Columbus-America Discovery Group v. Atlantic Mutual Insurance

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
COLUMBUS-AMERICA DISCOVERY
GROUP,
Plaintiff-Appellant,
and
TRUSTEES OF COLUMBIA UNIVERSITY IN
THE CITY OF NEW YORK; JACK F.
GRIMM; JOANNE LAMPE CHARLTON,
Personal Representative of the
Estate of Harry G. John,
Intervenors-Plaintiffs,
v.
ATLANTIC MUTUAL INSURANCE
COMPANY; COMMERCIAL UNION
ASSURANCE COMPANY, LIMITED;
No. 98-2120
ROYAL INSURANCE COMPANY,
LIMITED; SUN ALLIANCE GROUP;
GREOF AMERICA CORPORATION;
SUPERINTENDENT OF INSURANCE OF THE
STATE OF NEW YORK,
Claimants-Appellees,
and
THE UNIDENTIFIED WRECKED AND
ABANDONED SAILING VESSEL, its
engines, tackle, apparel,
appurtenances, cargo, etc., located
within a box defined by the
following coordinates: Northern
Boundary--31 degrees 37 minutes
North Latitude; Southern
Boundary--31 degrees 33 minutes
North Latitude; Western
Boundary--77 degrees 2 minutes
West Longitude, (believed to be the
S.S. Central America), in rem,
Defendant,
THE INSURANCE COMPANY OF NORTH
AMERICA; COMMERCIAL UNION
INSURANCE COMPANY; WILLIAM H.
MCGEE & COMPANY, INCORPORATED;
ROYAL INSURANCE; ROYAL INSURANCE
COMPANY OF AMERICA; CHUBB &
SON, INCORPORATED; SALVAGE
ASSOCIATION; UNDERWRITERS AT
LLOYD'S; LONDON ASSURANCE;
ALLIANCE ASSURANCE COMPANY,
LIMITED; GUARDIAN ROYAL
EXCHANGE; ROYAL EXCHANGE
ASSURANCE; INDEMNITY MUTUAL
MARINE ASSURANCE COMPANY;
INDEMNITY MARINE ASSURANCE
COMPANY, LIMITED; SUN INSURANCE
COMPANY OF NEW YORK; SUN
INSURANCE OFFICE, LIMITED; MARINE
INSURANCE COMPANY, LIMITED;
INDEMNITY MARINE; LONDON
ASSOCIATED CORPORATION; ROYAL
ASSOCIATED CORPORATION; ROYAL
MARINE; INDEMNITY MUTUAL; ROYAL
EXCHANGE & LONDON OFFICES;
UNION BANK OF LONDON; DENNIS
STANDEFER; THE R/V LIBERTY
2
STAR, her master, officers, crew, and
all persons aboard; BOARD OF
TRUSTEES OF COLUMBIA UNIVERSITY;
LAMONT-DOHERTY GEOLOGICAL
INSTITUTE; S. S. GEORGE LAW
PARTNERSHIP; BOSTON SALVAGE
CONSULTANTS, INCORPORATED,
Claimaints.
COLUMBUS-AMERICA DISCOVERY
GROUP,
Plaintiff-Appellant,
and
TRUSTEES OF COLUMBIA UNIVERSITY IN
THE CITY OF NEW YORK; JACK F.
GRIMM; JOANNE LAMPE CHARLTON,
Personal Representative of the
Estate of Harry G. John,
Intervenors-Plaintiffs,
No. 98-2198
v.
ATLANTIC MUTUAL INSURANCE
COMPANY; COMMERCIAL UNION
ASSURANCE COMPANY, LIMITED;
ROYAL INSURANCE COMPANY,
LIMITED; SUN ALLIANCE GROUP;
GREOF AMERICA CORPORATION;
SUPERINTENDENT OF INSURANCE OF THE
STATE OF NEW YORK,
Claimants-Appellees,
and
3
THE UNIDENTIFIED WRECKED AND
ABANDONED SAILING VESSEL, its
engines, tackle, apparel,
appurtenances, cargo, etc., located
within a box defined by the
following coordinates: Northern
Boundary--31 degrees 37 minutes
North Latitude; Southern
Boundary--31 degrees 33 minutes
North Latitude; Western
Boundary--77 degrees 2 minutes
West Longitude, (believed to be the
S.S. Central America), in rem,
Defendant,
THE INSURANCE COMPANY OF NORTH
AMERICA; COMMERCIAL UNION
INSURANCE COMPANY; WILLIAM H.
MCGEE & COMPANY, INCORPORATED;
ROYAL INSURANCE; ROYAL INSURANCE
COMPANY OF AMERICA; CHUBB &
SON, INCORPORATED; SALVAGE
ASSOCIATION; UNDERWRITERS AT
LLOYD'S; LONDON ASSURANCE;
ALLIANCE ASSURANCE COMPANY,
LIMITED; GUARDIAN ROYAL
EXCHANGE; ROYAL EXCHANGE
ASSURANCE; INDEMNITY MUTUAL
MARINE ASSURANCE COMPANY;
INDEMNITY MARINE ASSURANCE
COMPANY, LIMITED; SUN INSURANCE
COMPANY OF NEW YORK; SUN
INSURANCE OFFICE, LIMITED; MARINE
INSURANCE COMPANY, LIMITED;
4
INDEMNITY MARINE; LONDON
ASSOCIATED CORPORATION; ROYAL
ASSOCIATED CORPORATION; ROYAL
MARINE; INDEMNITY MUTUAL; ROYAL
EXCHANGE & LONDON OFFICES;
UNION BANK OF LONDON; DENNIS
STANDEFER; THE R/V LIBERTY STAR,
her master, officers, crew, and all
persons aboard; BOARD OF
TRUSTEES OF COLUMBIA UNIVERSITY;
LAMONT-DOHERTY GEOLOGICAL
INSTITUTE; S. S. GEORGE LAW
PARTNERSHIP; BOSTON SALVAGE
CONSULTANTS, INCORPORATED,
Claimaints.
