United States District Court, D. Columbia.
ANGELEX LTD., Plaintiff: George M. Chalos, CHALOS & CO, P.C.,
Oyster Bay, NY.
UNITED STATES OF AMERICA, Defendant: Michael Anthony DiLauro,
LEAD ATTORNEY, U.S. DEPARTMENT OF JUSTICE, Civil Division,
Document No.: 6
CONTRERAS, United States District Judge.
in Part and Denying in Part Defendant's motion to
Angelex Ltd. (" Angelex" ), the owner of the
foreign-flagged M/V ANTONIS G. PAPPADAKIS (the "
Pappadakis" ), filed his action against Defendant the
United States of America (the " Government" ) under
33 U.S.C. § 1904(h) seeking compensation for losses and
damages that Angelex incurred as a result of what it alleges
was an unreasonable detention and delay of the Pappadakis by
the Government from April to September 2013 during the
Government's investigation and criminal prosecution of
Angelex, the operator of
the Pappadakis, and the Chief Engineer of the Pappadakis
relating to the unlawful disposal of oily bilge waste at sea.
See Complaint, ECF No. 3.
not the first action that Angelex has filed against the
Government in connection with the detention and delay of the
Pappadakis. While the Pappadakis was detained in 2013,
Angelex filed an emergency petition in the Eastern District
of Virginia seeking a court order fixing terms of surety for
release of the Pappadakis. See Angelex Ltd. v.
United States, No. 2:13-cv-237, 2013 WL 1934490 (E.D.
Va. May 8, 2013) (" Angelex I " ). Though
the district court in that action ordered the Government to
release the Pappadakis upon the filing of a penal bond with
certain conditions specified by the court, the Fourth Circuit
stayed the order and, on appeal, reversed the decision and
remanded the petition for dismissal for lack of subject
matter jurisdiction. See Angelex Ltd. v. United
States, 723 F.3d 500 (4th Cir. 2013) (" Angelex
II " ).
the Fourth Circuit's decision and the Government's
eventual release of the Pappadakis in September 2013 after
the conclusion of the criminal trial, Angelex filed this
action for compensation. The Government has filed a motion to
dismiss the Complaint under Rule 12(b)(6) of the Federal
Rules of Civil Procedure, arguing that Angelex's claim as
to the terms of the Pappadakis's detention and surety is
barred under the doctrine of res judicata and that
Angelex has not pleaded a plausible claim as to the
withdrawal of the Pappadakis's departure clearance.
See Def.'s Mot. Dismiss, ECF No. 6. For the
reasons explained below, the Court will grant the
Government's motion in part and deny the motion in part.
is a foreign corporation with a registered office address in
Malta. See Compl. ¶ 1. The Pappadakis, an
ocean-going bulk carrier registered in Malta, is
Angelex's sole fee-earning asset. See id. ¶
¶ 1, 6, 8. At all relevant times, Kassian Maritime
Navigation Agency, Ltd. (" Kassian" ), a foreign
corporation operating in Greece, managed the Pappadakis
pursuant to a contractual agreement with Angelex. See
id. ¶ ¶ 9-10. Though Kassian managed the
Pappadakis, Angelex, through employment contracts, was the
employer of its crew members. See id. ¶ 7.
about April 14, 2013, the Pappadakis arrived at the Norfolk
Southern terminal within the Port of Virginia to load a cargo
of coal. See id. ¶ 13. On April 15, 2013, U.S.
Coast Guard officers conducted a routine inspection onboard
the Pappadakis. See id. ¶ 14. After the
inspection, a member of the Pappadakis crew passed a note to
Coast Guard personnel alleging that the Pappadakis had a
so-called " magic pipe," meaning a temporary
modification of the Pappadakis's systems intended to
bypass the ship's pollution prevention equipment, known
as an Oil Water Separator. See id. ¶ 15. This
tip led the Coast Guard to conduct an expanded investigation
concerning the Pappadakis's compliance with the Act to
Prevent Pollution from Ships (" APPS" ), 33 U.S.C.
§ § 1901, et seq. See id. ¶
The Legal Framework
enacted APPS in order to implement two related marine
environmental treaties to which the United States is a party,
jointly referred to as " MARPOL" : (1) the 1973
International Convention for the Prevention of Pollution from
Ships; and (2) the Protocol of 1978 Relating to the
International Convention for the Prevention of Pollution from
Ships. See United States v. Jho, 534 F.3d
398, 401 (5th Cir. 2008). MARPOL is aimed at preventing
discharges of oily waste at sea, and, accordingly, it places
limitations on how ocean-going vessels may dispose of waste.
