IncredibleBank v. PROVOCATIVE (O.N. 1248080) et al

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
INCREDIBLEBANK, 	:
Plaintiff, 	:
:
v. 	: 	C.A. No. 22-445JJM
:
PROVOCATIVE (O.N.1248080), et al. 	:
Defendants. 	:
REPORT AND RECOMMENDATION
PATRICIA A. SULLIVAN, United States Magistrate Judge.
This is an admiralty case filed on December 15, 2022, pursuant to Rule D of the
Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions (“Rule D”)
brought by IncredibleBank (“Incredible”) against the Vessel Provocative (the “Vessel”), together
with her trailer, engines, tackle and appurtenances, (collectively the “Secured Property”), in rem,
with supplemental claims pursuant to state law for replevin against the Secured Property and for
breach of contract against the owner of the Secured Property, Jonathan Cohen, in personam.
ECF No. 1. Incredible claims that Mr. Cohen is liable because he has defaulted on a Promissory
Note that was secured by the Secured Property, which entitles it to contractual damages,
including interest, attorney’s fees and expenses; it also claims breach of the related Security
Agreement and seeks the remedies that it affords in the event of default. Specifically, proceeding
in rem against the Secured Property, Incredible seeks possession and title; proceeding in
personam against Mr. Cohen, Incredible seeks a money judgment for its damages.
Also participating in the case is Outerlimits Offshore Performance Ltd. (“Outerlimits”), a
Rhode Island manufacturer of high-performance boats. Outerlimits was the original
manufacturer of the Vessel and is the location where the Secured Property is currently located.
Outerlimits was appointed by the Court as the substitute custodian of the Secured Property on
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January 12, 2023, and is entitled to be paid for its custodia legis fees and expenses. ECF No. 10.
Outerlimits has also asserted a “necessaries” maritime lien against the Secured Property for
storage costs and repairs performed before it was appointed substitute custodian as reflected in a
Verified Statement of Interest filed on March 7, 2023. ECF No. 14; see also ECF No. 24 at 1.
While the amount of Outlimits’ pre-suit lien is disputed, the parties do not dispute that both the
maritime lien and the custodia legis lien have priority over Incredible’s rights with respect to the
Secured Property.
Now pending before the Court is Incredible’s motion for final judgment on the pleadings
pursuant to Fed. R. Civ P. 12(c) asserting its rights pursuant to Rule D to possession and title to
the Secured Property and for interim judgment of liability against Mr. Cohen based on his breach
of the operative agreements, with further proceedings to calculate the amount of damages. ECF
No. 20. Incredible contends that Mr. Cohen’s Answer to its Verified Complaint admits all of the
operative facts. Id. Mr. Cohen has not objected to the motion.1 Outerlimits has advised the
Court that it does not object to the entry of judgment as requested by the motion but has raised
concerns about certain of Incredible’s arguments. The motion has been referred to me for report
and recommendation. Based on the briefs, a hearing and the analysis that follows, I recommend
that the motion be granted in part and denied in part for the reasons that follow.
I. 	Background
1 Despite the Court having delayed the date of the hearing on the motion in part to accommodate Mr. Cohen, ECF
No. 32 at 1, and despite his having received notice of the hearing electronically by email sent to his email of record
with no bounce-back, Mr. Cohen did not appear at the zoom hearing held on December 5, 2023. Based on Mr.
Cohen’s non-opposition to Incredible’s motion, there is nothing surprising or wrongful about Mr. Cohen’s failure to
appear. Nevertheless, the Court is aware that Mr. Cohen contacted the Clerk’s office a few minutes after the hearing
ended, using an email address different from the one he has registered with the Court for electronic receipt of filings,
complaining that he had not seen the hearing notice. Mindful of Mr. Cohen’s facility with timely participation in all
proceedings to that date and of his duty to advise the Court of any change in the applicable email address, DRI LR
Gen 205(d), to the extent that Mr. Cohen later attempts to assert new arguments that could have been raised at the
hearing, I find that Mr. Cohen waived his right to appear.