Appeals from the United States District Court
for the Eastern District of Virginia, at Norfolk.
J. Calvitt Clarke, Jr., Senior District Judge.
(CA-87-363-N)
Argued: March 2, 1999
Decided: February 8, 2000
Before WIDENER, WILLIAMS, and
MICHAEL, Circuit Judges.
_________________________________________________________________
Affirmed in part, vacated in part, reversed in part, and remanded with
instructions by published opinion. Judge Widener wrote the opinion,
in which Judge Williams and Judge Michael joined.
_________________________________________________________________
5
COUNSEL
ARGUED: R. Hewitt Pate, HUNTON & WILLIAMS, Richmond,
Virginia; Richard T. Robol, COLUMBUS-AMERICA DISCOVERY
GROUP, INC., Columbus, Ohio, for Appellant. George Robert Daly,
I, BIGHAM, ENGLAR, JONES & HOUSTON, New York, New
York; Guilford D. Ware, CRENSHAW, WARE & MARTIN, P.L.C.,
Norfolk, Virginia, for Appellees. ON BRIEF: Sarah C. Johnson, John
S. Martin, HUNTON & WILLIAMS, Richmond, Virginia; Robert W.
Trafford, James D. Curphey, PORTER, WRIGHT, MORRIS &
ARTHUR, Columbus, Ohio, for Appellant. Joseph A. Yamali,
BIGHAM, ENGLAR, JONES & HOUSTON, New York, New York;
David H. Sump, CRENSHAW, WARE & MARTIN, P.L.C., Norfolk,
Virginia, for Appellees.
_________________________________________________________________
OPINION
WIDENER, Circuit Judge:
The appellant, Columbus-America Discovery Group, appeals three
orders of the district court: an order entering a previously signed
agreed order of settlement and dismissal, a sua sponte order of the
district court partially vacating the previously entered agreed dis-
missal order, and a third order unsealing the inventory of the treasure
recovered by Columbus-America from the shipwreck S.S. Central
America. For the reasons that follow, we affirm in part, vacate in part,
reverse in part, and remand the case to the district court for further
proceedings consistent with this opinion.
I.
In 1857, the S.S. Central America sank in the Atlantic Ocean dur-
ing a powerful storm. Many lives were lost as well as substantial
sums of gold belonging to passengers and a large commercial ship-
ment of gold in route from California to New York. In 1988, after
years of searching, the Columbus-America Discovery Group, a group
of scientists, engineers, ocean explorers, and other experts led by sci-
entist and ocean engineer Thomas G. Thompson, found the sunken
6
ship at the bottom of the ocean 160 miles off the South Carolina
coast. (974 F.2d 455, 742 F. Supp. at 1330).
After finding the Central America, Columbus-America Discovery
Group (hereinafter referred to as Columbus-America or CADG)
brought an in rem proceeding in admiralty seeking to establish owner-
ship of and the right to salvage the defendant ship and its cargo of
gold and other artifacts. The district court found that Columbus-
America was a first salvor under substantive admiralty law and
thereby entitled to salvage the ship without interference and to the
exclusion of other salvors. In its order of August 18, 1989, the district
court granted Columbus-America an injunction which permanently
enjoined and restrained any other persons from conducting search,
survey, or other salvage operations of the site. Columbus-America
Discovery Group, Inc. v. Unidentified, Wrecked and Abandoned Sail-
ing Vessel, No. 87-363-N (E.D. Va. Aug. 18, 1989).
On September 29, 1989, the Underwriters and other insurers or
their successors-in-interest intervened in the in rem proceeding, each
claiming that it had underwritten the risk of loss and had paid claims
for portions of the lost gold which all together totaled approximately
$1,219,189.00. On April 3, 1990, the district court entered an order
closing the action to the filing of additional claims against the defen-
dant ship or to any items recovered therefrom whether recovered prior
thereto or subsequently. Columbus-America Discovery Group, Inc. v.
Unidentified, Wrecked and Abandoned Sailing Vessel , No. 87-363-N
(E.D. Va. April 3, 1990).
Following a trial, the district court entered its final order and opin-
ion on August 14, 1990 holding that the Underwriters had abandoned
any interest they may have had in the gold and that Columbus-
America was entitled to keep everything recovered from the ship.
Columbus-America Discovery Group, Inc. v. Unidentified, Wrecked
and Abandoned Sailing Vessel, 742 F. Supp. 1327, 1348 (E.D. Va.
