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Club v. Vessel Ultimatum

United States District Court, N.D. California, San Francisco Division

May 9, 2014

OAKLAND YACHT CLUB, a California non-profit corporation, Plaintiff,
v.
The Vessel ULTIMATUM, Official Number 1047526, her masts, sails, engine and appurtenances, in rem., Defendant.

REPORT AND RECOMMENDATION RE: PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT AND ORDER FOR FINAL SALE [Re: ECF No. 20]

LAUREL BEELER, Magistrate Judge.

INTRODUCTION

Plaintiff Oakland Yacht Club filed this admiralty and maritime action in rem against Defendant The Vessel Ultimatum, seeking to foreclose a maritime lien under the Federal Maritime Lien Act, 46 U.S.C. §§ 31342, 31325(d)(1). See Complaint, ECF No. 1.[1] Oakland Yacht Club filed a motion for default judgment and an Order for Final Sale, which the district court referred to the undersigned for a Report and Recommendation. See Motion for Default Judgment, ECF No. 20; Order of Reference, ECF No. 23. The court held a hearing on May 8, 2014 and for the reasons below, the court RECOMMENDS the district court GRANT the motion.

STATEMENT

Defendant The Vessel Ultimatum is a U.S. documented vessel, Official Number 1047526, known as a J-105 sloop. Complaint, ECF No. 1, ¶ 2. Plaintiff Oakland Yacht Club is a California non-profit corporation with its principal place of business in Alameda, California. Id. ¶ 2. In May 2010, Mustafa Gunan was a member of Oakland Yacht Club and an owner of the Ultimatum. Complaint ¶ 4. Gunan entered into a contract with Oakland Yacht Club under which the club would provide a slip to berth the Ultimatum, electrical power to the vessel, and the use of a dock box adjacent to the boat. Id. Since then, Gunan berthed the Ultimatum in a slip in Oakland Yacht Club's marina. Id. Because the Ultimatum is more than 35 feet long (as measured by Oakland Yacht Club rules) Gunan was charged rent for berthing a 36-foot boat. Id. He paid this rent in 2010, 2011, and part of 2012. Id.

In December 2012, Oakland Yacht Club terminated Gunan's membership and the berthing contract for non-payment of slip rental fees and other charges. Id. ¶5.

Gunman still has not removed the Ultimatum from its berth at Oakland Yacht Club. Id. ¶ 6. He has not paid any of the fees for berth rental, electrical power, or dock box rental since January 2013, even though Oakland Yacht Club has continued to provide berthing, electrical power, and use of a dock box. Id. ¶¶ 6-7. As alleged in the complaint, the fair rental value of the slip the Ultimatum occupies for a vessel that does not belong to an Oakland Yacht Club member and that is not subject to a slip rental agreement with a term of at least a month is $1 per foot of measured length per day. Id. ¶ 7. In the case of the Ultimatum, this comes to $36 per day. Id. The fair value of the dock box is $2.50 per month. Id. The electric power charges are based on actual cost of metered usage. Id. The fair value of the berthing, electrical power and dock box provided to the Ultimatum from January 1, 2013 to January 31, 2014 is $14, 318.90. See Complaint ¶ 8. Oakland Yacht Club provides a declaration from its General Manager with an attached spreadsheet that corroborates the fair rental values and accrued charges as alleged in the Complaint. See Doering Decl. Supp. Motion Ex. A, ECF No. 20-1.

II. PROCEDURAL HISTORY

Oakland Yacht Club filed this in rem action on January 31, 2014. See ECF No. 1. On February 7, 2014, the district court approved Oakland Yacht Club's proposed warrant of arrest, and it ordered the issuance of a warrant for arrest of the Ultimatum. See ECF Nos. 6, 9. The same day, the court granted Oakland Yacht Club's Application for Appointment of Substitute Custodian, appointed Oakland Yacht Club as the substitute custodian, and ordered that if the U.S. Marshal for the Northern District of California arrests the Ultimatum it should immediately transfer custody of the boat to Oakland Yacht Club. See ECF Nos. 8, 10. Also on February 7, the Clerk of the Court issued the warrant to the U.S. Marshal. See Warrant for Arrest, ECF No. 11.

