(CN) - A provisions supplier to the maritime industry got a little too creative when it tried to stake a claim to proceeds from a legal settlement related to the sale of television's Love Boat, the 11th Circuit ruled.
As the three-judge panel explained in a ruling announced Sept. 30, the history underlying the appeal by supplier World Wide Supply OU, is complicated, involving lawsuits in a number of federal district courts, Florida state court, and a Spanish bankruptcy court.
The common denominator is all of these suits is Quail Cruises Ship Management company, from which a number of parties are trying to collect money.
Quail Cruises was a newly established company in 2008 when it charted the MS Pacific to operate cruises out of Valencia, Spain. The vessel had previously sailed as the Pacific Princess and had become an icon of sorts after being featured on the hit television company "The Love Boat" beginning in the late 1970s.
Securing the Pacific Princess initially appeared to be an auspicious event for
Quail Cruises, but when the cost of renovating the 19,900-ton cruise ship proved far greater than anticipated, it was decided to sell the Pacific Princess for scrap.
The first of these deals fell through, and the vessel remained laid up in Genoa, Italy for an extended period, further draining the company's resources.
Finally, during the summer of 2013, a firm deal was struck with a Turkish concern to scrap the ship, and it was dismantled that fall.
In 2012, while all of this remained to be worked out, Quail sued an entity called Agencia de Viagens CVC Turlimitada and others in Miami Federal Court, claiming the defendants conspired to defraud it through the complicated transaction that led to its engagement of the Pacific Princess.
The deal called for Quail to receive stock in Templeton International Inc., the company that actually owned the Pacific Princess, the value of the stock being predicated on the project revenues to be derived from the commercial use of the vessel.
"The seller of the stock and its supporting actors fraudulently colluded to induce Quail to acquire the stock of Templeton while concealing the seriously deteriorated and unsafe conditions of the asset," the complaint said.
The parties reached a $5 million settlement, the proceeds of which had been promised by Quail to a third-party to settle an unrelated lawsuit. However, before that settlement came to pass, Quail secretly transferred the money to its parent company, when was then in bankruptcy proceedings.
But the third party, Jewel Owner Ltd. filed an writ of garnishment under Rule B, sending Quail into bankruptcy in the U.S., which led others who had been suing the company to try to get their hands on the $5 million.
A federal judge in Miami thought he had unwound the messy affair, and set a schedule for various parties to receive a distribution from the funds, when World Wide Supply OU filed its own writ of garnishment for money it says it was owed by Quail.
The other parties objected to the emergency filing, arguing that World Wide Supply's attorney had represented Viagens during its legal battle with Quail, and therefore trumped up a phony "emergency" on his new clients behalf when he was well aware of when and how funds would be transferred.
Based on this knowledge, the parties argued, World Wide Supply should have intervened in the proceedings earlier, and that if it has any claim at all, it is against Quail and not the other parties or the money they are expecting to receive through the underlying settlement.
A magistrate judge recommended that World Wide Supply's Rule B. attachment be vacated, concluding, "Quite simply, the funds [at issue] were no longer the property of Quail at the time Plaintiff sought to attach them. Thus, Plaintiff's attachment was invalid and must be vacated."
The district court adopted the magistrate's recommendation, and World Wide Supply appealed to the 11th Circuit.
But here too, its argument that it was entitled to a portion of the funds -- roughly $137,698 -- proved unpersuasive.
In a per curiam opinion, a three-judge panel held that World Wide Supply had misinterpreted the law and the court's ruling in order to essentially shoe-horn its way into the dispersal of funds.
"Plaintiff's reading of Rule B(3)(a) therefore holds no water, either as a stand-alone interpretation or as applied to this case," the opinion says.