1990). The Underwriters appealed and a divided panel of this court
held that the district court erred in applying the law of finds, rather
than the law of salvage. The panel remanded the case to the district
court to apply the law of salvage and for discovery and determination
of the appropriate salvage award for Columbus-America. Columbus-
7
America Discovery Group v. Atlantic Mut. Ins. Co., 974 F.2d 450,
468 (4th Cir. 1992), cert. denied, 507 U.S. 1000 (1993).
Following discovery and trial on remand, the district court entered
an order on November 18, 1993 finding that Columbus-America was
entitled to a salvage award of 90 percent of the recovered gold alleg-
edly insured by the Underwriters. An issue at that time, as now, was
the marketing of the gold. The district court found that all parties
agreed that a marketing plan was necessary. The court credited the
reasoning of several marketing experts who were of opinion that the
marketing plan should extend for some period of years. The court
instructed the parties to agree to a central authority to conduct market-
ing of the gold and to present the court with a detailed plan for mar-
keting, or if the parties could not agree, to make such
recommendations to the court. Unable to agree on which party should
act as the central marketing authority, the Underwriters asked the
court to direct an award to the parties in kind. In an order entered Jan-
uary 13, 1994, the district court denied this request, finding that this
approach was contrary to the Underwriters' earlier position, to the tes-
timony of the experts, and to the greater weight of the evidence on
the issue of marketing. The court then designated Columbus-America
as the central marketing authority based on the work Columbus-
America had already performed in consulting with numerous market-
ing experts, Columbus-America's collection of a great quantity of
information concerning marketing, and Columbus-America's far
greater interest in a successful and proper marketing because of its
investment in the project and its significantly higher share of the sal-
vage award.
The Underwriters again appealed, and Columbus-America cross-
appealed on the grounds that the individual Underwriters had not
established proof of what portion of the gold, if any, to which they
were actually entitled. A panel of this court affirmed the district
court's judgment that Columbus-America was entitled to a salvage
award of 90 per cent of the treasure. We also affirmed the district
court's order that the gold should be marketed as a whole with
Columbus-America acting as the central marketing authority.
8
Columbus-America Discovery Group v. Atlantic Mut. Ins. Co., 56
F.3d 556 (4th Cir.), cert. denied, 516 U.S. 938 (1995).1
On remand, the district court provided certain terms and conditions
under which Columbus-America was to proceed with marketing the
remaining gold. See order and judgment of April 19, 1996. Following
the death of the district court judge, Richard B. Kellam, the case was
reassigned to Judge Clarke, and he issued a very similar marketing
order on August 13, 1996.2
Over the following months, the relationship between the remaining
Underwriters and Columbus-America became more contentious.
Despite the marketing evidence relied on by the district court and the
district court's statement in its order of April 19, 1996 that "the prop-
erty has not yet been converted to money and will not be for some
five or more years," the Underwriters pushed for immediate sale of
the gold and their share of the proceeds or for division of the gold in
specie. Columbus-America sought to keep the gold together and
argued for the development of the long-range marketing approach
recommended by its marketing experts, which it argued would also
help protect and satisfy investors in the project. Between August 14,
1996 and May 1998, there were some 61 docket entries in the case,
the majority of which involved the marketing issue. On May 14,
1998, the district court announced that it had removed Columbus-
America as marketer. The court gave Columbus-America a choice --
it could (1) agree with the Underwriters to effect an in specie division
of the treasure or (2) leave the court to appoint the Underwriters to
handle marketing and sale of the treasure, but if the Underwriters
declined this appointment, it would appoint a special master or hire
a third party to do so. On May 19, 1998, counsel for both parties
signed a settlement agreement which stated that the parties agreed to
divide the treasure in specie. The agreement provided that the settle-
ment was conditioned, among other things, upon the following:
_________________________________________________________________
1 A more detailed account of the facts can be found at 742 F. Supp.
1327 (E.D. Va. 1990) and 974 F.2d 450 (4th Cir. 1992).
2 Judge Russell and Judge Hall from the original panel of this court
have since died.
9
The parties signing a "Dismissed Agreed" order dismissing
all claims of the parties with prejudice, including claims for
interest, attorneys fees, costs and custodial expenses. The
order will be delivered to Magistrate Judge Tommy Miller
as custodian thereof on or before May 29, 1998, to be
entered once the in specie division is performed . . . .
The agreement further stated that "[u]pon the failure of any of the
conditions set forth in paragraph 2, the parties agree that the settle-
ment will be null, void, and of no effect." Finally, the agreement
stated that:
In the event the settlement is completed as set forth in this
agreement, the endorsed "Agreed" Order as referenced in
paragraph 2(c) shall be delivered to Judge J. Calvitt Clarke,
Jr. for entry and upon the entry thereof, each party shall be
considered released from the other from all liability of any
nature whatsoever that may arise by virtue of any claim that
was or may have been asserted in the action.
The Settlement Agreement was signed by both parties and filed
with the court on May 21, 1998. As per the Settlement Agreement's
express condition, the agreed dismissal order was consented to and
signed on May 19, 1998 by counsel for both parties and given to
Magistrate Judge Miller to be held in escrow until completion of the
settlement. On June 17, 1998, the res was divided according to the
Settlement Agreement and the Underwriters took possession of their
portion.
