Silver Star Enterprises, Inc. v. M/V Saramacca ( 1994 )

UNITED STATES COURT OF APPEALS
FIFTH CIRCUIT
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No. 92-9572
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SILVER STAR ENTERPRISES, INC., ET AL.,
Plaintiffs-Appellees,
versus
M/V SARAMACCA, Her Engines, Tackle,
Apparel, Etc., in rem,
Defendant-Appellant.
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Appeal from the United States District Court
for the Eastern District of Louisiana
________________________________________________
(April 21, 1994)
Before HENDERSON,* SMITH, and EMILIO M. GARZA, Circuit Judges.
EMILIO M. GARZA, Circuit Judge:
Silver Star Enterprises, Inc. ("Silver Star") brought an
action in rem to foreclose on two preferred mortgages on the M/V
SARAMACCA, a vessel of the Republic of Suriname. Prejudgment
arrest of the vessel occurred in the Port of New Orleans. The
owner of the M/V SARAMACCA appeals several rulings of the district
court regarding the foreclosure action, including the court's order
for interlocutory sale of the vessel pursuant to Rule E(9)(b) of
the Supplemental Rules for Certain Admiralty and Maritime Claims of
the Federal Rules of Civil Procedure. We dismiss the appeal of
certain rulings pursuant to the separate document requirement of
*
Circuit Judge of the Eleventh Circuit, sitting by designation.
Fed. R. Civ. P. 58, and dismiss the appeal of another ruling for
lack of appellate jurisdiction. Consequently, the only issue
before us is the propriety of the interlocutory sale. Because it
is undisputed that the owner of the M/V SARAMACCA failed to secure
the release of the vessel during the seven months between the time
of arrest and the sale order, we affirm the court's interlocutory
sale order and vacate our prior order which stayed the sale of the
vessel pending appeal.
I
Scheepvaart Maatschappij Suriname, N.V. ("SMS"), an agency of
the Republic of Suriname, is the owner of the M/V SARAMACCA. In
1989 and 1990, Silver Star took two preferred mortgages on the M/V
SARAMACCA as security for certain loans. Those mortgages allegedly
secured an amount up to $1.3 million.
When SMS defaulted on the underlying loans, Silver Star
brought an action in rem to foreclose on the two foreign ship
mortgages. The district court had subject matter jurisdiction over
the action pursuant to an exception to the Federal Sovereign
Immunities Act ("FSIA"), 28 U.S.C. § 1602 et seq. (1988), which
provides that "[a] foreign state shall not be immune from the
jurisdiction of the courts of the United States in any action
brought to foreclose a preferred mortgage . . . ."1 28 U.S.C.
1
"The FSIA is the exclusive means by which a foreign state, as that
term is defined in the Act, may be sued in a United States federal court. Under
the FSIA, a foreign state is immune from suit))and the district court lacks
subject matter jurisdiction))unless one of the specific exceptions contained in
sections 1605-1607 is found to apply." Forsythe v. Saudi Arabian Airlines Corp.,
885 F.2d 285, 288 (5th Cir. 1989).
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§ 1605(d). As part of its foreclosure action, Silver Star effected
the prejudgment arrest of the M/V SARAMACCA on April 15, 1992.2 On
June 8, 1992, SMS moved to dismiss Silver Star's complaint on the
ground that Silver Star was a dissolved corporation with no
capacity to sue or contract. By minute entry, the district court
denied the motion to dismiss. The court did not sign or enter a
separate judgment.
On August 18, 1992, Silver Star moved for the interlocutory
sale of the M/V SARAMACCA pursuant to Rule E(9)(b) of the
Supplemental Rules for Certain Admiralty and Maritime Claims of the
Federal Rules of Civil Procedure.3 The district denied Silver
Star's motion without prejudice.
On the same day that it moved for the sale of the vessel,
Silver Star also moved for summary judgment. On November 18, 1992,
the district court signed a minute entry granting Silver Star
partial summary judgment in the amount of $728,600, which the court
found due and owing to Silver Star. The court did not sign or
2
See 28 U.S.C. § 1610(e) ("The vessels of a foreign State shall not
be immune from arrest in rem, interlocutory sale, and execution in actions
brought to foreclose a preferred mortgage as provided in section 1605(d).").
3
Rule E(9)(b) provides:
If property that has been attached or arrested is perishable, or
liable to deterioration, decay, or injury by being detained in
custody pending the action, or if the expense of keeping the
property is excessive or disproportionate, or if there is
unreasonable delay in securing the release of property, the court,
on application of any party or of the marshal, or other person or
organization having the warrant, may order the property or any
portion thereof to be sold; and the proceeds, or so much thereof as
shall be adequate to satisfy any judgment, may be ordered brought
into court to abide the event of the action; or the court may, upon
motion of the defendant or claimant, order delivery of the property
to the defendant or claimant, upon the giving of security in
accordance with these rules.
