EDITH BROWN CLEMENT, Chief Judge, United States District Court
Before the Court is a Motion to Set Bond and to Increase Security filed by defendants Kennedy Funding, Inc.; Cordell Funding, L.L.L.P.; Ashton Global Enterprises, Inc.; Coastal Funding, Inc.; J.C.W. Funding, Inc.; K.S.I. Funding, Inc.; Lexis Funding, Inc.; Pillar Funding, Inc.; and Faraglioni, Ltd. (collectively "the Kennedy Group"). For the following reasons, the Court increases plaintiff Winchester Navigation, Ltd.'s security to $8,000,000.00.
BACKGROUND
On April 5, 2001, the M/V ENCHANTED CAPRI was sold at a Court-ordered auction to the Kennedy Group, which paid $4 million in cash and $4.9 million in credit pursuant to a mortgage it held against Norsong Shipping Limited ("Norsong"), the previous owner of the boat. Plaintiff Winchester Navigation, Ltd. ("Winchester") objected to the sale, contending that it was the true owner of the ENCHANTED CAPRI, that Norsong's mortgage was invalid, and that the Kennedy Group's purchase should therefore be vacated. Because Winchester lacked proof to back up its allegations, the Court confirmed the sale. Winchester took an interlocutory appeal to the Fifth Circuit, and the appeal is currently awaiting disposition.
In August 2001, Winchester attached the ENCHANTED CAPRI in two separate state court actions, alleging that it suffered damages because the Kennedy Group fraudulently purchased the ship with an invalid mortgage. The issues in the state court actions are identical to the issues currently on appeal to the Fifth Circuit. The Kennedy Group removed both cases to this Court, which chose to exercise its in rem jurisdiction over the ENCHANTED CAPRI to the exclusion of the state courts in order to avoid the massive problems that might result from concurrent jurisdiction over the same heavily-litigated piece of property. The Kennedy Group now asks the Court to increase Winchester's security or to set a release bond so that it may sell or charter the ENCHANTED CAPRI.
LAW AND ANALYSIS
Winchester originally arrested the ENCHANTED CAPRI in Louisiana state court pursuant to a non-resident writ of attachment. Article 3544 of the Louisiana Code of Civil Procedure provides that security for a non-resident writ of attachment "shall not exceed two hundred fifty dollars, but on proper showing the court may increase the security to any amount not exceeding the amount of the demand." LA. CODE CIV. PROC. ANN. art 3544 (West 1961).
In light of the charges of bad faith and fraud that have been levied by both parties and the mystery surrounding Faraglioni, Ltd.'s involvement in the case, the Court cannot place complete confidence in the ownership claims of either party. However, the Kennedy Group, which has been legally recognized as the owner of the ENCHANTED CAPRI, has submitted evidence that it lost approximately $900,000.00 by missing an opportunity to charter the vessel. See Rec. Doc. No. 474 at Ex. 1. The Court cannot ignore that large a waste of resources and will not allow such substantial losses to continue, especially since Winchester can always seek recourse against Kennedy after it has proof of the alleged fraud. Accordingly, the Court finds that Kennedy's current and probable future financial losses warrant the imposition of increased security on Winchester, whose claim against the ENCHANTED CAPRI remains tenuous and whose financial viability has been called into question.
Immediately after the state court suits were removed, Faraglioni appeared in this Court for the first time and claimed that it owned the ENCHANTED CAPRI. Winchester responded that Faraglioni was merely a shell corporation set up by the Kennedy Group, and Faraglioni strenuously and repeatedly denied this claim. See Rec. Docs. No. 351 and 376. However, on October 4, 2001, Faraglioni and the Kennedy Group filed a joint stipulation, stating that "they will not contest Winchester's allegations that [the Kennedy Group] and Faraglioni are one and the same." Rec. Doc. No. 441.
Louisiana law allows security to be set at an amount up to the plaintiffs demand. See LA. CODE CIV. PROC. ANN. art 3544. Although the extent and nature of Winchester's demand is unclear, Winchester has offered to release the vessel if Kennedy would sign a letter of undertaking in the amount of $8,000,000.00. See Rec. Doc. No. 420 at 13. In light of this offer, the Court finds that Winchester's demand is for $8,000,000.00 and will increase its security to that amount. The $8,000,000.00 security will suffice for both of Winchester's attachments. However, if Winchester fails to post this amount in the registry of court within 10 working days of the entry of this order, both attachments will be immediately vacated.