Regulations promulgated under APPS, consistent with MARPOL,
require that, in order to monitor pollution from oil
discharges, vessels over a certain tonnage must maintain an
Oil Record Book. See 33 C.F.R. § 151.25. The
Oil Record Book must contain, among other things, an accurate
record of discharges of bilge water, sludge, and oily
mixtures. See 33 C.F.R. § 151.25(d). The Oil
Record Book must also be readily available for inspection at
all reasonable times. See 33 C.F.R. §
151.25(i). Under APPS, it is a felony for any person to
knowingly violate MARPOL, APPS, or regulations promulgated
under APPS. See 33 U.S.C. § 1908(a). APPS also
provides for civil penalties for any violation, whether
knowing or not. See 33 U.S.C. § 1908(b). In
addition, any ship operating in violation of MARPOL, APPS, or
APPS regulations is liable in rem for any criminal
fine imposed under Section 1908(a) or civil penalty assessed
under Section 1908(b). See 33 U.S.C. § 1908(d).
The Coast Guard has authority to board vessels and inspect
them for compliance with MARPOL, APPS, and APPS regulations.
See 14 U.S.C. § 89(a); 33 C.F.R. §
151.23(a). The Coast Guard's inspection authority
includes the ability to examine the Oil Record Book kept by
the vessel. See 33 C.F.R. § 151.23(c).
APPS provides that " if reasonable cause exists to
believe that the ship, its owner, operator, or person in
charge may be subject to a fine or civil penalty" under
Section 1908, then the Secretary of Homeland
Security may refuse or revoke the ship's
departure clearance. 33 U.S.C. § 1908(e). Without the
clearance, a foreign vessel may not depart a United States
port. See 46 U.S.C. § 60105(b). A ship's
clearance may be granted or reinstated " upon the filing
of a bond or other surety satisfactory to the Secretary"
of Homeland Security. 33 U.S.C. § 1908(e). The Secretary
of Homeland Security has delegated authority to detain or
deny entry to ships to the Coast Guard. See 33
C.F.R. § 151.07. U.S. Customs and Border Protection
(" CBP" ) is responsible for refusing, revoking,
and granting a ship's departure clearance upon the
request of the Coast Guard. See 19 C.F.R. §
4.66c(a). Regulations provide that if the Coast Guard
requests that CBP refuse or revoke the clearance for the
reasons stated in Section 1908(e), then CBP must do so.
See id. The regulation also states that "
[c]learance or a permit to proceed may be granted when [CBP]
is informed that a bond or other security satisfactory to the
Coast Guard has been filed." Id.
relevant to this case, APPS also provides that " [a]
ship unreasonably detained or delayed by the Secretary [of
Homeland Security] acting under the authority
of this chapter is entitled to compensation for any loss or
damage suffered thereby." 33 U.S.C. § 1904(h). A
separate section of the statute, titled " Legal
Actions," specifically provides for causes of action
under APPS with certain limitations. See 33 U.S.C.
§ 1910. Section 1910(a) provides four grounds for any
person having an adversely affected interest to bring an
action: (1) against " any person alleged to be in
violation of the provisions" of APPS or its regulations;
(2) against the Secretary of Homeland Security " where
there is alleged a failure of the Secretary to perform any
act or duty under this chapter which is not discretionary
with the Secretary" ; (3) against the Administrator of
the Environmental Protection Agency " where there is
alleged a failure of the Administrator to perform any act or
duty under this chapter which is not discretionary" ;
and (4) against the Secretary of the Treasury where there is
an alleged failure of the Secretary to take action under
Section 1908(e). 33 U.S.C. § 1910(a). The Section also
requires that the plaintiff must give notice, in writing and
under oath, to " the alleged violator, the Secretary
concerned or the Administrator, and the Attorney
General" of the plaintiff's claim more than 60 days
before commencing an action under Section 1910(a). 33 U.S.C.
Initial Withdrawal of Departure Clearance and Surety
Coast Guard's investigation of the Pappadakis began soon
after it received the tip from one of the Pappadakis's
crewmembers. In the days that immediately followed, Coast
Guard officers and agents took control of the Pappadakis,
performed inspections, and conducted several rounds of
interviews of crewmembers. See Compl. ¶ ¶
19-24. The Coast Guard completed its onboard investigation on
April 19, 2013. See id. ¶ 24. The same day, the
Coast Guard's Captain of the Port for the Hampton Roads
Sector sent a letter to Angelex and Kassian informing them
that the Coast Guard had collected evidence "
establishing reasonable grounds to believe" that the
Pappadakis had violated MARPOL and APPS. Letter (Apr. 19,
2013), Compl. Ex. 2 at 13, ECF No. 1-1. The letter also
stated that, pursuant to 33 U.S.C. § 1908(e), the Coast
Guard had requested that CBP withhold the Customs departure
clearance required for the Pappadakis to depart the port.
