ORDER GRANTING MOTION FOR INTERLOCUTORY VESSEL SALE AND AUTHORIZATION TO CREDIT BID

[ECF No. 20]

GONZALO P. CURIEL, District Judge.

Before the Court is Plaintiff Shelter Cove Marina's ("Shelter Cove") motion for interlocutory vessel sale and authorization to credit bid. (ECF No. 20.) The motion is unopposed. For the reasons set forth below, the Court GRANTS Shelter Cove's motion.

I. Background

This is an in rem action against the vessel S/V Isabella, U.S.C.G. Official Number 1192004 ("Defendant Vessel"), which is—according to the verified complaint—owned by Ocean Bay Charters, LLC. (ECF No. 1 at 2 ¶ 3.) The President of Ocean Bay Charters is Tom Kelley. (Id.) On September 15, 2015, Kelley executed a wharfage contract with Shelter Cove. (Id. at 2 ¶ 5.) Under the agreement, Shelter Cove provided wharfage services for Defendant Vessel. (Id.) Since November 2016, however, no one has paid the accruing wharfage fees resulting from Shelter Cove's services to Defendant Vessel. (Id. at 2 ¶ 6.) On February 21, 2017, Shelter Cove sent a letter to Kelley demanding payment and threatening to cancel the contract; no payment was offered in response, and as a result, Shelter Cove terminated the contract. (Id. at 3 ¶¶ 7-8.) At the time Shelter Cove filed its complaint, the account for Defendant Vessel stood in arrears by as much as $37,209.88. (Id. at 3 ¶ 10.)

In light of this nonpayment, Shelter Cove filed this action on August 4, 2017, asserting claims of breach of a maritime contract, trespass, and quantum meruit. (See generally id.) On August 14, 2017, the Court authorized the arrest of Defendant Vessel and substituted Shelter Cove as custodian. (ECF No. 5.) Because no pleadings were filed in response to Shelter Cove's complaint, and upon Shelter Cove's motion, the Clerk of Court entered default against Defendant Vessel on October 18, 2017. (ECF No. 19.)

In the pending motion, Shelter Cove asks the Court to order the United States Marshal Service to sell Defendant Vessel at public auction so as to satisfy Shelter Cove's maritime liens resulting from Defendant Vessel's account arrearage. Shelter Cove also seeks authorization to credit bid on Defendant Vessel.

II. Legal Standards

"The interlocutory sale of a vessel is not a deprivation of property but rather a necessary substitution of the proceeds of the sale, with all of the constitutional safeguards necessitated by the in rem process." Cal. Yacht Marina—Chula Vista, LLC v. S/V OPILY, No. 14-cv-1215-BAS-BGS, 2015 WL 1197540, at *2 (S.D. Cal. Mar. 16, 2015) (quoting Ferrous Fin. Servs. Co. v. O/S Arctic Producer, 567 F.Supp. 400, 401 (W.D. Wash. 1983)). The Federal Rules of Civil Procedure's Supplemental Rule for Certain Admiralty and Maritime Claims E(9)(a)(i) states:

As indicated by the disjunctive nature of Rule E(9)(a)(i), Shelter Cove need show just one of these criteria to obtain an interlocutory sale. See Cal. Yacht Marina—Chula Vista, 2105 WL 1197540, at *2.

As for Shelter Cove's request for authorization to submit a credit bid, this Court's Local Civil Rule E.1(e)(2) states:

III. Discussion

A. Interlocutory Sale of Defendant Vessel

i. Liability to Deterioration

Shelter Cove contends that the Court should grant the interlocutory sale of Defendant Vessel because the vessel's condition is deteriorating by sitting idle. Shelter Cove offers the declaration of Ray Jones, a professional yacht broker, who states that the inevitable deterioration of a vessel "is exacerbated when vessels (as in this case) sit idle for extended periods in a salt water environment." (ECF No. 20-3 at 2 ¶ 2.) "[W]hile an arrested vessel sits idle, her engines, generators and other equipment are not operated under load (if at all), and . . . such disuse can detrimentally impact the condition and value of such vessel." (Id.) After reviewing pictures of Defendant Vessel, Jones asserts that he "believe[s] that if [Defendant Vessel] is permitted to lay idle without routine maintenance and without proper lay-up preparations, the vessel's engines might (even if now operational) rust and freeze up, necessitating costly overhaul." (Id. at 2 ¶ 3.) According to Jones, the longer Defendant Vessel sits idle, "the greater the deterioration will be," and as a result, "in the interest of preserving the value of the Defendant Vessel, she should be sold as soon as possible." (Id.)

