United States Court of Appeals,
Eleventh Circuit.
No. 95-4765.
ISBRANDTSEN MARINE SERVICES, INC., a Connecticut corporation,
Plaintiff-Counter-Defendant-Appellee,
Florida Transportation Services, Inc., Intervenor-Plaintiff,
v.
M/V INAGUA TANIA, Her engines, tackle, apparel, freights, etc.,
in rem, Defendant-Intervenor-Defendant,
Zuki Teria Navigation, Inc., Claimant-Defendant-Counter-Claimant,
Sea Road Shipping, Inc., Defendant,
Crew and Seamen of the M/V Inagua Tania, Movant-Appellant.
Aug. 20, 1996.
Appeal from the United States District Court for the Southern
District of Florida. (No. 95-6206-CIV-WJZ), William J. Zloch,
Judge.
Before COX, Circuit Judge, DYER, Senior Circuit Judge, and
GOETTEL*, Senior District Judge:
GOETTEL, Senior District Judge:
The crew of the M/V INAGUA TANIA appeal from a denial of their
attempt to intervene in an in rem admiralty action in the Southern
District of Florida. The M/V INAGUA TANIA is an ocean-going
freighter of Honduran registry whose crew was composed of aliens
from Central and South America. The vessel was arrested on March
1, 1995, by Isbrandtsen Marine Services, Inc., ("Isbrandtsen")
which claimed a lien for necessaries in the amount of $83,657.65.
At the time of the arrest the vessel was engaged in the carriage of
international trade for hire. It was arrested in Port Everglades
*
Honorable Gerard L. Goettel, Senior U.S. District Judge for
the Southern District of New York, sitting by designation.
but shortly after the arrest a substitute custodian was placed in
charge and the vessel was moved to an offshore anchorage.
The vessel had been on charter and was scheduled to commence
a new charter two days after its arrest. On March 2, 1995, the
vessel's owner, Zuki Teria Navigation, Inc., filed a claim and an
emergency motion for post-arrest hearing to vacate arrest or,
alternatively, to set the amount of the release bond and counter
security.
On March 14, 1995, Isbrandtsen filed a second amended
complaint increasing the maritime lien claimed to $175,958.04 and
adding in personam claims against the owner of the vessel and the
vessel charterer. The shipowner's motion for relief was heard by
a Magistrate Judge who set a release bond in the approximate amount
of $300,000. The bond was to be for the benefit of Isbrandtsen
alone. Isbrandtsen sought an immediate sale of the vessel claiming
that it was a wasting asset. (Actually the greatest cause of waste
was the substantial cost of the substitute custodian.) The owner
opposed this application advising the Court that it was attempting
to obtain security in accordance with the Court's order and that it
was also attempting to settle the claims of Isbrandtsen. The owner
complained about the fact that the vessel had been moved one and a
half miles out to sea at an anchorage without specific permission
of the Court and noted that it was accruing substantial costs in
terms of the crew's salaries and other items.
On March 24, 1995, Florida Transportation Services, Inc., was
allowed to intervene to enforce its maritime lien against the
vessel. Its lien was substantially greater than that of
Isbrandtsen. A dispute occurred between the two arresting parties
as to sharing the substantial costs of the substitute custodian.
However, the Court then noted that Florida Transportation Services,
Inc., had not prepared a supplemental warrant of arrest required by
the local rules of the Southern District of Florida.1
Consequently, the Court vacated the initial order allowing Florida
Transportation Services, Inc., to intervene.
Several other disputes evolved between the owner and
Isbrandtsen. Isbrandtsen valued the vessel at a maximum of
$300,000; the owner claimed the vessel was worth ten times that
amount. Isbrandtsen maintained that the crew had refused to work
and that, consequently, it had been forced to retain a substitute
crew at its own expense; the owner denied this and claimed that
the crew was aboard and doing such work as could be done
considering the situation of the vessel.
The crew members maintain that, while they were aware that the
vessel was under arrest, they were continually assured by the
Isbrandtsen representatives and the substitute custodian that the
matter would be resolved and, thus, they had no fears concerning
their own position.
