International Ship Repair & Marine Services, Inc. v. Barge B. 215

         IN ADMIRALTY

          ORDER

          CHRISTOPHER P. TUTTE, UNITED STATES MAGISTRATE JUDGE

         Before the Court are the Defendant's Motion to Vacate Arrest and Request for Prompt Hearing (Doc. 19) and the Defendant's Motion to Set Security and Counter Security (Doc. 26). For the reasons discussed below, the Defendant's motion to vacate is denied and its motion to set security and countersecurity is granted in part and denied in part.

         I.

         Plaintiff International Ship Repair & Marine Services, Inc. (ISR) initiated this in rem action in March 2019, claiming a maritime lien against the vessel, Barge B. 215 (the Barge). The Barge is owned by B. No. 215 Corporation (B. 215 Corp.) and managed by Bouchard Transportation Co. Inc. (Bouchard). Although not a defendant in this action, B. 215 Corp. has appeared in defense of the Barge and has asserted counterclaims for wrongful arrest and breach of contract.

         The genesis of this dispute dates back to sometime prior to November 2018, when the American Bureau of Shipping (ABS) inspected and surveyed the Barge for seaworthiness and classification in South Carolina. The United States Coast Guard delegates to ABS certain responsibilities with respect to examining and certifying vessels, like the Barge, for operation. As a result of its inspection and survey, ABS recommended that the Barge proceed to a shipyard for repairs and an overall deck assessment.

         The Barge was then sent to Gulf Marine Repair in Tampa, which began the deck assessment project by blasting the main deck down to bare steel and performing gauging to determine the steel's thickness. The Barge was subsequently moved to ISR's facility because ISR provided a better quote for the project.

         On November 29, 2018, Bouchard and ISR entered into a written contract for repair work at the agreed-upon amount of $4, 200, 000. That repair work consisted chiefly of ISR purchasing, pre-fabricating, installing, and welding replacement steel plates on the Barge's deck. The contract limited the repairs to those identified in a deck replacement plan, and included a “no growth” clause requiring Bouchard's advance approval for any additional work not covered by the contract.

         The contract also obligated ISR to complete the agreed-upon repairs and deliver the Barge to Bouchard by February 18, 2019. In conjunction with this timetable, Bouchard was to make progress payments in accordance with the following schedule:

Payment Schedule	Payment Amount	Payment Date
8% deposit on contract signing	$336, 000	November 29, 2018
10%	$420, 000	December 15, 2018
12%	$504, 000	January 20, 2019
70% on delivery	$2, 940, 000	Delivery of Vessel

         In addition, the contract contained a completion incentive provision. That provision called for Bouchard to pay an additional $70, 000 if ISR finished the repairs ten days early, and $100, 000 if ISR completed the repairs twenty days early. Even without these incentive payments, ISR expected a 30% profit-$1, 260, 000-if it completed the project on time.

         Between November 29, 2018, and January 11, 2019, ISR prepared the Barge for the work and began making the agreed-upon repairs. Given the size of the Barge, which measures more than 400 feet long and eighty feet wide, that process was not insubstantial. It included ISR hiring at least twenty subcontractors; renting and buying equipment (such as welding machines, lights for nighttime wok, and firefighting equipment); ventilating the tanks; installing hanging staging below the deck; ordering pre-fabricated new plates with underdeck stiffeners; and removing and replacing the old plates with the new ones. To meet the February 18, 2019, deadline, ISR's crew worked ten-hour shifts, seven days a week.

         During this process, ABS and the Coast Guard boarded the Barge to ensure the deficient steel around the old deck plates had been removed and the new steel plates had been properly installed. While ABS and the Coast Guard conducted these inspections, they identified new work to be completed, including the replacement of additional steel. Bouchard asked ISR to provide a quote for this additional work but ultimately did not authorize ISR to undertake it.

         From November 29, 2018, to January 11, 2019, Bouchard made several installment payments to ISR. On January 11, 2019, however, it instructed ISR to cease all work. Bouchard asserts it issued this stop work order because ISR advised that making further repairs at that point would involve additional work outside the contract. Following its stop work order, Bouchard made one or two additional installment payments, bringing the total sum it paid ISR under the contract to $1, 810, 000.^[1] As a result of the stop work order, ISR did not engage in any further work after January 11. The Barge, however, remained berthed at its facility.

         On January 31, 2019, ISR invoiced Bouchard for $2, 583, 762, claiming it had completed 85% of the contracted work. ISR also began charging Bouchard for berthing and other services rendered following the stop work order.

         In addition, as noted above, ISR initiated the instant action against the Barge in March 2019. At the same time, ISR filed a motion for issuance of an arrest warrant in rem and a motion for appointment of a substitute custodian. The Court granted both of these motions, directed the Clerk of Court to issue a warrant for the Barge's arrest, and designated ISR as the Barge's substitute custodian. The Barge was arrested on April 5, 2019.

         B. 215 Corp. and the Barge itself thereafter moved to vacate the arrest and to set security and countersecurity.^[2] At a subsequent evidentiary hearing on these matters, ISR offered the testimony of Bruce Rosen, ISR's project manager who provided Bouchard with a price quotation for the work Bouchard sought to have completed. In response, Bouchard offered three witnesses: Kevin Donohue, Bouchard's Chief Operating Officer (COO), who negotiated the contract; Hugo Ortiz, ISR's Senior Vice President, who oversaw the contract's performance; and Charles Gillespie, an independent surveyor Bouchard retained to evaluate the work ISR had completed. In addition to this testimony, the Court admitted a number of exhibits into evidence.

         In accordance with the Court's directive, the parties thereafter submitted proposed findings of fact and conclusions of law. The matter is ...