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Kkmi Sausalito, LLC v. The Vessel "Self Inflicted"

United States District Court, N.D. California

December 20, 2019

KKMI SAUSALITO, LLC, Plaintiff,
v.
THE VESSEL “SELF INFLICTED, ” Defendant.

          ORDER GRANTING MOTION FOR DEFAULT JUDGMENT RE: DKT. NO. 24

          KANDIS A. WESTMORE UNITED STATES MAGISTRATE JUDGE

         On May 23, 2019, Plaintiff KKMI Sausalito, LLC filed this admiralty and maritime action in rem against Defendant Vessel “Self Inflicted, ” Documentation No. 1064308. (Compl., Dkt. No. 1.) Plaintiff alleges that between June 29, 2017 and May 22, 2019, the Vessel incurred repairs, hull maintenance, and storage charges at Plaintiff's boatyard in Sausalito, California. (Compl. ¶¶ 6-9.) Plaintiff now seeks to foreclose a maritime lien against the Vessel, her engines, rigging, sails, boats, tackle, apparel, and furniture pursuant to the Federal Maritime Lien Act (“FMLA”), 46 U.S.C. § 31342, and seeks a judgment condemning the Vessel and an order for its sale to pay the outstanding amount owed.

         On October 4, 2019, Plaintiff filed a motion for default judgment. (Mot., Dkt. No. 24.) On December 19, 2019, the Court held a hearing on Plaintiff's motion for default judgment, at which no potential claimants appeared. For the reasons set forth below, the Court GRANTS Plaintiff's motion for default judgment.

         I. BACKGROUND

         Defendant Vessel is a steel-hulled recreational sailing vessel, approximately 48' in length. (Compl. ¶ 3.) On June 29, 2017, the Vessel's owner, Daniel A. Morgan, entered into a Service Agreement with Plaintiff for repair and hull maintenance work at Plaintiff's Sausalito boatyard. (Compl. ¶ 5.)

         Between June 29, 2017 and November 12, 2018, the Vessel incurred repair charges for labor and parts in the amount of $15, 748.13. (Compl. ¶ 6; Kaplan Decl. ¶ 6, Dkt. No. 24-1.) Payments of $6, 590.00 were made, leaving a balance due of $9, 158.13 as of November 12, 2018. (Compl. ¶ 6; Kaplan Decl. ¶ 6.) No. further payments were made, despite demands from Plaintiff. (Compl. ¶ 7; Kaplan Decl. ¶ 7.) Pursuant to the Service Agreement, a vessel storage charge was applied at the usual and customary daily storage rate of $3.00 per foot of boat length, or $144.00 per day. (Compl. ¶ 7; Kaplan Decl. ¶ 7.) Between November 13, 2018 and May 22, 2019 - the date the complaint was verified by Plaintiff - the Vessel incurred daily storage charges of $144.00 for 191 days, for a total unpaid storage charge of $27, 504.00. (Compl. ¶ 7; Kaplan Decl. ¶ 8.)

         Plaintiff then filed the instant in rem action, asserting a maritime lien against the Vessel, her engines, rigging, sails, boats, tackle, apparel, and furniture pursuant to 46 U.S.C. § 31341(a)(1) and general maritime law. (Compl. ¶ 13.)

         On May 31, 2017, the Court approved Plaintiff's proposed warrant of arrest, ordering that the warrant be issued for the arrest of the Vessel, which the Clerk of the Court issued. (Dkt. Nos. 11, 12.) The Court also granted Plaintiff's Application for Appointment of a Substitute Custodian, appointing Paul Kaplan, Plaintiff's founding partner, custodian of the Vessel and authorizing the U.S. Marshal to surrender possession of the Vessel to him. (Dkt. No. 12.) The Marshal arrested and served the Vessel on June 18, 2019 at Plaintiff's boatyard in Sausalito, California. (Dkt. No. 15.) The Marshal filed the executed return of Arrest Warrant on July 23, 2019, and the executed return of the Summons on July 26, 2019. (Dkt. Nos. 15, 21.)

         Plaintiff published a Notice of Action and Arrest in The Daily Journal, in compliance with Admiralty Local Rule 4-2(a), and Plaintiff filed the Proof of Publication pursuant to Admiralty Local Rule 4-2(b). (Dkt. No. 20.)

