 (E.D.N.Y. 1974), case does not stand for the proposition that as subrogee, National has now assumed Defendant Weinstein’s liability to RMC for unpaid repair and storage charges on the Vessel. In Butler Aviation, the court mentions in mere dicta that if the Case 2:15-cv-06352-DRH-ARL Document 27-7 Filed 02/27/17 Page 11 of 13 PageID #: 319 8 plaintiff has succeeded in converting its security interest into virtual ownership of the plane, then “it can pay defendant’s accrued charges and move the plane, obviating these practical problems.” See id. (emphasis added). This statement (which is a mere suggestion by the court) was not part of the holding of the case nor was it a consideration by the court that affected the holding of the case. The Butler Aviation, 370 F. Supp. at 1018, case decided the narrow issue of “whether or not plaintiff is entitled to an order of seizure pursuant to section 7102(a) of the CLPR,” which is entirely different from the assertion for which the Defendant cited to this case. More specifically, National is not responsible for any unpaid pre-casualty repair costs, post-casualty repair costs, or post-casualty storage fees. First and foremost, it is absolutely ridiculous if RMC is alleging that Plaintiff, as subrogee, is responsible for any amount owed for the pre-casualty repairs to the M/V PELAGIC as those costs were accrued months before National acquired its subrogation rights. Second, RMC does not even have a purported lien against the Vessel for any post-casualty repair costs, as explained above. Additionally, Plaintiff is not responsible for any post-casualty repair costs because those charges are a direct result of RMC’s negligence, which is certainly not Plaintiff’s responsibility. Finally, National is not responsible for any post-casualty storage fees because those charges resulted from RMC’s conversion of the M/V PELAGIC. CONCLUSION When RMC’s strawman arguments are dispensed with, RMC’s sole justification for its self-help seizure and continued detention of the M/V PELAGIC is that it contends it is authorized to do so under New York Lien Law § 184. For the reasons set forth above and in the moving papers by Plaintiff National Liability & Fire Insurance Company, New York Lien Law § 184 is preempted by the Federal Maritime Lien Act and, therefore, there is no justification Case 2:15-cv-06352-DRH-ARL Document 27-7 Filed 02/27/17 Page 12 of 13 PageID #: 320 9 for RMC’s self-help seizure and continued detention of the M/V PELAGIC. Accordingly, Defendant RMC should be found liable for the wrongful conversion of the M/V PELAGIC and ordered to release the vessel to Plaintiff (or its agents) forthwith, together with such other and further relief as the Court deems just and proper. Dated: February 27, 2017 New York, New York Respectfully submitted, NICOLETTI HORNIG & SWEENEY Attorneys for Plaintiff National Liability & Fire Insurance Co. By: s/William M. Fennell William M. Fennell, Esq. Wall Street Plaza 88 Pine Street, Seventh Floor New York, New York 10005 Tel: 212-220-3830 E-mail: WFennell@NicolettiHornig.com Reference No.: 00001195 TO (via ECF): ROSENBERG & PITTINSKY, LLP Attorneys for Defendant Adam Weinstein, Esq. Laurence D. Pittinsky, Esq. 232 Madison Avenue, Suite 906 New York, New York 10016 Tel: 212-286-6100 Email: larry@rpllplaw.com KENNEDY LILLIS SCHMIDT & ENGLISH Craig S. English, Esq. 75 Maiden Lane - Suite 402 New York, New York 10038-4816 Tel: 212-430-0803 Email: CEnglish@klselaw.com Case 2:15-cv-06352-DRH-ARL Document 27-7 Filed 02/27/17 Page 13 of 13 PageID #: 321