Sikousis Legacy Inc. v. B-Gas Limited A/K/A Bepalo LPG Shipping Ltd., et al.

Background

Sikousis Legacy Inc. received a $7.5 million arbitration award involving breach-of-contract claims against B-Gas Limited, also identified as Bepalo LPG Shipping Ltd. The court had authorized attachment of the vessel M/T BERICA under Rule B of the Supplemental Rules for Certain Admiralty or Maritime Claims. Bergshav Aframax, Ltd., identified as Aframax and described as the vessel’s then-owner, made a restricted appearance and moved to vacate the attachment.

In January 2023, the court granted Aframax’s motion, finding that Plaintiffs had not shown that Aframax’s corporate veil could be pierced to recover Bepalo’s debt, and vacated the attachment. Plaintiffs appealed, but the Ninth Circuit affirmed. Their request for rehearing en banc was denied, as was their petition for review by the Supreme Court.

Plaintiffs later filed an earlier motion for relief from the Vacatur Order based on factual findings by a Norwegian court. This court denied that motion, and the Ninth Circuit later affirmed after the Norwegian court reversed the judgment underlying Plaintiffs’ argument. Plaintiffs then filed the current motion, their second request for relief, based on information that Aframax had sold the BERICA in November 2022. Plaintiffs argued that Aframax had improperly obtained the Vacatur Order and that continuing to apply it would be inequitable. The Plaintiffs were Sikousis Legacy Inc. and intervenors Bahla Beauty, Inc. and K Investments, Inc.

Legal standard

Federal Rule of Civil Procedure 60(b) permits a court, on motion and just terms, to grant relief from a final judgment, order, or proceeding in specified circumstances. Rule 60(b)(5) applies when, among other things, applying an order prospectively is no longer equitable. Rule 60(b)(6) allows relief for another reason that justifies it, but such relief is available only in extraordinary circumstances and is granted sparingly because of the strong interest in the finality of judgments. Motions under both provisions must be filed within a reasonable time.

Discussion

The court first held that Plaintiffs’ motion was untimely. More than three years had passed since entry of the Vacatur Order. Plaintiffs had already appealed to the Ninth Circuit and sought Supreme Court review, and Aframax had an interest in finality so it could release the substitute security and backing funds. Plaintiffs did not explain the delay or show that they could not have learned earlier that the BERICA had been sold. The court noted that Plaintiffs’ own materials indicated that the sale was publicly documented in 2022 financial statements.

The court then ruled that, even if the motion were timely, Rule 60(b)(5) would not provide relief. An order has prospective application when it is executory or requires supervision of changing conduct or conditions. The Vacatur Order did not require a party to perform or refrain from performing a future act, and it did not involve the court’s supervision of changing conditions. Plaintiffs therefore could not obtain relief under Rule 60(b)(5).

The court also denied relief under Rule 60(b)(6). Plaintiffs alleged that Aframax had failed to respond truthfully to discovery and had not been candid about the vessel’s sale. The court questioned whether any alleged discovery misconduct would qualify as an extraordinary circumstance, but found it unnecessary to decide that issue. The court held that whether the BERICA had been sold did not matter because the letter of undertaking became the substitute security once it was posted.

Aframax’s request

Aframax asked the court to bar Plaintiffs from further motion practice without permission or to require Plaintiffs to pay Aframax’s legal fees and costs. The court denied that request. Although the court criticized Plaintiffs’ litigation conduct, it found that their conduct was not the kind of flagrant abuse of the judicial process that would support designating them vexatious litigants. The court stated that Plaintiffs remained entitled to bring different litigation based on distinct facts and to appeal orders they considered unjust.

Disposition

The court denied Plaintiffs’ Motion to Vacate. It also denied Aframax’s request to enjoin Plaintiffs from further motion practice or require them to pay Aframax’s legal fees and costs.