Ducky-Momo, LLC v. Robert E. Derecktor, Inc.

Background

The opinion addressed related actions involving M/Y Independence, which the court arrested on October 22, 2015. On October 29, 2015, the court appointed National Maritime Services as substitute custodian and authorized routine maintenance, repairs, and cleaning needed to keep the yacht seaworthy and marketable. Major or unexpected repairs required further court approval.

Derecktor paid National Maritime and provided services to the yacht at National Maritime’s direction from December 1, 2015, through September 12, 2017, when Ducky-Momo provided substitute security and the yacht was released. The services included expenses associated with preserving and safeguarding the yacht. The arbitration panel separately issued a partial award in Derecktor’s favor, and the court later confirmed a final arbitration award giving Ducky-Momo a net recovery of $1,628,754.

The court had previously declined to decide Derecktor’s request for payment of its yacht-maintenance expenses because Ducky-Momo’s eventual arbitration recovery might create a setoff. After confirming the final arbitration award, the court considered Derecktor’s remaining claim for $248,969 in expenses of justice, also called custodia legis expenses—costs incurred to preserve property held in the court’s custody.

Court’s Analysis

The court explained that services or property advanced under court authority to preserve and maintain an arrested vessel may qualify as expenses of justice. It found that National Maritime was authorized to perform routine maintenance and that using Derecktor’s services was reasonable because the yacht was already docked at Derecktor’s shipyard.

The court rejected Ducky-Momo’s argument that Derecktor could not recover because it had not obtained separate approval before providing the services and incurring the expenses. The court found that the work was performed at National Maritime’s direction and was not shown to involve major or unexpected repairs requiring advance approval.

The court also rejected Ducky-Momo’s arguments that Derecktor had arrested the yacht in bad faith, relied on an illegitimate lien, or failed to preserve and maintain the yacht. The court found persuasive the statement from the chairman of the company that owned National Maritime that the claimed fees—including payments to National Maritime, winterization, daily checks, and dockage—were reasonable and necessary. The court also noted that the arbitration panel had awarded Ducky-Momo compensation for loss in value and unfinished or defective work, which did not prevent Derecktor from recovering preservation expenses.

Rulings and Judgment

The court granted Derecktor’s claim for expenses of justice in the amount of $248,969. The amount was deducted from Ducky-Momo’s confirmed arbitration award of $1,628,754.

The court also addressed Ducky-Momo’s request for payment under Derecktor’s $331,000 bond. Because the court was prepared to enter judgment against Derecktor, it ordered Aspen American Insurance Company to pay $331,000 to Blank Rome LLP, Ducky-Momo’s attorneys, under the bond, with interest calculated from the date the bond was posted.

Judge Vincent L. Briccetti instructed the Clerk to enter judgment in favor of Ducky-Momo against Derecktor for $1,379,785 in case number 15 CV 9372. The opinion also required counsel to submit a joint letter about the status of the remaining parties or claims in the related actions.