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Dziennik v. Sealift

September 29, 2009

SYLVESTER DZIENNIK, MIECZYSLAW KIERSZTYN, FERDYNAND KOBIEROWSKI, INDIVIDUALLY AND ON BEHALF OF ALL PERSONS SIMILARLY SITUATED, PLAINTIFFS,
v.
SEALIFT, INC., FORTUNE MARITIME, INC., SAGAMORE SHIPPING, INC., VICTORY MARITIME, INC., DEFENDANTS.
JOSEF FELSKOWSKI, PLAINTIFF,
v.
SEALIFT, INC., SAGAMORE SHIPPING, INC., DEFENDANTS.



The opinion of the court was delivered by: Dora L. Irizarry, United States District Judge

MEMORANDUM AND ORDER

Wilson Shipping Co., LLC (the "movant"), a non-party in this action,*fn1 asks the court for an order declaring void and unenforceable its stipulation with the plaintiffs dated April 28, 2008 (the "stipulation"), which released the plaintiffs' claim of lien against the S/S Wilson (the "Wilson"), a vessel formerly owned by the movant. The movant contends that the plaintiffs concealed the material fact that the United States Coast Guard had rejected their notice of claim of lien against the Wilson prior to the execution of the stipulation, entitling the movant to rescind the agreement. (Movant's Mem. of Law in Supp. of Mot. for Order to Declare Stipulation Void or Alternatively to Deposit Funds with Clerk of the Court (Dkt. # 101) ("motion" or "Mot.") at 3.) The movant further argues that, if Plaintiff believed that their Coast Guard filing was valid, this amounts to a mutual mistake that similarly voids the stipulation. (Mot. at 4.) Should the court deny their motion to declare the stipulation void, the movants asks, in the alternative, that the court direct the Clerk of the Court to accept the Wilson's sale proceeds for deposit into an interest-bearing account until a subsequent order by the court.

The plaintiffs respond that the lien was properly filed and noted by the Coast Guard, making the stipulation valid and enforceable. (Pls.' Mem. in Opp'n to Def.'s Mot. and Pls.' Mem. in Supp. of Requiring Def.'s to Deposit Funds with Clerk of Court (Dkt. # 103) ("Opp'n.") at 6-7.) They further argue that, even if the Coast Guard filing was defective, the existence and validity of the wage lien is not dependent on recordation. Since the stipulation extinguished the plaintiffs' ability to arrest the Wilson and prevent the sale, the movant should not be allowed to renege on the stipulation. (Opp'n at 7-8.)

For the following reasons, the motion to declare the stipulation void is denied. The court grants the movant's alternative request to deposit funds with the Clerk of the Court, and directs the Clerk of the Court to accept the Wilson's sale proceeds for deposit into an interest-bearing account until a subsequent order by the court directs their disposition.

BACKGROUND

On August 29, 2007, the plaintiffs filed a notice of a claim of lien for wages and penalties with the United States Coast Guard National Vessel Documentation Center (the "Coast Guard") against the Wilson (the "notice"), pursuant to 46 U.S.C. §§ 11107, 10313, and federal maritime law. (See Decl. of Richard J. Dodson, dated June 27, 2008 (Dkt. # 103) ("Dodson Decl."), Ex. A.) In a letter dated October 4, 2007, the Coast Guard informed the plaintiffs that the notice was invalid because it listed the plaintiffs' counsel's name and address in lieu of claimants'. (Dodson Decl. Ex. C.)

The plaintiffs allege that, on October 10, 2007, they contacted the Coast Guard by phone to discuss the filing deficiencies. (Opp'n at 4.) They claim to have informed the Coast Guard that they could not include claimants' actual names and addresses because this data had been redacted by court order, and was only known by defendants in the ongoing class action lawsuit.*fn2

(Id.) A person that the plaintiffs identify as "Nicole" allegedly accepted their explanation and indicated that the liens would be noted on the vessels' titles despite the plaintiffs' inability to produce claimants' actual names and addresses. (Id. at 5.) In addition, "Nicole" allegedly told the plaintiffs that they would be informed if there were any subsequent issues with the filings. (Id.) The plaintiffs claim that they were not so informed, which caused them to believe that the notices were properly filed. (Id.)

On April 28, 2008, the parties entered into the stipulation to execute a "satisfaction or release of mortgage, claim of lien or preferred mortgage" to "facilitate the sale of the S.S. Wilson without impeding the rights and material positions of the parties." (Decl. of Gregory O'Neill (Dkt. # 102) ("O'Neill Decl.") Ex. 2.) Under the terms of the stipulation, the proceeds from the sale of the Wilson were to be deposited with the clerk of the court for the duration of the plaintiffs' class action lawsuit against several vessels. (Id.) Such proceeds would serve as substitute collateral for the claimed lien. (Id.)

The movant subsequently filed a "Satisfaction of Lien" with the Coast Guard to remove the notice against the Wilson. (O'Neill Decl. Ex. 3.) On May 2, 2008, however, the Coast Guard informed the movant that the notice against the Wilson was "never recorded due to deficiencies never... taken care of" and, as a result, the "Satisfaction of Lien is returned with no action taken an [sic] the filing has been [t]erminated." (O'Neill Decl. Ex. 4.) The movant sold the Wilson in early June 2008 for approximately $7.1 million, and now seeks an order to void its obligation to deposit the proceeds with the Clerk of the Court during the pendency of the captioned action.

DISCUSSION

This dispute turns on whether the stipulation was meant to release only the notice against the Wilson, or also covered the underlying claim of lien that was noticed in the Coast Guard filing. If the stipulation encompassed a release of both the notice and the underlying claim of lien, then the stipulation must be enforced regardless of whether the notice was valid. Considering the parties' intent as adduced from the plain language of the stipulation, the court finds that the stipulation encompassed a release of both the notice and any underlying claims noticed therein. Therefore, the stipulation is enforceable despite the plaintiffs' alleged failure to disclose that the Coast Guard had rejected the notice.

I. The Stipulation

A stipulation "is treated as a contract among the parties, and is subject to the general principles of contract construction and interpretation." United States v. Assets of Revere Armored, Inc., 131 F.3d 132, 132 (2d Cir. 1997). "Under New York law, the terms of a contract must be construed so as to give effect to the intent of the parties as indicated by the language of the contract." Curry Rd. v. K Mart Corp., 893 F.2d 509, 511 (2d Cir. 1990) (citing Slatt v. Slatt, 477 N.E.2d 1099, 1100 (1985)). "Only when the contract is ambiguous may a court turn to extrinsic evidence of the contracting parties' intent." Id. (citation omitted). "The question of whether the language of a contract is clear or ambiguous is a question of law to be decided by the court." Compagnie Financiere de CIC et de L'Union Europeenne v. Merrill Lynch, Pierce, Fenner & Smith Inc., 232 F.3d 153, 158 (2d Cir. 2000). ...


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