Silver Star Enterprises, Inc. v. M/V Saramacca

• Court: Court of Appeals for the Fifth Circuit
• Decided: April 21, 1994
• Docket: 92-09572
• Status: Published

Opinion

UNITED STATES COURT OF APPEALS FIFTH CIRCUIT

_____________

No. 92-9572 _____________

SILVER STAR ENTERPRISES, INC., ET AL.,

Plaintiffs-Appellees,

versus

M/V SARAMACCA, Her Engines, Tackle, Apparel, Etc., in rem,

Defendant-Appellant.

________________________________________________

Appeal from the United States District Court for the Eastern District of Louisiana ________________________________________________ (April 21, 1994)

Before HENDERSON,* SMITH, and EMILIO M. GARZA, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

Silver Star Enterprises, Inc. ("Silver Star") brought an

action in rem to foreclose on two preferred mortgages on the M/V

SARAMACCA, a vessel of the Republic of Suriname. Prejudgment

arrest of the vessel occurred in the Port of New Orleans. The

owner of the M/V SARAMACCA appeals several rulings of the district

court regarding the foreclosure action, including the court's order

for interlocutory sale of the vessel pursuant to Rule E(9)(b) of

the Supplemental Rules for Certain Admiralty and Maritime Claims of

the Federal Rules of Civil Procedure. We dismiss the appeal of

certain rulings pursuant to the separate document requirement of

* Circuit Judge of the Eleventh Circuit, sitting by designation. Fed. R. Civ. P. 58, and dismiss the appeal of another ruling for

lack of appellate jurisdiction. Consequently, the only issue

before us is the propriety of the interlocutory sale. Because it

is undisputed that the owner of the M/V SARAMACCA failed to secure

the release of the vessel during the seven months between the time

of arrest and the sale order, we affirm the court's interlocutory

sale order and vacate our prior order which stayed the sale of the

vessel pending appeal.

I

Scheepvaart Maatschappij Suriname, N.V. ("SMS"), an agency of

the Republic of Suriname, is the owner of the M/V SARAMACCA. In

1989 and 1990, Silver Star took two preferred mortgages on the M/V

SARAMACCA as security for certain loans. Those mortgages allegedly

secured an amount up to $1.3 million.

When SMS defaulted on the underlying loans, Silver Star

brought an action in rem to foreclose on the two foreign ship

mortgages. The district court had subject matter jurisdiction over

the action pursuant to an exception to the Federal Sovereign

Immunities Act ("FSIA"), 28 U.S.C. § 1602 et seq. (1988), which

provides that "[a] foreign state shall not be immune from the

jurisdiction of the courts of the United States in any action

brought to foreclose a preferred mortgage . . . ."1 28 U.S.C.

1 "The FSIA is the exclusive means by which a foreign state, as that term is defined in the Act, may be sued in a United States federal court. Under the FSIA, a foreign state is immune from suit))and the district court lacks subject matter jurisdiction))unless one of the specific exceptions contained in sections 1605-1607 is found to apply." Forsythe v. Saudi Arabian Airlines Corp., 885 F.2d 285, 288 (5th Cir. 1989).

-2- § 1605(d). As part of its foreclosure action, Silver Star effected

the prejudgment arrest of the M/V SARAMACCA on April 15, 1992.2 On

June 8, 1992, SMS moved to dismiss Silver Star's complaint on the

ground that Silver Star was a dissolved corporation with no

capacity to sue or contract. By minute entry, the district court

denied the motion to dismiss. The court did not sign or enter a

separate judgment.

On August 18, 1992, Silver Star moved for the interlocutory

sale of the M/V SARAMACCA pursuant to Rule E(9)(b) of the

Supplemental Rules for Certain Admiralty and Maritime Claims of the

Federal Rules of Civil Procedure.3 The district denied Silver

Star's motion without prejudice.

On the same day that it moved for the sale of the vessel,

Silver Star also moved for summary judgment. On November 18, 1992,

the district court signed a minute entry granting Silver Star

partial summary judgment in the amount of $728,600, which the court

found due and owing to Silver Star. The court did not sign or

2 See 28 U.S.C. § 1610(e) ("The vessels of a foreign State shall not be immune from arrest in rem, interlocutory sale, and execution in actions brought to foreclose a preferred mortgage as provided in section 1605(d)."). 3 Rule E(9)(b) provides: If property that has been attached or arrested is perishable, or liable to deterioration, decay, or injury by being detained in custody pending the action, or if the expense of keeping the property is excessive or disproportionate, or if there is unreasonable delay in securing the release of property, the court, on application of any party or of the marshal, or other person or organization having the warrant, may order the property or any portion thereof to be sold; and the proceeds, or so much thereof as shall be adequate to satisfy any judgment, may be ordered brought into court to abide the event of the action; or the court may, upon motion of the defendant or claimant, order delivery of the property to the defendant or claimant, upon the giving of security in accordance with these rules.