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A. 	The Pleadings
By its Verified Complaint (ECF No. 1, “Complaint”), Incredible is proceeding against the
Secured Property in rem for possession (Count I) and title (Count II) in admiralty pursuant to
Rule D and pursuant to Rhode Island state law (replevin) (Count IV), and against Mr. Cohen in
personam for state law breach of contract damages (Count III). Attached to the Complaint are
copies of the Promissory Note (ECF No. 1-1) and the Security Agreement (ECF No. 1-2) signed
by Mr. Cohen on which Incredible relies. The Complaint clearly labels paragraphs 8-40 as the
“Factual Allegations.” ECF No. 1 at 3-8.
In response to the Complaint, Mr. Cohen filed a pro se Verified Answer (ECF No. 12,
“Answer”) in which he admits that he is an individual, that he executed the Promissory Note, that
the Secured Property is presently in Rhode Island, that he insured the Secured Property and that
he made two insurance claims on the Secured Property that were communicated to Incredible.
ECF No. 12 ¶¶ 7, 8, 31-33, 35-36. Mr. Cohen denies that his current address is in Beverly Hills,
California, and that he is currently in possession of the Secured Property, which he admits is
located at Outerlimits in Rhode Island. ECF No. 12 ¶¶ 7, 40. Mr. Cohen responded to the
balance of Incredible’s Factual Allegations by pleading that “the allegations . . . constitute legal
argument(s) or legal conclusion(s), [and] no answer is required.” E.g., ECF No. 12 ¶ 9. Mr.
Cohen’s Answer contains no affirmative defenses.
Incredible’s motion for judgment on the pleadings was originally filed on June 12, 2023.
In it, Incredible made plain its position that Mr. Cohen’s pleading that certain of Incredible’s
factual “allegations . . . constitute . . . legal conclusion(s)” amounts to an admission of any fact to
which it pertains.2 ECF No. 20 at 4, 6-9. Following the filing of the motion, it was put on hold
2Incredible’s position is well grounded in the proposition that pleading that a factual allegation is a legal argument
or legal conclusion as to which no answer is required amounts to an admission as to such fact. Fed. R. Civ. P.
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as Incredible, Mr. Cohen and Outerlimits actively participated in court-annexed mediation. After
the mediation reached impasse, the Court set a schedule for further briefing and argument on the
motion. During the six months that the motion has been pending, Mr. Cohen has not quibbled
with Incredible’s interpretation of his pleading nor has he sought leave to amend his Answer.
Nor did he object to Incredible’s motion for entry of judgment. Further, based on Mr. Cohen’s
extensive active participation in proceedings in this case, including the mediation over which I
presided, I find that, although he is pro se, Mr. Cohen is clearly far more sophisticated than the
typical pro se litigant. Brown v. CitiMortgage, Inc., Case No. 16-cv-11484-LTS, 2016 WL
9223830, at *1 (D. Mass. Oct. 20, 2016). Therefore, I find that the indulgence usual for the
filings of pro se litigants is not appropriate for the Court’s interpretation of Mr. Cohen’s Answer.
See Rhode Island Hosp. Tr. Nat’l Bank v. Howard Commc’ns Corp., 980 F.2d 823, 828 n.8 (1st
Cir. 1992); In re Cyphermint, Inc., Civil Action No. 09-40138-FDS, 2011 WL 2417132, at *4 (D.
Mass. June 10, 2011) (citing Claremont Flock Corp. v. Alm, 281 F.3d 297, 299 (1st Cir. 2002)
(pro se litigant not entitled to special treatment where litigant was a “sophisticated”
businessman)). Based on these circumstances, and mindful of Mr. Cohen’s failure to seek leave
to amend his Answer and failure to assert any opposition to the motion, I find that the operative
Factual Allegations drawn from Incredible’s Complaint as laid out below are deemed admitted
for purposes of the Court’s analysis of Incredible’s motion.
