Crescent Towing & Salvage Co., Inc. v. M/V Anax

UNITED STATES COURT OF APPEALS
For the Fifth Circuit

No. 93-3725

CRESCENT TOWING & SALVAGE CO., INC.,

Plaintiff-Appellant,

versus

M/V ANAX (formerly known as M/V KOMIN),
her engines, tackle, apparel, furniture, etc., in rem,

Defendant,

ANAX NAVIGATION CO., S.A.,

Claimant-Appellee

Appeal from the United States District Court
For the Eastern District of Louisiana
(December 13, 1994)

Before REAVLEY, DeMOSS and STEWART, Circuit Judges.
DeMOSS, Circuit Judge:
Crescent Towing & Salvage Company filed this libel in rem

against the M/V ANAX (formerly the M/V KOMIN) seeking to enforce

a maritime lien for tug services furnished to the vessel. Anax

Navigation Co., S.A. ("Anax") claims that Crescent's maritime

lien, if any, was extinguished by a judicial sale, which was

ordered and conducted in Greece pursuant to a valid in rem

proceeding in that country. The district court granted summary
judgment in favor of Anax, holding that the judicial sale in

Greece wiped out all pre-existing liens. Because we find that

Anax failed to meet its burden of proof on summary judgment, we

reverse.

BACKGROUND

The question to be answered in this appeal is: What type of

evidence must be presented to a district court sitting in

admiralty before that court can recognize and give effect, as a

matter of law, to a judicial sale conducted in a foreign country

such that the sale extinguishes all pre-existing maritime liens?

In June 1992 Crescent Towing furnished tug services to the

M/V KOMIN in the amount of $ 10,676.00. Despite repeated demands

upon the vessel owner, Secretariat Shipping, the bill remained

unpaid. In February 1993 the vessel returned to U.S. waters and

Crescent Towing threatened arrest of the vessel to obtain

payment. In lieu of arrest, the vessel interests and Crescent

Towing entered into a private security agreement which

established a fund adequate to cover any final judgment against

the vessel for the towing services. Crescent then filed this

suit to enforce the lien.

In May 1993, Anax filed a claim of ownership, praying to

defend the action, and a motion for summary judgment. Anax's

motion for summary judgment alleged that the M/V KOMIN had been

seized and sold at auction in Piraeus, Greece pursuant to a

judicial order by a Greek court foreclosing a first preferred

ship mortgage held by Norges Hypotekinstitutt A/S. Norges, the

2
mortgage holder, was apparently the successful bidder at auction

and was allowed to offset the sale price by the amount of its

claim against the mortgagor, Secretariat Shipping. Anax produced

a bill of sale showing that the M/V KOMIN was sold by Norges to

Anax the following day for ten dollars. Anax subsequently

renamed the vessel the M/V ANAX.

In its motion for summary judgment Anax argued that the

judicial sale in Greece was conducted pursuant to a valid in rem

proceeding and therefore extinguished all pre-existing maritime

liens, including Crescent Towing's lien for towing services.

Crescent responded that there were genuine issues of fact as to

whether the Greek proceeding was in fact a valid in rem

proceeding and whether the sale had the effect, under Greek law,

of extinguishing pre-existing maritime liens. In July 1993, the

district court granted summary judgment in favor of Anax.

Thereafter Crescent filed a motion for reconsideration or in the

alternative for Rule 56(f) relief.1 After hearing oral argument

on the motion, the district court denied Crescent's motion,

entered judgment in Anax's favor, and dismissed Crescent's

claims. This appeal followed.

DISCUSSION

We review the district court's grant of summary judgment de

novo, using the same standards as the district court. Lavespere

1
Rule 56(f) provides that the court can order a continuance
or refuse the application for judgment if it appears that a party
opposing summary judgment cannot present facts essential to its
position by affidavit.

3
v. Niagra Machine & Tool Works, 910 F.2d 167, 177 (5th Cir.

1990), cert. denied, 114 S. Ct. 171 (1993). Summary judgment is

appropriate only if there are no genuine issues of material fact

and the moving party is entitled to judgment as a matter of law.

