JANE TRICHE MILAZZO, District Judge.
Before the Court is Plaintiff's Motion for Summary Judgment (Doc. 25). For the foregoing reasons, the Motion is GRANTED.
Plaintiff Wells Fargo Equipment Finance, Inc. ("Wells Fargo") seeks confirmation of the validity of a preferred ship mortgage on the DB CROSSMAR 21 and money judgments against Defendants Cross Maritime Inc., Cross Holdings Inc., and The Investment Group Inc. ("TIG"). Wells Fargo contends that Defendants are indebted to it pursuant to a Loan and Security Agreement ("Loan Agreement"). The Loan Agreement is evidenced by two separate promissory notes executed on June 25, 2014. The first was executed by Cross Maritime payable to Wells Fargo in the amount of $12,462,399.30 (the "First Note"). The second was executed by Cross Maritime and TIG, on a joint and several basis, payable to Wells Fargo in the amount of $2,096,423.89 (the "Second Note"). Each note was guaranteed by Cross Holdings and secured by a First Preferred Ship Mortgage in the DB CROSSMAR 21. In addition, Wells Fargo alleges that it is the beneficiary of other security instruments, including 1) an Assignment of Charter Parties, Charter Hire and Earnings relating to earnings of the vessel (the "Charter Assignment"); 2) an Assignment of Insurances relating to policies of insurance covering the vessel (the "Insurance Assignment"); and 3) a security interest in TIG's right to Accommodation Units and an Accommodation Lease, as set forth in Section 10.4 of the Loan Agreement (the "TIG Security Agreement").
Wells Fargo alleges that Cross Maritime and TIG failed to pay installments on the Notes beginning in April 2016 and are in default. After notifying the Defendants of the amounts due, the parties entered into a forbearance agreement, which expired by its terms on June 1, 2017. Cross Maritime made payments in the amount of $350,000.00 during the period of forbearance.
Plaintiff has moved for summary judgment seeking a money judgment against the Defendants and confirmation of the validity and enforceability of its preferred ship mortgage covering the vessel DB CROSSMAR 21, as well as reimbursement of attorneys' fees and costs. Defendants responded that they "respectfully defer to this Court's determination of whether to grant or deny Wells Fargo's Motion for Summary Judgment."
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."
In determining whether the movant is entitled to summary judgment, the Court views facts in the light most favorable to the non-movant and draws all reasonable inferences in his favor.
Despite Defendants' failure to raise any argument or fact contesting the merits of this motion, the Court may not simply grant the instant Motion as unopposed. The Fifth Circuit approaches the automatic grant of dispositive motions with considerable aversion.
Plaintiff first asks for a judgment finding the guaranty of Cross Holdings to be valid and enforceable. The guaranty states that it shall be governed by the laws of New York, which provide that in order for a guaranty to be valid, it "must be a written instrument guaranteeing payment of another's debt, describing with precision the obligation to which the person is bound."
In order to be an enforceable preferred ship mortgage, a mortgage must comply with the requirements of the Ship Mortgage Act. The Ship Mortgage Act defines a preferred ship mortgage as one that "(1) includes the whole of the vessel; (2) is filed in substantial compliance with [46 U.S.C. § 31321]; [and] (3) covers a documented vessel."
The mortgage at issue here was executed by Cross Maritime as owner of the CROSSMAR 21 to secure the indebtedness of Cross Maritime and TIG incurred in the Loan Agreement. It covers 100% of the CROSSMAR 21, which is a U.S. flagged vessel documented under the laws of the United States. The mortgage document meets each of the requirements set forth by the Ship Mortgage Act and was properly recorded. There is no material issue of fact as to the validity and enforceability of the preferred ship mortgage on the CROSSMAR 21.
By their terms, the Charter Assignment, Insurance Assignment, and TIG Security Agreement are governed by New York law. Under New York law, "a security interest is enforceable against the debtor and third parties with respect to the collateral only if: (1) value has been given; (2) the debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party; and . . . [(3)] the debtor has authenticated a security agreement that provides a description of the collateral."
