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State Bank and Trust Co. v. Lil Al

United States District Court, E.D. Louisiana

August 31, 2017

STATE BANK AND TRUST CO.
v.
LIL AL M/V et al.

         SECTION: “H” (1)

          ORDER AND REASONS

          JANE TRICHE MILAZZO UNITED STATES DISTRICT JUDGE.

         Before the Court are Plaintiff State Bank & Trust Company's Motion for Summary Judgment (Doc. 60); and Defendants' Motion to Dismiss for Lack of Subject Matter Jurisdiction (Doc. 66). For the following reasons, Plaintiff's Motion is GRANTED IN PART, and Defendants' Motion is DENIED.

         BACKGROUND

         Plaintiff State Bank & Trust Company (“State Bank”) is a financial institution that loaned money to Defendant C & G Liftboats, LLC (“C&G”). On July 16, 2014, C&G executed a promissory note in the sum of $8, 055, 000.00 payable to State Bank (the “Hand Note”). The Hand Note was secured by the pledge of a first preferred ship mortgage note dated May 7, 2014 in the sum of $8, 500, 000.00. The preferred ship mortgage note was secured by a first preferred mortgage on the vessel M/V Lil Al. The Hand Note was further secured by the pledge of preferred ship mortgage notes in the form of collateral chattel mortgages by A.M.C. Liftboats, Inc. (“AMC”) on the M/V Mr. Alan and the M/V L/B Whitney. AMC also granted a commercial guaranty to State Bank to guarantee the Hand Note. Finally, Polly and Adam Cheramie, the owners of C&G and AMC, granted personal guarantees on the Hand Note.

         Plaintiff alleges that on December 15, 2015, C&G defaulted on the Hand Note, and Plaintiff made demand on Defendants C&G, AMC, and the Cheramies. The failure of any Defendant to satisfy their obligation to State Bank resulted in the filing of the instant action.

         Plaintiff now moves for summary judgment recognizing its preferred ship mortgages on the M/V Lil Al, the M/V Mr. Alan, and the M/V L/B Whitney pursuant to the Ship Mortgage Act and its in personam claims against the remaining Defendants. Defendants oppose this Motion and file their own Motion to Dismiss for Lack of Subject Matter Jurisdiction, arguing that collateral chattel mortgages are no longer valid instruments for mortgaging movable property under Louisiana law, and Plaintiff therefore does not have a preferred ship mortgage under the Ship Mortgage Act. They argue that because no preferred ship mortgage is at issue, this Court does not have federal question jurisdiction pursuant to the Ship Mortgage Act. The Court will consider each argument in turn.

         LEGAL STANDARD

         A. Subject Matter Jurisdiction

         A Rule 12(b)(1) motion challenges the subject matter jurisdiction of a federal district court. “A case is properly dismissed for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the case.”[1] In ruling on a Rule 12(b)(1) motion to dismiss, the court may rely on (1) the complaint alone, presuming the allegations to be true, (2) the complaint supplemented by undisputed facts, or (3) the complaint supplemented by undisputed facts and by the court's resolution of disputed facts.[2] The proponent of federal court jurisdiction-in this case, the Plaintiff- bears the burden of establishing subject matter jurisdiction.[3]

         B. 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.”[4] A genuine issue of fact exists only “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”[5]

         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.[6] “If the moving party meets the initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to produce evidence or designate specific facts showing the existence of a genuine issue for trial.”[7] Summary judgment is appropriate if the non-movant “fails to make a showing sufficient to establish the existence of an element essential to that party's case.”[8] “In response to a properly supported motion for summary judgment, the non-movant must identify specific evidence in the record and articulate the manner in which that evidence supports that party's claim, and such evidence must be sufficient to sustain a finding in favor of the non-movant on all issues as to which the non-movant would bear the burden of proof at trial.”[9] “We do not . . . in the absence of any proof, assume that the nonmoving party could or would prove the necessary facts.”[10] Additionally, “[t]he mere argued existence of a factual dispute will not defeat an otherwise properly supported motion.”[11]

         LAW AND ANALYSIS

         In its Motion for Summary Judgment, Plaintiff argues that it is entitled to a judgment recognizing its preferred ship mortgages on the M/V Lil Al, the M/V L/B Whitney, and the M/V Mr. Alan.[12] Plaintiff argues that it has valid preferred ship mortgages on these vessels pursuant to the Ship Mortgage Act under 46 U.S.C. § 31325.

         Defendants present two arguments to Plaintiff's Motion. First, they argue that Plaintiff does not have valid ship mortgages under the Ship Mortgage Act because the mortgages are not valid under Louisiana law. Second, they argue that the ne varietur notes used in the collateral mortgage packages for the Mr. Alan and L/B Whitney are prescribed. Defendants have also filed their own Motion to Dismiss for Lack of Subject Matter Jurisdiction, arguing that because Plaintiff does not have a ...


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