On April 28, 1995 the Court ordered an interlocutory sale. On
May 1, 1995, the District Court directed the interested parties to
engage in mediation to see if the dispute could be settled. This
effort was ultimately unsuccessful.
1
The Southern District of Florida rules do require a
supplemental warrant of arrest by an intervening party even
though the vessel has already been arrested. The purpose of this
rule is not readily apparent.
The vessel's owner continued to oppose the application for the
interlocutory sale of the vessel. It argued that it had one
million dollars in hull insurance coverage so that the vessel was
clearly not to be sold for scrap. The owner also produced an
appraisal supporting its claim that the vessel was worth about
$3,000,000. It also claimed that it continued to support the crew
and to render necessary maintenance on the vessel, at its own
expense, in the total amount of $125,000 since the arrest. (It
submitted invoices which it claimed to have paid concerning these
expenses.) With respect to the crew, the owner claimed that it was
working with them concerning the wages owed to them. Certain of
the crew members had been paid off and expatriated to their homes.
The owner claimed that it had made arrangements with the remaining
crew members to pay any outstanding wages.
Florida Transportation Services, Inc., filed a supplemental
warrant of arrest claiming a lien in the amount of $473,115.80 and
was allowed once again to intervene on May 11, 1995. At that point
the Court had already ordered the sale of the vessel. Notice of
the sale was published twice in the Broward Daily Business Review,
on May 9 and May 12, 1995. The date of the sale was set for May
16, 1995. The Notice advised interested parties that the ship was
at Sunshine Shipping, Inc., Berth 25, Port Everglades. In fact,
the vessel was anchored a couple of miles off shore.
On the date of the sale, an attorney apparently not familiar
with admiralty practice or the Local Admiralty and Maritime Rules
of the Southern District of Florida filed an intervenors' "Notice
of Maritime Liens and Motion to Enforce 46 U.S.C. §§ 971, [sic]
Maritime Lien" with respect to the crew and seamen of the vessel as
well as a number of other suppliers of necessaries.2 With respect
to the crew he submitted invoices totalling $158,800 for wages owed
to them.
On May 17, 1995, the Court entered an Order, rejecting the
applications of all the parties seeking intervention at that time.
The Court noted that they had failed to file intervening complaints
as required by the local rules,3 that they were not presently
2
Among the other parties seeking intervention at that time
was a travel agency which claimed to have supplied transportation
to eight or ten crew members for their return to their homelands.
It was alleged that these amounts were supplied prior to the
arrest. However, with one or two exceptions, all of the amounts
claimed were subsequent to the arrest of the vessel.
3
Rule E(2)(b) of the Southern District of Florida Admiralty
and Maritime Rules governs permissive intervention when the
vessel has been scheduled for sale by the Court and provides as
follows:
(b) Permissive Intervention When the Vessel or Property
Has Been Scheduled for Sale by the Court. Except as
indicated below, and subject to any other rule or order
of this Court, no person shall have an automatic right
to intervene in an action where the Court has ordered
the sale of the vessel or property, and the date of the
sale is set within fifteen (15) days from the date the
party moves for permission to intervene in accordance
with this subsection. In such cases, the person
seeking permission to intervene must:
(1) File a motion to intervene and indicate in the
caption of the motion a request for an expedited
hearing when appropriate.
(2) Include a copy of the anticipated intervening
complaint as an exhibit to the motion to
intervene.
(3) Prepare and offer for filing a supplemental
warrant of arrest and/or a supplemental process of
attachment and garnishment.
(4) Serve copies of the motion to intervene, with
exhibits and proposed process upon every other
parties to the action and, consequently, the Court found itself
without jurisdiction to consider the notices of maritime liens and
motions to enforce. Alternatively, the Court held that, if they
were properly before the Court, their applications were denied for
failure to comply with the local rules. In particular the Court
noted that it had ordered the sale of the vessel on April 28, 1995,
and that under the local rule no one was allowed automatically to
4
intervene within fifteen days of the date set for sale.
