428 F.2d 888 (5th Cir. 1970), 27497, In re Unterweser Reederei, Gmbh

Docket Nº:27497.
Citation:428 F.2d 888
Party Name:In the Matter of the Complaint of UNTERWESER REEDEREI, GMBH. v. M/S BREMEN and Unterweser Reederei GMBH, Defendants-Appellants. ZAPATA OFF-SHORE COMPANY, Plaintiff-Appellee,
Case Date:June 19, 1970
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 888

428 F.2d 888 (5th Cir. 1970)

In the Matter of the Complaint of UNTERWESER REEDEREI, GMBH.

ZAPATA OFF-SHORE COMPANY, Plaintiff-Appellee,

v.

M/S BREMEN and Unterweser Reederei GMBH, Defendants-Appellants.

No. 27497.

United States Court of Appeals, Fifth Circuit.

June 19, 1970

Page 889

David C. Kerr, Jack C. Rinard, Tampa, Fla., Faiis, Ellis, Cutrone, Gilmore & Lautenschlaeger, J. Y. Gilmore, Jr., Warren Faris, New Orleans, La., for defendants-appellants.

Dewey R. Villareal, Jr., Tampa, Fla., James K. Nance, Houston, Tax., for plaintiff-appellee.

Before WISDOM, GEWIN and AINSWORTH, Circuit Judges.

GEWIN, Circuit Judge:

Unterweser Reederei, GMBH (Unterweser), seeks review of an order of the district court denying a stay of the limitation action Unterweser had filed in that court and enjoining Unterweser from proceeding further with litigation concerning the same subject matter in an English court. The limitation action was brought after Zapata Off-Shore Company (Zapata) filed a complaint in admiralty against Unterweser and its tug Bremen.

Unterweser, a German corporation, contracted with Zapata, a Delaware corporation, with its principal place of business in Houston, Texas, to tow Zapata's drilling barge Chaparral 1 from Venice, Louisiana to Ravenna, Italy. The towage contract contained a forum selection clause providing that any dispute must be litigated before the High Court of Justice in London, England. On 5 January 1968, the Unterweser tug Bremen 2 departed Venice, Louisiana with the Chaparral in tow. During the morning of 9 January 1968, the Chaparral sufferred a casualty while proceeding in the Gulf of Mexico. Pursuant to instructions from Zapata, Bremen made for Tampa Bay, the nearest port. Promptly upon arrival, Bremen was arrested by a United States Marshal and her master served with a copy of Zapata's complaint seeking $3,500,000 in damages from Bremen and Unterweser. 3

Unterweser filed a motion praying in the alternative that the district court (1) dismiss for want of jurisdiction, (2) decline jurisdiction on the basis of forum non conveniens, or (3) stay further prosecution of the action. 4 Unterweser

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subsequently instituted an action against Zapata in the High Court of Justice in London, claiming moneys due under the towage contract and damages for breach of contract. Zapata was served with the summons of that court; it appeared and moved that the English court dismiss its process. The High Court of Justice denied Zapata's motion holding that it had jurisdiction of the action. This determination was affirmed by the English Court of Appeal which held the forum selection provision of the contract to be reasonable and found no circumstances which would require it to deny enforcement of the agreement.

Before the English Court of Appeal had rendered the above decision, Unterweser filed a complaint in the district court seeking exoneration or limitation of liability arising from the casualty. 5 Consequently the district court entered the usual injunction restraining claimants from proceeding outside the limitation court regarding the events of 9 January 1968. Zapata filed its claim in the limitation proceedings asserting the same cause of action as in its original action. Unterweser filed objection to Zapata's claim and counterclaimed against Zapata alleging the same claims embodied in its English action plus an additional salvage claim.

Zapata moved for an injunction restraining Unterweser from litigating further in the High Court of Justice. Unterweser moved to stay its own limitation proceeding pending a determination of Unterweser's suit in the English court. The district court denied the requested stay and enjoined Unterweser from proceeding in any other court regarding the same matter prior to a determination of the limitation action. 6 Unterweser appeals from these orders, and we affirm.