In light of Jones's analysis—the veracity of which the Court has no reason to doubt—the Court finds that Defendant Vessel is liable to deterioration or injury if it remains arrested during the pendency of this action. See Cal. Yacht Marina— Chula Vista, 2015 WL 1197540, at *3.

ii. Unreasonable Delay in Securing Release

Under Supplemental Admiralty Rule E(4)(f), a person claiming an interest in arrested property is entitled to a prompt hearing. But, as Shelter Cove notes, in this case "no person or entity has answered or otherwise responded to the Verified Complaint, posted or sought to post security for the release of the Defendant Vessel, or requested a prompt hearing" under Rule E(4)(f). (ECF No. 20-2 at 6.) As a result, the Court agrees with Shelter Cove that there is little chance anyone will, at this point, seek to secure the release of Defendant Vessel. (See id.)

Before granting an interlocutory sale, however, the Court must permit "defendants sufficient time to provide a bond to secure the vessel's release." Cal. Yacht Marina— Chula Vista, 2015 WL 1197540, at *4. The Court finds that sufficient time for anyone with an interest in Defendant Vessel to provide such a bond has passed. This Court issued the order granting the arrest of Defendant Vessel on August 14, 2017 (ECF No. 5), and the warrant was returned executed on August 18 (ECF No. 7). Nearly four months have now passed since Defendant Vessel's arrest. Courts in this circuit have found four months to be adequate in this context. See, e.g., Vineyard Bank v. M/Y Elizabeth I, No. 08-cv-2044, 2009 WL 799304, at *2 (S.D. Cal. Mar. 23, 2009). The Court therefore finds that there has been an unreasonable delay in securing Defendant Vessel's release.

iii. Excessive or Disproportionate Maintenance Expense

Shelter Cove also asserts that maintaining Defendant Vessel imposes excessive and disproportionate expense. "Maintenance expenses of several thousand dollars per month, particularly where a defendant has made no attempt to answer the complaint or secure the vessel's release, are excessive and disproportionate." Cal. Yacht Marina—Chula Vista, 2015 WL 1197540, at *4. That is the case here. Jones states in his declaration that Defendant Vessel's fair market will not exceed $62,500. (ECF No. 20-3 at 2 ¶ 4.) In light of the Court's setting a rate of $243 per day1 compensation for maintenance services, the substitute custodian fees to date since Defendant Vessel was arrested exceed $18,000. (See ECF No. 20-2 at 8.) Assuming Jones's valuation is correct, the maintenance expenses so far amount to almost 30 percent of Defendant Vessel's total value. (See id. at 8.) In light of the fact that these expenses will continue, and there is no reason to believe Defendant Vessel will increase in value in the future, the Court finds that the maintenance expenses are excessive and disproportionate to Defendant Vessel's value. Cf. Cal. Yacht Marina—Chula Vista, 2015 WL 1197540, at *4; Vineyard Bank, 2009 WL 799304, at *2.

B. Credit Bid

According to Shelter Cove, no party other than Shelter Cove has asserted a maritime lien claim against Defendant Vessel. (ECF No. 20-2 at 9.) As the only claimant, Shelter Cove is therefore the senior-most claimant, and is entitled, under Local Admiralty Rule E.1(e)(2), to bid an amount up to its lien amount. Shelter Cove's lien consists of the $37,209.88 arrearage attested to in its verified complaint (ECF No. 1 at 3 ¶ 10), plus "actual and demonstrable costs of suit, including U.S. Marshal, substitute custodian and other custodia legis expenses" as specified by this Court's August 14 order, "to be calculated through the date of the vessel sale" (ECF No. 20-2 at 10). Shelter Cove does not request to include in its credit bid its attorneys' fees. (Id.)

Provided that Shelter Cove complies with Local Admiralty Rule E.1(e)(2) by establishing the total amount of the secured indebtedness by affidavit, and filing and serving on all other parties such an affidavit no later than seven (7) days prior to the date of the sale, the Court GRANTS Shelter Cove authority to credit bid at the auction of Defendant Vessel.

IV. Conclusion

For the reasons discussed above, Shelter Cove's motion for interlocutory sale and authorization to credit bid (ECF No. 20) is GRANTED.

IT IS HEREBY ORDERED that:

IT IS SO ORDERED.