Opinion
Civil Action No. 00-3455, Section "N".
November 30, 2000.
ORDER AND REASONS
Before the Court are two letter briefs submitted by Plaintiff Thyssen, Inc. and the owner of the Defendant vessel, M/V SENA DENIZ. At issue is whether the Court should allow the SENA DENIZ to be released in return for a letter of undertaking over Plaintiff's objection. As explained below, the Court finds that it should not.
Pursuant to this Court's November 21, 2000 order of arrest, the United States Marshal seized the M/V SENA DENIZ on November 26, 2000. On November 29, 2000, counsel for the owner of the seized vessel contacted the Court and stated that his client wished to have the vessel released. Counsel stated that his client was prepared to offer a Letter of Undertaking from the U.K. PI Club as security for the release of the vessel but that Plaintiff was unwilling to accept anything less than an actual bond. By telephone, counsel for Plaintiff confirmed this statement, and the Court orally ordered both parties to submit letter briefs by 9:00 a.m. on November 30.
Counsel for the vessel owner argues that the standard form U.K. Club Letter of Undertaking constitutes adequate security under Rule E(5) of the Supplemental Rules for Certain Admiralty and Maritime Claims, which allows for the release of a seized vessel on the giving of security. Counsel notes that it is the custom of parties operating in the Port of New Orleans to accept letters of undertaking as adequate security under this rule.
Custom, however, is not always binding. "In the Eastern District of Louisiana, the courts ordinarily do not accept a letter of undertaking by an unapproved surety unless the other side agrees to accept it." Koch Refining Co. v. M/V JENNIFER BOUDREAUX, 1993 WL 92515 at *3 (E.D. La. March 23, 1993) (Heebe, J.). The U.K. Club is not an authorized surety, and the Court will not force Plaintiff to accept the letter of undertaking against its will. The cases cited by the vessel owner are not to the contrary. See, e.g., Panaconti Shipping Co., S.A. v. M/N YPAPANTI, 865 F.2d 705 (5th Cir. 1989) (parties agreed to a stipulation that was the functional equivalent of a letter of undertaking); see also LL Marine Transp., Inc. v. M/V HOKUETSU HOPE, 895 F. Supp. 297 (S.D. Ala. 1995) (plaintiff accepted letter of undertaking in lieu of seizure or bond).
Local Admiralty Rule 65.1.2 provides that
In all cases where the surety on a bond or stipulation for the release of a vessel or other property under seizure is not a corporate surety holding a certificate of authority from the Secretary of the Treasury, and the bond or stipulation is not approved as to amount and nature by the party at whose instance the vessel or other property is detained, or by his or her attorney, the vessel or property shall not be released without an order of a judge, on reasonable notice and contradictorily, approving the surety. . . .
Contrary to defense counsel's suggestion, this ruling does not imply that letters of undertaking are inadequate forms of security. As the Fifth Circuit noted in Panaconti, "Letters of undertaking may . . . secure a claim even without the formal arrest of a vessel", 865 F.2d at 708, and the Court encourages parties to utilize such arrangements whenever practical. Today, the Court merely rules that it will not force an unwilling plaintiff to accept a letter of undertaking from an unauthorized surety in lieu of a bond.
Accordingly,
The Court DENIES the vessel owner's request to release the M/V SENA DENIZ without bond.