542 F.3d 43 (2nd Cir. 2008), 07-0548, Williamson v. Recovery Ltd. Partnership

Docket Nº:07-0548-cv(L), 07-0746-cv(XAP).
Citation:542 F.3d 43
Party Name:Michael WILLIAMSON, Estate of Don C. Craft, Kirk O'Donnell, John Lettow, Timothy McGinnis, Fred Newton, William Watson, Chris Hancock, Dale Schoeneman, and International Deep Sea Survey, Inc., Plaintiffs-Appellees-Cross-Appellants, v. RECOVERY LIMITED PARTNERSHIP, Columbus Exploration, LLC, Columbus-America Discovery Group, Inc., Omni Engineering,
Case Date:August 22, 2008
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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542 F.3d 43 (2nd Cir. 2008)

Michael WILLIAMSON, Estate of Don C. Craft, Kirk O'Donnell, John Lettow, Timothy McGinnis, Fred Newton, William Watson, Chris Hancock, Dale Schoeneman, and International Deep Sea Survey, Inc., Plaintiffs-Appellees-Cross-Appellants,

v.

RECOVERY LIMITED PARTNERSHIP, Columbus Exploration, LLC, Columbus-America Discovery Group, Inc., Omni Engineering, Inc., Omni Engineering of Ohio, Inc., Economic Zone Resource Associates, Economic Zone Resource Associates, Ltd., EZRA, Inc., EZRA of Ohio, Inc., Econ Engineering Associates, Inc., Doe E., Inc., Thomas G. Thompson, Gilman D. Kirk, James F. Turner, Michael J. Ford, and W. Arthur Cullman, Defendants-Appellants-Cross-Appellees.

Nos. 07-0548-cv(L), 07-0746-cv(XAP).

United States Court of Appeals, Second Circuit.

August 22, 2008

Argued: May 15, 2008.

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William M. Mattes, Dinsmore & Shohl, LLP, Columbus, OH, and William G. Ballaine, Landman Corsi Ballaine & Ford, P.C., New York, NY, for Defendants-Appellants-Cross-Appellees Thompson, Kirk, Turner, Ford and Cullman.

Richard T. Robol and Melanie L. Frankel, Robol Law Office, LPA, Columbus, OH, for Defendants-Appellants-Cross-Appellees Recovery Limited Partnership, Columbus Exploration, LLC, Columbus-America Discovery Group, Inc., Columbus Exploration Limited Partnership, Omni Engineering, Inc., Omni Engineering of Ohio, Inc., Economic Zone Resource Associates, Economic Zone Resource Associates, Ltd., EZRA, Inc., EZRA of Ohio, Inc., Econ Engineering Associates, Inc., Doe E., Inc.

James T. Shirley, Jr. and Michael J. Frevola, Holland & Knight, LLP, New York, NY, for Plaintiffs-Appellees-Cross-Appellants.

Before: CARDAMONE, MINER, and POOLER, Circuit Judges.

POOLER, Circuit Judge:

On March 31, 2006, Plaintiffs filed a civil action in the Court of Common Pleas for Franklin County, Ohio, arising out of the same set of facts and circumstances as in this case. On April 24, 2006, Defendants removed the suit to the United States District Court for the Southern District of

