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Wachovia Bank v. M/Y Just a Notion

September 2, 2010

WACHOVIA BANK, N/A, PLAINTIFF,
v.
M/Y JUST A NOTION; GREGORY A. STRASBURG, DEFENDANT.



The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge

ORDER: (1) DENYING CLAIMANTS' THIRD PARTY CLAIMS OF RIGHT; (2) DENYING PETER BLAIR'S MOTION TO INTERVENE (Doc. No. 31, 32, 33, 47.)

On April 1, 2010, Claimants Peter Blair, James Singleton, and David Moniz filed separate petitions for hearing on third party claims of right to the vessel M/Y Just a Notion. (Doc. Nos. 31, 32, 33.) A hearing on all three petitions was held on April 15, 2010. The Court thereafter lifted the stay placed on the sale and transfer of the vessel as a result of these petitions, confirmed the sale, and requested further briefing regarding the issue of priority of third party claim of rights. (Doc. No. 47.) In compliance with the Court's order, on April 26, 2010, Plaintiff Wachovia Bank and Defendant Gregory Strasburg filed a joint response (Doc. No. 54), Peter Blair filed a response (Doc. No. 55), and James R. Singleton filed a response. (Doc. No. 56.) Claimant David Moniz did not file a response.

Shortly after this Court's order, on April 19, 2010, Peter Blair filed a motion to intervene. (Doc. No. 49.) Pursuant to this Court's Order, Wachovia Bank and Strasburg timely filed a joint response in opposition. (Doc. Nos. 51, 58.)

For the reasons discussed below, the Court HEREBY DENIES Claimants Peter Blair, James Singleton, and David Moniz's third party claims and DENIES Peter Blair's motion to intervene.

BACKGROUND

This case was filed on June 6, 2008 by Wachovia Bank against Gregory Strasburg, the trustee of M/Y Just a Notion (the "vessel"). Wachovia filed the complaint seeking foreclosure of the vessel. (1023 Compl. ¶ 1.) In February 2004, Wachovia and Strasburg executed a Note in the amount of $680,000 plus interest and other expenses and a Mortgage which secured the obligations of the Note. (Id. ¶¶ 5, 6.) The mortgage constitutes a lien on the vessel in the amount of the outstanding Note and Mortgage indebtedness. (Id. ¶ 8.) The complaint alleges that Strasburg defaulted under the Note and Mortgage and therefore Wachovia is entitled to foreclosure. (Id. ¶ 9.) The complaint notes that the Yacht Club LLC purports to claim a preferred mortgage on the vessel and that David Moniz, Kim Warner, Peter Blair, James Singleton, Rob La Brech and the Yacht Club LLC all have recorded unexpired notices of claims of undischarged liens on the Vessel. (Id.)

On April 7, 2009, Wachovia and Strasburg signed a stipulated judgment that Wachovia issued the Note and Mortgage and therefore has a security interest in the vessel. (Doc. No. 22 at ¶¶ 5-6.) The stipulated judgment also states that Strasburg and the Strasburg Trust materially defaulted under the Note and Mortgage.

Among the defaults, Strasburg and Strasburg Trust have (i) purported to convey ownership and/or mortgage interests in the vessel to others, creating a dispute over title to the vessel, (ii) allowed notices of claims of lien against the vessel presently on file with the Coast Guard and has not yet removed such notices although they are disputed, and (iii) caused the maritime arrest of the vessel, among other defaults. (Id. ¶ 7.) The stipulated judgment ordered that, upon any of these defaults, Wachovia may require the vessel, Strasburg and Strasburg Trust to pay the balance owed to Wachovia in full, bring suit to foreclose, and to pay all related costs. (Id. ¶ 8.) Thus, the stipulated judgment awarded payment of $555,110.7 to Wachovia as of February 27, 2009 plus interest. (Id. ¶ 9.)

The stipulated judgment also states that the "Mortgage is senior, prior and superior to all other interests, liens or claims of whatsoever nature against the Vessel" and that all proceeds from the foreclosure sale first go to Wachovia. (Id. ¶ 14.) Further, the judgment notes that there is a related action, 08cv21, but that the time to file a claim in the present action had expired under Rule C(6)(a) of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure. (Id. ¶ 12.)

Along with the stipulated judgment, the Court signed an Order of Sale of the vessel, condemning the vessel to be sold by the US Marshal within thirty days. (Doc. No. 23.) The vessel was to be sold in accordance with the Marshal's rules and regulations governing such sales, and then the parties were to notify the Court when the sale was complete and the litigation otherwise concluded. (Id.)

After various stays of the sale of the vessel, on April 1 and 2, 2010, Peter Blair, David Moniz, and James Singleton filed third party claims of right in an effort to once again prevent the sale, which was scheduled to take place that Friday, April 2, 2010. The Court again stayed the sale of the vessel, set a briefing schedule, and scheduled a hearing for April 15, 2010. (Doc. No. 38.) Gregory Strasburg and Wachovia Bank filed a response in opposition to the third party petitions on April 12, 2010. (Doc. No. 40.) The hearing took place as scheduled and thereafter the Court found no basis to continue the stay of the sale of the vessel and no basis for injunctive relief, as all matters were financial and would not result in irreparable harm, and therefore lifted the stay and confirmed the sale of the vessel for $650,000.00. (See Doc. Nos. 47, 53.) However, despite the sale, the issue remained as to the priority of the claimed third party rights, especially in light of the stipulated judgment. Thus, the Court ordered all parties and Claimants to file supplemental briefing on these issues. (Doc. No. 47.) The parties and Claimants, except for David Moniz, filed said briefs on April 26, 2010. (Doc. Nos. 54, 55, 56.)

DISCUSSION

Three individuals filed third party claims of right ("COR") in this case: Peter Blair, James Singleton, and David Moniz. (Doc. Nos. 31, 32, 33.) Peter Blair claims that he "acquired maritime lien rights for labor and services performed on the Vessel, repairs, materials, cure and improvements on the Vessel" which he believes gives him priority over Wachovia's preferred ship mortgage liens. (Blair COR at 1 (citing United States v. 254 Foot Freighter M/V Andoria, 570 F. Supp. 413, 415 (E.D. La 1983); United States v. ZP Chandon, 889 F.2d 233, 237 (9th Cir. 1989).) He claims that the fair market value of his property is approximately $581,360.00 under the Lien Notice dated December 20, 2007. (Blair COR at 2.) James Singleton's COR is essentially the same as Blair's, but claims an ...


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