B. 	The Admitted Facts
8(b)(6) (“An allegation . . . is admitted if a responsive pleading is required and the allegation is not denied.”); see
Mahanor v. United States, 192 F.2d 873, 876 (1st Cir. 1951) (“averments in a pleading to which a responsive
pleading is required are admitted when not denied”)(internal quotation marks omitted); Trustees of IBEW Local No.
7 Pension Fund v. DAW MAC Service, Corp., C.A. No. 13-cv-30029-MAP, 2014 WL 4656874, at *3 (D. Mass.
Sept. 15, 2014) (defendant’s failure to deny facts alleged in complaint or state defendant was without sufficient
knowledge or information to answer constitutes admission); Gomez v. United States, No. 09-22148-Civ., 2010 WL
3834211, at *2 (S.D. Fla. Sept. 28, 2010) (factual allegation answered by pleading only that it states a legal
conclusion is deemed admitted).
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On July 1, 2019, Mr. Cohen executed the Promissory Note memorializing a loan of
$225,600 from Incredible and the loan proceeds were made available to him. ECF No. 1 ¶ 8. To
secure the loan, Mr. Cohen executed the Security Agreement, “grant[ing] to [Incredible] a
security interest in all of the [Secured Property].” Id. ¶¶ 9-12; ECF No. 1-2 at 1. The
Promissory Note and the Security Agreement both provide that they are governed by federal law,
and by state law only to the extent that state law is not preempted by federal law. ECF No. 1-1 at
2; 1-2 at 3. For applicable state law to the extent not preempted, the Promissory Note invokes
the law of Wisconsin, while the Security Agreement invokes the law of California for procedural
matters and otherwise the law of Wisconsin.3 Id.
Beginning in late 2019, Mr. Cohen was in default as he repeatedly failed to pay as agreed.
ECF No. 1 ¶ 22; see ECF No. 1-1 at 1 (default is failure to make “any payment when due”).
Despite a modification of the loan,4 the default persisted, ultimately resulting in Incredible’s
declaration of default as of August 12, 2022. Id. ¶¶ 23-27. Under the terms of the Promissory
Note and the Security Agreement, default means that the entire unpaid balance and all accrued
unpaid interest became immediately due. ECF No. 1-1 at 2; ECF No. 1-2 at 2. To the present,
the loan remains unpaid and Mr. Cohen remains in default. Id. ¶ 28-29. In addition to default
based on non-payment in breach of the Promissory Note, Mr. Cohen also breached two terms of
the Security Agreement. First, beginning just before he stopped paying Incredible, Mr. Cohen
made a series of insurance claims based on losses arising from damage to the Secured Property.
Id. ¶¶ 35-36. While the first two claims (totaling $122,745.01) were disclosed to Incredible, id. ¶
3 Incredible’s principal place of business is in Wisconsin.
4 The Modification Agreement afforded Mr. Cohen a reset to avoid default if he began to pay as agreed. ECF No. 1-
6. He did not. ECF No. 1 ¶¶ 25-26.
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36, during April through May 2020, Mr. Cohen made additional insurance claims totaling
$36,854.20; in breach of his contractual obligation to inform Incredible of any losses or damage
to the Secured Property, Mr. Cohen did not disclose the latter claims to Incredible, nor have any
insurance proceeds been paid to Incredible. Id. ¶¶ 34-39. Instead, after he first went into default
of the duty to pay, on April 24, 2020, in breach of his duty not to move the Secured Property
from California except with Incredible’s consent, Mr. Cohen wrongfully moved the Secured
Property from his own possession in California to the physical possession of Outerlimits in
Rhode Island where it is currently located. Id. ¶¶ 6, 30-33; ECF No. 12 ¶¶ 6, 30-33.