Following the division of the res, but prior to the entry of the previ-
ously signed agreed dismissal order, Thomas G. Thompson,
Columbus-America's President, informed the court by letter to Mag-
istrate Judge Miller dated June 22, 1998 that Columbus-America
wished to withdraw from the Settlement Agreement and the agreed
dismissal order. Thompson stated in the letter that he regretted the
agreement to divide the treasure in specie and that he believed it pref-
erable to allow the Underwriters to market and sell the res as a whole.
A hearing was held on June 23, 1998 at which counsel for
Columbus-America moved for substitution of counsel and for a delay
10
in entering the proposed agreed order or alternatively for withdrawal
of Columbus-America's consent to the entry of the order. Addition-
ally, counsel requested that if the court denied the motions, the order
be changed to indicate that Columbus-America had seen, objected to,
and taken exception to entry of the order rather than be entered as an
agreed order as previously signed. The court denied the motions as
untimely and entered the agreed dismissal order as written, without
noting Columbus America's objection.3 Subsequently, however, on
July 1, 1998, the court entered a second order in which it vacated the
agreed dismissal order entered on June 23, 1998"to the extent it dis-
misses this in rem action against the Defendant wreck." Finally, in a
third order entered July 31, 1998, the court granted the Underwriters'
motion to unseal the inventory of recovered treasure. Columbus-
America now appeals these orders entered on June 23, July 1, and
July 31, 1998, which we address in turn.
II.
We first address the district court's authority to enter the original
"Dismissed Agreed" order that each party's counsel signed in accor-
dance with the Settlement Agreement.
A.
A trial court has inherent equitable power to enforce summarily a
settlement agreement "when the practical effect is merely to enter a
judgment by consent." Millner v. Norfolk & Western Ry. Co., 643
_________________________________________________________________
3 The court stated in its Memorandum Opinion of June 25, 1998:
A Settlement Agreement was executed stating how the division
would take place and when a pre-drafted and pre-signed agreed
dismissal order would be entered. All the contingencies in the
Settlement Agreement have been resolved and the agreement
was fully consummated by the parties as of June 17, 1998 [the
date on which the res was physically divided]. All that remained
to be done on June 23 was for the Court to enter the agreed dis-
missal order, which it did. At that point, it was too late for
CADG to reverse its assent to the completed in specie division,
withdraw from the fully consummated Settlement Agreement, or
recant its voluntary agreement to the dismissal order.
11
F.2d 1005, 1009 (4th Cir. 1981). However, if there is a material dis-
pute about the existence of a settlement agreement or the authority of
an attorney to enter a settlement agreement on behalf of his client, a
trial court must conduct a plenary evidentiary hearing to resolve that
dispute. Millner, 643 F.2d at 1009.
As a general rule, counsel of record have the apparent authority to
settle litigation on behalf of their client. Moore v. Beaufort County,
North Carolina, 936 F.2d 159, 163 (4th Cir. 1991). However, appar-
ent authority can be limited by the principal, "and if the limitation is
brought to the attention of the parties . . . the limitation must be
respected by such parties." Pasco County Peach Ass'n v. J.F. Solley
& Co., 146 F.2d 880, 883 (4th Cir. 1945); Restatement (Second) of
Agency § 125 (1958) (apparent authority terminates when third person
has notice of a manifestation by the principal that he no longer con-
sents).
Prior to the entry of the agreed dismissal order, Columbus-America
indicated that it wished to withdraw its consent to the Settlement
Agreement, which it did by sending a letter to Magistrate Judge Mil-
ler on June 22, 1998 and then by motion at the hearing before the dis-
trict court on June 23, 1998. Presumably, at least, the intent of the
letter was to revoke the apparent authority of Columbus-America's
attorneys, and under Millner, a separate hearing would have been
required to resolve any dispute as to counsel's authority. However,
without conducting a separate hearing, the district court denied these
motions as untimely.
While the district court apparently erred in failing to conduct a sep-
arate hearing on Columbus-America's objection to entry of the agreed
dismissal order, we are further of opinion that such error is not revers-
ible. Columbus-America does not dispute the existence of the Settle-
ment Agreement or that each of the conditions to entering the agreed
dismissal order was satisfied. The record also indicates that each con-
dition to the Settlement Agreement was either met or waived, leaving
only the entry of the agreed dismissal order to be completed. This
court has held that setting aside an otherwise valid agreement is not
justified because a party has second thoughts about the results. See
Young v. FDIC, 103 F.3d 1180, 1195 (4th Cir. 1997) (citing Petty v.
Timken Corp., 849 F.2d 130 (4th Cir. 1988)).
12
Any argument that Columbus-America's counsel may have lacked
authority to enter into the Settlement Agreement is without merit
because the record clearly shows that Thompson, Columbus-
America's President, authorized its attorney to execute the contract of
settlement at issue here.4 Plainly stated, a plenary hearing could only
have established that Columbus-America's attorney had actual
authority to execute the Settlement Agreement on May 19, 1998,
which he did. This evidence would have allowed the district court to
enforce summarily the Settlement Agreement by entering the agreed
dismissal order. Millner, 643 F.2d at 1009. Because the district
court's entry of the agreed dismissal order was correct, although for
a different reason, we affirm entry of the order. See Securities and
Exch. Comm'n v. Chenery Corp., 318 U.S. 80, 88 (1943) (a lower
court's decision must be affirmed if the result is correct although it
may have relied upon a different reason).
B.