Id. at 177-78. To determine whether there are genuine fact

issues, we first consult the applicable law to ascertain what

issues are material. Id. at 178. Next, we review the evidence

on those issues, viewing the facts and inferences in the light

most favorable to the nonmoving party. Id.

In this case Anax is asserting the judicial sale in Greece

as a bar to Crescent's pre-existing maritime lien. This is an

affirmative defense for which Anax would have the burden of proof

at trial. Therefore, Anax had the burden on summary judgment to

establish each element of that defense as a matter of law.

Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986);

Thorsteinnsson v. M/V Drangur, 891 F.2d 1547, 1550-51 (11th Cir.

1990).

The Applicable Law

Relying on the doctrine of comity, this Circuit has held that

judicial sale of a vessel pursuant to a valid in rem proceeding by

a court of competent jurisdiction extinguishes all pre-existing

maritime liens. Belcher Co. v. M/V Maratha Mariner, 724 F.2d 1161,

1165 (5th Cir. 1984) (citing Zimmern Coal Co. v. Coal Trading

Assoc., 30 F.2d 933 (5th Cir. 1929) and The Trenton, 4 F. 657 (E.D.

Mich. 1880)). In the Fourth Circuit this doctrine has been

extended to provide that judicial sale by way of attachment, rather

4
than in rem, will also extinguish pre-existing maritime liens if

the court's proceedings are "sufficiently similar to an in rem

proceeding to make its decree recognizable by and binding on the

American courts."2 The district court in this case relied on the

Fourth Circuit's interpretation in Gulf & Southern Terminal Corp.

v. S.S. President Roxas, 701 F.2d 1110, 1112 (4th Cir.), cert.

denied, 462 U.S. 1133 (1983). Our own Circuit, however, has been

much more reluctant to give such an effect to a foreign judicial

sale unless the in rem character of the proceeding has been clearly

established and the evidence demonstrates that the sale was made

free and clear of all liens. Perez & Compania (Cataluna), S.A. v.

M/V Mexico, 826 F.2d 1449, 1451 (5th Cir. 1987)3; Belcher, 724 F.2d

2
South Carolina State Ports Authority v. Silver Anchor S.A.,
23 F.3d 842, 848 (4th Cir. 1994); see also Gulf & Southern
Terminal Corp. v. S.S. President Roxas, 701 F.2d 1110 (4th Cir.),
cert. denied, 462 U.S. 1133 (1983).
3
We note in passing that, although Greece is signatory to
the Brussels Convention, this Court's broad holding in Perez, 726
F.2d 1449, 1451 (5th Cir. 1987) that "the attachment of a vessel
in a nation signatory to the Brussels Convention cannot be
equated to an in rem Rule C seizure in the United States" does
not apply to this case. In Perez, the vessel was sold in a
foreign forum to satisfy a debt for fuel. As to that claim, this
Court correctly held that the Convention's provision allowing
arrest of either the receiving vessel or any other vessel owned
by the same ship owner converted the proceeding from one against
the vessel in rem to an attachment. Perez, 726 F.2d at 1451. As
to claims arising from the "mortgage or hypothecation of a ship,"
however, the Convention provides that "no ship other than the
particular ship in respect of which the claim arose, may be
arrested." International Convention Relating to the Arrest of
Sea-Going Ships, 1952, Brussels, May 10, 1952, Art. I (1)(q) & 3
(1) (reprinted in BENEDICT ON ADMIRALTY, Doc. 8-1 (Frank L. Wiswall,
Jr. ed. 6th ed. (1994). Therefore, the fact that Greece is
signatory to the Brussels Convention does not alone convert the
action from one of arrest in rem to attachment because the
Convention did not authorize arrest of any vessel other than the
M/V KOMIN to foreclose on the mortgage.

5
at 1164-65. Based on existing precedent, therefore, we hold that

summary judgment based upon the affirmative defense of a prior

judicial sale in a foreign country is inappropriate unless there

are no genuine issues of fact relating to the following elements:

(1) that a foreign court of competent admiralty jurisdiction

ordered the sale; (2) that the court conducted fair and regular

proceedings; (3) that the sale was ordered pursuant to a validly

entered judgment in an in rem admiralty proceeding; and (4) that

the effect of the sale, under the law of that foreign forum, would

be to extinguish all pre-existing maritime liens. See Perez, 826

F.2d at 1450-51; Belcher, 724 F.2d at 1164-65; Atlantic Ship

Supply, Inc. v. M/V LUCY, 392 F. Supp. 179, 182 (M.D. Fla. 1975),

aff'd, 553 F.2d 1009 (5th Cir. 1977); Zorgias v. S.S. Hellenic

Star, 370 F.Supp. 591 (E.D. La. 1972), affd, 487 F.2d 519 (5th Cir.

