Motor Yacht Sold at Judicial Sale Following Owner's Death
On April 14, 2023, the United States District Court for the Southern District of California (the "Court"), in the case Cahuenga Associates II v. M/Y Gold Dust, et al, granted a motion to sell a motor yacht under seizure. The opinion addresses, among other things, the steps a yacht owner must take to secure the release of his/her vessel and the potential consequences for failing to do so in a timely manner.
On January 4, 2020, Robert Trout ("Trout"), a yacht owner, executed a private wharfage contract with Cahuenga Associates II ("Cahuenga"). Cahuenga operates a marina in San Diego California where Trout kept the M/Y GOLD DUST. Trout fell behind paying Cahuenga in August 2021. Cahuenga tried to reach Trout to secure payment and discovered he passed away.
Cahuenga sent a notice of termination of the wharfage contract to the Estate of Robert Trout and Trout's brother Thomas Trout. Counsel for Cahuenga spoke with Thomas Trout after the effective date of the termination and agreed to defer legal action so that Thomas Trout could speak with counsel about the amount due. However, neither Thomas Trout nor his counsel followed up with Plaintiff. On February 21, 2022, wharfage fees attributable to the M/Y GOLD DUST totaled $ 11,116.00 and continued to accrue at a rate of $117.00 per day.
On March 7, 2022, Plaintiff, Cahuenga, filed a verified complaint in the United States District Court for the Southern District of California against the M/Y GOLD DUST for breach of a maritime contract and trespass. The district court issued an order authorizing the arrest of the vessel and appointing Plaintiff as its substitute custodian. The district court entered a default against the M/Y GOLD DUST on October 26, 2022. Plaintiff then filed a motion to have the M/Y GOLD DUST sold prior to judgment.
The Court noted that courts in the Ninth Circuit generally allow at least four months for a vessel owner to post a bond to secure the release of a vessel before granting a motion for expedited sale. The Court examined the evidence and Plaintiff's arguments and determined that Plaintiff seized the M/Y GOLD DUST over seven months before it filed a motion to sell the vessel prior to judgment. There had been no effort to secure the release of the vessel. The Court concluded that the M/Y GOLD DUST's likelihood of deterioration, the unreasonable delay in securing the release of the vessel, and the excessive and disproportionate cost of keeping the vessel in custody warranted an interlocutory sale and granted Plaintiff's motion.
C. Why Is This Important
- If you own a vessel/yacht, which has been seized, be mindful that you may need to take prompt action to secure the release of the vessel or it could be defaulted and sold to secure the payment of the outstanding liens prior to a judgment in plaintiff's favor.
- A yacht owner should consider and/or plan for payment of future recurring vessel expenses like wharfage, insurance, maintenance, etc. for their yacht(s) in the event of their death.
- A maritime lien holder can seize a vessel/yacht and potentially have it sold at a judicial sale to secure unpaid wharfage.
W. Brett Mason is a Member at Stone Pigman Walther Wittmann L.L.C. and advises companies doing business in Louisiana in their desire to evaluate and manage maritime risk by counseling them on changes in law and protecting their interests should a dispute arise.