Morewitz v. West of England Ship Owners Mut. Protection and Indem. Ass'n (Luxembourg)
| Citation | 62 F.3d 1356 |
| Decision Date | 06 September 1995 |
| Docket Number | No. 94-6650,94-6650 |
| Parties | Stephen J. MOREWITZ, as Administrator of the Estates of Chrisos Passalis; Constantinos Stamatis; Gerassimos Markatos; George Marangos; Jesus Ramos Mayorquin; Efran Alvarado Martinez; and Mukhtar Ahmed, deceased, Plaintiffs-Appellants, v. The WEST OF ENGLAND SHIP OWNERS MUTUAL PROTECTION AND INDEMNITY ASSOCIATION (LUXEMBOURG), Defendant-Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (11th Circuit) |
Ross Diamond, III, Diamond Hasser & Frost, Mobile, AL, for appellants.
Joseph M. Allen, Jr., Mobile, AL, for appellee.
Appeal from the United States District Court for the Southern District of Alabama.
Before CARNES and BARKETT, Circuit Judges, and FLOYD R. GIBSON *, Senior Circuit Judge.
Stephen Morewitz, 1 as administrator for the estates of several of the crew members who were aboard the M/V IMBROS when it disappeared at sea, brought wrongful death actions against the vessel's owner and managing agent in the United States District Court for the Eastern District of Virginia. After obtaining a favorable judgment, Morewitz brought this action in the United States District Court for the Southern District of Alabama, seeking to enforce the judgment and recover on a marine protection and indemnity policy issued by West of England Ship Owners Mutual Protection and Indemnity Association ("West of England").
The district court dismissed Morewitz's lawsuit for lack of subject matter jurisdiction, concluding that this action was not based on a marine insurance contract, but rather, on English bankruptcy statutes. We reversed and held that this case fell within the federal court's admiralty and maritime jurisdiction pursuant to 28 U.S.C. Sec. 1333. 2 Morewitz v. The West of Eng. Ship Owners Mut. Protection and Indemnity Ass'n (Lux.), 896 F.2d 495, 496 (11th Cir.1990) ("Morewitz I ").
On remand, the district court granted West of England's motion to stay the proceedings pending arbitration. Morewitz appealed, and we dismissed for lack of jurisdiction because the district court's order was interlocutory and not subject to appeal. Morewitz v. The West of Eng. Ship Owners Mut. Protection and Indemnity Ass'n (Lux.), 5 F.3d 1498 (11th Cir.1993) (unpublished) ("Morewitz II ").
On remand again, Morewitz argued that the deceased crew members were not bound by the arbitration agreement and, alternatively, that West of England had waived its right to compel arbitration. Unpersuaded by Morewitz's arguments, the district court ordered that the parties had six months in which to demonstrate that they were proceeding with arbitration. Morewitz requested that the district court reconsider its stay order or certify the question for immediate appeal. The district court denied both of these motions. As a result of Morewitz's continued refusal to comply with the arbitration order, the district court dismissed this case with prejudice for want of prosecution.
Upon Morewitz's third appeal to this Court, the issues before us are whether the district court erred in ordering arbitration, and, if so, whether it was an abuse of discretion to dismiss Morewitz's case with prejudice for failure to comply with the arbitration order. Because we conclude that the district court erred in compelling arbitration, we VACATE the district court's order dismissing this action and REMAND for further proceedings consistent with this opinion.
On December 13, 1975, the M/V IMBROS loaded with cargo in Mobile, Alabama, and departed for Quebec, Canada. Three days into its voyage, the crew notified the vessel's managing agent about leakage in the salt water cooling system for the main engine gears. On December 18, the crew broadcast an SOS or "Mayday message" from international waters in the region known as the Bermuda Triangle. The M/V IMBROS disappeared at sea, and no trace of the ship, its cargo, or its eighteen crew members was ever found.
The M/V IMBROS was registered to Imbros Shipping Company, Limited, ("Imbros Shipping") and managed by General Development & Shipping Enterprises Company, Limited, ("General Development"). Both Imbros Shipping and General Development were Cypriot corporations owned by George Tsourinakis and his wife. West of England had issued a marine protection and indemnity policy covering the M/V IMBROS, which was in force and effect at the time of the vessel's disappearance.