Consequently, the Court denied the motion for permissive
intervention. The Court also noted that three of the proposed
intervenors (not including the travel agency) were claiming a lien
by virtue of repairs and supplies provided during a time period
that overlapped the arrest of the vessel by a couple of months
which was contrary to the order with respect to a substitute
custodian.
Following the sale, the ship owner objected to confirmation of
the sale and moved to set it aside. It noted that the notice of
sale inaccurately stated the location of the vessel and argued that
it was insufficient to give reasonable notice to intended
purchasers. In fact, at the sale of the vessel, the only bidders
party to the litigation.
(5) File a certificate of service indicating the
date and manner of service.
Thereafter, the Court may permit intervention under
such conditions and terms as are equitable to the
interests of all parties ... (emphasis added).
4
We note that this left only a three-day period following
the order to sell the vessel, namely, from April 28 to May 1,
1995 in which any party which had not previously done so should
seek to intervene. Of these three days, two were weekend days.
present were the two plaintiffs, Isbrandtsen and Florida
Transportation Services, Inc., who bought the vessel for the amount
of $300,000. The ship owner argued that there were other
interested purchasers but that the vessel was in a location where
they could not examine it and that prospective purchasers had been
refused access to the vessel by Isbrandtsen. (One prospective
purchaser did gain access to the vessel albeit with some
difficulty). Following its acquisition of the vessel, Isbrandtsen
offered the vessel for sale or time charter pursuant to a published
notice and set a price of $1,000,000 for the vessel in "as is"
condition.
The crew also moved to set aside the sale of the vessel and
for emergency interim relief allowing it to file as priority
creditors. The crew members maintained that under 46 U.S.C. §§
971-975 they had a superior claim to those of the original
plaintiffs as suppliers of necessaries. They argued that they had
not been given proper notice of the intended date of sale and did
not learn about it until two days prior to the date of sale. It
was at that point that they first retained an attorney who prepared
papers the following day which were filed on the day of the sale.
In their application the crew members argued that, contrary to the
owner's earlier representations, they had not been paid since the
date of the vessel's arrest. Moreover, as foreign subjects they
did not have the financial means either to get themselves home or
to maintain themselves.
The crew's application was denied by the Court on June 2,
1995. The Court noted that the vessel had been sold more than two
weeks earlier and consequently held that the motion for permissive
intervention was untimely. However, since the petition sought
leave to file priority creditors' claims nunc pro tunc, the Court
assumed that the petition had been timely filed. Nevertheless, it
again relied on the fact that intervention must occur more than
fifteen days before the sale of the vessel. Although the Court
found that the instant petition fulfilled the procedural
requirements of the local rules, the Court held that "intervention
at this late date would not be equitable to the interest of all
parties." As to the petition to set aside the sale, the Court held
that since the seamen were not properly before the Court it would
not consider the application.
The motion was renewed by counsel for the seamen on June 15,
1995. It was denied for lack of jurisdiction. On June 21, 1995,
the Court granted an order confirming the sale finding that the
sale was reasonable under the circumstances and that accessibility
to the vessel by potential buyers was not unduly burdensome. The
record does not reveal whether the vessel was sold by the plaintiff
or chartered, but shortly thereafter it was released from arrest
and left the district. The sum paid to the Marshal from the sale,
less certain expenses, has been held in the custody of the Court
because of appeals filed by the ship owner and other proceedings.
The crew members sought to have the release of the sums stayed
until their appeal could be heard. That application was initially
denied by this Court. However, by order dated March 22, 1996,
disbursement of the proceeds of the sale was stayed pending
decision of this appeal.
THE LAW
Initially the plaintiffs argue that the sale in an in rem
proceeding clears a vessel of all maritime liens and that the
purchaser gained good title against the world. That proposition
appears correct. Schoenbaum, Admiralty and Maritime Law 514 (2d
ed. 1994 & Supp.1995), citing Tamblyn v. River Bend Marine, Inc.,
837 F.2d 447 (11th Cir.1988). However, this Court still has
jurisdiction in the in rem action since the proceeds of the sale
remain in the Court's registry in lieu of the res. Point Landing,
Inc. v. Alabama Dry Dock & Shipbuilding Co., 261 F.2d 861, 864 (5th
Cir.1958).5 It is also clear that the interlocutory order denying
intervention to the seamen constitutes an appealable order
determining the rights and liabilities of the parties as 28 U.S.C.