We next address whether the district court had jurisdiction to
enforce the Settlement Agreement after entering the agreed dismissal
order. Federal courts are courts of limited jurisdiction whose power
is derived from the Constitution and statute, and that power cannot be
expanded by judicial decree. Kokkonen v. Guardian Life Ins. Co. of
Am., 511 U.S. 375, 377 (1994). Generally, a district court may not
enforce a Settlement Agreement unless "the agreement had been
approved and incorporated into an order of the court, or, at the time
the court is requested to enforce the agreement, there exists some
independent ground upon which to base federal jurisdiction." Fairfax
Countywide Citizens Ass'n v. Fairfax County, 571 F.2d 1299, 1303
(4th Cir. 1978). However, if the Settlement Agreement is approved
and incorporated into an order of the court, a breach of the agreement
is a violation of the order, and the district court possesses jurisdiction
_________________________________________________________________
4 In an affidavit signed on July 14, 1998, Columbus-America's Presi-
dent, Thompson, acknowledged that the Settlement Agreement was at his
instruction. Although the affidavit states that his authorization to settle
was given to comply with a perceived court order to settle, Columbus-
America does not in this appeal raise an issue of compulsion or duress
by the district court.
13
to enforce the agreement. Kokkonen, 511 U.S. at 381; Fairfax, 571
F.2d at 1303 n.8.
The agreed dismissal order signed by the parties in this case specif-
ically notes that "[t]he Court retains jurisdiction to enforce the settle-
ment of the parties and the prior Orders in this case." Columbus-
America Discovery Group, Inc. v. Unidentified, Wrecked and Aban-
doned Sailing Vessel, No. 87-363-N (E.D. Va. June 23, 1998). Under
Kokkonen and Fairfax, we hold the above quoted language is suffi-
cient to grant the district court jurisdiction to enforce specifically the
Settlement Agreement.
III.
We next address the district court's ability to partially vacate the
original agreed dismissal order entered June 23, 1998 by entering a
second order on July 1, 1998. Columbus-America asserts that the dis-
trict court lacked authority to modify terms of the agreed dismissal
order signed by the parties pursuant to the Settlement Agreement. We
agree.
As discussed supra, a district court has inherent jurisdiction and
equitable power to enforce certain agreements entered into during set-
tlement of litigation before that court. Millner , 643 F.2d at 1009.
Authority to enforce such an agreement, however, applies to the
agreement in its entirety, not to such selected parts that the court
deems appropriate. Ozyagcilar v. Davis, 701 F.2d 306, 308 (4th Cir.
1983). If the court determines that such a settlement agreement is only
a partial settlement, then it should reject the whole. See Wood v. Vir-
ginia Hauling Co., 528 F.2d 423, 426 (4th Cir. 1975) (district court
may either implement a complete settlement agreed to by the parties
or restore them to the status quo).
The Settlement Agreement entered into by Columbus-America and
the Underwriters was expressly conditioned upon the"[p]arties sign-
ing a `Dismissed Agreed' order dismissing all claims of the parties
with prejudice." The proposed agreed dismissal order stated in perti-
nent part:
14
On representation of the parties by their counsel that the par-
ties have completed the division of the res as set forth in the
Settlement Agreement signed on their behalf on May 19,
1998, all claims, matters, and issues raised in this case . . .
have been resolved to the satisfaction of the parties and all
court costs have been paid: it is ORDERED THAT:
1. This case is "DISMISSED AGREED" including
all claims, matters, issues, interest, attorneys' fees,
costs and custodial expenses incurred by the par-
ties being DISMISSED WITH PREJUDICE.
Moreover, the Settlement Agreement stated that upon completion of
the conditions of settlement, each party would be"considered
released from the other from all liability of any nature whatsoever that
may arise by virtue of any claim that was or may have been asserted
in the action." Columbus-America Discovery Group, Inc. v. Unidenti-
fied, Wrecked and Abandoned Sailing Vessel, No. 87-363-N (E.D. Va.
June 23, 1998) (Settlement Agreement).
On June 23, 1998, the district court entered the agreed dismissal
order, which by its terms, dismissed agreed with prejudice all claims
pursuant to a valid settlement agreement. Then, in its order of July 1,
1998, the court vacated the agreed Order "to the extent" that the
Agreed Order dismissed the in rem action against the Defendant
wreck, but left intact all other rights and responsibilities of the parties
under the Settlement Agreement. The district court stated two reasons
for its entry of the July 1, 1998 order: one, to retain in rem jurisdiction
over the wreck to protect the salvor-in-possession rights of
Columbus-America, and two, the court found as fact that there had
not been a meeting of the minds. The court noted that the parties "dis-
agree about whether their settlement agreement covers any future
treasure salvaged from the wreck" and "a dispute will inevitably arise
as to whether the Underwriters are entitled to any of it."
We first note that both Columbus-America and the Underwriters
agree that the Settlement Agreement eliminates the possibility of
claims between the parties over future salvage. Columbus-America
states in its brief that dismissal of all claims of the parties was a "key,
material term of the Agreement." [Blue brief pg 14]. The Underwrit-
15
ers also construe the Settlement Agreement as eliminating claims to
future salvage. In their brief, they state that"Underwriters confirm
that in accordance with the Settlement Agreement, they have no
future claim. Underwriters' position that the Settlement Agreement
settles all claims with prejudice, including rights to any future trea-
sure salvaged by CADG, is consistent with the understanding of
CADG." [Red brief pg 20]. Thus, contrary to the district court's asser-
tion and construction of the Settlement Agreement, the parties had a
meeting of the minds on the issue of future salvage. The Underwriters
have no claim in any future treasure salvage from the wreck, and we
so hold. Any contrary indication in the order of the district court of
July 1, 1999 is reversed.
