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Peoples Bank v. P/C Ambassador of Lake

United States District Court, W.D. Washington

January 22, 2018

PEOPLES BANK, et al., Plaintiffs,
v.
P/C AMBASSADOR OF THE LAKE, et al, Defendants.

          ORDER ON MOTION FOR FEES AND MOTION FOR JUDGMENT

          JAMES L ROBART UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         Before the court are: (1) Plaintiff Peoples Bank's motion for an order approving administrative expenses, directing partial reimbursement of those expenses from Plaintiff-in-Intervention Seattle Mobile Marine LLC ("SMM"), and approving legal fees and costs (Mot. (Dkt. # 109)); and (2) Peoples Bank's motion for a deficiency judgment against in personam Defendant Salvatore Ragusa (MDJ (Dkt. # 120)). SMM and Mr. Ragusa oppose portions of each motion.[1] (SMM Mot. Resp. (Dkt. #115); Ragusa Mot. Resp. (Dkt. # 113); SMM MDJ Resp. (Dkt. # 130); Ragusa MDJ Resp. (Dkt. # 127).) The court has considered the parties' submissions in support of and in opposition to the motion, the relevant portions of the record, and the applicable law. Being fully advised, [2]the court GRANTS in part and DENIES in part the motion for fees and ORDERS that Peoples Bank is entitled to judgment against Mr. Ragusa, in personam, for $143, 367.52, plus interest at $45.98 per day from November 27, 2017, through the date of entry of this judgment and until paid.

         II. BACKGROUND

         This case arises from several debts that Mr. Ragusa owed to various entities; only two loans with Peoples Bank remain in dispute. (See MDJ at 1-2; 11/28/17 Loosmore Deck "(Dkt. # 122) ¶¶ 4-6, 8.) Peoples Bank made the first loan, Loan Number 5045130-601 ("the 601 Loan"), to Mr. Ragusa on November 20, 2015, for an original principal amount of $90, 000.00. (11/28/17 Olson Deck (Dkt. # 121) ¶ 3.) The principal amount of the 601 Loan was subsequently increased to $126, 500.00 on February 4, 2016. (Id.) Peoples Bank made the second loan, Loan Number 5045130-602 ("the 602 Loan"), to Mr. Ragusa on August 10, 2016 for a principal amount of $22, 485.90. (Id.) As of November 27, 2017, Mr. Ragusa owes $135, 388.96 on the 601 Loan and $26, 300.68 on the 602 Loan, owing in total $161, 689.64. (Id. ¶ 4.) Mr. Ragusa does not dispute any of the above figures. (See generally Ragusa MDJ Resp.; Vaughn Decl. (Dkt. # 129) ¶ 2.)

         On September 2, 2016, the court issued a vessel arrest warrant for Mr. Ragusa's vessel, the Ambassador of the Lake, based on Peoples Bank's foreclosure on the 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.) but dismissed its in rem claims against the vessel on April 24, 2017 (Not. of Dismissal (Dkt. # 90)). The court granted Peoples Bank's motion for an interlocutory sale and authorized Peoples Bank to submit a credit bid at that sale. (4/20/17 Order (Dkt. # 89) at 6-7, 10). Peoples Bank then purchased the Ambassador of the Lake at the court-ordered interlocutory sale on May 24, 2017 for a credit bid of $149, 753.12. (Ret. of Serv. Re: Marshal's Sale (Dkt. # 94) at 1).

         Peoples Bank believed that it would be able to sell the vessel for $123, 363.35 to a private buyer but instead realized only $34, 100.00 from the sale. (See 8/9/17 Order (Dkt. # 106) at 2-3; 11/28/17 Loosmore Decl. ¶ 3; 11/15/17 Olson Decl. (Dkt. # 110) ¶¶ 4-5.) Peoples Bank now asks the court to approve various administrative expenses, legal fees and costs, and to enter a deficiency judgment against Mr. Ragusa, in personam. (See generally Mot.; MDJ.) However, the parties disagree as to who is responsible for the administrative expenses and the amount of the deficiency owed. The court first addresses the motion concerning the administrative expenses and legal fees and then turns to the motion for a deficiency judgment.

         III. ANALYSIS

         A. Motion for Administrative Expenses and Legal Fees

         Peoples Bank asks the court for an order that: (1) approves administrative expenses of $65, 501.56 incurred during this matter; (2) directs SMM to reimburse half of those administrative expenses; and (3) approves $65, 929.44 of legal fees to be paid by Mr. Ragusa. The court considers the issues pertaining to the administrative expenses before turning to the legal fees.

         1. Administrative Expenses

         a. Approval of Administrative Expenses

         Peoples Bank asserts that it has incurred and paid "costs of custody of the substitute custodian of $10, 521.51, for storage of the vessel ashore of $49, 743.62, and charges of the U.S. Marshal of $5, 236.43" for a total of $65, 501.56. (Mot. at 3.) As evidence of these costs, Peoples Bank offers the declaration of Amber Olson, the vice president and Special Assets and Credit Risk manager, who has personal knowledge of this suit and is responsible for receiving all statements for expenses and fees paid by Peoples Bank. (11/15/17 Olson Decl. ¶¶ 1-2; see also 12/1/17 Olson Decl. (Dkt. # 125) ¶¶ 1-2.) She states that "from the time Peoples Bank filed the lawsuit against Mr. Ragusa and his boat through the date the boat was released from arrest after the U.S. Marshals sale, Peoples Bank paid $65, 501.56 for administrative expenses." (12/1/17 Olson Decl. ¶ 3.) She also includes a breakdown of those costs. (Id. ¶ 4, Ex. 1.) Neither Mr. Ragusa // nor SMM offers any evidence to the contrary.[3] (See Ragusa Mot. Resp. at 2; SMM Mot. Resp. at 12-13.)

         On September 2, 2016, the court appointed Dock Street Custodial, LLC as substitute custodian for the vessel and ordered that all authorized expenses that are incurred by Peoples Bank for "the movement and safekeeping of the defendant vessel and its equipment" shall be deemed administrative expenses. (9/2/16 Order (Dkt. # 9) at 5.) Finding no reason to question the above submissions of these expenses, the court approves $65, 501.56 as administrative expenses in this matter.

         b. Contribution from SMM

         Peoples Bank also requests that SMM contribute to the administrative expenses by reimbursing half of the costs. (Mot. at 3-5.) Peoples Bank argues that because the proceeds from the subsequent private sale of the vessel-$34, 100.00-are less than the costs of custody-$65, 501.56-SMM, as an intervenor plaintiff, must contribute equally to the administrative expenses. (Id. at 4.) SMM disagrees for two reasons. First, SMM relies on the judicial sale price of the vessel-$149, 753.12-and thus maintains that the value of the boat exceeded the costs of custody. (SMM Mot. Resp. at 6-8.) Second, SMM purports that even if the costs of custody exceeded the value of the boat, SMM should not be responsible for ...


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