As part of the risks insured against, the West of England policy provided compensation for the loss of life of any person on board an insured vessel. Furthermore, according to Rule 64 of the West of England Ship Owners Mutual Protection and Indemnity Association:
If any difference or dispute shall arise between an insured Owner ... and the Association out of or in connection with these Rules or arising out of any contract between an insured Owner and the Association or as to the rights or obligations of the Association or the insured Owner thereunder or in connection therewith or as to any other matter whatsoever, such difference or dispute shall be referred to the arbitration in London of a sole legal Arbitrator.... The obtaining of an Arbitration Award as hereinbefore provided shall be a condition precedent to the right of any insured Owner to bring or maintain any action, suit or other legal proceedings against the Association in respect of any such difference or dispute.
The record indicates that during 1976 and 1977, West of England paid settlements in Greece to the families of at least seven of the M/V IMBROS crew members. In addition, Morewitz alleged that West of England reimbursed General Development for the loss of vessel and cargo by giving the company credits against its unpaid premiums or "calls."
Between 1976 and 1978, Morewitz brought wrongful death actions on behalf of seven of the deceased crew members against Imbros Shipping and General Development. The United States District Court for the Eastern District of Virginia dismissed Imbros Shipping for lack of personal jurisdiction, but determined that it had personal jurisdiction over General Development. West of England retained counsel to defend this action both before and after the district court dismissed Imbros Shipping from the litigation.
Morewitz then argued that General Development was an alter ego for Imbros Shipping and that General Development had procured the West of England policy and was responsible for the premiums. Morewitz also claimed that, according to George Tsourinakis' deposition testimony, General Development exercised all incidents of ownership over the M/V IMBROS, effectively making General Development a "demise charter party." 3
In attempts to establish the party responsible for the M/V IMBROS at the time of its disappearance, Morewitz submitted interrogatories to General Development, but the company refused to respond. As a sanction for General Development's failure to comply with the district court's discovery order, the court found General Development to be the owner pro hac vice of the M/V IMBROS at the time of the loss. 4
The district court then determined that the M/V IMBROS was inadequately staffed and unseaworthy when it disappeared and that General Development was liable for the deaths of the vessel's crew members. On April 3, 1980, the district court entered judgment in favor of the decedents for a total of $459,456.36 in damages. General Development appealed, and the judgment was summarily affirmed by the Fourth Circuit Court of Appeals. Morewitz v. General Dev. & Shipping Enters. Co., Ltd., 660 F.2d 491 (4th Cir.), cert. denied, 454 U.S. 939, 102 S.Ct. 474, 70 L.Ed.2d 246 (1981). At some point during the litigation in Virginia, General Development became insolvent and is now defunct. The judgment remains unpaid.
Morewitz registered the Virginia judgment in the United States District Court for the Southern District of Alabama. 5 On June 26, 1985, Morewitz filed the present lawsuit to enforce the judgment and recover proceeds under West of England's marine protection and indemnity policy that covered the M/V IMBROS at the time of its disappearance.
In the first incarnation of this litigation, Morewitz alleged that this suit was based on: (1) English bankruptcy statutes, 6 which created third party rights in favor of the decedents; and (2) a marine insurance contract, which fell within federal admiralty and maritime jurisdiction. West of England filed a motion to dismiss, arguing that the district court lacked subject matter jurisdiction.
Erroneously believing that it was constrained to characterize these proceedings either as a foreign bankruptcy or an admiralty action, the district court determined that this suit was based on the English bankruptcy statutes. Consequently, the district court dismissed for lack of subject matter jurisdiction. Morewitz I, 896 F.2d at 498. This Court reversed, holding that "the subject matter of the suit is liability under a marine insurance policy, so the basis of [Morewitz's] case also is admiralty subject matter." Id. at 500.
On remand, Morewitz abandoned his argument that the English bankruptcy statutes applied, and instead, relied solely on the Alabama direct action statutes. Ala.Code Secs. 27-23-1 and 27-23-2 (1975). As we stated in Morewitz I, direct action statutes "give a group of persons--those whose possible injury was the risk insured by the contract--direct standing to sue an insurer by putting them 'in the shoes' of the assured." 896 F.2d at 499.
On October 17, 1990, West of England filed a motion to stay the proceedings pending arbitration, 7 and on January 31, 1991, the district court granted West of England's motion. Morewitz then filed a motion for reconsideration and argued that West of England had waived any right that it may have had to compel arbitration. The district court denied Morewitz's motion, concluding that West of England was not in...
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