§ 1292(a)(3) requires. Id. at 863.
The District Court's decisions in this matter were responses
to the procedural requirements of the Admiralty and Maritime Local
Rules of the Southern District of Florida.6 The District Court's
application of admiralty law and the local rules implementing that
law is subject to de novo review by this Court. See Banco de
Credito Industrial S.A. v. Tesoreria General, 990 F.2d 827, 830
(5th Cir.1993)(holding circuit court of appeals reviews district
5
In Bonner v. City of Prichard, Ala., 661 F.2d 1206 (11th
Cir.1981) (en banc), the Eleventh Circuit adopted as precedent
the decisions of the Fifth Circuit rendered prior to October 1,
1981.
6
Indeed Florida Transport Services, Inc. congratulates
itself for having "properly jumped through all the procedural
hurdles imposed by the Federal Rules of Civil Procedure, the
supplemental rules for certain admiralty and maritime proceedings
and the local admiralty rules for the Southern District of
Florida." Appellees' Brief pg. 6.
court's denial of crewmen's motion to intervene de novo ), cert.
denied, 510 U.S. 1071, 114 S.Ct. 877, 127 L.Ed.2d 73 (1994).
We start with the well known consideration that "[s]eamen ...
are wards of admiralty whose rights federal courts are duty-bound
to jealously protect." Bass v. Phoenix Seadrill/78, Ltd., 749 F.2d
1154, 1160-61 (5th Cir.1985). Since the often cited opinion by
Justice Story in Harden v. Gordon, 11 F.Cas. 480, 485
(C.C.D.Me.1823) (No. 6047), it has been accepted that
[e]very Court should watch with jealousy an encroachment upon
the rights of seamen, because they are unprotected and need
counsel; .... They are emphatically the wards of the
admiralty; .... They are considered as placed under the
dominion and influence of men, who have naturally acquired a
mastery over them; and as they have little of the foresight
and caution belonging to persons trained in other pursuits of
life, the most rigid scrutiny is instituted in the terms of
every contract, in which they engage.
Harden was cited approvingly by this Circuit in Flores v. Carnival
Cruise Lines, 47 F.3d 1120, 1123 (11th Cir.1995).
As the Supreme Court has held, a seaman is "often ignorant
and helpless, and so in need of protection against himself as well
as others.... Discrimination may thus be rational in respect of
remedies for wages." Warner v. Goltra, 293 U.S. 155, 162, 55 S.Ct.
46, 49, 79 L.Ed. 254 (1934). A super priority is afforded seamen's
liens for wages under 46 U.S.C. § 10313, since such liens are "
"sacred and indelible,' Sheppard v. Taylor, 30 U.S. (5 Pet.) 675,
710, 8 L.Ed. 269 (1831), and are entitled to be paid "as long as a
plank of the ship remains.' The John G. Stevens, 170 U.S. 113,
119, 18 S.Ct. 544, 547, 42 L.Ed. 969 (1898)." Key Bank of Puget
Sound v. Alaskan Harvester, 738 F.Supp. 398, 405 (W.D.Wash.1989).
Because the crew's initial Notice of Maritime Lien and Motion
to Enforce was filed on the day the vessel was to be sold, under
Local Rule E(2)(b), their notice was untimely and they had no
automatic right to intervene. See S.D.Fla.Adm. & Mar.R. E(2)(b).
The District Court, however, could have permitted intervention
"under such conditions and terms as are equitable...." Id.
The Court abused its discretion by failing to aid the crew,
"wards of admiralty whose rights federal courts are duty-bound to
jealously protect." Noble Drilling, Inc. v. Davis, 64 F.3d 191,
195 (5th Cir.1995) (citation omitted); see also Abogado v.
International Marine Carriers, 890 F.Supp. 626, 634 (S.D.Tex.1995)
("As the Supreme Court has long made clear, courts are to avoid the
application of rules and interpretations "which would affect ...
