Absolute Nevada, LLC v. Grand Majestic Riverboat Company LLC

Background

Joseph Baer was found in civil contempt on September 1, 2020, for violating a January 6, 2020 stipulation and order. Baer was the owner, sole member, and president of Grand Majestic Riverboat Company LLC. The January 6 order required claims arising from a failed charter to be brought through New York arbitration and limited them to damages rather than a lien or other encumbrance on the vessel.

The court previously found that Baer violated the order by bringing a related claim outside arbitration and by sending notice of, and filing, a “seaman’s wage lien” against the M/V Americana. The Second Circuit affirmed the findings concerning subject-matter jurisdiction, personal jurisdiction, service of process, and civil contempt. It remanded only the remedy for the court to consider what was reasonable at that time. Baer did not appear at the November 21, 2022 hearing on the post-remand remedy.

Standing and Mootness Arguments

Baer moved to dismiss for lack of standing and argued that the sale of the M/V Americana ended the controversy because the lien now concerned the vessel’s new owners. The court acknowledged that Absolute Nevada sold the vessel in or about October or November 2021 and that the vessel had been removed from the Coast Guard registry.

The court relied on the sale agreement, which stated that the vessel remained subject to Baer’s lien and that Absolute Nevada would indemnify the buyer against consequences of claims incurred before delivery. The agreement also stated that Absolute Nevada was responsible for removing the lien or posting a bond in its place. The court therefore concluded that Absolute Nevada still had responsibility for removing the lien and bearing related costs. The sale did not make the controversy moot or eliminate Absolute Nevada’s standing.

Contempt Remedy

The court stated that a civil-contempt sanction may be used to encourage future compliance with a court order. In choosing the remedy, it considered the harm threatened by continued noncompliance, the likely effectiveness of the sanction, and the financial burden on Baer. The court found that Baer had not provided much reason to believe he would comply, although he had the ability to withdraw the lien, and concluded that compliance would not be burdensome to him.

The court ordered Baer to comply fully with the January 6, 2020 stipulation and order and the September 1, 2020 opinion and order by January 10, 2023, by withdrawing all liens against the M/V Americana. If he failed to do so, a $500-per-day monetary sanction would be imposed, with the amount doubling every 14 days until the liens were withdrawn. The sanction was capped at $500,000, excluding attorneys’ fees, costs, and actual damages, if any.

Disposition

Judge P. Castel ordered that the Motion to Set Remedy for the Affirmed Finding of Civil Contempt was GRANTED in part and that Baer’s Motion to Dismiss was DENIED. The court also stated that Absolute Nevada’s separate application for attorneys’ fees and costs was subject to a schedule, and that Absolute Nevada’s motion to confirm certain arbitration awards and Baer’s motion to vacate were under advisement.