See id. The letter stated that, pursuant to APPS,
" [w]hen adequate surety has been provided to this
office, we will notify CBP and request they grant departure
clearance" for the Pappadakis. Id.
between Angelex and the Coast Guard concerning the terms of a
surety that would be satisfactory to the Coast Guard began
soon thereafter. During these discussions, the Coast Guard
made a number of demands that Angelex alleges were
unreasonable and unrelated to ensuring the payment of a
potential fine or penalty. See Compl. ¶ ¶
30-31. The Coast Guard demanded, for example, that Angelex
and Kassian jointly and severally post a bond in the amount
of $3 million. See id. ¶ 38. The Coast Guard
also demanded that Angelex agree to several non-monetary
conditions, including expressly waiving all jurisdictional
defenses, paying the salaries and expenses for several
crewmembers to remain in the Eastern District of Virginia,
stipulating to the authenticity of all documents and items
seized from the Pappadakis, and assisting the Government
in effecting service on foreign citizens not located in the
United States. See id. ¶ ¶ 33 n.8. Angelex
alleges that the demands were " grossly disproportionate
and wholly unreasonable." Id. ¶ 39. The
Coast Guard refused to negotiate on the amount of the bond
and rebuffed Angelex's counter-offers. See id.
Litigation in the Fourth Circuit
or unable to meet the Coast Guard's demands, and with the
Pappadakis unable to leave the port, Angelex filed an "
Emergency Petition" against the Government, the Coast
Guard, and CBP in the District Court for the Eastern District
of Virginia on April 25, 2013 seeking a court order "
set[ting] an appropriate bond for the reinstatement of the
[Pappadakis's] departure clearance." Id.
¶ 42. See also Angelex I, [WL] at *3.
After Angelex filed the emergency petition and before the
district court held a hearing, the Coast Guard lowered its
monetary demand for the bond to $2.5 million but maintained
its other, non-monetary demands. See Compl. ¶
43. Angelex counter-proposed a bond of $1.5 million but was
rebuffed. See id. ¶ 44.
Judge Robert Doumar of the Eastern District of Virginia held
a hearing on Angelex's emergency petition on May 6, 2013.
See id. ¶ 48; Angelex I, [WL] at *3.
During the hearing, the court recessed for a period in order
to permit the parties to negotiate further. See
Compl. ¶ 50; Angelex I, [WL] at *3. Though
during the recess the party representatives reached an
agreement in principle for a bond of $1.5 million, plus
certain non-monetary conditions, subject to approval from
Coast Guard headquarters, when the court reconvened, the
Government informed the court that Coast Guard headquarters
had rejected the settlement and refused to accept less than
the $2.5 million bond it had previously offered. See
Compl. ¶ 50; Angelex I, [WL] at *3. At the
hearing, the Government took the position that the Coast
Guard could set any bond amount that it wanted. See
Compl. ¶ 49; Compl. Ex. 5 at 22. Judge Doumar disagreed
and, after first finding that the court had subject matter
jurisdiction to hear Angelex's emergency petition under
both the Administrative Procedure Act (" APA" ) and
the court's admiralty jurisdiction, held that the Coast
Guard abused its discretion in demanding a bond of $2.5
million and the imposition of non-monetary conditions.
See Angelex I, [WL] at *9. In reaching his
holding, Judge Doumar stated that the Coast Guard's
position and approach was " simply repugnant to the
Constitution" and stated that " [i]n more than
thirty years on the bench, this Court can recall seeing no
greater disregard for due process, nor any more egregious
abdication of the reasonable exercise of discretion."
Id. The court then entered an order setting a bond
of $1.5 million with several specific non-monetary
conditions. See Angelex II at 504-05. The
Government requested that the district court temporarily stay
its order and simultaneously filed a notice of appeal and
requested a stay from the Fourth Circuit. See
id. at 505. The district court denied the stay
motion, but the Fourth Circuit granted it and implemented an
expedited briefing schedule. See id.
brief on appeal to the Fourth Circuit, the Government argued,
in part, that the APA did not permit judicial review of the
Coast Guard's surety demands, because APPS commits the
determination of whether and under what conditions a vessel
may be granted permission to leave a United States port to
agency discretion. See Pet.'s Br., Pl.'s
Opp. Mot. Dismiss Ex. 3 at 4-7, ECF No. 8-3. As support, the
Congress in APPS authorized an after-the-fact remedy for
obtaining compensation from the government, further
suggesting that it did not intend Coast Guard offers of
surety to be judicially reviewable. Under 33 U.S.C. §
1904(h), " [a] ship unreasonably detained or delayed
by the Secretary acting under the authority of this Act [sic]
is entitled to compensation for any loss or damage suffered
thereby." Congress thus did not leave vessel owners
without recourse against unreasonable denials of clearance.
But rather than providing for judicial review of surety
negotiations, it authorized an independent ...