The settlement was conditioned upon entering an order dismissing
"all claims, matters, and issues raised in this case." Columbus-
America Discovery Group, Inc. v. Unidentified, Wrecked and Aban-
doned Sailing Vessel, No. 87-363-N (E.D. Va. June 23, 1998) (Settle-
ment Agreement). The district court expressly reasoned that it
changed the terms of the agreed dismissal order to retain in rem juris-
diction over the shipwreck and to adjudicate the Underwriters' claims
to treasure recovered from the wreck in the future, claims the court
found would inevitably arise. By amending the original order, which
we and both parties interpret to deny all future claims of the Under-
writers to future treasure salvaged from the Central America, the dis-
trict court altered the Settlement Agreement by providing that future
claims between the parties were in fact not settled, rather were inevi-
table, and the court would retain jurisdiction to adjudicate these future
claims. The district court's alteration of the agreed dismissal order
had the effect of re-writing the Settlement Agreement by eliminating
a term to which both parties had already agreed, namely that the
Underwriters had no claim to any future salvage from the Central
America.
The order of the district court filed July 1, 1998 was premised in
part on its opinion that the Dismissed Agreed order, filed June 23,
1998, had "dismissed the in rem action with regard to the defendant
wreck." The order of July 1, 1998 then changed that part of the Dis-
missed Agreed order so that "the in rem action must remain open to
continue the court's jurisdiction over the defendant wreck." It stated
that such order "enabled the court to monitor CADG's activities as
16
salvor in possession and adjudicate any disputes with regard to trea-
sure salvaged by CADG in the future." The district court concluded
that
[a]ccordingly, the Agreed Dismissed order is hereby vacated
to the extent it dismisses this in rem action against the
defendant wreck. This order, however, in no way relieves
CADG and the Underwriters of the rights and responsibili-
ties under the Settlement Agreement.
As we have demonstrated above, there is no dispute with regard to
any claim by the Underwriters to treasure salvaged by CADG in the
future. There is no such claim by the Underwriters. So this support
for changing the Dismissed Agreed order filed June 23, 1998, does
not exist.
We do not agree with the district court that the Dismissed Agreed
order filed June 23, 1998 dismissed the in rem action with regard to
the defendant wreck. The order is with respect to"all claims, matters
and issues raised in this case." (italics added). "This case" on appeal
is the quarrel between the Underwriters and Columbus-America and
is not a case with respect to the jurisdiction of the district court over
the defendant wreck. That case is the in rem action of Columbus-
America Discovery Group, et al., v. The Unidentified Wrecked and
Abandoned Sailing Vessel, in rem, et al., District Court No. 87-363-
N, which has been pending for more than twelve years, and which the
Settlement Agreement and the Dismissed Agreed order leave pending
except that all of the quarrel between Columbus-America and the
Underwriters is here disposed of. We thus construe the Dismissed
Agreed order of June 23, 1998 as not relinquishing jurisdiction of the
district court over the wreck of the Central America and are of opin-
ion and hold that the jurisdiction of the district court over the wreck
of the Central America in the in rem action yet continues despite the
Dismissed Agreed order of June 23, 1998. Since the district court's
jurisdiction continues over the wreck of the Central America and the
in rem action with respect to that wreck, it is able to enforce its previ-
ous orders in the case with respect to that wreck.
Our construction of the Dismissed Agreed order of June 23, 1998
is supported by the authorities and the Rules of Civil Procedure. This
17
is an interlocutory appeal in an admiralty case under 28 U.S.C.
§ 1292(a)(3). Such appeals decide only the matters which have been
decided by the district court, and as with other interlocutory appeals
under § 1292, the trial court has authority to pursue its own proceed-
ings filed when a § 1292(a)(3) appeal is pending. Wright, Miller &
Cooper, Federal Practice and Procedure,§ 3927 (2d ed. 1996).
Although in slightly different context, the Court has spoken to the
very problem before us here as to the effect of an interlocutory
appeal. We think that reasoning applies in this case and follow it:
Obviously that which is contemplated is a review of the
interlocutory order, and of that only. It was not intended that
the cause as a whole should be transferred to the appellate
court prior to the final decree. The case, except for the hear-
ing on the appeal from the interlocutory order, is to proceed
in the lower court as though no such appeal had been taken,
unless otherwise specially ordered.
Ex parte Nat. Enameling & Stamping Co., 201 U.S. 156, 162 (1906).
So, we are left with the change in the Settlement Agreement the
district court effected in the Dismissed Agreed order with respect to
"whether Underwriters retain any rights to treasure salvaged by
Columbus-America Discovery Group in the future," which was unau-
thorized as well as being in error. We conclude that the order of the
district court filed July 1, 1998 effecting changes in the Dismissed
Agreed order of June 23, 1998, must be, and it hereby is, vacated.
IV.
