Evergreen Marine Corp. v. Six Consignments of Frozen Scallops

• Decision Date: 09 June 1993
• Docket Number: No. 93-1136,93-1136
• Citation: 4 F.3d 90
• Parties: , 21 UCC Rep.Serv.2d 502 EVERGREEN MARINE CORPORATION, Plaintiff, Appellant, v. SIX CONSIGNMENTS OF FROZEN SCALLOPS, In Rem, et al., Defendants, Appellees. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 90

4 F.3d 90

1994 A.M.C. 30, 21 UCC Rep.Serv.2d 502

EVERGREEN MARINE CORPORATION, Plaintiff, Appellant, v. SIX CONSIGNMENTS OF FROZEN SCALLOPS, In Rem, et al.,

Defendants, Appellees.

No. 93-1136.

United States Court of Appeals, First Circuit.

Heard June 9, 1993.

Decided Sept. 17, 1993.

Joseph F. De May, Jr. with whom Cichanowicz, Callan & Keane, New York City, Thomas J. Muzyka, and Clinton & Muzyka, P.C., Boston, MA, were on brief, for appellant.

Evan Slavitt with whom Hugh J. Gorman III and Hinckley, Allen & Snyder, Boston, MA, were on brief, for appellees.

Before TORRUELLA, SELYA and CYR, Circuit Judges.

CYR, Circuit Judge.

Appellant Evergreen Marine Corporation, an ocean carrier, was fraudulently induced to discharge six consignments of frozen scallops, valued at $1.2 million, to Gloucester Corporation, without taking up possession of the bills of lading. After Gloucester became insolvent, the discharged scallops were seized by appellees Fleet National Bank and Cooperative Centrale Raiffeisen-Boerenleenbank B.A. (hereinafter, collectively, "the Banks"), holders of security interests in Gloucester's after-acquired inventory. The district court entered summary judgment for the Banks on Evergreen's claim for conversion. As we conclude on the present record that Evergreen held a superior claim to the scallops, we vacate the judgment and remand for further proceedings.

I FACTS

On various dates in 1991, Evergreen contracted with Towamarin, Ltd. to carry six consignments of frozen scallops from Tokyo, Japan to Port Elizabeth, New Jersey. Evergreen thereupon issued order bills of lading, designating Gloucester as "Notify Party." ¹ When the scallops arrived at Port Elizabeth, Gloucester represented that it held title to the scallops but that the bills of lading were still in transit. For present purposes, the circumstantial evidence, infra, compels the inference that Gloucester's representations of title were false and fraudulent at the time made. See Continental Grain Co. v. Puerto Rico Maritime Shipping Auth., 972 F.2d 426, 429-30 (1st Cir.1992) (under Rule 56(c), all reasonable inferences must be drawn in favor of party opposing summary judgment).

Evergreen released the scallops to Gloucester, without taking up the original bills of lading, upon Gloucester's execution of certain indemnity and guarantee agreements ("letters of guaranty"). The letters of guaranty included Gloucester's representations of title to the scallops under the bills of lading; its promise to produce the bills of lading "as soon as [the bills] shall have arrived and/or come into [Gloucester's] possession;" and its agreement to defend and indemnify Evergreen against third party claims. ² Shortly On February 7, 1992, a third party, Raiffeisenbank Lekkerkerk Holland ("Dutch Bank"), notified Evergreen that it held the true bills of lading for the six consignments of scallops. ³ Facing liability to Dutch Bank, Evergreen sued the Banks, Gloucester, and the scallops, seeking recovery of the scallops or tort damages for their value. ⁴ See Evergreen Marine Corp. v. Six Consignments of Frozen Scallops, 806 F.Supp. 291 (D.Mass.1992). The district court denied admiralty jurisdiction and dismissed Evergreen's Rule D claim against the scallops in rem. Upon affirming its diversity jurisdiction, however, the court applied Massachusetts law to Evergreen's remaining claims. Id. at 293-94. The court dismissed Evergreen's claim against the Banks for tortious interference with contract, see id. at 296, and entered summary judgment for the Banks on Evergreen's conversion and replevin claims, on the ground that the Banks' perfected security interest in Gloucester's inventory was superior to Evergreen's reclamation rights. See id. at 297. As Evergreen's brief on appeal is expressly limited to its conversion claim, its other claims are deemed waived. See Washington Legal Found. v. Massachusetts Bar Found., 993 F.2d 962, 970 n. 4 (1st Cir.1993) (claims not raised on appeal are deemed abandoned); Sheinkopf v. Stone, 927 F.2d 1259, 1263 (1st Cir.1991) (similar).

after issuing the letters of guaranty and removing the scallops to its Massachusetts warehouse, Gloucester became insolvent; the scallops were seized by the Banks pursuant to their security interests in Gloucester's after-acquired inventory.

