Bennett Brothers Yachts, Inc. v. S/V KELLY GIRL, 8:17-cv-01871

Bennett Brothers (plaintiff) contracted to repair/refit the sailing vessel S/V KELLY GIRL owned by Allan Lesser (defendant); defendant removed the vessel before completion.
Plaintiff sued in rem under the Commercial Instruments and Maritime Liens Act (CIMLA) for unpaid work (~$40,225.58) and obtained a warrant; defendant posted $70,000 security and regained the vessel.
Defendant answered and asserted counterclaims (breach of contract, negligence, breach of warranty, NC UDTPA) alleging at least $251,218.41 in damages based on alleged unauthorized, deficient, and overbilled work.
Defendant moved to compel countersecurity of $425,000 under Admiralty Rule E(7); plaintiff opposed, arguing counterclaims are barred or frivolous and asserting it cannot afford such countersecurity.
The court found defendant’s counterclaims non-frivolous and that Rule E(7) entitles defendant to countersecurity but reduced the required amount because plaintiff lacks ability to post large security and defendant is already in possession of the vessel.
Court ordered countersecurity in the amount of $70,000; defendant’s motion granted in part and denied in part.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Rule E(7) requires plaintiff to post countersecurity for defendant's counterclaims	Counterclaims are barred, frivolous, and plaintiff lacks obligation to post	Counterclaims are non-frivolous and Rule E(7) requires equality of security	Countersecurity is required (Rule E(7) applies)
Proper amount of countersecurity	Plaintiff cannot afford large security; posting large bond would force abandonment	Plaintiff’s $70,000 bond over-secures plaintiff; defendant seeks proportional countersecurity ($425,000)	Amount left to court discretion; equality principle balanced against plaintiff’s financial inability
Relevance of defendant’s possession of the vessel to countersecurity	N/A (plaintiff not seeking vessel release)	Defendant notes he already holds the vessel and alleges specific damages (~$62,000)	Possession and alleged damages justify reduced countersecurity amount
Whether counterclaims are frivolous enough to deny countersecurity	Claims are frivolous or barred under maritime law	Claims are well pleaded and plausible	Court finds claims non-frivolous; denies frivolousness argument

Spriggs v. Hqffstot, 240 F.2d 76 (4th Cir. 1957) (Rule E(7) countersecurity amount left to district court discretion)
Washington-Southern Navigation Co. v. Baltimore & Philadelphia S.S. Co., 263 U.S. 629 (1924) (historical discussion of security equality in admiralty practice)
Afram Lines Int'l, Inc. v. M/V Capetan Yiannis, 905 F.2d 347 (11th Cir. 1990) (factors for ordering countersecurity and cautions against automatic parity)
Results Shipping Co. v. Ferruzzi Trading USA Inc., 56 F.3d 394 (2d Cir. 1995) (balance equality principle with avoiding burdensome costs on plaintiff)
Titan Navigation, Inc. v. Timsco, Inc., 808 F.2d 400 (5th Cir. 1987) (courts should consider plaintiff’s ability to post bond)
City of Beaumont, 8 F.2d 599 (4th Cir. 1925) (insolvency can justify dispensing with countersecurity)