Incredible has publicly declared and/or perfected its security interest in the Secured
Property separately as to each of its components. Id. ¶¶ 13-15. As to the Vessel, in 2021,
Incredible “obtained title” in Nevada as reflected in a Nevada Certificate of Ownership (Title),
which lists Incredible as the “legal owner” with Mr. Cohen (based on an address in Nevada) as
the “registered owner.” Id. ¶ 13; ECF No. 1-3. For the trailer, in 2022, a Certificate of Title was
filed in California listing Incredible as the lienholder and Mr. Cohen (with an address in
California) as the “registered owner[]”; for the engines, in 2020, a UCC Financing Statement was
filed in California listing Incredible as the “secured party” and Mr. Cohen (with a different
address in California) as the “debtor.” Id. ¶¶ 14-15; ECF Nos. 1-4, 1-5.
The Promissory Note and Security Agreement make clear that Mr. Cohen may keep and
use the Secured Property only so long as he is not in default. The Security Agreement lays out
the legal consequences of default based on nonpayment as follows:
x 	Incredible has all of the rights of a secured party under the Uniform
Commercial Code. ECF No. 1-2 at 2.
x 	Incredible has the right to enter Mr. Cohen’s premises and “take the
[Secured Property] peaceably and sell it.” Id.
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x 	Incredible has the consent of Mr. Cohen to enter any other premises to
“retake[]” possession of the Secured Property. Id.
x 	Mr. Cohen has irrevocably appointed Incredible as his attorney-in-fact to
“execute documents necessary to transfer title.” ECF No. 1-2 at 1.
x 	If Incredible exercises its right to sell the Secured Property in the event of
default, the net proceeds of the sale shall be applied to reduce the amount
owed to Incredible with Mr. Cohen continuing to owe any difference
between the amount owed and the net proceeds of a sale. ECF No. 1-2 at
2.
While clearly conferring Incredible’s rights in the event of default to possession of the Secured
Property and to sell the Secured Property, neither the Promissory Note nor the Security
Agreement confers on Incredible more than a security interest in the Secured Property. That is,
these documents do not confer title on Incredible; rather, they empower Incredible to act as Mr.
Cohen’s “attorney-in-fact to execute documents necessary to transfer title if there is a default,”
for example, to facilitate a sale of the Secured Property to a third party who would become the
new owner. ECF No. 1-2 at 1. Further, Mr. Cohen retains his substantive rights under Wisconsin
law to surplus equity on disposition of the collateral, or to contest the commercial reasonableness
of any sale. Kraenzler v. Brace, 773 N.W.2d 481, 486 (Wisc. Ct. App. 2009); see March v. Linn,
865 N.W.2d 885, 2015 WL 1650098, at *3 (Wisc. Ct. App. 2015) (Table) (secured party must
proceed in a commercially reasonable manner in disposing of collateral and applying proceeds to
offset outstanding obligation).
C. 	Claims and Liens
Based on the facts set out above, Incredible contends that it is entitled to a judgment
placing it in possession of the Secured Property and declaring that it is the true owner, as well as
judgment against Mr. Cohen for the contractual damages caused by Mr. Cohen’s breaches, plus
interest, costs, expenses and attorney’s fees pursuant to the terms of the Promissory Note and the
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Security Agreement. ECF No. 1 ¶¶ 46, 50, 58-59, 67. The Complaint also contends that
Incredible’s total contractual damages were $224,184.73,5 as of the date of the pleading, plus
prejudgment interest, costs and attorney’s fees. Id. ¶ 59.
Outerlimits entered this case on March 7, 2023, by filing a Verified Statement of Interest.
ECF No. 14. Not reflected in the pleadings but revealed by Outerlimits’ Statement are the facts
that, after the Secured Property arrived in Rhode Island, Outerlimits claims that it performed
substantial repairs at Mr. Cohen’s request, as well as that Outerlimits provided storage services.
ECF No. 14 ¶¶ 3-4; ECF No. 14-1. The invoice attached to the Statement, ECF No. 14-1,
indicates that the net amount claimed to be owing on account to Outerlimits by Mr. Cohen is
$70,590.87, which remains unpaid. ECF No. 14 ¶ 6. Following the Vessel’s arrest on January
12, 2023, the Secured Property has remained in the physical possession of Outerlimits as the
court-appointed custodian. ECF No. 10.
