Vessel Arrest and Sale in Western District of Washington
VESSEL ARREST AND SALE IN WESTERN
DISTRICT OF WASHINGTON
A vessel “arrest" means the detention of a ship to secure a maritime lien or preferred ship mortgage. A vessel “seizure", generally speaking, is the detention of a ship to sell it to pay a judgment for claim that was not maritime. This memo deals only with vessel arrests.
A lawsuit is started by the filing of a Complaint with the clerk of the court in the United States District Court. A Complaint is a document, a “pleading", that details the claims a person (“plaintiff") is making against a vessel as a defendant, and details the relief being sought by the plaintiff. The vessel owner may also be a defendant. In a vessel arrest action, the relief being sought is a judgment for payment of money, as well as a court order for the vessel to be sold and for the sale proceeds to be applied to what is owed to the plaintiff. Once the Complaint is served, the defendant has 21 days to answer.
Default judgment can be entered if the Complaint is filed and served on the defendant, and the defendant fails to appear or answer within 21 days of service of the Complaint upon the defendant. There are circumstances where the defendant can ask the court to set aside a default judgment.
Plaintiff needs to provide his/her lawyer with all the information necessary to draft the Complaint. The Complaint must state a basis for a claim against the vessel itself, such as a maritime lien or a preferred ship mortgage.
At the same time as filing the Complaint, plaintiff files a motion (a written request to the judge for a court order) to appoint a substitute custodian, and a motion for an order directing the clerk of the court to issue a warrant for arrest of the vessel. But there has to be some preliminary work done before the Complaint and motions are filed.
Plaintiff must make arrangements before filing the Complaint for adequate moorage after the vessel is arrested. Plaintiff must make arrangements for a substitute custodian. The substitute custodian must be properly qualified, and approved by the U.S. Marshal. Plaintiff must make a deposit of $2,000.00 with the U.S. Marshal and is responsible for post-arrest moorage and substitute custodian fees.
VESSEL ARREST PROCESS
The Complaint and motions should be filed at the same time. The judge will sign an order approving the appointment of the substitute custodian, and an order directing the clerk to sign (“issue") the Warrant for Arrest of the vessel, which is then delivered to the U.S. Marshal.
The Marshal goes to the vessel and posts it with official Marshal’s notice that the vessel is under arrest, and the Marshal then turns formal control of the vessel over to the substitute custodian.
Time to Make Claims to the Vessel
After the vessel is arrested by the Marshal and turned over to the substitute custodian, the Complaint (and a Summons), as well as a pleading called “Notice of Arrest", must be delivered (“served") on the owner of the vessel.
If the vessel is not released from custody within 14 days after it is arrested, the plaintiff must promptly instruct the U.S. Marshal to publish a Notice of Arrest in the Seattle Daily Journal of Commerce. The vessel may be released by agreement between the plaintiff and the owner, and usually only when the owner files a bond or other “security" to take the place of the vessel.
All other known maritime lien claimants must be served a Notice of Arrest and a copy of the Complaint via certified mail or delivery in person, before plaintiff seeks a judgment against the vessel. “Known" claimants include those whose claims appear in the vessel’s Coast Guard Abstract of Title.
The owner, and all other maritime lien claimants, are given 14 days after the date of publication to file a Notice of Claim to the vessel. After the owner or claimant files their Notice of Claim, they must answer the plaintiff’s Complaint within 21 days of filing the Notice of Claim.
The Complaint is answered by sending a copy of the answer to the plaintiff’s attorney and filing a copy with the clerk’s office. To pursue their own claim to the vessel, the maritime lien claimants must file a motion to “intervene" in the lawsuit.
Where there has not yet been a judgment entered, the sale of the vessel is referred to as an “interlocutory" sale. That means essentially that the sale takes place between the time the Complaint was filed, and the time judgment is entered. An interlocutory sale will be allowed when the vessel is  liable to deterioration, decay, or injury by being detained in custody until the trial date, or  if the expense of keeping the property is excessive or disproportionate, or  if there is unreasonable delay in “securing the release of the property".
A Motion for Interlocutory Sale will be decided no earlier than 21 days after it is filed. It may take the judge up to several weeks, however, to decide the motion.
After the Motion for Sale is Granted
When the Motion for Sale of the vessel is granted, then a Notice of Sale must be published, through the U.S. Marshal’s service, in the Seattle Daily Journal of Commerce for 8 consecutive days. This must be published before the sale takes place.
The vessel sale will be conducted by auction. The full sale price must be paid within three days. Three days after the auction, the sale will be automatically confirmed unless an objection is filed in the interim. When the sale is confirmed, the Marshal can sign the title over to the highest bidder at the sale.
Proceeds from the sale are deposited by the U.S. Marshal into the registry of the court, which is administered by the clerk of court. The judge will determine to whom the clerk should pay the proceeds. The claimants may agree how the funds should be distributed and ask the court to order the distribution. If the parties do not agree how the funds should be distributed, the judge will make that determination by either ruling on a pretrial motion, or at the end of a trial.