         On July 24, 2019, Plaintiff requested entry of default. (Dkt. No. 18.) On July 26, 2019, the Clerk of the Court entered default. (Dkt. No. 22.) No. one has appeared in this action or filed a verified statement of right of possession or ownership interest in the Vessel.

         II. LEGAL STANDARD

         Federal Rule of Civil Procedure 55(b)(2) permits a court to enter a final judgment in a case following a defendant's default. Shanghai Automation Instrument Co. v. Kuei, 194 F.Supp.2d 995, 999 (N.D. Cal 2001). Whether to enter a judgment lies within the court's discretion. Id. (citing Draper v. Coombs, 792 F.2d 915, 924-925 (9th Cir. 1986)).

         Before assessing the merits of a default judgment, a court must confirm that it has subject matter jurisdiction over the case and personal jurisdiction over the parties, as well as ensure the adequacy of service on the defendant. See In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). If the court finds these elements satisfied, it turns to the following factors (“the Eitel factors”) to determine whether it should grant a default judgment:

(1) the possibility of prejudice to the plaintiff, (2) the merits of Plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action[, ] (5) the possibility of a dispute concerning material facts[, ] (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring a decision on the merits.

Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986) (citation omitted).

         Upon entry of default, all factual allegations in the complaint are accepted as true, except allegations relating to the amount of damages. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). Where a default judgment is granted, the scope of relief “must not differ in kind from, or exceed in amount, what is demanded in the pleadings.” Fed.R.Civ.P. 54(c).

         III. DISCUSSION

         A. Magistrate Judge Jurisdiction to Enter Default Judgment

         Section 636(c) confers magistrate judges the authority to enter judgment in a civil action “upon consent of the parties.” Generally, the consent of all of the parties, including unserved defendants, is required for a valid judgment to be entered. Williams v. King, 875 F.3d 500, 504 (9th Cir. 2017). Here, however, the action is in rem against the Vessel. In in rem forfeiture proceedings, the Ninth Circuit has held that a putative claimant's failure to comply with the applicable filing requirements precludes standing as a party to the action, such that the property owner's consent to magistrate judge jurisdiction is not a prerequisite to the entry of default judgment against his interest in the subject property. United States v. Real Property, 135 F.3d 1312, 1316-17 (9th Cir. 1998). In Williams, the Ninth Circuit affirmed this narrow exception, such that the undersigned is vested with jurisdiction to enter judgment against the Vessel even absent the consent of the property owner. See 875 F.3d at 504. Accordingly, since the undersigned has obtained consent from the only party to the action - Plaintiff - the Court may enter default judgment.

         B. Jurisdiction and Service of Process

         In considering whether to enter default judgment, a district court must first determine whether it has jurisdiction over the subject matter and the parties to the case. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999) (“When the entry of judgment is sought against a party who has failed to plead or otherwise defend, a district court has an affirmative duty to look into its jurisdiction over both the subject matter and the parties.”)

         i. Jurisdiction

         This 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.” 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, Plaintiff seeks to enforce a maritime lien under the Federal Maritime Lien Act (“FMLA”), 46 U.S.C. § 31342. Accordingly, the Court has subject matter jurisdiction over this action. See Ventura Packers, Inc. v. F/V Jeanine Kathleen, 305 F.3d 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 also has in rem jurisdiction over the Vessel because the Vessel is located within the Northern District of California, was “arrested pursuant to maritime process, ” and “the warrant w[as] successfully served.” Ventura Packers, Inc. v. F/V Jeanine Kathleen, 424 F.3d 852, 858 (9th Cir. 2005); accord Fed. R. Civ. P. Supp. C(2)-(3).

         ii. Venue

         Venue is proper because the Court has jurisdiction over the parties, and the Vessel is located in the district. (Compl. ¶ 4.)

         iii. Service of Process

         The Court finds that Plaintiff has complied with the service requirements set forth in Federal Rule of Civil Procedure Supplemental Rule C(3)(b)(i). This rule provides: “If the property that is the subject of the action is a vessel or tangible property on board a vessel, the warrant and any supplemental process must be delivered to the marshal for service.” Fed.R.Civ.P. Suppl. R. C(3)(b)(i). The Marshal's Process Receipt and Return shows that the Vessel's custodian was served when the Vessel was arrested on June 18, 2019. (Dkt. No. 16.)

         Plaintiff has also complied with the notice requirements in Admiralty Local Rule 4-2(a) when it published notice in The Daily ...


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