Versilia Supply Serv. SRL v. M/Y Waku

Citation: 371 F. Supp. 3d 1143Docket: CASE NO. 18-62975-CIV-COHN/SELTZER

Court: District Court, S.D. Florida; April 16, 2019; Federal District Court

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The Court is reviewing Motions to Dismiss filed by Nautical Corp., owner and operator of the M/Y WAKU, in response to a lawsuit initiated by Versilia Supply Service SRL. Versilia seeks to enforce a maritime lien for $48,376.45 owed for services rendered to the Vessel. The Court allowed other claimants, including yacht supply companies and Crew Members owed wages, to intervene in the case. Nautical's dismissal motions argue that the Foreign Narcotics Kingpin Designation Act and related regulations prevent the enforcement of the Plaintiffs' liens and assert that it is not subject to in personam jurisdiction in Florida. The Kingpin Act, enacted in 1999, targets significant foreign narcotics traffickers and allows for sanctions against individuals and organizations involved in international drug trafficking, including those who assist or are controlled by traffickers.

Persons and entities designated under the Kingpin Act are listed as "specially designated nationals" (SDNs), resulting in the blocking or freezing of their assets in the U.S. The Act mandates that individuals must obtain a government-issued license to execute against these frozen assets. U.S. citizens and residents are prohibited from dealing in blocked property unless authorized by licenses issued under the Act, which renders any transfer of such property void if it violates the regulations. 

In this case, the vessel Nautical, owned by Venezuelan citizen Samark Lopez Bello, is implicated. Lopez was designated as an SDNT by the Office of Foreign Assets Control (OFAC) on February 13, 2017, making his property, including the vessel, blocked under the Act. Nautical contends that the plaintiffs' in rem claims against the vessel should be dismissed due to their failure to secure an OFAC license, making any court orders enforcing maritime liens against the vessel null and void. 

The plaintiffs argue against dismissal, claiming their maritime liens predate Lopez's designation, they were unaware of the allegations against him, and that Nautical cannot use the Kingpin Act to obstruct the sale of the vessel. They also reference a license granted by OFAC in 2018 to cover operating expenses of the vessel, suggesting that their claims should be allowed to proceed. However, the court emphasizes that it cannot disregard the Kingpin Act and its regulations, despite the plaintiffs' assertions of unfairness.

Plaintiffs acknowledge that the Vessel qualifies as blocked property under the Kingpin Act and concede their lack of a license from the Office of Foreign Assets Control (OFAC) to execute against it. The Kingpin Act mandates that individuals obtain such a license before taking action against assets frozen under the Act. Plaintiffs fail to present any legal basis for proceeding with their claims without this license. The Kingpin Act and its regulations prohibit any transfers of assets once actual or constructive notice of a designated person is received. Plaintiffs are deemed to have constructive notice of Mr. Lopez's Specially Designated Narcotics Trafficker (SDNT) designation since February 17, 2017. Therefore, even if their maritime liens attached prior to that date, enforcement of those liens is barred over two years later without the necessary OFAC license, rendering any court orders to enforce them invalid. The OFAC license granted to Archer, Greiner, P.C. and Mr. Castillo does not change this circumstance, as it does not authorize title transfer of the Vessel.

Additionally, the court lacks personal jurisdiction over Nautical, a Cayman Islands corporation, regarding in personam claims from Crew Members for breaches of maritime employment contracts. The Crew Members allege Nautical's insufficient contacts with Florida, stating generally that Nautical engaged in business there, but specific allegations are limited to maintenance and operation of the Vessel. They claim Nautical operated vessels in Florida, contracted with them for work in Florida, failed to pay wages there, and entered contracts for services related to the Vessel with Florida entities. However, the clarity and sufficiency of these allegations in establishing jurisdiction remain questionable.

A two-step inquiry is required to establish personal jurisdiction over Nautical. First, the court evaluates whether Florida's long-arm statute permits jurisdiction. If it does, the court then assesses whether exercising jurisdiction would breach the Due Process Clause of the Fourteenth Amendment. The Crew Members must initially plead sufficient facts to establish a prima facie case of personal jurisdiction, which requires evidence strong enough to survive a motion for a directed verdict. Florida's long-arm statute allows jurisdiction over non-residents for actions such as conducting business in the state or breaching a contract that requires performance in Florida. 

The Crew Members assert that Nautical meets both criteria; however, the court finds they cannot demonstrate a breach of contract in Florida, as there must be a duty to perform an act in Florida, not merely a contractual duty to a Florida resident. The Crew Agreements do not specify that Nautical had to pay wages in Florida. Regarding the claim that Nautical is "carrying on a business" in Florida, the court states that the Crew Members have not provided sufficient evidence of a general business activity for profit in the state. The court highlights specific factors to consider, such as having an office in Florida, maintaining a business license, and the number of Florida clients served, which the Crew Members did not adequately address. Their claim that Nautical operated the Vessel in Florida is insufficient without evidence of profit-oriented activities.

The long-arm statute aims to treat nonresidents engaging in business activities within the state for economic gain as conducting a business venture. The court acknowledges that a single profit-generating act, such as chartering a yacht, could potentially satisfy this statute. However, in this case, the plaintiffs did not allege such activities by Nautical Corp. Consequently, the court finds that Nautical is not subject to personal jurisdiction under Florida's long-arm statute, and it does not need to consider due process implications. As a result, Nautical Corp.'s motions to dismiss are granted, leading to the dismissal of Plaintiff Versilia Supply Service SRL's complaint and the intervening complaints without prejudice. Additionally, Dania Cut Super Yacht Repair, Inc. is pursuing a maritime lien against the vessel for unpaid services, which remains unresolved as Nautical has not moved to dismiss this intervenor complaint. The order was finalized on April 16, 2019, in Fort Lauderdale, Florida.