II. 	Standard of Review
Pursuant to Fed. R. Civ. P. 12(c), “[a]fter the pleadings are closed – but early enough not
to delay trial – a party may move for judgment on the pleadings.” “Judgment on the pleadings is
proper only if the uncontested and properly considered facts conclusively establish the movant’s
entitlement to a favorable judgment.” Zipperer v. Raytheon Co., Inc., 493 F.3d 50, 53 (1st Cir.
2007) (internal quotation marks omitted). The court considers a Rule 12(c) motion according to
the same standard as a Rule 12(b)(6) motion. Jay Blahnik Inc. v. WaterRower, Inc., C.A. No.
1:21-CV-00026-MSM-PAS, 2022 WL 910929, at *4 (D.R.I. Mar. 29, 2022). While a 12(c)
motion is typically “based solely on the factual allegations in [the pleadings],” NEPSK, Inc. v.
5Paragraph 58 of the Complaint alleges $224,184.71 in damages while paragraph 59 alleges $224,184.73. Because
I am recommending judgment of liability only as to damages, with the amount to be proven in further proceedings,
this difference is immaterial.
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Town of Houlton, 283 F.3d 1, 8 (1st Cir. 2002), the court also may consider “documents
incorporated by reference into the complaint, matters of public record, and facts susceptible to
judicial notice.” Grajales v. P.R. Ports Auth., 682 F.3d 40, 44 (1st Cir. 2012) (internal quotation
marks omitted). The court is “compelled to accept all factual allegations as true without
crediting any conclusory legal allegations.” Conservation L. Found., Inc. v. Shell Oil Prods. US,
C.A. No. 17-00396-WES, 2022 WL 2353065, at *1 (D.R.I. June 30, 2022), adopted by text order
(D.R.I. July 15, 2022). Because a Rule 12(c) motion “calls for an assessment of the merits of the
case at an embryonic stage, the court must view the facts contained in the pleadings in the light
most favorable to the nonmovant and draw all reasonable inferences therefrom.” R.G. Financial
Corp. v. Vergara-Nunez, 446 F.3d 178, 182 (1st Cir. 2006).
“‘[T]he mere fact that a motion [for judgment on the pleadings] is unopposed does not
relieve the district court of the obligation to examine the complaint itself to see whether it is
formally sufficient to state a claim.’” Principe v. M 2 M Glob. Corp., Civil No. 17-2262 (ADC),
2018 WL 4735720, at *4 (D.P.R. Sept. 28, 2018) (quoting Vega-Encarnación v. Babilonia, 344
F.3d 37, 41 (1st Cir. 2003)). That is, while the Court may rely on facts admitted based on the
lack of a denial, it may not simply grant a motion for judgment on the pleadings due to the lack
of an opposition without first considering the pleadings and the motion’s substance.
III. 	Analysis
A. 	Admiralty Claims
The applicable admiralty rule, Rule D, governs possessory actions and petitory actions to
quiet title involving vessels, over which the federal courts have exclusive admiralty jurisdiction.
Mullane v. Chambers, 333 F.3d 322, 327-28 (1st Cir. 2003) (“It is beyond dispute that admiralty
jurisdiction extends to possessory and petitory actions.”) (citing Ward v. Peck, 59 U.S. (18 How.)
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267, 267 (1855) (“In this country . . . the ancient jurisdiction over petitory suits or causes of
property has been retained [by courts of admiralty].”)). An action under Rule D proceeds in rem
to assert title or a possessory right to a vessel or other maritime property and is commenced by
arrest of the vessel and related property, as Incredible did in this case. See Barsom v. P/V
AQUIDNECK FERRY, No. CA 12-808 S, 2013 WL 5447551, at *2 (D.R.I. Sept. 30, 2013).
