162 F.3d 63 (2nd Cir. 1998), 97-9353, Dluhos v. Floating and Abandoned Vessel, Known as New York

Docket Nº:Docket No. 97-9353
Citation:162 F.3d 63
Party Name:Emre E. DLUHOS, Plaintiff-Appellant, v. The FLOATING AND ABANDONED VESSEL, KNOWN AS
Case Date:November 20, 1998
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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162 F.3d 63 (2nd Cir. 1998)

Emre E. DLUHOS, Plaintiff-Appellant,



Official Number 127168, now in the Erie Canal System located

at Waterford, New York, near Troy/Albany, New York,

abandoned in excess of four years, etc., and Sovereign State

of New York, Defendants-Appellees,

Friends of Catawissa, c/o Richard Anderson, Claimant.

Docket No. 97-9353

United States Court of Appeals, Second Circuit

November 20, 1998

Argued Aug. 12, 1998.

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Emre E. Dluhos, Belleville, NJ, Pro Se.

Julie S. Mereson, Assistant Attorney General, Albany, N.Y. (Dennis C. Vacco, Attorney General of the State of New York, Peter G. Crary, Assistant Attorney General, of counsel), for Defendant-Appellee State of New York.

Before: CALABRESI, CABRANES, and STRAUB, Circuit Judges.

STRAUB, Circuit Judge:

Emre E. Dluhos, pro se, appeals from a judgment of the United States District Court for the Northern District of New York (David R. Homer, M.J.) dismissing his complaint for lack of in rem jurisdiction and denying his motion for leave to amend the complaint. After considering the parties' arguments, we hold that the trial court properly dismissed Mr. Dluhos's in rem admiralty claim for lack of jurisdiction. Specifically, Rule D of the Supplemental Rules for Certain Admiralty Claims requires that in order to maintain an in rem admiralty action against a vessel, the vessel generally must be arrested. Because Mr. Dluhos did not post the bond required by the trial court, the court did not arrest the vessel and therefore lacked jurisdiction over the vessel in rem.

We also hold that Mr. Dluhos should not be permitted to amend his complaint to attempt to bring his claim in diversity because any amendment would be futile. While the magistrate judge so concluded, we do not agree with the bases for his decision. In reaching our conclusion, we rely on two distinct grounds. First, it is a well-settled proposition that actions brought against vessels in rem sound exclusively in admiralty. Because Mr. Dluhos's claim is at its core an in rem action against a vessel, it may not proceed in diversity. Second, even if the claim could permissibly be brought in diversity, the substantive law of admiralty must still apply to any diversity action brought by Mr. Dluhos, and admiralty law carries with it the legal fiction that a vessel may never be abandoned. Through the application of this fiction, because the vessel to which Mr. Dluhos seeks title would never have been abandoned as a matter of law, it would therefore be unavailable to him as the vessel's "finder."

Accordingly, we affirm both the dismissal of Mr. Dluhos's complaint and the denial of his motion for leave to amend.


In 1896 the New York, a 158 foot long iron steam tugboat, was built by the Pennsylvania-Reading Railroad. 1 The vessel, then called the Catawissa, 2 began its one hundred year career hauling coal to and from various ports between Boston, Massachusetts, and Charleston, South Carolina. In the 1940s, after the end of the vessel's useful life as a tug, a Baltimore salvage company saved her from the scrap heap, employing her in the less glamorous occupation of steam cleaning sludge from the insides of freighters docked in New York Harbor. In 1992, the Sandusky Maritime History Association, a group of steamship enthusiasts from Sandusky, Ohio, bought the ship, made plans to turn her into a museum, and began towing her through the Erie Canal towards Lake Erie and the Sandusky Peninsula. Passing Waterford, New York, the vessel became trapped in the Erie Canal and subsequently began to leak oil. Overwhelmed by the cost of removing the ship and paying for the ensuing cleanup, the Sandusky Maritime History Association dissolved, leaving the vessel in the Erie Canal. As a result, state and federal authorities bore the half million dollar cost of the oil-spill cleanup. The New York remained floating and untended in roughly the same location until the inception of this lawsuit. 3

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Mr. Dluhos is a retired ship engineer living in New Jersey, who by his own estimation has over forty years' seagoing experience as a chief engineer. At some point before March of 1996, Mr. Dluhos boarded the vessel and posted notices on it claiming ownership. On March 26, 1996, he filed a complaint in the Northern District of New York, alleging jurisdiction both in admiralty in rem and in diversity, seeking title to the vessel under the law of finds. Specifically, he claimed that the New York had been abandoned and that, as its "finder," he acquired ownership of the vessel. Although the vessel was the only named defendant in the action, Mr. Dluhos also named the State of New York as an indispensable party under Rule 19(a) of the Federal Rules of Civil Procedure. In its answer, the State asserted numerous defenses, including that the complaint failed to establish an in rem admiralty action and that the court lacked jurisdiction over the vessel, the subject matter of the litigation. In the course of the fourteen months that followed, Mr. Dluhos amended his complaint twice, both times asserting jurisdiction only in admiralty in rem. 4