1973); see also M/V Drangur, 891 F.2d at 1550-55; President Roxas,

701 F.2d at 1112 (Mexican court had control over res, conducted

fair and regular proceedings and had the power to sell the vessel

free and clear of all liens). Therefore, a party claiming that a

judicial sale has extinguished pre-existing liens must produce

evidence on these four material issues in order to be entitled to

summary judgment.

Reviewing the Evidence: Anax's Summary Judgment Proof

Anax's proof on summary judgment consisted of three documents:

(1) the affidavit of Aris D. Vourdas, a Greek attorney who

represented Norges in the foreclosure, purchase and subsequent

resale of the vessel; (2) a Summary of the Report on the Auction

6
("Summary") prepared by a notary public, also identified as the

"Auction Officer," and translated from Greek by Vourdas; and (3) a

bill of sale memorializing, not the sale at auction, but Norges'

subsequent sale to Anax.

The Summary of the Report on the Auction states (1) that

Norges had an enforceable and validly recorded preferred ship

mortgage under the law of St. Vincent and the Grenadines; (2) that

the ship mortgage had been declared an enforceable title by a Greek

Court exercising "voluntary jurisdiction"; and (3) that the vessel

had been "arrested for the purposes of foreclosure" and sold at

auction to Norges. The Summary also specifies the distribution of

the sums received at auction, including the offset allowed to

Norges for its outstanding claim. Finally, the document asserts

that "[a]ll the lawful conditions and provisions have been

fulfilled." The affidavit of Norges' attorney Vourdas reiterates

in identical language many of the facts averred in the Summary.

We find that Anax failed to produce sufficient summary

judgment evidence to establish as a matter of law that: (1) the

Greek court was a competent court of in rem admiralty jurisdiction;

(2) that the proceedings in Greece were fair and regular in the

sense that the applicable Greek substantive and procedural law was

complied with; (3) that the Greek court's seizure and sale of the

vessel was a valid in rem proceeding; and (4) that the intended and

actual effect of the alleged judicial sale was to transfer title to

the vessel free and clear of all liens and encumbrances.

Although the Summary and affidavit produced by Anax contain a

7
virtual labyrinth of numbers and information identifying the ship

mortgage and the Greek court's judgment, Anax did not produce the

actual documents. Mere reference to a numbered document does not

sufficiently establish the existence or validity of a foreign court

judgment, or the basis of that court's jurisdiction, such that an

American court should give full faith and credit to that judgment.

Likewise, the conclusory statements by Norges' attorney and the

notary public reporting on the auction that "all lawful conditions

and provisions have been fulfilled" do not demonstrate as a matter

of law that a court judgment was entered after fair and regular

judicial proceedings. Neither of these documents bears a court

seal or indicates that it was prepared by an officer of the Greek

court or a person making a report to that court. Rather, the

Summary states that it was prepared in order to be used by Norges

"as a title of ownership in the vessel." We hold that the Summary

and the attorney's affidavit were insufficient at the summary

judgment stage to establish and require an American court to

recognize the jurisdiction and judgment of the Greek court as a

matter of law.

More importantly, Anax produced no evidence that the actual or

intended effect of the judicial sale was to pass title to Norges

free and clear of all liens and encumbrances. Neither the Summary

nor Vourdas' affidavit states that the auction transferred title to

Norges free and clear of all liens. Likewise, although the bill of

sale does purport to transfer title free of encumbrances, the fact

that Norges warranted its subsequent sale to Anax is of very

8
little, if any, probative value concerning the issue of whether

Norges in fact purchased the vessel at auction free and clear of

all liens and encumbrances. The complete absence of evidence on

this critical element of proof alone creates a genuine issue of

material fact which should have defeated Anax's motion for summary

judgment.

