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Turnkey Yacht Services, Inc. v. Sailing Vessel" Shearwater"

United States District Court, D. Maryland

January 9, 2015

TURNKEY YACHT SERVICES, INC., t/a Annapolis Harbor Boat Yard Plaintiff,



This Memorandum addresses a motion to vacate orders of default, arising from an admiralty action.[1]

In September 2013, plaintiff Turnkey Yacht Services, Inc. t/a Annapolis Harbor Boat Yard ("Turnkey") filed a complaint against the sailing vessel Shearwater (the "Vessel"); Shearwater, LLC (the "LLC"), the alleged owner of the Vessel; and Morton S. Taubman, in his individual capacity and as trustee of the assets of Shearwater, LLC. ECF 1 at 1, 5. Turnkey seeks foreclosure on an alleged maritime lien, pursuant to 46 U.S.C. § 31301 et seq., related to outstanding sums allegedly owed by defendants to Turnkey for Turnkey's repair, restoration, and dockage of the Vessel. ECF 1 at 4.

As an in rem admiralty proceeding, the matter is subject to the Federal Rules of Civil Procedure and its Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions ("Supp. Rules"). See, e.g., Am. Dredging Co. v. Miller, 510 U.S. 443, 446-47 (1994) ("An in rem suit against a vessel is... distinctively an admiralty proceeding...."); Supp. Rule A(1)(A)(ii) (Supp. Rules apply to admiralty actions in rem ); Supp. Rule A(2) ("The Federal Rules of Civil Procedure also apply to the foregoing proceedings except to the extent that they are inconsistent with these Supplemental Rules."). Pursuant to Supp. Rule C(3)(a), I issued a warrant for the Vessel's arrest on September 20, 2013, ECF 6, which was executed on September 24, 2013. ECF 10. Under Supp. Rule C(6)(a)(i), in an action in rem, "a person who asserts a right of possession or any ownership interest in the property that is the subject of the action must file a verified statement of right or interest." The statement must be filed "within 14 days after the execution of process, " as described in other subsections of Rule C, or "within the time that the court allows." Supp. Rule C(6)(a)(i)(A), (B).

As of the date of this Memorandum, and as discussed, infra, only the LLC and Mr. Taubman filed statements of right or interest in this action. See ECF 12 (LLC statement, filed Oct. 8, 2013); ECF 39 (Taubman statement, filed May 2, 2014).

On November 3, 2014, Turnkey filed a "Motion for Interlocutory Sale of S/V Shearwater, Defendant In Rem, Pursuant to Admiralty Rule E(9)(a)." ECF 50. Thereafter, on November 21, 2014, Turnkey filed a "Request For Entry of Default As To All Potential Claimants Except Morton Taubman." ECF 59. The motion for entry of default asserted: "The only person who has filed a verified statement of interest or an answer in this matter is Morton Taubman." Id. at 2. Further, Turnkey alleged that LLC members Allyson Taubman, Barry Friedman, and Barbara Friedman (collectively, the "Defaulters"), failed to file verified statements of interests and answers, as required by Supp. Rule C(6). Accordingly, Turnkey sought entry of default against the Defaulters. Id. at 2-3. Thereafter, the Clerk entered default against each of them. See ECF 60, 61, 62.

On December 3, 2014, following the Clerk's entry of default against the Defaulters, plaintiff filed a "Motion for Partial Default Judgment Against 85% of the In Rem Defendant Vessel." ECF 67. Also on December 3, 2014, defendants and counterclaim plaintiffs Taubman, The Vessel, and the LLC[2] filed a "Response in Opposition to Entry of Default" (ECF 64, the "Motion"). The Motion asked that "the Orders of Default entered against Allyson Taubman (ECF 60), Barry Friedman (ECF 61), and Barbara Friedman (ECF 62) be vacated, or, in the alternative, " that the same three persons "be granted leave to file statements of interest and answers or be allowed to adopt" submissions (ECF 39, ECF 25) already filed by defendants. Motion at 5. Plaintiff has responded. ECF 66 ("First Reply").