In October 1996, Mr. Dluhos sought to effect the arrest of the vessel and to be appointed the vessel's custodian during the pendency of the action. As a condition of arrest and appointment of Mr. Dluhos as custodian, the trial court required the posting of a $5,000 bond to cover the cost of insuring the vessel. Mr. Dluhos moved unsuccessfully to have the bond waived. In April 1997, because Mr. Dluhos had not posted the bond, the magistrate judge denied the motion to arrest the vessel. That June, the State of New York filed a motion to dismiss the complaint for lack of in rem jurisdiction because the res had not been arrested. Responding to the State's motion, Mr. Dluhos sought to amend his complaint a third time to bring his claim in diversity. In a published opinion, the magistrate judge granted the state's motion to dismiss and denied Mr. Dluhos's third motion to amend. See Dluhos v. Floating and Abandoned Vessel, Known as "New York," 979 F.Supp. 138 (N.D.N.Y.1997).

Analyzing Mr. Dluhos's most recent complaint, which alleged in rem admiralty jurisdiction only, the magistrate judge held that "before a court may exercise jurisdiction in an in rem admiralty action, the defendant vessel must be arrested within the court's territorial jurisdiction." Id. at 140. Because the vessel was never arrested, the magistrate judge determined that the court lacked jurisdiction over Mr. Dluhos's claim for title to the vessel and therefore dismissed the complaint. Id. Turning to the motion to amend the complaint, the magistrate judge first found that the New York was not a "dead ship" and that it therefore remained a vessel for purposes of admiralty jurisdiction. Id. The magistrate went on to hold that Mr. Dluhos's "assertion of diversity jurisdiction cannot succeed because his entire claim of title to the vessel is based on the law of finds, a concept grounded in admiralty." Id. at 141. Accordingly the court denied the motion to amend the complaint because any amendment would be futile. Id.

Early in the litigation, pursuant to 28 U.S.C. § 636(c) and Rule 73 of the Federal Rules of Civil Procedure, the parties consented to have the magistrate judge conduct all further proceedings in the matter including any order of final judgment, waiving any appeal to a District Judge. Their appeal therefore lies with us, and for the reasons that follow, we affirm.

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I. Motion To Dismiss

We must first determine whether the trial court properly granted New York State's motion to dismiss for failure to arrest the res. The magistrate judge based his decision on the complaint supplemented by the undisputed fact that the vessel was not arrested. Under those circumstances, we review de novo a dismissal for lack of in rem jurisdiction. See United States v. One 1987 Mercedes Benz Roadster 560 SEC, 2 F.3d 241, 243 (7th Cir.1993). As explained below, we find no error in the magistrate judge's dismissal of the complaint and therefore affirm that portion of his ruling.

The magistrate judge was correct to look only to the allegations in Mr. Dluhos's most recent complaint as " '[i]t is well established that an amended complaint ordinarily supercedes the original, and renders it of no legal effect.' " Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1128 (2d Cir.1994) (quoting International Controls Corp. v. Vesco, 556 F.2d 665, 668 (2d Cir.1977), cert. denied, 434 U.S. 1014, 98 S.Ct. 730, 54 L.Ed.2d 758 (1978)). In the most recent complaint, Mr. Dluhos pleads only an admiralty action in rem, seeking to acquire title to the vessel New York through admiralty's law of finds. The Supplemental Rules for Certain Admiralty and Maritime Claims explicitly provide for such an action--a petitory action against a vessel--in Rule D. The Rule explains in pertinent part that: "In all actions ... to try title maintainable according to the course of the admiralty practice with respect to a vessel ... the process shall be by a warrant of arrest of the vessel...." Fed.R.Civ.P. Supp. R. D.

A plain reading of the text of the rule makes clear that a warrant of arrest of the vessel must issue for the trial court to establish jurisdiction over the res. Id. ("[T]he process shall be by a warrant of arrest of the vessel ....") (emphasis added). In this way, the rule complies with historical admiralty practice, which requires a vessel's arrest in order to maintain an in rem action against it. See Goodman v.1973 26 Foot Trojan Vessel, 859 F.2d 71, 74 (8th Cir.1988) (affirming dismissal of an action under Supplemental Admiralty Rule C because even though the claimant requested a warrant of...

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