REPORT AND RECOMMENDATION

WILLIAM E. CASSADY, Magistrate Judge.

Before the undersigned, pursuant to 28 U.S.C. § 636(b)(1)(B), is Substitute Custodian Southern Marine's ("Southern") "Motion to Disburse Custodial Fees" (Doc. 121), Intervenor-Plaintiff Midsouth Bank, N.A.'s objection thereto (Doc. 137), Southern's response to Judge DuBose's November 18, 2011 Order1 (Doc. 159), and Midsouth's surreply (Doc. 164).

After Judge DuBose's November 18, 2011 Order, the only issues raised by Southern's motion remaining—and addressed in the requisite supplemental briefing—were the expenses associated with boom rental and storage/wharfage. An evidentiary hearing as to those issues was conducted by the undersigned on January 24, 2012. And based on the parties' briefing and the evidence presented to the Court, it is RECOMMENDED that Southern's motion (Doc. 121) be GRANTED IN PART, as set out herein, and that it be awarded $7,800 for storage/wharfage and nothing for boom rental.

Standard

1. Generally, for an expense to gain preferential treatment as an custodia legis expense, there must be preapproval by the Court.

"In order to qualify for preferential treatment as an expense in custodia legis, an expense must be incurred `upon the authority of the court or its officer,' and be `for the common benefit of those interested in [the] fund.'" Oil Shipping (Bunkering) B.V. v. Sonmez Denizcilik Ve Ticaret A.S., 10 F.3d 176, 182 (3d Cir. 1993) (quoting Kingstate Oil v. M/V GREEN STAR, 815 F.2d 918, 922-24 (3d Cir. 1987) (quoting, in turn, New York Dock Co. v. S.S. POZNAN, 274 U.S. 117, 121 (1927))); see Fortis Bank (Nederland) N.V. v. M/V SHAMROCK, 379 F.Supp.2d 2, 7-8 (D. Me. 2005) (same); see also Dresdner Bank AG v. M/V OLYMPIA VOYAGER, 465 F.3d 1267, 1272 (11th Cir. 2006) ("Steamship is not entitled, under the doctrine of custodia legis, to equitable prioritization of its claim for the value of insurance it provided to the vessel after its arrest because it did not first seek or receive the district court's permission to provide such insurance[.]") (emphasis added).

2. Southern's ability, as the Court-appointed substitute custodian, to seek its custodial expenses, however, is not barred by its failure to seek preapproval for the expenses it incurred as the substitute custodian.

While the Eleventh Circuit has remarked that "those furnishing custodial services to a ship in custodia legis are gambling on a wholly unpredictable result unless they take the precaution of having their services authorized in advance of any order of the custodial court[,]" Dresdner Bank, 465 F.3d at 1273 (quoting Bassis v. Universal Line, S. A., 484 F.2d 1065, 1068 (2d Cir. 1973)), Southern's appointment by this Court as the substitute custodian enables it to seek the recoupment of expenses it incurred while performing that role. See General Elec. Credit & Leasing Corp. v. Drill Ship Mission Exploration, 668 F.2d 811, 816 (5th Cir. 1982) ("[S]ervices or property advanced to preserve and maintain the vessel under seizure, furnished upon authority of the court or of an officer of the court (here, the keeper2) acting within his authority, should be allowed as a custodia legis expense.") (citations omitted and footnote and emphasis added); see also Turner v. Neptune Towing & Recovery, Inc., No. 8:09-CV-1071-T-27AEP, 2011 WL 4542265, at *10 (M.D. Fla. Sep. 23, 2011) ("Neptune is [ ] entitled to recover the reasonable expenses it has incurred as substitute custodian.") (citing Drill Ship Mission Exploration) (emphasis added); Absolute Marine Towing & Salvage, Inc. v. S/V INIKI, No. 6:09-cv-1712-Orl-31KRS, 2011 WL 2183054, at *1 (M.D. Fla. May 18, 2011) (report of the Magistrate Judge recommending that the unopposed motion for taxation of substitute custodial fees against defendant vessel in rem be granted) (citing Drill Ship Mission Exploration).

3. Southern, as substitute custodian, however, still bears the burden of establishing that its expenses were incurred for the common benefit of all interested parties.