Having found that the initial agreed dismissal order that effectuated
the parties' Settlement Agreement was properly entered by the district
court, and that the district court erred in altering the parties' Settle-
ment Agreement, we must now determine the disposition of this case.
The Underwriters argue that the district court was correct in enforc-
ing the underlying Settlement Agreement and that the agreed order
remains in full force and effect.
18
Columbus-America asserts that following the district court's order
of July 1, 1998, the Settlement Agreement cannot be enforced and the
parties should be returned to their pre-settlement status. Its argument
that the Settlement Agreement does not bar future claims on behalf
of the Underwriters is not well taken, as we have demonstrated above.
It is not possible for the Underwriters and Columbus-America to have
agreed that there would be no future claims by anyone else to the trea-
sure, and the agreement could not be so construed. Any future claim
made to anything salvaged from the Central America by a claimant
other than the Underwriters would have to be decided at that time. In
that respect, we note that Columbus-America is already protected to
what would seem to be the fullest extent possible by the orders
entered in this case by the court. The district court's order of August
18, 1989 is yet in effect, and it provides, among other things: that
Columbus-America is the first salvor and is entitled to salvage the
Central America without interference; that it has a substantive right
to enjoin interference by others; that any person having notice of the
order is permanently enjoined and restrained from conducting search,
survey or salvage operations, etc., with respect to the Central
America, and within delineated latitude and longitude boundaries in
the North Atlantic.
The order of the district court filed April 3, 1990, which is yet in
effect, provides that the proceeding is closed to the filing of additional
claims by any person to the Central America or any items recovered
therefrom, whether such items be recovered prior to the order or sub-
sequent to it, and that all claims after April 3, 1990 are ordered fore-
closed.
Those orders of the district court are enforceable by it either by
order, injunction or contempt proceeding, if appropriate, and
Columbus-America has received all of the protection a court could
give it absent actual claims against the Central America or salvage
from that ship.5 There having been no such claims, we cannot give
_________________________________________________________________
5 The district court can enforce and punish willful violations of its order
with its contempt powers. See Washington v. Washington State Commer-
cial Passenger Fishing Vessel Assoc., 443 U.S. 658, 693 n.32, modified,
Washington v. United States, 444 U.S. 816 (1979) ("[A] court possessed
19
any advisory opinion as to the disposition of any which might be
made.
That being true, we take notice in the reply brief of Columbus-
America at page 15 that it "has no desire to prolong litigation. If there
is in fact a way to make certain no others have any claim whatsoever
to future recoveries, the concepts embodied in the June 23rd order
might provide an appropriate basis for resolution of the case."
We are of opinion that Columbus-America has been given all the
protection it can be given consistent with due process and the previ-
ous opinion of this court in this case in 974 F.2d 450 (4th Cir. 1992).
We thus, on remand, require the district court to re-enter its Dis-
missed Agreed order previously entered June 23, 1998.
V.
Columbus-America also appeals the order of the district court
unsealing the list of the inventory of the recovered treasure.
The evidence before the district court which supported the sealing
of the inventory was that making the same public could substantially
damage the ultimate value received for the antique gold. There is no
evidence before us that this condition has changed. When the Settle-
ment Agreement is made effective by virtue of this decision, a spe-
cific part of the treasure in kind will be the property of the
Underwriters and the balance of the treasure in kind will be the prop-
erty of Columbus-America. When our decision is final, the Under-
writers may do with their share of the gold whatever they want by
way of advertising, sale or otherwise, and Columbus-America may do
_________________________________________________________________
of the res in a proceeding in rem . . . may enjoin those who would inter-
fere with that custody."); Marex International, Inc. v. Unidentified,
Wrecked and Abandoned Vessel, 952 F. Supp. 825, 829-30 (S.D. Ga.
1997) (granting salvor exclusive rights to salvage wreck and enjoining all
third parties from interfering with those rights); United States v.
Crookshanks, 441 F. Supp. 268, 270 (D. Or. 1977) (finding that court
could hold third parties in contempt to enforce in rem injunction).
20
with the balance of the treasure as it wants by way of advertising, sale
or otherwise. But the fact remains that the record in this case is that
the value of the inventory may be damaged by premature release of
the inventory. That being true, so much of the record in this case as
reveals the items of treasure which are the property of Columbus-
America will remain under seal, and the Underwriters may not dis-
close it. But the seal of the court is lifted as to the items of treasure
in the hands of the Underwriters.
We are aware that there is a common law as well as a constitutional
right to have court records made public. Publicity of such records, of
course, is necessary in the long run so that the public can judge the
product of the courts in a given case. It is hardly possible to come to
a reasonable conclusion on that score without knowing the facts of the
case. So we are aware that the record of the inventory will have to be
made public, but not presently, over the objection of Columbus-
America, it being the owner of at least 90% of the treasure involved.
We are confident that future motions in that respect will receive due
consideration in the district court.
VI.
Columbus-America submits that the panel majority opinion in
Columbus-America Discovery Group v. Atlantic Mutual Ins. Co., 974
F.2d 450 (4th Cir. 1992), cert. denied, 507 U.S. 1000 (1993), applied
a test for abandonment inconsistent with traditional maritime law.
