United States District Court, W.D. Washington, Seattle
L. ROBART United States District Judge
the court is Plaintiff Peoples Bank's motion for an order
of interlocutory sale of the P/C Ambassador of the Lake
pursuant to Federal Rule of Civil Procedure, Supplemental
Rule E(9)(a). (Mot. (Dkt. # 78).) Defendant Salvatore Ragusa
opposes People's Bank's motion (Ragusa Resp. (Dkt. #
82)), and Plaintiff-in-Intervention Seattle Mobile Marine,
LLC (“SMM”) opposes the motion in part (SMM Resp.
(Dkt. # 83)). The court has considered the parties'
submissions, the relevant portions of the record, and the
applicable law. Considering itself fully advised,
court GRANTS Peoples Bank's motion as described below.
September 2, 2016, the court ordered the clerk to issue a
vessel arrest warrant for the Ambassador of the Lake, Mr.
Ragusa's vessel, based on Peoples Bank's foreclosure
on a marine mortgage. (Arrest Order (Dkt. # 8); see
also Peoples Bank Compl. (Dkt. # 1).) SMM subsequently
intervened in the case based on its verified statement of
interest. (10/25/16 Order (Dkt. # 40); see also SMM
Compl. (Dkt. # 39).) Mr. Ragusa subsequently moved to release
his vessel from custody, and the court denied that motion but
set a bond of $234, 000.00. (11/18/16 Order (Dkt. # 60).)
Pursuant to the parties' stipulated motion, the court
also ordered a change in the arrest arrangements of the
Ambassador of the Lake in order to most effectively preserve
its condition. (11/29/16 Order (Dkt. # 66).)
Ragusa failed to pay the bond, and the vehicle therefore
remains arrested. (See Dkt.; Ragusa Decl. (Dkt. #
82-2) ¶¶ 7-8; Loosmore Decl. (Dkt. # 81)
¶¶ 3, 6.) In addition, despite representing in
settlement discussions that he would obtain a loan in order
to settle this action and secure release of the Ambassador of
the Lake, Mr. Ragusa has failed to do so. (Loosmore Decl.
¶¶ 4-5.) The custodian for the Ambassador of the
Lake attests that the six months of idle time since the
vessel's arrest has “resulted in some decay or
deterioration, ” which he opines further idle time will
exacerbate. (Osborn Decl. (Dkt. # 79) ¶ 6.) Because the
value of Peoples Bank's collateral declines every day,
Peoples Bank moves for an interlocutory sale of the
Ambassador of the Lake. (See generally Mot.)
parties have asked for various forms of relief from the
court. Peoples Bank seeks an order authorizing the United
States Marshal to conduct an interlocutory sale of the
Ambassador of the Lake (id. at 1-5); a declaration
that Peoples Bank's claim is superior to all other
claimants (id. at 5-6); and authorization to submit
a credit bid of up to $149, 753.12 at the interlocutory sale
(id. at 6-7). In the event the court grants Peoples
Bank's motion, SMM asks the court to set a minimum bid
amount at the interlocutory sale of $227, 371.39 or
“some round figure close thereto.” (SMM Resp. at
5.) Finally, Mr. Ragusa requests leave to remove certain
objects from the vessel. (Ragusa Resp. at 4-5.) The court
addresses each request in turn.
Federal Rules of Civil Procedure provide for an interlocutory
sale in an in rem action where: “(A) the
attached or arrested property is perishable, or liable to
deterioration, decay, or injury by being detained in custody
pending the action; (B) the expense of keeping the property
is excessive or disproportionate; or (C) there is an
unreasonable delay in securing release of the
property.” Fed. R. Civ. P., Supp. R. E(9)(a)(i).
Supplemental Rule E(9)(a)(i) is phrased in the disjunctive,
meaning the presence of any one of the three conditions
suffices to warrant an interlocutory sale. See id.
each of the conditions listed in Supplemental Rule E(9)(a)(i)
is met. The seven-and-a-half months that the Ambassador of
the Lake has remained idle render its machinery and equipment
liable to deterioration and decay. (See Osborn Decl.
¶ 6); Fed. R. Civ. P., Supp. R. E(9)(a)(i)(A). Mr.
Ragusa argues without citation to authority that Peoples Bank
has provided insufficient evidence of actual deterioration or
decay (Ragusa Resp. at 2-3), but Mr. Ragusa overstates the
legal standard that Peoples Bank must meet, see Cal.
