In June 2023, Shawn Steele borrowed $299,243 from Pen Air Credit Union to buy a 34-foot Cape Horn recreational boat called Fan-Dane-Go. The loan was secured by a First Preferred Ship Mortgage recorded with the U.S. Coast Guard.
Steele stopped making payments. By September 2024, Pen Air declared him in default and demanded the full outstanding balance of $335,375. Steele ignored the demands.
Pen Air sued in federal court in New Jersey, where the boat was sitting at Seaport Inlet Marina in Belmar. The bank pursued two tracks simultaneously: an in rem claim against the boat itself (asking the court to seize and sell it) and an in personam claim against Steele personally for the breach of contract. The court issued an arrest warrant for the vessel, and it was seized in May 2025.
Steele, a Florida resident, moved to dismiss the personal claim against him arguing New Jersey had no business dragging him into court there. According to Steele, he lived in Florida, the loan was made in Florida, and he never purposefully did anything in New Jersey related to the loan.
The court addressed the question of whether a New Jersey federal court could exercise personal jurisdiction over an out-of-state boat owner just because his vessel happened to be docked in New Jersey.
Personal jurisdiction requires that a defendant have sufficient “minimum contacts” with the forum state so that being sued there doesn’t offend basic fairness. In admiralty cases, the analysis looks at whether the defendant purposefully availed himself of the state. In other words, did the defendant chose to engage with it in a way that made being sued there a foreseeable consequence.
The court said yes to jurisdiction on two independent grounds.
First, under admiralty principles, the mere presence of a defendant’s vessel in the state is enough to establish minimum contacts for personal jurisdiction over the owner. A New Jersey court reached the same conclusion in a nearly identical case in 2001, and this court found that reasoning persuasive and applied it here.
Second, even setting that principle aside, Steele himself chose to store the boat in New Jersey, at a New Jersey marina, under a storage agreement, during the same period he was in default. That voluntary choice to dock the boat in New Jersey while failing to pay on the loan made it entirely foreseeable that litigation would follow him there. The court put it plainly: Steele knew the consequences of default would land in New Jersey, so he should have expected to answer for it there.
On the fairness side, the court noted that keeping the personal claim in New Jersey alongside the vessel arrest proceeding made practical sense. New Jersey also has a real interest in overseeing a commercial dispute involving a boat stored within its borders under contract with a local marina.
Steele’s motion to dismiss was denied. Steele has to defend himself in New Jersey.
The Takeaway
If you own a documented vessel secured by a ship mortgage and you default on the loan, wherever your boat is sitting is likely where you’ll be sued regardless of where you live or where the loan was signed. Borrowers should understand that mooring their vessel in another state doesn’t insulate them from jurisdiction there. Lenders, meanwhile, can take some comfort knowing that vessel location gives them meaningful leverage in choosing a favorable forum.
This post is for general informational purposes only and does not constitute legal advice. Contact a maritime attorney for guidance on your specific situation.