Crescent urges this Court to find that the district court has

a duty to scrutinize the applicable foreign procedural and

substantive law before allowing a foreign judicial sale to have the

effect of extinguishing pre-existing liens. In the hearing on

Crescent's motion for summary judgment and the hearing on

Crescent's motion for reconsideration, the district court expressed

the opposite view, stating that the Greek proceedings were entitled

to "a presumption of regularity." We strike a balance between

these views, both to instruct the district court on remand and to

establish some guiding principles related to the recognition of

foreign judgments.

While the district court need not undertake sua sponte a

detailed examination of the applicable law and procedures, it

should require on summary judgment that the moving party present

evidence to establish each element of the affirmative defense that

the judicial sale extinguished pre-existing liens. That evidence,

at minimum, should include (1) a certified copy of the foreign

court's judgment which meets the authentication requirements of

Federal Rule of Civil Procedure 44, together with an English

language translation, and (2) the bill of sale or similar document

9
memorializing the judicial sale. In most cases these two documents

will be insufficient to establish that the foreign court was a

court of competent admiralty jurisdiction, that the sale was

conducted pursuant to a valid in rem proceeding in the foreign

forum,4 and that under the law of that forum the judicial sale

would have transferred title free and clear of all encumbrances.

In those cases, the moving party should also submit the affidavit

of an expert, such as an attorney licensed to practice in the

foreign to establish these facts.

Our decision today is in no small way influenced by the

convoluted facts presented. The United States district court in

this case was asked to recognize the judgment of a Greek court

which ordered the sale of a vessel registered in St. Vincent and

the Grenadines pursuant to the foreclosure of a first preferred

ship mortgage executed and recorded in St. Vincent and the

Grenadines. These facts alone generate a plethora of confusing

conflict problems. Additionally, Anax sought to use that Greek

judgment to bar Crescent from enforcing a traditionally high-

ranking maritime lien for tug services, which directly benefitted

the vessel and were furnished in U.S. waters before both the

recordation of the mortgage and the judicial sale.5 Further, Anax,

4
Mere recitation of this fact will be insufficient. The
evidence must establish that the proceedings had all of the
characteristics attendant to an in rem action as described in
Belcher, 724 F.2d at 1165 and our other precedents.
5
Crescent's bill for towing states that towing services were
finished on June 29, 1992. Anax claims that the preferred ship
mortgage was executed on June 26 but not recorded until June 30,
1992.

10
the party claiming the benefit of the judicial sale, purchased the

vessel for ten dollars only the day after Norges, the mortgagee who

precipitated the foreclosure, bought the vessel at auction.

The linchpin piece, however, is that the only evidence of any

preferred ship mortgage, arrest in rem, Greek court judgment or

judicially ordered auction either comes from or was translated by

Norges' Greek attorney, who would be interested in upholding the

"free and clear" effect of the sale due to Norges' warranty in its

bill of sale to Anax. By establishing parameters for the

recognition of foreign judgments in this context, we do not reject

the important need for comity and predictability as expressed in

the age-old case of The Trenton, 4 F. 657 (E.D. Mich. 1880). We

merely impose upon the traditional deference given to judgments by

other courts of competent jurisdiction the requirement that parties

prove both the judgment and the competence of the foreign court.

CONCLUSION

Anax failed to meet its burden of proof on summary judgment to

prove as a matter of law that a prior judicial sale extinguished

Crescent Towing's pre-existing maritime lien. Genuine issues of

material fact exist concerning the effect and nature of the alleged

judicial sale of the M/V ANAX in Greece. We recognize that it is

entirely possible that Anax will, after further discovery, produce

sufficient evidence to establish that the Greek sale was ordered

pursuant to a valid in rem proceeding and acted to extinguish

Crescent Towing's lien. Based on the present state of the record,

however, they have not yet achieved that objective.

11
 REVERSED and REMANDED to the district court for proceedings

consistent with this opinion.6

6
Because we find that there were genuine issues of material
fact precluding summary judgment, we do not reach the issue of
whether the district court's correctly denied Crescent Towing's
motion seeking reconsideration or Rule 56(f) relief.
wjl\opin\93-3725.opn
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