For the Court to give priority to the boom rental and storage/wharfage expenses—as "expense[s] of justice"—Southern must establish that those expenses were incurred "for the common benefit of [all] interested [parties.]" The Poznan, 274 U.S. at 121 (citation and internal quotation marks omitted); see also Oil Shipping (Bunkering) B.V. v. Royal Bank of Scotland plc, 817 F.Supp. 1254, 1260 n.8 (E.D. Pa. 1993) ("[T]he ability of the substitute custodian to incur administrative expenses is limited to legitimate expenses that benefit all the interested parties and are necessary for the due care and preservation of the vessel.") (citations omitted).

Discussion

1. Storage/wharfage.

On April 7, 2011—before the vessel was arrested, on May 5, 2011 (see Doc. 12), and Southern was appointed substitute custodian, on May 13, 2011 (see Doc. 183)—Rodd Cairns, on behalf of Atchafalaya Marine, entered into a rental agreement with Southern to dock the vessel at its facility (see Doc. 159-1 at 12; Midsouth Hearing Ex. 3) at the rate of $750 per day (see id.; see also Doc. 159-1 at 1-3, Dec. 2, 2011 Mr. Connie Oliver Aff., ¶ 4 ("The original rate I quoted Rodd Cairns was for $750.00/day, which included the boom rental.")).

While Mr. Oliver, Southern's owner, testified that Southern does not have a usual rate for a vessel such as the M/V BARBARY COAST, the rate charged ($750) is far in excess of the daily rate Southern typically charges for a boat slip rental at its facility.4 Southern justifies this increased rate by explaining—basically—that as the substitute custodian it assumed responsibility for the safety of the vessel, whereas with a simple slip rental, Southern has no responsibility for the safety of a vessel. In connection with its assumption of responsibility for the vessel, Mr. Oliver testified that Southern took daily actions over and above what it would have done for a vessel that was merely moored at its facility. He testified that "[t]o ensure the safe mooring of the vessel, [he] sank two additional pilings for its moorings" on April 8, 2011. (Dec. 2, 2011 Oliver Aff., ¶ 5.) He further

(Id., ¶ 6 (footnote added).)

In the substitute custodian's motion for fees, the $750 per day rate was lowered to $250 per day for wharfage plus $250 per day for boom rental. (See Doc. 121 at 2 & 6 (Ex. C, Southern's invoice).) Midsouth's objection (Doc. 137) provides that "[t]here is no basis or foundation for the [ ] reduced charge" (id. at 6), and Southern's only explanation—made in response to Judge DuBose's November 18, 2011 Order (see Doc. 159 at 3) and again at the hearing on January 24, 2012—is "[t]hat the rate was reduced and broken out in light of the duration of the stay of the vessel at Southern" (id.).

At the hearing, Midsouth provided testimony regarding the reasonableness of the daily rate from Chris Collier (see also Doc. 164, Ex. C., at 15-16), a marine surveyor with 36 years experience, and Bob Schwartz (see also Doc. 137, Ex. C., at 14-15), the Controller for Dog River Marina. Through his affidavit, which sets forth testimony substantially similar to his testimony at the hearing, Mr. Collier states that he is

(Doc. 164 at 15-16.) Mr. Schwartz testified that Dog River Marina—which appears to be where Midsouth docked the M/V BARBARY COAST for at least sometime during January, 2012 (see Hearing Ex. Midsouth Schwartz #1 (stall rental receipt for $650))—charges $10 per foot (uncovered) and $12 per foot (covered) plus power per month for wharfage of vessels like the M/V BARBARY COAST (see Doc. 137 at 14).6

Because storage/wharfage of a vessel by the Court-appointed substitute custodian is generally "necessary for the due care and preservation of the vessel," Oil Shipping (Bunkering) B.V., 817 F. Supp. at 1260 n.8, it is an expense incurred "for the common benefit of [all] interested [parties,]" The Poznan, 274 U.S. at 121. The evidence presented in this matter, however, does not show that $250 per day is a legitimate rate for the services this substitute custodian provided in this regard. See Oil Shipping (Bunkering) B.V., 817 F. Supp. at 1260 n.8 ("[T]he ability of the substitute custodian to incur administrative expenses is limited to legitimate expenses[.]") (emphasis added). Based on the evidence presented, the undersigned finds a rate of $60 per day to be legitimate, and thus the substitute custodian should be awarded $7,800 for the 130 days the M/V BARBARY COAST was stored/wharfed at Southern. The $60 daily rate takes into consideration, primarily, the testimony of Mr. Collier and the fact that while Southern did not have to incur the expense of hiring a night watchman, according to his testimony, Mr. Oliver spent more than one night at the marina during inclement weather to ensure the vessel was secure.

