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Esco Marine Inc v. Ss Pacific Star

October 11, 2011


The opinion of the court was delivered by: Gregory G. Hollows United States Magistrate Judge


Previously pending on this court's law and motion calendar for October 6, 2011 was plaintiff's motion for default judgment and interlocutory sale of vessel, filed September 16, 2011. No opposition was filed. Norman Ronneberg appeared for plaintiff. Defendants Choi and Falche appeared in pro se. At hearing, all agreed that the motion was for interlocutory sale only, as one cannot have both an interlocutory order and a judgment on the same matter at the same time. Upon review of the motion and supporting documents, the court now issues the following findings and recommendations.


On December 15, 2008, plaintiff filed the underlying complaint in this action in the Northern District of California. The case was transferred to this district because the in rem defendant, a vessel named the SS Pacific Star (ex-ARTSHIP), is berthed at Mare Island in Vallejo, which is in the Eastern District of California. Other defendants are International Maritime Security Alliance, LLC ("IMSA"), International Data Security, Inc. ("IDS"), Anna Falche, and Kenneth Choi.*fn1

According to the first amended complaint, filed April 30, 2010, plaintiff Esco Marine sold the SS Pacific Star*fn2 to defendant IMSA on June 14, 2007. (FAC ¶ 17.) IMSA assumed the responsibilities of plaintiff's wharf lease with Lennar whereby IMSA would pay the monthly dock rental of $12,000 and monthly operational costs of $862, and procure annual liability and pollution insurance for the vessel. (Id. at ¶¶ 16, 19; Ronneberg Decl., ¶ 10.)*fn3 Lennar was aware of the sale but did not enter into a new lease agreement with IMSA but rather continued to hold Esco Marine liable under the lease. (Id. at ¶ 21.) IMSA failed to pay rent or procure the required insurance, and on April 7, 2008, plaintiff informed IMSA and its principals, Choi and Falche, that they were in default. (Id. at ¶ 24.) IMSA has continued to refuse to make payments or move the ship. The lease was terminated on November 14, 2008. (Id. at ¶ 29.) Plaintiff seeks declaratory judgment and payment of past and future rent and overhead charges as long as the vessel is at Lennar's wharf, payment of insurance, arrest and sale of the ship to pay $91,000 in damages, plus interest, costs and fees.

This case has a long history of attempts by plaintiff to get defendants to move the vessel and numerous promises by defendants to comply with these requests, to no avail. Years of recalcitrant conduct by defendants culminated in the Northern District's order of May 17, 2011, wherein the court dismissed defendants' counter-claim against Esco Marine with prejudice, struck defendants' answer to the first amended complaint, noted that previous monetary sanctions had never been paid and ordered them paid by a date certain with interest, imposed further monetary sanctions, granted default "judgment" against all defendants on the allegations of the first amended complaint except for the scope and amount of damages, found that defendants had breached the contracts specified in the first amended complaint, and that defendants Falche and Choi were the alter egos of defendants IMSA and IDS and therefore personally liable for the liabilities of those corporations as well as their own. Order, filed May 17, 2011. (Dkt. no. 109.)*fn4

The order of default judgment (entry of default, see footnote 4) was electronically served on defense counsel of record.

After transfer of the action to this district on May 18, 2011, a warrant of arrest was issued pursuant to this court's order of July 13, 2011. (Dkt. no. 121.) A notice of arrest was published in the Sacramento Bee and the San Francisco Chronicle on July 21 and 24, 2011. (Dkt. nos. 125, 128.) All defendants were served with the notice of arrest. (Beach Decl., dkt. no. 152, ¶¶ 2, 3, 6; dkt. no. 124.) Defendant Choi filed a letter, dated August 8, 2011, which purported to object to the arrest of the vessel, (Dkt. no. 135.); however, this objection was deficient on its face. Just prior to the filing of this letter, defense counsel Scott Furstman, who had represented defendants from the beginning, was terminated as counsel by order of August 2, 2011. (Dkt. no. 133.) It was at this time that corporate defendants IMSA and IDS were ordered to retain counsel within thirty days or face entry of default. (Id.) On September 12, 2011, after representing defendants as co-counsel since November 15, 2010, Robert Sheppard was permitted to withdraw as counsel. (Dkt. no. 146.) Shortly thereafter, on September 16, 2011, plaintiff filed the instant motion and supporting papers which were served by mail on defendants at their last known address. Defendants filed no opposition to the motion.


Although plaintiff's September 16, 2011 motion is styled "motion for order of default judgment and interlocutory sale of vessel," counsel conceded at hearing that the motion in reality seeks only an order for the sale of the vessel. The unique history of this case warrants this characterization as Judge Illston already entered default judgment against all defendants "save as to the scope and amount of damages." (Dkt. no. 109.) Because the damages were not ascertained at the time of that order, the order itself serves as an entry of default only. See footnote 4 above. The district court's order was based, not on failure to plead or otherwise defend, but rather to sanction defendants for their conduct throughout the case. Plaintiff's motion for sanctions which led to the order of default judgment sets forth defendants' actions in full, and described three previous motions for sanctions which were granted, but which defendants contemptuously disregarded. (Dkt. no. 102.) Defendants flouted court orders to produce discovery and appear for deposition, were sanctioned monetarily for their untruthful representations that no responsive documents existed, and their sanction check was returned for insufficient funds. (Id.) The court found "outright defiance of this court's orders" and that one of the defendants had "committed perjury" at his deposition. (Id. at 13, Ronneberg Decl., Ex. E.) At the hearing on the motion, the district judge proclaimed on the record:

[Defendants] are in outright defiance of this court's orders.

As far as I can tell, Mr. Choi, who actually is quite a charming man, I think, committed perjury at his deposition, because that's not the kind of thing about which one would be confused or mistaken. That was just a clear lie, it sounds like to me, and it was a material matter.

So, you know, those are all very serious things. And I have absolutely no confidence either in the likelihood of his showing up for his deposition, or it's being truthful once it's given, based on ...

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