A “possessory action” is one in which a party who claims to be entitled to possession of a
vessel of which it is wrongfully dispossessed seeks to recover the vessel. Wehr v. Pheley, No. C
99-4574 SI, 2000 WL 236438, at *3 (N.D. Cal. Feb. 16, 2000). The action “must seek to recover
possession rather than to obtain original possession, and the [plaintiff] must allege wrongful
deprivation of property.” Offshore Express, Inc. v. Bergeron Boats, Inc., No. 77-2202-Sec. D,
1978 A.M.C. 1504, 1506, 1977 WL 6476159 (E.D. La. Oct. 5, 1977) (contractual power to
exercise dominion and control constitutes constructive possession adequate for purposes of the
requirement of prior possession); see Trueman v. Historic Steamtug New York, 120 F. Supp. 2d
228, 233 (N.D.N.Y. 2000) (legal title “arguably transferred” by contract sufficient to establish
jurisdiction under Rule D), appeal dismissed, 14 F. App’x 106 (2d Cir. 2001). “A petitory suit is
utilized to assert legal title to a vessel . . . with a specific adversary in mind, rather than to perfect
a title against everyone in the world.” Wehr, 2000 WL 236438, at *3.
Incredible’s Fed. R. Civ. P. 12(c) motion asks the Court to enter judgment in its favor and
against the Secured Property on Counts I and II, for immediate possession and title. ECF No. 20
at 9. Incredible’s motion does not have a developed argument asking for the entry of judgment
for possession on Count IV, the state law claim against the Secured Property for replevin. At the
hearing, Incredible clarified that Count IV was pled in the alternative, that the replevin claim is
preempted by the admiralty claim for possession pursuant to Rule D and that the replevin claim
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will be moot and should be dismissed once judgment of possession pursuant to Rule D becomes
final.
Having carefully reviewed the Complaint, Answer and the contractual documents (the
Promissory Note and the Security Agreement), I find that Mr. Cohen’s admitted default of his
duty to pay under the Promissory Note beginning in late 2019 entitled Incredible to immediate
possession of the Secured Property, but that instead Mr. Cohen moved it to Outerlimits in Rhode
Island in breach of his duty to obtain consent from Incredible and that Incredible now has the
right to retake possession of the Secured Property, as provided by the Security Agreement, as
well as to exercise the right to sell and the right to “transfer title” (as the holder of Mr. Cohen’s
power of attorney) to any buyer at a commercially reasonable sale. ECF No. 1-2 at 1. Therefore,
with respect to Incredible’s Rule D admiralty claim in Count I, when the applicable law is
applied to the Complaint’s facts – both those that are admitted and those that are deemed
admitted – I find that there are no trial-worthy disputes and judgment for possession should enter
as Incredible asks. Relying on Barsom, I recommend that the Court enter judgment pursuant to
Fed. R. Civ. P. 12(c) in favor of Incredible and against the Secured Property on Count I for
possession. 2013 WL 5447551, at *3.
The only potential fly in this otherwise smooth ointment comes from Outerlimits, which,
despite its lack of opposition to the relief Incredible seeks, has filed an opposition to the motion
for judgment against the Secured Property on Count I. With regard to Incredible’s right to
possession, Outerlimits argues that such a claim may be brought only by a claimant who
originally was in physical possession of a vessel that was wrongfully taken. ECF No. 24 at 1, 5.
Therefore, it contends there is no wrongful taking in that Mr. Cohen had the right to keep and use
the Secured Property until he was in default. Id. at 1-2. To the extent that this Court held in
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Barsom that a Rule D claim is an appropriate mechanism grounded in admiralty jurisdiction for a
lender to acquire possession of and title to a vessel securing a loan following default, Outerlimits
contends that Barsom is wrongly decided. Id. at 6 n.4.
I do not agree. Contemporary admiralty decisions make clear that prior actual possession
is not necessary for a Rule D claimant as long as there was a right of possession (constructive
possession) that preceded the bringing of the Rule D action. See, e.g., Richmond Materials Co.
v. Dredge La Concha, Civil Action No. 06-557, 2009 WL 10705198, at *4-5 (S.D. Tex. Mar. 2,
2009) (legal claim of possession is sufficient to support Rule D claim despite lack of prior actual
possession); Offshore Express, Inc., 1978 A.M.C. 1504, 1977 WL 6476159 (owner who has been
wrongfully deprived of right to possession of a vessel may initiate Rule D action to secure return
of vessel despite lack of prior possession; construction possession is sufficient). Here,
Incredible’s constructive right of possession arose when Mr. Cohen’s right to “keep and use the
[Secured Property]” lapsed as soon as he entered default for the first time in December 2019,
ECF No. 1-2 at 2, well before the filing of this Rule D action in December 2022; further, Mr.