A corrected order of default was entered against all three Defaulters on December 9, 2014. ECF 68 (corrected order of default). The Court informed the parties on the same date that the Clerk was directed to correct clerical errors in the orders of default. See ECF 69 (Order explaining correction). In addition, I advised that I would consider the Motion and Reply as if filed in response to the corrected order, and invited the parties to submit supplemental briefings premised on the text of the corrected order. See Id.

On December 11, 2014, defendants filed a pleading titled "Defendants' Reply to Plaintiff Turnkey Services, Inc.'s Motion for Partial Default Judgment." ECF 74 ("Response"). Presumably in response to the pleading's title, it was docketed as defendants' response to plaintiff's motion for default judgment. See ECF 67 (plaintiff's motion for partial default judgment); ECF 74 (docket text). The Response seeks the same relief as the Motion - i.e., vacatur of the default order(s), or leave to file additional statements of interest. Because ECF 74 was filed shortly after my Order of December 9 (ECF 69), and it seeks the same relief as the Motion, I will consider it collectively with the Motion, even though it purportedly pertains to plaintiff's Motion for Default Judgment, rather than the Clerk's entry of default.

On January 5, 2015, Turnkey filed a "Reply to Defendants' Opposition to Plaintiff's Motion for Partial Default Judgment Against 85% of the In Rem Defendant Vessel." ECF 75, "Second Reply." In its Second Reply, Turnkey responded to defendants' arguments in ECF 74, by reiterating and reinforcing the arguments Turnkey made in its First Reply. Id. Because this pleading also pertains to the Clerk's entry of default, I will consider it along with the Motion.

No hearing is needed to resolve the Motion. See Local Rule 105.6. However, this Memorandum does not address plaintiff's pending motions (ECF 50, ECF 67). For the reasons that follow, I will deny defendants' Motion (ECF 64).

Factual Background

Both sides seem to agree that defendant Shearwater, LLC "was formed in January 2000 for the purpose to purchase" and "hold legal title and ownership of the Vessel Shearwater, " and that the LLC was dissolved before initiation of this action. ECF 35 at 5 (defendants); ECF 66 at 5 n.1 (plaintiff's First Reply). The LLC had only four members: Morton S. Taubman, Allyson Taubman, Barry Friedman, and Barbara Friedman. ECF 64-1 ("Taubman Aff.") ¶ 3.[3] The LLC's Operating Agreement provided set percentages of membership ownership. ECF 35 at 5. According to affidavits of the Defaulters filed by defendants, the "ownership of the vessel Shearwater and the percentage of ownership between the owners" has not changed since early 2001. ECF 31 at 33, 35, 37 (affidavits of Defaulters). The percentages are allotted as follows: Barry Friedman (36.25%); Allyson Taubman (12.5%); Morton Taubman (15%); and Barbara Friedman (36.25%). Id. According to Taubman, "the Sailing Vessel was distributed to members of the Shearwater, LLC" when the LLC dissolved. E.g., ECF 39.

Mr. Taubman, who is also an attorney, has been counsel of record for defendants since October 2013. ECF 11. In his entry of appearance, he stated: "Please enter the appearance of Morton S. Taubman... as counsel for the in rem Defendant identified in the above caption and the Defendant Shearwater, LLC." Id. He has not entered any other appearance. See Docket; see also ECF 43 (Joint Status Report to the Court dated June 17, 2014, signed and certified by Morton S. Taubman as "Defendant, in his personal capacity;" "In his capacity as an interested owner of the Vessel Shearwater;" and "In his capacity as trustee of Shearwater, LLC"). In November 2014, three additional attorneys appeared on behalf of "Shearwater, LLC, Morton S. Taubman, and S/V Shearwater." ECF 51, 52, 53 (notices of appearance). In December 2014, this Court granted those same three attorneys' motion to withdraw as counsel for the defendants. See ECF 70 (Motion); ECF 71 (Order).

As stated, only the LLC and Morton Taubman have filed statements of right or interest in this action, in ...

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