-3- enter a separate judgment. By minute entry dated November 25,

1992, the court clarified its earlier minute entry by finding that

an amount up to $1.3 million was secured by the two mortgages. The

court also stated that the purpose of the non-jury trial would be

to determine what amount beyond $728,600 was due and owing to

Silver Star. Again, the court did not sign or enter a separate

judgment.

On November 19, 1992, Silver Star renewed its motion for the

interlocutory sale of the M/V SARAMACCA, citing the excessive

expense of keeping the vessel under seizure and the unreasonable

delay taken by SMS in posting security for the release of the

vessel. On November 20, 1992, the district court granted the

motion and ordered that the vessel be sold by public auction on

December 24, 1992. The court set forth its order for interlocutory

sale on a separate document.

On December 1, 1992, one day before trial, SMS filed motions

to reconsider the grant of partial summary judgment and the

interlocutory sale order, as well as a motion to dismiss for lack

of subject matter jurisdiction. All the motions were premised on

SMS's argument that it had redeemed the mortgages in Suriname on or

around November 27, and that its redemption divested the district

court of subject matter jurisdiction since jurisdiction was

originally premised upon an action to foreclose on preferred

mortgages. By minute entry dated December 2, 1992, the motions

were denied. The court did not sign or enter a separate judgment.

-4- At the one-day trial, SMS stipulated to certain amounts due

and owing to Silver Star, and preserved for appeal its argument

that the alleged redemption of the mortgages divested the district

court of subject matter jurisdiction. The only issue at trial was

whether $24,800 in interest and finance charges relating to a

certain loan were owed to Silver Star. The district court ruled

that this item was also recoverable. The court delayed entry of

final judgment until such time as the remaining claims of other

creditors were resolved.

After trial and before the auction date, SMS sought the

release of the vessel by providing substitute security to Silver

Star. A dispute between SMS and Silver Star as to the appropriate

amount of the security prompted SMS to file a motion to fix

security for release of the vessel. The motion was opposed by

certain unsecured creditors. By minute entry dated December 22,

1992, the district court ordered that if SMS wanted the vessel

released and the sale cancelled, it had to post a bond in favor of

all creditors, whether secured or unsecured. The court did not

sign or enter a separate judgment.

On December 23, 1992, SMS filed its notice of appeal and filed

an emergency motion with this Court to stay the sale of the ship.

We granted SMS's motion for stay, pending the resolution of its

appeal. On appeal, SMS contends that the district court:

(1) erred in denying its motion to dismiss based on Silver Star's

alleged lack of capacity to sue and contract; (2) erred in granting

partial summary judgment in favor of Silver Star; (3) erred in

-5- ordering the interlocutory sale of the M/V SARAMACCA; (4) erred in

denying its motions for reconsideration of the partial summary

judgment and the interlocutory sale order; (5) erred in denying its

motion to dismiss for lack of subject matter jurisdiction; and (6)

erred in ordering that SMS post special release bonds in favor of

the intervening plaintiffs who held unsecured claims against the

M/V SARAMACCA.

II

A

Procedural and jurisdictional defects

We initially address Silver Star's motion to dismiss certain

issues on appeal for failure to satisfy the separate document

requirement of Fed. R. Civ. P. 58. Rule 58 provides in part that

"[e]very judgment shall be set forth on separate document. A

judgment is effective only when so set forth and when entered as

provided in Rule 79(a)." Rule 79(a) of the Federal Rules of Civil

Procedure requires that all judgments and orders filed in each case

be entered on the civil docket kept by the clerk of the district

court. SMS appeals, inter alia, from the district court's denial

of its motion to dismiss based on Silver Star's alleged lack of

capacity to sue or contract, the court's grant of partial summary

judgment for Silver Star, the court's denial of its motions for

reconsideration, and the court's denial of its motion to dismiss

for lack of subject matter jurisdiction. The record demonstrates

that the district court evidenced those rulings by minute entries

only, and never signed or entered a separate judgment regarding

-6- those rulings. We therefore hold that the appeal from those

rulings is premature under the separate document requirement of

Rule 58.4

The record reflects that the interlocutory sale order was set

forth in a separate document and entered on the clerk's civil

docket. The interlocutory sale order therefore satisfied the

requirements of Rule 58. We also have appellate jurisdiction over

the sale order pursuant to 28 U.S.C. § 1292(a)(3) (1988),5 because

the sale order effectively terminated SMS's rights to title and

possession of the M/V SARAMACCA. See Salazar v. Atlantic Sun, 881

F.2d 73, 75 (3d Cir. 1989) (holding that a district court's

confirmation order of its prior interlocutory sale order was

appealable under § 1292(a)(3) because the confirmation order

effectively terminated the owner's rights to title and possession

of the vessel). The district court's interlocutory sale order also

falls within the collateral order exception to the final order

rule, as the sale order affects rights that will be irretrievably

lost in the absence of an immediate appeal. See Coopers & Lybrand

v. Livesay, 437 U.S. 463, 468, 98 S. Ct. 2454, 2457-58, 57 L. Ed.