Plaintiff has established that Cross Maritime and TIG are in default under the Loan Agreement and the Notes for failing to make payments of principal and interest due on April 30, 2016; May 30, 2016; June 30, 2016; and July 31, 2016. Wells Fargo sent a demand to Cross Maritime, TIG, and Cross Holdings on August 15, 2016 accelerating the indebtedness and notifying them of the imposition of the default interest rate of 12.35% on the principal balance. Under the terms of the Guaranty, Cross Holdings is liable as a primary obligor for the indebtedness of Cross Maritime and TIG under the Loan Agreement.
Plaintiff calculates that Cross Maritime, TIG, and Cross Holdings owe $11,365,630.63 on the First Note, inclusive of the principal, interest, and default interest, and $1,920,802.49 on the Second Note, inclusive of the principal, interest, and default interest. In addition, Plaintiff claims that it is entitled to late fees on the Notes in the amounts of $72,614.40 and $12,215.19, respectively. Defendants have not disputed these calculations or raised any argument contesting their accuracy. Instead, Defendants ask to reserve their right to dispute "the final calculations to ensure that all lawful credits and offsets have been applied to Cross Maritime's amount owed, and to put forth available defenses on these limited matters, if necessary." The time to raise such defenses, however, was in response to Plaintiff's request for summary judgment. Defendants' failure to raise any arguments in opposition to Plaintiff's summary judgment regarding the final calculation of liability constitutes a waiver of that issue for summary judgment purposes.
The Loan Agreement and Notes provide that Cross Maritime and TIG agree to pay all reasonable attorneys' fees and costs incurred in the collection or enforcement of any obligations or rights under the Loan Agreement or Notes. While Defendants "request reservation of the right to dispute the awarding and calculation of attorney's fees," they again do not raise any argument calling into question Plaintiff's entitlement to an award of attorneys' fees. Accordingly, they have waived the opportunity to do so. The amount of attorneys' fees will be determined on separate motion pursuant to Federal Rule of Civil Procedure 54(d).
For the foregoing reasons, Plaintiff's Motion for Summary Judgment is GRANTED, and Plaintiff is entitled to a judgment as follows:
1. Against Cross Maritime, Inc. ("Cross Maritime") and Cross Holdings, Inc., ("Cross Holdings") in solido in the amount of $11,365,630.63 plus interest at the rate of 12.35% per annum, accruing after June 30, 2017 on the principal balance of $10,281,479.37 until paid in full;
2. Against Cross Maritime and Cross Holdings, in solido for outstanding late charges in the amount of $72,614.40 plus interest at the judicial rate, accruing from the date of this judgment until paid in full;
3. Against Cross Maritime, The Investment Group, Inc. ("TIG"), and Cross Holdings, in solido in the amount of $1,920,802.49 plus interest at the rate of 12.35% per annum, accruing after June 30, 2017 on the principal balance of $1,729,549.69 until paid in full;
4. Against Cross Maritime, TIG, and Cross Holdings, in solido for outstanding late charges in the amount of $12,215.19 plus interest at the judicial rate, accruing from the date of this judgment until paid in full;
5. Against Cross Maritime, TIG, and Cross Holdings, in solido for reimbursement of Wells Fargo's reasonable attorneys' fees and costs of collection to be determined by separate motion in accordance with Rule 54(d) of the Federal Rules of Civil Procedure;
6. Confirming that the First Preferred Ship Mortgage on the DB CROSSMAR 21 (Official Number 643889) granted by Cross Maritime to Wells Fargo and recorded with the United States Coast Guard, National Vessel Documentation Center on June 25, 2014 under Batch 20738800, Document ID No. 5 is properly executed and perfected under the laws of the United States and secures the indebtedness of Cross Maritime and TIG to Wells Fargo;
7. Confirming that the Assignment of Charter Parties, Charter Hire and Earnings and the Assignment of Insurances granted by Cross Maritime to Wells Fargo and included in the UCC-1 Financing Statement recorded on July 7, 2014 in Terrebonne Parish under Instrument No. 1457607 create valid and perfected security interests in the collateral described therein and secure the indebtedness of Cross Maritime and TIG to Wells Fargo; and
8. Confirming that the TIG Security Agreement granted by TIG in favor of Wells Fargo and included in the UCC-1 Financing Statement recorded on June 16, 2016 in Orleans Parish under Instrument No. 2016-24645 creates a valid and perfected security interest in the collateral described therein and secures the indebtedness of TIG to Wells Fargo.