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enter a separate judgment. By minute entry dated November 25,
1992, the court clarified its earlier minute entry by finding that
an amount up to $1.3 million was secured by the two mortgages. The
court also stated that the purpose of the non-jury trial would be
to determine what amount beyond $728,600 was due and owing to
Silver Star. Again, the court did not sign or enter a separate
judgment.
On November 19, 1992, Silver Star renewed its motion for the
interlocutory sale of the M/V SARAMACCA, citing the excessive
expense of keeping the vessel under seizure and the unreasonable
delay taken by SMS in posting security for the release of the
vessel. On November 20, 1992, the district court granted the
motion and ordered that the vessel be sold by public auction on
December 24, 1992. The court set forth its order for interlocutory
sale on a separate document.
On December 1, 1992, one day before trial, SMS filed motions
to reconsider the grant of partial summary judgment and the
interlocutory sale order, as well as a motion to dismiss for lack
of subject matter jurisdiction. All the motions were premised on
SMS's argument that it had redeemed the mortgages in Suriname on or
around November 27, and that its redemption divested the district
court of subject matter jurisdiction since jurisdiction was
originally premised upon an action to foreclose on preferred
mortgages. By minute entry dated December 2, 1992, the motions
were denied. The court did not sign or enter a separate judgment.
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At the one-day trial, SMS stipulated to certain amounts due
and owing to Silver Star, and preserved for appeal its argument
that the alleged redemption of the mortgages divested the district
court of subject matter jurisdiction. The only issue at trial was
whether $24,800 in interest and finance charges relating to a
certain loan were owed to Silver Star. The district court ruled
that this item was also recoverable. The court delayed entry of
final judgment until such time as the remaining claims of other
creditors were resolved.
After trial and before the auction date, SMS sought the
release of the vessel by providing substitute security to Silver
Star. A dispute between SMS and Silver Star as to the appropriate
amount of the security prompted SMS to file a motion to fix
security for release of the vessel. The motion was opposed by
certain unsecured creditors. By minute entry dated December 22,
1992, the district court ordered that if SMS wanted the vessel
released and the sale cancelled, it had to post a bond in favor of
all creditors, whether secured or unsecured. The court did not
sign or enter a separate judgment.
On December 23, 1992, SMS filed its notice of appeal and filed
an emergency motion with this Court to stay the sale of the ship.
We granted SMS's motion for stay, pending the resolution of its
appeal. On appeal, SMS contends that the district court:
(1) erred in denying its motion to dismiss based on Silver Star's
alleged lack of capacity to sue and contract; (2) erred in granting
partial summary judgment in favor of Silver Star; (3) erred in
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ordering the interlocutory sale of the M/V SARAMACCA; (4) erred in
denying its motions for reconsideration of the partial summary
judgment and the interlocutory sale order; (5) erred in denying its
motion to dismiss for lack of subject matter jurisdiction; and (6)
erred in ordering that SMS post special release bonds in favor of
the intervening plaintiffs who held unsecured claims against the
M/V SARAMACCA.
II
A
Procedural and jurisdictional defects
We initially address Silver Star's motion to dismiss certain
issues on appeal for failure to satisfy the separate document
requirement of Fed. R. Civ. P. 58. Rule 58 provides in part that
"[e]very judgment shall be set forth on separate document. A
judgment is effective only when so set forth and when entered as
provided in Rule 79(a)." Rule 79(a) of the Federal Rules of Civil
Procedure requires that all judgments and orders filed in each case
be entered on the civil docket kept by the clerk of the district
court. SMS appeals, inter alia, from the district court's denial
of its motion to dismiss based on Silver Star's alleged lack of
capacity to sue or contract, the court's grant of partial summary
judgment for Silver Star, the court's denial of its motions for
reconsideration, and the court's denial of its motion to dismiss
for lack of subject matter jurisdiction. The record demonstrates
that the district court evidenced those rulings by minute entries
only, and never signed or entered a separate judgment regarding
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those rulings. We therefore hold that the appeal from those
rulings is premature under the separate document requirement of
Rule 58.4
The record reflects that the interlocutory sale order was set
forth in a separate document and entered on the clerk's civil
docket. The interlocutory sale order therefore satisfied the
requirements of Rule 58. We also have appellate jurisdiction over
the sale order pursuant to 28 U.S.C. § 1292(a)(3) (1988),5 because
the sale order effectively terminated SMS's rights to title and
possession of the M/V SARAMACCA. See Salazar v. Atlantic Sun, 881
F.2d 73, 75 (3d Cir. 1989) (holding that a district court's
confirmation order of its prior interlocutory sale order was
appealable under § 1292(a)(3) because the confirmation order
effectively terminated the owner's rights to title and possession
of the vessel). The district court's interlocutory sale order also
falls within the collateral order exception to the final order
rule, as the sale order affects rights that will be irretrievably
lost in the absence of an immediate appeal. See Coopers & Lybrand
v. Livesay, 437 U.S. 463, 468, 98 S. Ct. 2454, 2457-58, 57 L. Ed.