Yacht Marina-Chula Vista, LLC v. S/V Opily, No.
10-cv-01215-BAS(BGS), 2015 WL 1197540, at *3 (S.D. Cal. Mar.
16, 2015) (“While the Court has not been presented with
any evidence the Defendant Vessel has in fact deteriorated,
the Court finds that the Defendant Vessel is liable to
deterioration or injury if it remains arrested during the
pendency of this action.”). The opinion of the
vessel's custodian, who is experienced with such matters,
suffices to demonstrate that the vessel is “liable to .
. . deterioration [or] decay.” Fed. R. Civ. P., Supp.
R. E(9)(a)(i)(A); (see Osborn Decl. ¶ 6.)
addition, the $46, 447.95 in custody charges as of March 21,
2017, are disproportionate to the market value of the
Ambassador of the Lake. (See Olson Decl. (Dkt. # 80)
¶¶ 3-4); Fed. R. Civ. P., Supp. R. E(9)(a)(i)(B).
Mr. Ragusa resists this conclusion on the ground that the
value of the Ambassador of the Lake is $240, 000.00, not
$190, 000.00 as Peoples Bank suggests. (See Ragusa
Resp. at 3 (citing Ragusa Decl. ¶ 3, Ex. A
(“1/12/15 Valuation”)).) As support, Mr. Ragusa
relies a January 12, 2015, valuation that predates the
deterioration and decay that has likely occurred since the
arrest here. (1/12/15 Valuation at 1.) Moreover, even
assuming the value remains at $240, 000.00, the growing
custody charges are excessive and disproportionate to the
value of the vessel. See Fed. R. Civ. P., Supp. R.
E(9)(a)(i)(B); see Seatrade Grp. N.V. v. 6, 785.5 Tons of
Cement, No. Civ.A. H-05-2771, 2005 WL 3878026, at *5
(S.D. Tex. Dec. 7, 2005) (“As time passes, the expense
of storing the property consumes more and more of the
cargo's value and becomes excessive in relation to the
value of the cargo.”).
Mr. Ragusa has caused unreasonable delay in securing the
release of the vessel by repeatedly failing to deliver on his
promises to pay Peoples Bank or post bond. (See
11/18/16 Order at 2 (granting Mr. Ragusa's request to set
a bond for release of the boat and setting a deadline for
payment of November 23, 2016); Loosmore Decl. ¶¶ 3
(indicating that to date, Mr. Ragusa has not paid the bond),
4-5 (representing that the parties reached a settlement
agreement on December 9, 2016, but Mr. Ragusa failed to pay
the agreed amount), 6 (indicating that after December 2016,
Mr. Ragusa has taken no steps to post a bond or pay the
settlement amount); Vaughn Decl. (Dkt. # 82-1) ¶¶
4-6 (predicting incorrectly that within a “few
days” of March 28, 2017, Mr. Ragusa would secure
private financing)); Fed. R. Civ. P., Supp. R. E(9)(a)(i)(C).
Mr. Ragusa argues without citation to legal authority that he
should be afforded additional time to secure a loan and post
a bond. (Ragusa Resp. at 3.) The court disagrees. Seven
months constitutes sufficient time for Mr. Ragusa to have
secured a bond, were he capable of doing so. See Bank of
Rio Vista v. Vessel Captain Pete, No. C 04-2736CW, 2004
WL 2330704, at *2 (N.D. Cal. Oct. 14, 2004) (collecting cases
in support of the proposition that defendants are typically
given at least four months to bond a vessel); see also
Ferrous Fin. Servs. Co. v. O/S Arctic Producer, 567
F.Supp. 400 (W.D. Wash. 1983) (concluding that a four-month
arrest without any effort to have the vessel released
constitutes unreasonable delay). Mr. Ragusa makes no showing
that he has progressed toward securing the requisite funds,
and the court concludes that the delay has been unreasonable.
See Fed. R. Civ. P., Supp. R. E(9)(a)(i)(C).
court concludes that under any of the disjunctive prongs of
Supplemental Rule E(9)(a)(i), an order authorizing an
injunctive sale is warranted. Accordingly, the court grants
Peoples Bank's motion to that effect and directs the
Marshal to cause the Ambassador of the Lake to be condemned
and sold at public auction, pursuant to the rules of the
United States District Court for the Western District of