I

We shall first comment on the power of the district court to restrain Unterweser from proceeding with its action in England. A court of equity has the traditional power to enjoin parties, properly before it, from litigating in another court. This power has been exercised where the foreign litigation would: (1) frustrate a policy of the forum issuing the injunction; (2) be vexatious or oppressive; (3) threaten the issuing court's in rem or quasi in rem jurisdiction; or (4) where the proceedings prejudice other equitable considerations. 7 We must now determine whether this traditional power of the Chancellor appertains to a district court sitting in a limitation proceeding.

Prior to the decision below there has been scant judicial discussion of the power of an admiralty court to enjoin a party bringing a limitation action from contemporaneous litigation in foreign courts. Our research has added little of significance to the authority cited by the district court. The principal decision on the question was rendered by the Second Circuit in The Salvore. 8 In that case, the owners of cargo damaged while on board the Salvore brought a libel in the district court. The Salvore's owner sued the cargo claimants in an Italian court for abuse of process, and subsequently brought a limitation proceeding in the district court. On a motion by the cargo claimants, the district court held that it was without power to stay the limitation proceeding or to compel the shipowner to discontinue its Italian suit. In reversing, the Second Circuit relied on the Supreme

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Court's description of a limitation proceeding as 'the administration of equity in an admiralty court; look(ing) to a complete and just resolution of a many cornered controversy.' 9 It stated:

The limitation proceeding was an appeal to a court of admiralty, which is a court of equity, * * * and the appellee (shipowner), seeking equity, should willingly do equity. * * * It must be willing to bring in all the controversies in the limitation proceedings, for it has invoked the court's aid. 10

In A. C. Dodge, Inc. v. J. M. Carras, Inc., 11 the Second Circuit relied on its Salvore decision in affirming an order of the district court dissolving an injunction entered against claimants in the shipowner's limitation proceeding, and providing that it would be reinstituted only if the shipowner obtained a stay of an action which it was simultaneously pursuing in another federal court. Unterweser seeks to distinguish these cases on the ground that neither involved an injunction of the sort issued in the present case. In Salvore and Dodge, the courts sought to coerce the shipowner by conditioning the continuance of the injunction, that restrained claimants from litigating outside the limitation court, on voluntary forebearance of the shipowner's foreign action. We find no implication in these cases which would influence us to hold that district courts are impotent to accomplish directly what these courts sought to effect circuitously. To the contrary, the court in Salvore expressly stated:

The court first securing jurisdiction has the authority and power of enjoining the parties to the litigation from proceeding in another jurisdiction. And the court has an undoubted authority to control all persons and things within its own territorial limits. 12

Unterweser emphasizes the third case of the trilogy cited in the district court's opinion, Petition of A/S J. Ludwig Mowinckels Rederi. 13 There the district court refused to enjoin litigation in an English court by a shipowner participating in a limitation proceeding before the district court. Though there is indication in the opinion that the Mowinckels court felt itself limited to the type of order fashioned in Salvore and approved in Dodge, we agree with the position of the district court below that Mowinckels was based on a determination that any restraint of the shipowner was improper under the attendant circumstances.

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Since the district court entered its orders below, Mowinckels has been affirmed by the Second Circuit. 14 The opinion on appeal supports the interpretation given Mowinckels by the district court in the instant case. Citing Salvore and Dodge with approval, the Second Circuit stated:

There can be no question * * * that one purpose of the Limitation Act is a concursus or concourse of claimants, and that in an appropriate situation the court may have power to enjoin persons within its jurisdiction with respect to their activities abroad. 15

The opinion makes it clear that the district court's action was based on the equitable considerations of that case, and implies no general limitation on a district court's equitable powers in a limitation action.

Concededly, the lower court could have restrained Mowinckels' continuance of its collision action in the English courts. But it declined to do so. We can find no fault in this decision. Under the circumstances of this case the lower court's decision was an appropriate exercise of its discretion. 16

Unterweser also draws our attention to the proposition, quoted by the district court in Mowinckels from British Transport Commission v. United States, 17 that:

'No compulsion could be exerted on foreign claimants to file claims' and * * * 'an injunction against suits being filed in foreign jurisdictions would be ineffective unless comity required its recogition.' 18

This practical observation is not pertinent to the present situation. Unterweser is not merely a potential claimant outside the jurisdiction of the district court; it is a party which has invoked, albeit reluctantly, that very jurisdiction. Though a domestic court has no power to restrain the courts of a foreign nation, it has admitted power to deal with litigants properly before it. An exercise of the latter power is not the...

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