Cohen wrongfully deprived Incredible of its right of possession when he moved the Secured
Property to Outerlimits in Rhode Island without Incredible’s consent. As in Barsom, Incredible
is the secured creditor of a Vessel and related Secured Property whose registered owner is in
default. 2013 WL 5447551, at *1-3. Thus, consistent with Barsom, the Court should enter
judgment of possession in favor of Incredible under Rule D. Id.
In contrast, I do not find that judgment should enter on Incredible’s petitory claim under
Rule D to the “legal title” of the Secured Property. Unlike Barsom, neither the Promissory Note
nor the Security Agreement conferred legal title on Incredible. Compare Barsom, 2013 WL
5447551, at *3 (collateral agreement assigned to lender “all right, title and interest” in vessel),
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with ECF No. 1-2 at 1 (Security Agreement signed by Mr. Cohen states, “I grant to Lender a
security interest”). While I do not credit Outerlimits’ argument that Incredible’s petitory claim
fails because Incredible’s Security Agreement is not a preferred ship mortgage pursuant to 46
U.S.C. § 31322, ECF No. 24 at 1, it is beside the point.6 What matters is that the admitted facts
establish only that Incredible is a secured party with a security interest conferring the right to
possess and sell (including the right to convey title to any buyer as Mr. Cohen’s attorney-in-fact);
the operative documents do not confer title. Seegenerally id. at 3-4. Also flawed is Incredible’s
contention that it is the holder of title to the Vessel under Nevada law because it perfected its
security interest with the filing of a certificate making it the “legal owner” under Nevada law; the
problem is that Nevada law provides that such a “legal owner” is merely “a secured party under a
security agreement relating to a vessel.” Nev. Rev. Stat. § 488.035 (11) & (15). Therefore, to the
extent that Incredible’s motion for judgment seeks an award to it of title to the Secured Property
under Rule D, I recommend that the motion be denied.
B. 	In Personam Claim against Mr. Cohen
Invoking the Court’s supplemental jurisdiction pursuant to 28 U.S.C.§ 1367, Count III
asserts a state law claim (under Wisconsin law per the operative agreements)7 for the money
6 Incredible’s right to relief is based on Rule D; the Court need not address the confusing argument injected into the
case by Outerlimits concerning whether Incredible holds a preferred ship mortgage.
7 Incredible’s brief cites to Rhode Island law for the elements of a breach of contract claim. ECF No. 20 at 12.
However, the Promissory Note clearly calls for the application of Wisconsin law, which is not materially different
from the law of Rhode Island. Compare Barkan v. Dunkin Donuts, Inc., 627 F.3d 34, 39 (1st Cir. 2010) (for “breach
of contract claim under Rhode Island law, a plaintiff must prove that (1) an agreement existed between the parties,
(2) the defendant breached the agreement, and (3) the breach caused (4) damages to the plaintiff”) (footnote
omitted), with CAP Servs., Inc. v. Schwartz, No. 16-CV-671-WMC, 2017 WL 6209918, at *5 (W.D. Wis. Dec. 7,
2017) (“elements for a breach of contract in Wisconsin are familiar; the plaintiff must show [1] a valid contract that
[2] the defendant breached and [3] damages flowing from that breach”). Mindful that Rhode Island courts treat a
contractual choice of laws clause as enforceable and that the Promissory Note calls for application of Wisconsin law
to the extent not preempted, I have relied on Wisconsin law. Rhode Island Charities Tr. v. Engelhard Corp., 109 F.