On February 13, 2014, the U.S. Marshal arrested the Ultimatum and turned over custody to Oakland Yacht Club. See Warrant Return, ECF No. 14. Also on February 13, 2014, in order to satisfy the service requirements of 46 U.S.C. § 31326(d)(1), the Oakland Yacht Club mailed copies of pleadings and documents from this proceeding to Mustafa Gunan and Sevtap Mimar at 15909 Peacock Avenue, Sunnyvale, CA 94087, their last known address. See Proof of Service, ECF No. 13-1. Specifically, Oakland Yacht Club mailed copies of the Notice of Arrest of Vessel, the Warrant, the Order for Issuance of Warrant, the Order Appointing Substitute Custodian, the Complaint, and the Oakland Filing Procedures. Id.

Thereafter, Oakland Yacht Club published a Notice of Arrest of Vessel in the San Francisco Daily Journal, in compliance with Admiralty Local Rule 4-2(a) and Civil Local Rule 77-4(c) and also filed the Proof of Publication, as required by Admiralty Local Rule 4-2(b).

On March 4, 2014, Oakland Yacht Club moved for entry of default, ECF No. 17, which the Clerk of Court entered on March 6, 2014, ECF No. 18. On March 10, 2014, the district court ordered Oakland Yacht Club to file a motion for Default Judgment within 30 days. Order Re Default, ECF No. 19. Oakland Yacht Club filed the pending motion for default judgment on March 12, 2014, Motion, ECF No. 20, and the district court referred it to a magistrate judge for findings and a recommendation. Motion, ECF No. 23. The Oakland Yacht Club filed a certificate of service that is served a copy of its motion and supporting papers on Mr. Gunan and Ms. Minar. See ECF No. 25. The undersigned held a hearing on the motion on May 8, 2014.

ANALYSIS

I. LEGAL STANDARD

Before assessing the merits of a default judgment in an in rem action brought pursuant to 46 U.S.C. § 31342(a), a court must confirm that it has subject matter jurisdiction over the case and in rem jurisdiction over the defendant, as well as ensure the adequacy of service upon those who may have an interest in the defendant. See Crescent City Harbor Dist. v. M/V Intrepid, No. 08-1007-JCS, 2008 WL 5211023, at *2-3 (N.D. Cal. Dec.11, 2008). The court then may grant a default judgment if the requirements in Admiralty Local Rule 6-2(b) have been met: "(1) Notice has been given as required by Admir. L.R. 6-1(a)(2) and (b)(2); (2) The time to answer has expired; and (3) No one has filed a verified statement of right of possession or ownership interest in the property." N.D. Cal. Admiralty L.R. 6-2(b).

Under Federal Rule of Civil Procedure 55(b)(2), a plaintiff may apply to the district court for - and the court may grant - a default judgment against a defendant who has failed to plead or otherwise defend an action. Draper v. Coombs, 792 F.2d 915, 925 (9th Cir. 1986). Whether to enter a judgment lies within the court's discretion. Pepsico, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1175 (C.D. Cal. 2002). Still, "[a] defendant's default does not automatically entitle the plaintiff to a court-ordered judgment." Draper 792 F.2d at 924-25. Default judgments generally are disfavored because "cases should be decided on their merits whenever reasonably possible." Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986). Where the clerk has already entered default, the court must take as true the factual allegations of the complaint and other competent evidence submitted. See Fair Hous. of Marin v. Coombs, 285 F.3d 899, 906 (9th Cir. 2002); TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917 (9th Cir. 1987).

In deciding whether to enter a default judgment, the court should consider: (1) the possibility of prejudice to the plaintiff; (2) the merits of plaintiff's substantive claims; (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute about the material facts; (6) whether the default was due to excusable neglect; and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. Eitel, 782 F.2d at 1471-72.

II. THE COURT HAS JURISDICTION OVER THIS ACTION AND DEFENDANT

The district court has jurisdiction over this action under 28 U.S.C. § 1333 which vests district courts with original jurisdiction over "any civil case of admiralty or maritime jurisdiction." 28 U.S.C. § 1333. An in rem action may be brought to enforce any maritime lien, or whenever a statute of the United States provides for a maritime action to be brought in rem. Fed.R.Civ.P. Supp. C(1). Here, Oakland Yacht Club seeks to enforce a maritime lien under the Federal Maritime Lien Act, 46 U.S.C. § 3142. Accordingly, the Court has subject matter jurisdiction over this action. See Ventura Packers, Inc. v. F/V Jeanine Kathleen, 305 F.2d 913, 918-23 (9th Cir. 2002) (holding that the Maritime Lien Act provides a statutory basis for the exercise of a district court's admiralty jurisdiction). The court has in rem jurisdiction over the Ultimatum because the vessel ...


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