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Salazar v. Atlantic Sun Her Engines

filed as amended august 24 1989.: August 3, 1989.

CAPTAIN MANUEL SALAZAR AND THE CREW OF THE VESSEL "ATLANTIC SUN" AND SALEM PORT AUTHORITY, INTERVENOR, AND COAST TO COAST TRUCKING, INC., INTERVENOR, AND HARBOR PETROLEUM, INC., INTERVENOR, AND THE PILOTS ASSOCIATION FOR THE BAY AND RIVER DELAWARE, INTERVENOR
v.
THE "ATLANTIC SUN," HER ENGINES, BOILERS, TACKLE, APPURTENANCES, ETC., IN REM, AND ATLANTIC SUN LTD., AND RESOLVE MARITIME CORP., IN PERSONAM ATLANTIC SUN, LTD., APPELLANT



Appeal from the United States District Court for the District of New Jersey (D.C. Civil Action No. 88-3056).

Author: Weis

Opinion OF THE COURT

WEIS, Circuit Judge

In this admiralty case, we conclude that the shipowner has failed to substantiate its contention that the district court denied due process by failing to conduct a hearing following the arrest of a vessel. We are also persuaded that the owner waived any right it might have had to release the vessel on bond by not taking action until the day of the hearing to confirm the marshal's sale of the vessel. Accordingly, we will affirm the order of the district court confirming the sale.

Before docking at the port of Salem, New Jersey, a dispute had arisen between the captain and seamen aboard The Atlantic Sun and the ship's owner over alleged unpaid wages and the crew's failure to pick up cargo at a Brazilian port. After the vessel arrived at Salem, negotiations took place, but were unsuccessful.

At the instance of the captain, the district court ordered the ship arrested and ultimately set bond at $75,000. Apparently unable to secure a bond, the owner filed a petition in bankruptcy under Chapter 11. After a hearing, the bankruptcy judge lifted the automatic stay, and the district court scheduled a marshal's sale.

On the day set for sale, the owner presented a bond for $75,000, which the district court found defective in form and inadequate in amount because of increased charges resulting from the lapse of time. After the marshal's auction, the court set the time for a confirmation hearing. Near the conclusion of that hearing, the owner asked for a delay of two weeks to post a bond in the amount of $140,000, the high bid at the auction. The court denied the request, and instead confirmed the sale. When the owner did not present a supersedeas bond on the morning of the following day, the court refused a stay of confirmation. A panel of this Court denied a twenty-four hour stay.

On appeal, the owner argues that the sale should be set aside and the vessel returned. The owner asserts that the district court's failure to conduct an adversarial post-arrest hearing resolving challenges to the plaintiffs' claims amounts to a denial of due process and a violation of the Federal Rules of Civil Procedure. The owner also argues that the district judge denied it a reasonable opportunity to post a bond at the conclusion of the confirmation hearing.

I.

JURISDICTION

Preliminarily, we address the question of our jurisdiction. Because the district court did not adjudicate all issues involved in the parties' claims and counterclaims, the order appealed from is not final under 28 U.S.C. § 1291. Although that might be fatal to appellate jurisdiction in most civil cases, special provisions apply in admiralty matters.

The Courts of Appeals have jurisdiction to review "[interlocutory] decrees of . . . district courts . . . determining the rights and liabilities of the parties to admiralty cases." 28 U.S.C. § 1292(a)(3). For a district court order in admiralty to be appealable, it "need not determine all rights and liabilities of all parties." Kingstate Oil v. M/V Green Star, 815 F.2d 918, 921 (3d Cir. 1987). Section 1292(a)(3), however, is not completely open-ended -- the order appealed from "must conclusively determine the merits of a claim or defense." Kingstate Oil, 815 F.2d at 921. See Todd Shipyards Corp. v. Auto Transp., S.A., 763 F.2d 745, 751 (5th Cir. 1985); Bankers Trust Co. v. Bethlehem Steel Corp., 761 F.2d 943, 945 n. 1 (3d Cir. 1985); Gulf Towing Co. v. The Steam Tanker Amoco New York, 648 F.2d 242, 244 (5th Cir. Unit B June 1981) (per curiam).

In the matter at hand, the order of confirmation effectively terminated the owner's rights to title and possession of The Atlantic Sun. The order, therefore, comes within the ambit of 28 U.S.C. § 1292(a)(3), and is properly before this Court.

Plaintiffs concede our jurisdiction over the confirmation order, but would limit our review to the circumstances of the sale itself, leaving to another day the owner's due process and other challenges. We think that approach impracticably narrow.

If the owner successfully establishes a due process violation in the district court's alleged failure to provide a post-arrest hearing, reversible error may have occurred, undermining the legitimacy of the sale. See Neapolitan Navigation. Ltd. v. Tracor Marine, Inc., 777 F.2d 1427 (11th Cir. 1985). Consequently, the issues raised by defendant are inextricably intertwined with the validity of the sale, and are properly subject to review at this time. See Kershner v. Mazurkiewicz, 670 F.2d 440, 449 (3d Cir. 1982) (in banc). We therefore exercise jurisdiction over all of the points raised in this appeal.

II.

DUE PROCESS

Arrest of a vessel is an in rem procedure in admiralty law having an ancient lineage. Utilized even before the Elizabethan era, it had become a dominating feature of admiralty practice by the nineteenth century. See generally F. Wiswall, The Development of Admiralty Jurisdiction and Practice Since 1800 155-208 (1970), noted in Merchants Nat'l Bank v. The Dredge Gen. G.L. Gillespie, 663 F.2d 1338, 1342 n. 8 (5th Cir. Unit A Dec. 1981), cert. dismissed, 456 U.S. 966, 72 L. Ed. 2d 865, 102 S. Ct. 2263 (1982).

Seizure of a vessel by court officials at the instance of a complainant serves the dual purpose of securing jurisdiction and providing a source for the satisfaction of a maritime lien. In the English view -- the so-called "procedural" theory -- the arrest of a vessel is intended to force the owner to appear so as to give the court in personam jurisdiction.*fn1 American courts, by and large, adopted a "personification" theory in which the vessel itself is a party and judgments are entered against her without the necessity of securing jurisdiction over the owner.

The Supreme Court in Tucker v. Alexandroff, 183 U.S. 424, 438, 46 L. Ed. 264, 22 S. Ct. 195 (1902), described the personification theory in modern admiralty practice. See also United States v. The Little Charles, 26 F.Cas. 979, 981-82 (C.C.D.Va. 1818) (No. 15,612) (Marshall, C.J., sitting as Circuit Justice). Although subjected to academic criticism, e.g., G. Gilmore & C. Black, The Law of Admiralty § 9-3 (2d ed. 1975), the personification theory has provided a ...


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