Supp. 2d 66, 73 (D.R.I. 2000) (in Rhode Island, a choice of law provision in contract is enforceable where
transaction bears reasonable relationship to both Rhode Island and another state), aff’d, 267 F.3d 3 (1st Cir. 2001);
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damages caused by Mr. Cohen’s breaches of the Promissory Note (and the Modification
Agreement) and the Security Agreement. The facts admitted and deemed admitted establish that
Incredible is entitled to judgment of liability for the breaches. These include that Mr. Cohen
executed the Promissory Note; that Incredible performed its obligation to make available to him
the loan of $255,600; that Mr. Cohen breached his duty to pay pursuant to the Promissory Note
(and the Modification Agreement), as well as the duties established by the Security Agreement to
notify Incredible of insurable losses, to pay insurance proceeds to Incredible and to obtain
consent to move the Secured Property; and that Mr. Cohen’s default entitles Incredible to
judgment for its contractual damages caused by these breaches, including interest, attorney’s fees
and expenses. See United Cent. Bank v. Maple Ct. LLC, No. 10-CV-00464, 2013 WL 4517243,
at *5 (E.D. Wis. Aug. 27, 2013). Accordingly, I recommend that the Court enter interim
judgment against Mr. Cohen of liability for breach of the Promissory Note, the Modification
Agreement and the Security Agreement, with the amount of the final judgment to be determined
in further proceedings in this case in accordance with Wisconsin law.
IV. 	Conclusion
In reliance on Rule D and the Court’s admiralty jurisdiction, as well as in reliance on
Wisconsin law and the Court’s supplemental jurisdiction, I recommend that the Court grant in
part and deny in part Incredible’s motion for judgment on the pleadings (ECF No. 20) as follows:
(1) that the Court enter partial final judgment in rem in favor of Incredible and against Mr. Cohen
on Count I for possession of the Secured Property, with the right to sell and convey title as set
Providence & Worcester R. Co. v. Sargent & Greenleaf, Inc., 802 F. Supp. 680, 687 (D.R.I. 1992) (choice of law
provision reasonable where, inter alia, choice of law jurisdiction was defendant’s principal place of business).
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out in the Security Agreement;8 (2) that the Court deny the motion for judgment of title on Count
II; and (3) that the Court enter partial interim judgment in personam in favor of Incredible and
against Mr. Cohen on Count III, adjudging Mr. Cohen liable to Incredible based on his breaches
of the Promissory Note, the Modification Agreement and the Security Agreement with further
proceedings for calculation of the net damages to be awarded. Upon judgment on Count I for
possession becoming final, I further recommend that Incredible’s replevin claim (Count IV)
against the Secured Property be dismissed without prejudice and that Mr. Cohen be exonerated
from any ongoing responsibility with respect to the Secured Property, including for ongoing
custodia legis fees and expenses incurred by Outerlimits. Finally, I recommend that the Court’s
orders make clear that Mr. Cohen’s rights under applicable law and pursuant to the terms of the
Promissory Note and the Security Agreement, including his right to the surplus (if any)
remaining following any sale of the Secured Property and the satisfaction in full of any and all
liens (including Incredible’s judgment and Outerlimits’ maritime liens and custodia legis) will
not be adversely impacted.
Any objections to this report and recommendation must be specific and must be served
and filed with the Clerk of the Court within fourteen days of service of this report and
recommendation. See Fed. R. Civ. P. 72(b); DRI LR Cv 72. Failure to file specific objections in
a timely manner constitutes waiver of the right to review by the District Court and the right to
appeal the District Court’s decision. See Brenner v. Williams-Sonoma, Inc., 867 F.3d 294, 297
n.7 (1st Cir. 2017); Santos-Santos v. Torres-Centeno, 842 F.3d 163, 168 (1st Cir. 2016).
/s/ Patricia A. Sullivan
PATRICIA A. SULLIVAN
United States Magistrate Judge
December 14, 2023
8I do not recommend that the Court direct entry of final judgment immediately pursuant to Fed. R. Civ. P. 54(b)
because Incredible did not make such a request.
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