2d 351 (1978) (stating that to fall within the collateral order
4
We need not decide whether those rulings were final orders or
appealable interlocutory orders because the separate document requirement of Rule
58 applies equally to both kinds of decisions. See Theriot v. ASW Well Service,
Inc., 951 F.2d 84, 88 (5th Cir. 1992) ("Irrespective of whether the decision of
the district court . . . is otherwise appealable as a final order or as an
interlocutory order under [28 U.S.C.] § 1292(a)(3), it still must comply with
Rules 58 and 79(a) before an appeal can be taken.").
5
Section 1292(a)(3) provides that "[i]nterlocutory decrees of such
district courts or the judges thereof determining the rights and liabilities of
the parties to admiralty cases in which appeals from final decrees are allowed."
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exception, the order must (1) conclusively determine the disputed
question, (2) resolve an important issue completely separate from
the merits of the action, and (3) be effectively unreviewable on
appeal from a final judgment).6
As for the court's ruling that SMS must post a bond in favor
of all creditors, the record reflects that the appeal from this
ruling is premature under Rule 58.7 Because Silver Star does not
object to the appeal from that ruling, however, we are free to
entertain that appeal if the prerequisites for appellate
jurisdiction are met.8 "To be appealable, an order must be final,
it must fall within the specific class of interlocutory orders made
appealable by statute, or it must fall within some jurisprudential
exception." Lakedreams v. Taylor, 932 F.2d 1103, 1107 (5th Cir.
6
As an appellate court, we also have the obligation to satisfy
ourselves of the jurisdiction of the district court. When the action was filed,
it is undisputed that the district court had subject matter jurisdiction over the
action pursuant to an exception to the FSIA. See 28 U.S.C. § 1605(d). To the
extent that SMS argues that its alleged redemption of the mortgages in Suriname
divested the district court of jurisdiction, we note that the redemption issue
relates not to jurisdiction, but to the merits of SMS's action to foreclose on
the two ship mortgages. That the alleged redemption of the mortgages may have
been a valid ground to dismiss the cause of action on the merits does not change
the fact that the district court had jurisdiction over the action because it was
one "brought to foreclose a preferred mortgage." Id. We further note that
generally speaking, "[f]ederal jurisdiction . . . depends on the state of facts
when the suit is filed, and is not lost by a change in the facts afterwards."
Brelsford v. Whitney Trust & Sav. Bank, 69 F.2d 491, 492 (5th Cir. 1934); see
also Molett v. Penrod Drilling Co., 872 F.2d 1221, 1227 (5th Cir.) (stating that
in a diversity suit, jurisdiction is ordinarily "determined at the commencement
of the lawsuit, such that subsequent occurrences will not divest the court of
subject-matter jurisdiction"), cert. denied, 493 U.S. 1003, 110 S. Ct. 563, 107
L. Ed. 2d 558 (1989).
7
The district court's order was not set forth in a separate document.
8
Rule 58 is not a jurisdictional rule, and thus its requirements may
be waived by the parties. See Bankers Trust Co. v. Mallis, 435 U.S. 381, 387,
98 S. Ct. 1117, 1121, 55 L. Ed. 2d 357 (1978) ("The same principles of
commonsense . . . that led the Court . . . to conclude that the technical
requirements for a notice of appeal were not mandatory where the notice ``did not
mislead or prejudice' the appellee demonstrate that parties to an appeal may
waive the separate-judgment requirement of Rule 58.").
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1991) (citations omitted). The district court's ruling does not
fall within any of these categories. The ruling is not a final
judgment because it did not end the litigation on the merits and
leave nothing for the court to do but execute judgment. See 28
U.S.C. § 1291 (1988); Askanase v. Livingwell, Inc., 981 F.2d 807,
810 (5th Cir. 1993) ("A decision if final when it ``ends the
litigation on the merits and leaves nothing for the court to do but
execute the judgment.'" (attribution omitted)). The ruling also
does not constitute an appealable interlocutory order, as the
court's order))requiring that SMS post a bond in favor of all
creditors before the vessel could be released))made no
determination of the rights and liabilities of the parties.9
Lastly, the court's ruling does not fall within a jurisprudential
exception to the final order rule. See Lakedreams, 932 F.2d at
1107 n.7 (citing the recognized exceptions of the collateral order
doctrine, hardship or irreparable injury, and practical finality).