2d 351 (1978) (stating that to fall within the collateral order

4 We need not decide whether those rulings were final orders or appealable interlocutory orders because the separate document requirement of Rule 58 applies equally to both kinds of decisions. See Theriot v. ASW Well Service, Inc., 951 F.2d 84, 88 (5th Cir. 1992) ("Irrespective of whether the decision of the district court . . . is otherwise appealable as a final order or as an interlocutory order under [28 U.S.C.] § 1292(a)(3), it still must comply with Rules 58 and 79(a) before an appeal can be taken."). 5 Section 1292(a)(3) provides that "[i]nterlocutory decrees of such district courts or the judges thereof determining the rights and liabilities of the parties to admiralty cases in which appeals from final decrees are allowed."

-7- exception, the order must (1) conclusively determine the disputed

question, (2) resolve an important issue completely separate from

the merits of the action, and (3) be effectively unreviewable on

appeal from a final judgment).6

As for the court's ruling that SMS must post a bond in favor

of all creditors, the record reflects that the appeal from this

ruling is premature under Rule 58.7 Because Silver Star does not

object to the appeal from that ruling, however, we are free to

entertain that appeal if the prerequisites for appellate

jurisdiction are met.8 "To be appealable, an order must be final,

it must fall within the specific class of interlocutory orders made

appealable by statute, or it must fall within some jurisprudential

exception." Lakedreams v. Taylor, 932 F.2d 1103, 1107 (5th Cir.

6 As an appellate court, we also have the obligation to satisfy ourselves of the jurisdiction of the district court. When the action was filed, it is undisputed that the district court had subject matter jurisdiction over the action pursuant to an exception to the FSIA. See 28 U.S.C. § 1605(d). To the extent that SMS argues that its alleged redemption of the mortgages in Suriname divested the district court of jurisdiction, we note that the redemption issue relates not to jurisdiction, but to the merits of SMS's action to foreclose on the two ship mortgages. That the alleged redemption of the mortgages may have been a valid ground to dismiss the cause of action on the merits does not change the fact that the district court had jurisdiction over the action because it was one "brought to foreclose a preferred mortgage." Id. We further note that generally speaking, "[f]ederal jurisdiction . . . depends on the state of facts when the suit is filed, and is not lost by a change in the facts afterwards." Brelsford v. Whitney Trust & Sav. Bank, 69 F.2d 491, 492 (5th Cir. 1934); see also Molett v. Penrod Drilling Co., 872 F.2d 1221, 1227 (5th Cir.) (stating that in a diversity suit, jurisdiction is ordinarily "determined at the commencement of the lawsuit, such that subsequent occurrences will not divest the court of subject-matter jurisdiction"), cert. denied, 493 U.S. 1003, 110 S. Ct. 563, 107 L. Ed. 2d 558 (1989). 7 The district court's order was not set forth in a separate document. 8 Rule 58 is not a jurisdictional rule, and thus its requirements may be waived by the parties. See Bankers Trust Co. v. Mallis, 435 U.S. 381, 387, 98 S. Ct. 1117, 1121, 55 L. Ed. 2d 357 (1978) ("The same principles of commonsense . . . that led the Court . . . to conclude that the technical requirements for a notice of appeal were not mandatory where the notice `did not mislead or prejudice' the appellee demonstrate that parties to an appeal may waive the separate-judgment requirement of Rule 58.").

-8- 1991) (citations omitted). The district court's ruling does not

fall within any of these categories. The ruling is not a final

judgment because it did not end the litigation on the merits and

leave nothing for the court to do but execute judgment. See 28

U.S.C. § 1291 (1988); Askanase v. Livingwell, Inc., 981 F.2d 807,

810 (5th Cir. 1993) ("A decision if final when it `ends the

litigation on the merits and leaves nothing for the court to do but

execute the judgment.'" (attribution omitted)). The ruling also

does not constitute an appealable interlocutory order, as the

court's order))requiring that SMS post a bond in favor of all

creditors before the vessel could be released))made no

determination of the rights and liabilities of the parties.9

Lastly, the court's ruling does not fall within a jurisprudential

exception to the final order rule. See Lakedreams, 932 F.2d at

1107 n.7 (citing the recognized exceptions of the collateral order

doctrine, hardship or irreparable injury, and practical finality).