Columbus-America argues that we should adopt the dissenting opin-
ion's abandonment test and overrule the prior panel's judgment under
exceptions to the law of the case doctrine. After examination of the
cases cited by Columbus-America, we agree that the majority's aban-
donment test was rejected by two other courts of appeal, the Ninth
Circuit in Deep Sea Research, Inc. v. The Brother Jonathan, 102 F.3d
379, 387-88 (9th Cir. 1996), aff'd in part, vacated in part on other
grounds, and remanded, 118 S.Ct. 1464 (1998), 6 and the Sixth Circuit
_________________________________________________________________
6 On remand, the Ninth Circuit vacated the judgment in its entirety
except for the assumption of jurisdiction and remanded the case to the
district court. Deep Sea Research, Inc. v. Brother Jonathan, 143 F.3d
1299 (9th Cir. 1998). We are not aware of any subsequent proceedings
in the case.
21
in Fairport International Exploration, Inc. v. The Shipwrecked Vessel
Known as the Captain Lawrence, in rem, 105 F.3d 1078 (6th Cir.
1997), vacated and remanded on other grounds, 118 S.Ct. 1558 (1998).7
The Supreme Court, however, did not define abandonment when it
reviewed Brother Jonathan. California v. Deep Sea Research, Inc.,
118 S.Ct. 1464, 1473 (1998) (leaving the issue of whether the Brother
Jonathan was abandoned under the Abandoned Shipwreck Act for
reconsideration on remand). The Court either declined to or simply
did not resolve the conflict between the Sixth, Ninth, and Fourth cir-
cuits regarding the test for abandonment and instead remanded with
the clarification that the "meaning of `abandoned' under the ASA
conforms with its meaning under admiralty law." California v. Deep
Sea Research, Inc., 528 U.S. 491, 508 (1998).
Under the law of the case doctrine, "when a court decides upon a
rule of law, that decision should continue to govern the same issues
in subsequent stages in the same case." Arizona v. California, 460
U.S. 605, 618 (1983). Even under this instruction to adhere to earlier
decisions of law in a case, the doctrine is a rule of discretion, not a
jurisdictional requirement. See Smith v. Bounds , 813 F.2d 1299, 1304
(4th Cir. 1987). Under certain conditions the exceptions to the law of
the case doctrine allow a panel of the court to change a prior ruling
in the same case. See United States v. Aramony , 166 F.3d 655, 661
(4th Cir. 1999) ("Under law of the case doctrine . . . the decision of
an appellate court establishes the law of the case[and] it must be fol-
lowed in all subsequent proceedings in the same case. . . unless: (1)
a subsequent trial produces substantially different evidence, (2) con-
trolling authority has since made a contrary decision of law applicable
to the issue, or (3) the prior decision was clearly erroneous and would
_________________________________________________________________
7 On remand, the Sixth Circuit revised its prior opinion regarding the
abandonment test. Fairport International Exploration, Inc. v. The Ship-
wrecked Vessel, known as the Captain Lawrence, 177 F.3d 491 (6th
Cir.), reh'g denied, (1999). While it held that "a State may prove by
inference that a shipwreck last owned by a private party is "abandoned,"
Fairport, 177 F.3d at 500, it qualified that rule: "[W]e choose to view
length of time as one factor among several relevant to whether a court
may infer abandonment . . . [but] [w]e agree that lapse of time, alone,
does not necessarily establish abandonment. . . ." Fairport, 177 F.3d at
499 (citation omitted).
22
work a manifest injustice." (internal quotations omitted) (citation
omitted)); Maryland Cas. Co. v. City of South Norfolk, 54 F.2d 1032,
1039 (4th Cir. 1932) ("[W]hile we have the power on a subsequent
appeal to reverse [the law of the case], we exercise [it] only in the
most unusual circumstances. . . .").
A comparison of our earlier decision in this case in 974 F.2d 450with the decision of the Supreme Court and the Ninth Circuit in The
Brother Jonathan and the Sixth Circuit in Fairport indicates that the
rule for finding abandonment is more stringent in this circuit than in
the Sixth Circuit and may be the same as the Ninth Circuit's rule in
Brother Jonathan. In any event, the rule in the three circuits is not the
same and the Supreme Court has not clarified the question as the
above quotation from Deep Sea Research (Brother Jonathan) indi-
cates. Our en banc court has declined to reexamine our panel holding
in 974 F.2d 450 as to the proof necessary for abandonment, although
two members of the panel favored reexamination. In such event, we
do not believe that the circumstances exist for a panel to change the
decision of the previous panel and that that subject is better addressed
by an en banc court. Cf. Oman v. Johns Mansville Corp., 764 F.2d
224, 226-27 (4th Cir. 1985).
VII.
To summarize, the order of the district court filed July 1, 1998
changing the Settlement Agreement and vacating a part of the Dis-
missed Agreed order filed June 23, 1998 is vacated. The Dismissed
Agreed order previously filed June 23, 1998 is reinstated. The order
of the district court unsealing the inventory of the treasure is affirmed
so far as it concerns the treasure in the hands of the Underwriters, but
is reversed so far as it concerns the inventory of the treasure in the
hands of Columbus-America. The argument of Columbus-America
that we adopt the dissenting opinion in this case in 974 F.2d 450 (4th
Cir. 1992) is denied, that being left to an en banc court.
The parties will pay their own costs.
AFFIRMED IN PART, VACATED IN PART, REVERSED
IN PART, AND REMANDED WITH INSTRUCTIONS
23