II GOVERNING LAW

As an initial matter, Evergreen asserts that its conversion claim was subject to the district court's admiralty jurisdiction. Although the Banks do not challenge diversity jurisdiction, see 806 F.Supp. at 295, they contest admiralty jurisdiction, apparently to avoid the application of maritime law. See, e.g., Austin v. Unarco Inds., Inc., 705 F.2d 1, 6 n. 1 (1st Cir.), cert. dismissed, 463 U.S. 1247, 104 S.Ct. 34, 77 L.Ed.2d 1454 (1983) ("once admiralty jurisdiction is established, then all of the substantive rules and precepts peculiar to the law of the sea become applicable") (quoting Brance v. Shumann, 445 F.2d 175, 178 (5th Cir.1971)). The parties have identified no material difference between maritime law and Massachusetts law governing these conversion claims. Compare Goodpasture, Inc. v. M/V Pollux, 602 F.2d 84, 87 (5th Cir.1979), cert. denied, 460 U.S. 1084, 103 S.Ct. 1775, 76 L.Ed.2d 347 (1983) (identifying elements of conversion claim in admiralty), with, e.g., Joseph R. Nolan & Laurie J. Santorio, 37 Massachusetts Practice: Tort Law, Sec. 55 (2d ed. 1989), at 65 (identifying elements of conversion claim under Massachusetts law). Assuming differences exist, however, see Furness Withy (Chartering), Inc. v. World Energy Sys. Assoc., 854 F.2d 410, 412 (11th Cir.1988), cert. denied, 489 U.S. 1013, 109 S.Ct. 1124, 103 L.Ed.2d 186 (1989), we agree with the district court that Massachusetts law governs Evergreen's claim.

The admiralty jurisdiction test for tort claims is "clearly established." Shea v. Rev-Lyn Contracting Co., 868 F.2d 515, 517 (1st Cir.1989). It comprises two functional inquiries: first, the traditional "situs" analysis determines whether the tort was committed or the alleged injury occurred on navigable waters, see id. (citing The Plymouth, 70 U.S. (3 Wall.) 20, 33, 18 L.Ed. 125 (1866)); and, second, the more recently developed "nexus" analysis determines whether the alleged tort bears a significant relationship to traditional maritime activities. See Foremost Ins. Co. v. Richardson, 457 U.S. 668, 102 The present conversion claim founders on the "situs" prong of the Executive Jet analysis. In the admiralty context, as elsewhere, conversion is simply an intentional and wrongful exercise of dominion or control over a chattel, which seriously interferes with the owner's rights in the chattel. See Goodpasture, 602 F.2d at 87; Berry v. Boat Giannina B., Inc., 460 F.Supp. 145, 150 (D.Mass.1978); Restatement (Second) of Torts Sec. 222A (1965). Admiralty jurisdiction over a conversion claim accordingly depends on whether the chattel was "on navigable waters" at the time of the alleged wrongful exercise of dominion. See, e.g., Leather's Best, Inc. v. S.S. Mormaclynx, 451 F.2d 800, 808 (2d Cir.1971) (no admiralty jurisdiction over warehouseman whose loss of property, entrusted by ocean carrier, occurred while goods were on land); cf. Schoening v. Shipment of 102 Jute Bags, 132 F.Supp. 561, 562 (E.D.Pa.1955) (no admiralty jurisdiction over ocean carrier for shipment of goods converted from onshore warehouse; "the conversion was completed when the goods were removed from the warehouse"); see generally The Lydia, 1 F.2d 18, 23 (2d Cir.) cert. denied, 266 U.S. 616, 45 S.Ct. 97, 69 L.Ed. 470 (1924) ("conversion is a tort, ... and if that tort is committed on navigable waters, admiralty has jurisdiction"). In the present case, long before the Banks asserted dominion over the scallops under the terms of their security agreements, Gloucester had removed the scallops to its storage warehouse in Massachusetts, some four hundred miles from the point of Evergreen's disaffreightment in Port Elizabeth, thereby severing any conceivable maritime situs. Compare Leather's Best, 451 F.2d at 808.

S.Ct. 2654, 73 L.Ed.2d 300 (1982); Executive Jet Aviation, Inc. v. Cleveland, 409 U.S. 249, 93 S.Ct. 493, 34 L.Ed.2d 454 (1972). The "situs" and "nexus" requirements must both be met before admiralty jurisdiction can attach. See, e.g., Shea, 868 F.2d at 517 (noting dual nature of test); Carey v. Bahama Cruise Lines, 864 F.2d 201, 207 n. 4 (1st Cir.1988) (same); accord, Cochran v. E.I. DuPont de Nemours & Co., 933 F.2d 1533, 1537 (11th Cir.1991) ("The Court in Executive Jet did not replace the traditional locality test, but instead added a second prong, the nexus test"), cert. denied, --- U.S. ----, 112 S.Ct. 881, 116 L.Ed.2d 785 (1992).

Evergreen bases its assertion of admiralty jurisdiction on the ground that the district court's decision "directly affects the integrity of order bills of lading." Thus, apparently Evergreen would extend the so-called "impact" test for admiralty jurisdiction, applicable to claims for intentional interference with contractual relations, to the present claim for conversion. See Carroll v. Protection Maritime Ins. Co., 512 F.2d 4, 8 (1st Cir.1975) (articulating "impact" test); see also Pino v. Protection Maritime Ins. Co., 599 F.2d 10, 12-13 (1st Cir.) cert. denied, 444 U.S. 900, 100 S.Ct. 210, 62 L.Ed.2d 136 (1979) (reaffirming Carroll 's "extension of location test"). We agree with the district court that the Carroll "impact test" does not apply to the present transaction.

Carroll was an action for tortious interference with contractual relationships, brought by various seamen and commercial fishermen, against marine insurers whose "blacklist" of past claimants allegedly interfered with the claimants' efforts to contract for employment on marine vessels. Although it was alleged that the blacklist prevented the claimants, while on land, from securing contracts of employment, its purpose and effect was to prevent...