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Ohio on the ground that the dispute was over a maritime contract and thus was governed by federal law. On July 28, 2006, Plaintiffs filed this civil action in the Southern District of New York (Swain, J.), alleging that each Plaintiff had a maritime claim against the Defendants. On the same day, Plaintiffs obtained an ex parte attachment order, invoking Supplemental Admiralty Rule B (“Rule B" ). FED.R.CIV.P., ADM. SUPP. RULE B. On October 18, 2006, the Defendants moved to vacate the attachment. On January 16, 2007, the district court below issued its decision, which 1) vacated the attachment as to the individual Defendants other than Thomas G. Thompson, and 2) denied vacatur as to Defendants Economic Zone Resources Associates, Inc. (“EZRA" ), Recovery Limited Partnership (“RLP" ), and Columbus Exploration, LLC (“CXLLC" ), but vacated the attachments as to the remaining Defendants, and 3) denied the individual Defendants' requests for an award of compensation, costs, and fees for the wrongful attachment. Defendants appeal the district court's decision, arguing that the district court erred in finding: (1) that the contracts between Plaintiffs and Defendants are maritime contracts, (2) that the notice requirements of Rule B were met, (3) that equitable factors did not weigh in favor of vacating the maritime attachments, and (4) that a Rule 11 hearing was not required. Plaintiffs cross-appeal the district court's decision to vacate the maritime attachments against all Defendants, except Thomas G. Thompson, EZRA, RLP, and CXLLC. Because we agree with all of the district court's determinations, we AFFIRM the judgment of the district court.

BACKGROUND

I. Procedural Background

On March 31, 2006, Plaintiffs filed a civil action in the Court of Common Pleas for Franklin County, Ohio, over the alleged nonpayment of contracts entered into between Plaintiffs and Defendants in connection with the search for the shipwreck S.S. Central America in the 1980s. Plaintiffs are individuals who contracted to participate in the S.S. Central America search and recovery efforts and a company that supplied side scan sonar equipment to one of the Defendant corporations. Defendants are individuals who were, or allegedly were, parties to certain contracts or are, or were, directors or officers of one of the Defendant corporations, and several corporations that were allegedly responsible for, and involved in, the search and recovery operation, and the alleged successors and alter-egos of those companies. On April 24, 2006, Defendants removed the suit to the United States District Court for the Southern District of Ohio on the ground that the dispute was over a maritime contract and thus was governed by federal law. On July 28, 2006, Plaintiffs filed this civil action in the Southern District of New York (Swain, J.), alleging that each Plaintiff had a maritime claim against the Defendants. Plaintiffs immediately obtained an ex parte order for the issuance of a writ of attachment pursuant to Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims (“Supplemental Rules" ). FED.R.CIV.P., ADM. SUPP. RULE B. On October 18, 2006, the Defendants moved, through an order to show cause, to vacate the writ and the attachment achieved under the writ, to dismiss the complaint, and for attorneys' fees and costs incurred in connection with the application. The district court, pursuant to Rule E of the Supplemental Rules, heard arguments on the matter and received pre-and post-hearing briefs and evidentiary submissions. FED.R.CIV.P., ADM. SUPP. RULE E(4)(f). On January 16, 2007, the

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district court issued its decision, which (1) vacated the attachment as to the individual Defendants other than Thomas G. Thompson, and (2) denied vacatur as to Defendants EZRA, RLP, and CXLLC, but vacated the attachments as to the remaining corporate Defendants, and (3) denied the Defendants board members' request for an award of compensation, costs, and fees for the wrongful attachment. Defendants timely filed their notice of appeal, and Plaintiffs cross-appealed the district court's decision to vacate certain attachments.

II. Facts

Plaintiffs assisted Defendant Thompson, at various times between 1986 and 1988, in the location and recovery of the S.S. Central America, a United States Mail steamship that sank off the coast of South Carolina in 1857. As part of the compensation offered to Plaintiffs for their assistance on the project, Plaintiffs and Thompson entered into non-disclosure and non-compete agreements that gave Plaintiffs rights to a fraction of a percentage of the total recovery of the shipwreck-i.e., the gross value of gold, silver, and valuable artifacts recovered from the shipwreck. The individual Plaintiffs were members of Defendant Thompson's “team" that first imaged the S.S. Central America in 1986, confirmed that the wreck was in fact the S.S. Central America in 1988, and recovered the gold, silver, and other artifacts from the ship. Additionally, Plaintiffs allege that one of the Plaintiffs, International Deep Sea Survey, Inc. (“IDSS" ), leased a side sonar to one of the Defendants, Recovery Limited Partnership (“RLP"...

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