Yamamoto directed to show cause

A federal judge directed Japanese investor Takahisa Yamamoto yesterday to explain why he has not paid $130,406 in custodial fees for cargo ship M/V Luta.

U.S. District Court for the NMI designated judge Frances M. Tydingco-Gatewood ordered Yamamoto to appear personally in the U.S. District Court for the NMI on Feb. 21, 2017. Yamamoto’s counsel, George Lloyd Hasselback, was also ordered to appear.

At that time, Yamamoto would be required to explain why he should not be held in contempt for disobeying a court’ order for him to pay his share in custodial fees.

According to the court, Yamamoto’s must pay an outstanding balance of $130,406 in custodial fees for cargo ship M/V Luta.

If Yamamoto, however, pays his outstanding balance, including any additional costs that have accrued since Friday, Feb. 10, Tydingco-Gatewood said she would order the release of M/V Luta and discharge the National Maritime Services as the vessel’s custodian.

However, if Yamamoto resists paying NMS, he may be found in contempt and result in the imposition of monetary and other sanctions.

NMS counsel Sean E. Frink told the court yesterday that Yamamoto has not made any payment toward his outstanding balance of $130,406 in custodial fees. The court earlier set the deadline for Yamamoto to pay yesterday at 10am.

Frink said the vessel’s crew, Long Consulting, and Norton Lilly already paid on Monday their share in custodial fees in the total amount of $28,916.

On Friday, Tydingco-Gatewood directed Yamamoto and the three intervenors to pay by yesterday, Tuesday, their share in custodial fees, now amounting to $189,323.

Meanwhile, Tydingco-Gatewood issued a written order late Monday afternoon in which she determined that Yamamoto’s relationship with Abelina T. Mendiola and her family demonstrates that he was a joint venturer with them on M/V Luta.

Abelina T. Mendiola is president of Luta Mermaid, and Luta Mermaid’s members are Deron T. Mendiola and Fidel S. Mendiola III.

Tydingco-Gatewood ruled that Yamamoto failed to show probable cause that he has a maritime lien on M/V Luta.

That is not to say that Yamamoto was not harmed by the Mendiolas and Luta Mermaid LLC and that he has no cause to complain about their conduct, or that he cannot prosecute them, the judge said.

Yamamoto’s arrest of M/V Luta, however, cannot stand, said Tydingco-Gatewood. She vacated the arrest of the vessel and quashed all warrants for the ship’s arrest.

She also vacated her Jan. 9, 2017, order for the sale of the vessel.

Tydingco-Gatewood said M/V Luta will remain in the custody of NMS until all its fees and costs are paid off.

From the beginning, Tydingco-Gatewood said, Yamamoto intended to be involved and was intimately involved in a joint business venture to buy a shipping vessel, with the prospect of making a profit for himself as a co-owner.

The judge noted that Yamamoto took an active part in the structuring of the business and exerted control beyond what a creditor would exert in an arm’s length transaction.

Tydingo-Gatewood stated Friday that her tentative decision was going to be in favor of Luta Mermaid LLC and the Mendiolas pertaining to their motion to declare the maritime lien invalid.

Luta Mermaid LLC and the Mendiolas, through counsel William Fitzgerald, asserted that based on the evidence in the record, Yamamoto was never entitled to a maritime lien on M/V Luta as he is joint venturer with the Mendiolas.

Fitzgerald asked the court to invalidate the lien and vacate its order for the sale of M/V Luta.

Yamamoto is suing Lt. Gov. Victor Hocog and the owner/operators of M/V Luta for allegedly refusing to pay back the $3.4 million that he put up for the vessel. After Yamamoto filed the lawsuit last Oct. 25, the U.S. Marshal Service seized the ship. NMS was appointed custodian of the vessel.

Last Jan. 9, Tydingco-Gatewood ordered the sale of M/V Luta.

In opposing the sale, defendants, through Fitzgerald, asserted that Yamamoto did not have a maritime lien because he is a joint venture and/or co-owner and not a stranger to the vessel.

By the end of January 2017, all intervenors had settled their claims with defendants, no longer favored a sale, and released the vessel from their warrants.

At a hearing last Jan. 31, defendants requested a post-arrest hearing for Yamamoto to show probable cause why the vessel be kept under arrest.

The judge then conducted the post-arrest hearing last Friday.

In her written order on Monday, Tydingco-Gatewood said it is well settled that a joint venture/co-owner may not assert a valid maritime lien.

To determine whether a joint venture existed, the court “looks to the whole relationship” between the plaintiff and the owner.

Tydingco-Gatewood said e-mails exchanged between Yamamoto and various defendants substantiate this relationship.

Last Jan. 9, Tydingco-Gatewood ordered the sale of M/V Luta with a minimum bid of $550,000. Tydingco-Gatewood approved the sale, citing its expensive upkeep and the delay in securing its release.

The judge, however, recently ordered that the sale be stayed for 60 days, pending the resolution of some issues.

Luta Mermaid and the Mendiolas have filed in court counterclaims for fraud and other claims against Yamamoto.