2. Boom rental.

Southern originally requested $32,500 for "rental [of 200 feet of] boom required by the U.S. Coast Guard[.]" (Doc. 121 at 2 & 6.) This amount was based on a rate of $1.25 per foot per day for 130 days. (Id.)7 During the hearing, Southern conceded that the boom was not deployed for the entire 130 days the M/V BARBARY COAST was at Southern, but for only a 65-day period (from July 11, 2011 to September 14, 2011). (See also Doc. 159-1 at 112 (notation in Mr. Oliver's log that boom was deployed on July 11, 2011).)

In addition to the fact that deployment of the boom was never "required by the [ ] Coast Guard,"8 Southern has failed to show that the deployment of the boom was otherwise necessary, much less a separate "expense of justice" incurred "for the common benefit of [all] interested [parties.]" The Poznan, 274 U.S. at 121. Mr. Oliver testified that oil sheen was observed in the vicinity of the vessel when the boom was deployed, but there is no documentation of—or witnesses other than Mr. Oliver who observed—this. It was never established, moreover, that the oil sheen Mr. Oliver observed was caused by a leak in the vessel. In fact, the testimony of Mr. Collier revealed that an alternative source of the alleged oil sheen could have been derelict hauls just north of Southern.

Further, because (1) the cost of boom rental (if required) was not a separate expense in the original quoted daily rate; (2) the substitute custodian's original motion erroneously doubled the number of days the boom was deployed (according to Mr. Oliver's log); and (3) the testimony of Mr. Schwartz that Dog River Marina deploys containment/absorption boom as part of its monthly rate charged to vessels stored at its facility and only charges additional for the cost of materials—such as absorption boom—consumed, the undersigned is not prepared to accept that the separate charge for boom rental is a "legitimate" administrative expense. See Oil Shipping (Bunkering) B.V., 817 F. Supp. at 1260 n.8

Conclusion

For the reasons stated above, the undersigned RECOMMENDS that Southern Marine's motion be GRANTED IN PART, as set out herein, and that, as the Court-appointed substitute custodian, it be awarded $7,800 for storage/wharfage and nothing for boom rental. The undersigned further RECOMMENDS that, consistent with Judge DuBose's November 18, 2011 Order (Doc. 155), Southern be awarded $1,055 for removal of excessive water/oil mixture in the bilge; $340 for installation of a high water bilge alarm, and $265 for the cost to list the United States Marshal as an additional insured. (See id. at 2.)

The instructions which follow the undersigned's signature contain important information regarding objections to the report and recommendation of the Magistrate Judge.

MAGISTRATE JUDGE'S EXPLANATION OF PROCEDURAL RIGHTS AND RESPONSIBILITIES FOLLOWING RECOMMENDATION, AND FINDINGS CONCERNING NEED FOR TRANSCRIPT

1. Objection. Any party who objects to this recommendation or anything in it must, within fourteen (14) days of the date of service of this document, file specific written objections with the Clerk of this court. Failure to do so will bar a de novo determination by the district judge of anything in the recommendation and will bar an attack, on appeal, of the factual findings of the Magistrate Judge. See 28 U.S.C. § 636(b)(1)(C); Lewis v. Smith, 855 F.2d 736, 738 (11th Cir. 1988); Nettles v. Wainwright, 677 F.2d 404 (5th Cir. Unit B, 1982) (en banc). The procedure for challenging the findings and recommendations of the Magistrate Judge is set out in more detail in S.D. Ala. L.R. 72.4 (June 1, 1997), which provides that:

A magistrate judge's recommendation cannot be appealed to a Court of Appeals; only the district judge's order or judgment can be appealed.

2. Transcript (applicable Where Proceedings Tape Recorded). Pursuant to 28 U.S.C. § 1915 and Fed. R. Civ. P. 72(b), the Magistrate Judge finds that the tapes and original records in this case are adequate for purposes of review. Any party planning to object to this recommendation, but unable to pay the fee for a transcript, is advised that a judicial determination that transcription is necessary is required before the United States will pay the cost of the transcript.