We reject Silver Star's argument that we have appellate
jurisdiction over the court's ruling))that SMS must post a bond in
favor of all creditors to effect the release of the vessel))because
that ruling is "inextricably entwined" with the court's
interlocutory sale order. See, e.g., People of State of Illinois
v. Peters, 861 F.2d 164, 166 (7th Cir. 1988) (stating that when an
ordinarily unappealable interlocutory order is inextricably
entwined with an appealable interlocutory order, the former may be
9
It is undisputed that the court's order did not fall within the other
categories of appealable interlocutory orders. See 28 U.S.C. § 1292(a).
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reviewed at the same time "if, but only if, there are compelling
reasons for not deferring the appeal of the former to the end of
the lawsuit . . . ."). In Peters, the court held that a
preliminary injunction which froze the appellant's assets was
"inextricably entwined" with an order appointing a receiver for
those assets. Id., 861 F.2d at 166. There the court noted that if
it had ultimately vacated the injunction but let the receivership
stand for lack of jurisdiction, the appellant would not have
obtained any benefit from his successful appeal of the appealable
injunction))i.e., the receiver still would have controlled the
assets. Id. Here, if we should ultimately vacate the
interlocutory sale order, SMS would get the benefit of not having
the ship sold, apart from the amount of security it must thereafter
post to effect the release of the vessel. We therefore hold that
the two orders are not "inextricably entwined" for purposes of
exercising pendent appellate jurisdiction. See id. (stating that
the concept of pendent appellate jurisdiction "is not to be used
for the appeal of normally unappealable interlocutory orders that
happen to be related, even closely related, to the appealable
order"); see also Ackerman v. Oryx Communications, Inc., 810 F.2d
336, 339-40 (2d Cir. 1987); Kershner v. Mazurkiewicz, 670 F.2d 440(3d Cir. 1982) (en banc). Consequently, the only issue properly
before is whether the district court erred in ordering the
interlocutory sale of the vessel under Rule E(9)(b).10
10
SMS also argues that the district court's various interlocutory
orders are appealable because they produced and merged into the court's
appealable interlocutory sale order. We reject this argument because the record
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B
Propriety of the interlocutory sale
In its renewed motion for interlocutory sale, Silver Star
cited (1) the excessive expense of keeping the vessel under
seizure, and (2) the unreasonable delay in securing the release of
the vessel. Both factors constitute valid and independent grounds
for an interlocutory sale. See Fed. R. Civ. P. Supp. R. E(9)(b).
The district court granted the motion and ordered the sale of the
vessel, but made no separate findings of fact or conclusions of law
supporting its order.11 The court did state in its order that
Silver Star had moved the court for the interlocutory sale of the
vessel pursuant to Rule E(9)(b) and that the "owner of the M/V
SARAMACCA ha[d] failed to furnish security . . . ." It is
undisputed that SMS failed to post security for the release of the
vessel during the seven months between the time of arrest and the
court's sale order.12 This delay in securing the release of the
vessel was unreasonable. See Merchants Nat'l Bank v. Dredge Gen.
G.L. Gillespie, 663 F.2d 1338, 1341-42 (5th Cir. 1981) (holding
that the failure to secure the release of a vessel during the eight
reflects that the sale order was separate and distinct from the court's other
orders.
11
Because we are sufficiently informed as to the district court's
rationale, and the record contains undisputed facts which support the court's
ruling, a remand for findings of fact and conclusions of law is unnecessary. See
Armstrong v. Collier, 536 F.2d 72, 77 (5th Cir. 1976) (stating that a remand for
failure to comply with Fed. R. Civ. P. 52(a) is not required if a complete
understanding of the issues may be had without the aid of separate findings); 9
Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2577
(1971).
12
The vessel was arrested on April 15, 1992. The district court's
interlocutory sale order was filed on November 20, 1992.
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months after arrest constituted an unreasonable delay), cert.
dismissed, 456 U.S. 966, 102 S. Ct. 2263, 72 L. Ed. 2d 865 (1982);
Ferrous Fin. Serv. Co. v. O/S Arctic Producer, 567 F. Supp. 400,
401 (W.D. Wash. 1983) (holding that the failure to secure the
release of a vessel during the four months after arrest constituted
an unreasonable delay). The interlocutory sale was therefore
proper pursuant to Rule E(9)(b).
III
For the foregoing reasons, we DISMISS from this appeal all
issues except the propriety of the district court's interlocutory
sale order. We AFFIRM the district court's judgment regarding the
interlocutory sale of the vessel, and REMAND to the district court
to reschedule the date of the sale. We further VACATE our prior
order staying the sale of the vessel.
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