[seamen] harshly because of the special circumstances attending
their calling.' ")(citing Socony-Vacuum Oil Co. v. Smith, 305 U.S.
424, 431, 59 S.Ct. 262, 266-67, 83 L.Ed. 265 (1939)).
The document filed by the crew can fairly be construed as a
motion to intervene and a complaint. It contains sufficient
information to constitute a complaint if set forth in the proper
procedural form. In order to protect the crew's claims, the Court
should have allowed the crew members to correct any deficiencies
under the Court's local rules. Undoubtedly the Court was
influenced by the fact that the same attorney had filed a handful
of other claims for sophisticated businessmen pursuing non-priority
liens. However, there is a rather substantial distinction between
businessmen accustomed to conducting commerce with sea-going
vessels and the foreign crew of a vessel anchored offshore during
a period of arrest. Although it appears that certain of the seamen
were given the option of being paid off and repatriated, we do not
know, and the record on appeal does not reveal, whether the same
option was even available to the remaining twelve crew members who
sought to intervene. If that option was not available to them,
they clearly lacked the resources to sustain themselves or obtain
their return to their homeland. They also probably lacked the
funds with which to obtain an attorney.
Denial of a motion to intervene due to procedural
deficiencies would not normally constitute an abuse of discretion.
But, here, the District Court ordered an interlocutory sale of the
vessel—often the only asset against which seamen can proceed to
enforce their claims—and, here, the crew attempted to intervene to
enforce a maritime lien for wages owed to them against that vessel.
The District Court dismissed the crew's notice "for lack of
jurisdiction," rather than affording the crew an opportunity to
amend. "Where a more carefully drafted complaint might state a
claim, a plaintiff must be given at least one chance to amend the
complaint before the district court dismisses the action with
prejudice." Bank v. Pitt, 928 F.2d 1108, 1112 (11th Cir.1991).
Thus, the crew members should have been given at least one chance
to amend to properly request leave to intervene to assert their
claims.
Furthermore, we do not view this case as moot. The vessel
was sold at an interlocutory sale and the final rights of the
original plaintiffs and the owner to proceeds have not yet been
decided. The proceeds of the sale are in the registry of the Court
as a substitute for the res of the vessel. Crabtree v. The SS
Julia, 290 F.2d 478, 481 (5th Cir.1961). In support of their claim
of mootness, the plaintiffs rely on American Bank of Wage Claims v.
Registry of the District Court of Guam, 431 F.2d 1215 (9th
Cir.1970). However, in that case the appeal was dismissed because
not only had the vessel been sold but the proceeds had been
disbursed divesting the Court of its in rem jurisdiction and there
was no bond or stay of execution. The Court, however, noted that
"[t]hus, where a vessel is the target of an in rem action in
admiralty, it must both be within the territorial jurisdiction of
[the] court hearing the cause and subject to the order of the court
through [the] process of arrest. The proceeds from the judicial
sale of a vessel, or security furnished in lieu thereof, are deemed
a jurisdictional substitute for the vessel itself." Id. at 1218
(emphasis added).
The District Court held that it would be inequitable to allow
the late claims of the crew members. That is possibly so. The
claims of the original plaintiffs and the substitute custodian
amount to approximately twice the amount at which the vessel was
bid in. However, we do not know what became of the vessel
thereafter. Nor, for that matter, do we know the validity of the
claims of the crew members that they forwent making an earlier
claim for their wages because of the obstruction of Isbrandtsen and
the substitute custodian and the owner's representations that a
bond would be filed and the vessel released. Finally, we do not
have any information as to when the crew first learned of the
prospective sale of the vessel.
The simple fact that the crew's attempts to intervene were
untimely under the rules should not be entirely dispositive.
Considering the obligations of the Court to seamen, particularly
foreign seamen with no adequate representation in Court, we find
that the District Court's Order of May 17, 1995, dismissing the
Notice filed by the crew "for lack of jurisdiction to consider the
same," constituted an abuse of discretion. That Order is vacated
and this matter is remanded to the District Court with instructions
that the crew be permitted to amend their complaint and motion to
intervene.
VACATED and REMANDED.