We reject Silver Star's argument that we have appellate

jurisdiction over the court's ruling))that SMS must post a bond in

favor of all creditors to effect the release of the vessel))because

that ruling is "inextricably entwined" with the court's

interlocutory sale order. See, e.g., People of State of Illinois

v. Peters, 861 F.2d 164, 166 (7th Cir. 1988) (stating that when an

ordinarily unappealable interlocutory order is inextricably

entwined with an appealable interlocutory order, the former may be

9 It is undisputed that the court's order did not fall within the other categories of appealable interlocutory orders. See 28 U.S.C. § 1292(a).

-9- reviewed at the same time "if, but only if, there are compelling

reasons for not deferring the appeal of the former to the end of

the lawsuit . . . ."). In Peters, the court held that a

preliminary injunction which froze the appellant's assets was

"inextricably entwined" with an order appointing a receiver for

those assets. Id., 861 F.2d at 166. There the court noted that if

it had ultimately vacated the injunction but let the receivership

stand for lack of jurisdiction, the appellant would not have

obtained any benefit from his successful appeal of the appealable

injunction))i.e., the receiver still would have controlled the

assets. Id. Here, if we should ultimately vacate the

interlocutory sale order, SMS would get the benefit of not having

the ship sold, apart from the amount of security it must thereafter

post to effect the release of the vessel. We therefore hold that

the two orders are not "inextricably entwined" for purposes of

exercising pendent appellate jurisdiction. See id. (stating that

the concept of pendent appellate jurisdiction "is not to be used

for the appeal of normally unappealable interlocutory orders that

happen to be related, even closely related, to the appealable

order"); see also Ackerman v. Oryx Communications, Inc., 810 F.2d

336, 339-40 (2d Cir. 1987); Kershner v. Mazurkiewicz, 670 F.2d 440

(3d Cir. 1982) (en banc). Consequently, the only issue properly

before is whether the district court erred in ordering the

interlocutory sale of the vessel under Rule E(9)(b).10

10 SMS also argues that the district court's various interlocutory orders are appealable because they produced and merged into the court's appealable interlocutory sale order. We reject this argument because the record

-10- B

Propriety of the interlocutory sale

In its renewed motion for interlocutory sale, Silver Star

cited (1) the excessive expense of keeping the vessel under

seizure, and (2) the unreasonable delay in securing the release of

the vessel. Both factors constitute valid and independent grounds

for an interlocutory sale. See Fed. R. Civ. P. Supp. R. E(9)(b).

The district court granted the motion and ordered the sale of the

vessel, but made no separate findings of fact or conclusions of law

supporting its order.11 The court did state in its order that

Silver Star had moved the court for the interlocutory sale of the

vessel pursuant to Rule E(9)(b) and that the "owner of the M/V

SARAMACCA ha[d] failed to furnish security . . . ." It is

undisputed that SMS failed to post security for the release of the

vessel during the seven months between the time of arrest and the

court's sale order.12 This delay in securing the release of the

vessel was unreasonable. See Merchants Nat'l Bank v. Dredge Gen.

G.L. Gillespie, 663 F.2d 1338, 1341-42 (5th Cir. 1981) (holding

that the failure to secure the release of a vessel during the eight

reflects that the sale order was separate and distinct from the court's other orders. 11 Because we are sufficiently informed as to the district court's rationale, and the record contains undisputed facts which support the court's ruling, a remand for findings of fact and conclusions of law is unnecessary. See Armstrong v. Collier, 536 F.2d 72, 77 (5th Cir. 1976) (stating that a remand for failure to comply with Fed. R. Civ. P. 52(a) is not required if a complete understanding of the issues may be had without the aid of separate findings); 9 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2577 (1971). 12 The vessel was arrested on April 15, 1992. The district court's interlocutory sale order was filed on November 20, 1992.

-11- months after arrest constituted an unreasonable delay), cert.

dismissed, 456 U.S. 966, 102 S. Ct. 2263, 72 L. Ed. 2d 865 (1982);

Ferrous Fin. Serv. Co. v. O/S Arctic Producer, 567 F. Supp. 400,

401 (W.D. Wash. 1983) (holding that the failure to secure the

release of a vessel during the four months after arrest constituted

an unreasonable delay). The interlocutory sale was therefore

proper pursuant to Rule E(9)(b).

III

For the foregoing reasons, we DISMISS from this appeal all

issues except the propriety of the district court's interlocutory

sale order. We AFFIRM the district court's judgment regarding the

interlocutory sale of the vessel, and REMAND to the district court

to reschedule the date of the sale. We further VACATE our prior

order staying the sale of the vessel.

-12-