720 F.2d 595 (9th Cir. 1983), 81-4174, Matter of Bowoon Sangsa Co., Ltd.

Docket Nº:81-4174.
Citation:720 F.2d 595
Party Name:In the Matter of the Complaint of BOWOON SANGSA CO., LTD., as Owner of the M/T Bowoon No. 7 for Exoneration From or Limitation of Liability. BOWOON SANGSA CO., LTD., Complainant and Appellant, v. MICRONESIAN INDUSTRIAL CORPORATION, Appellee.
Case Date:October 25, 1983
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 595

720 F.2d 595 (9th Cir. 1983)

In the Matter of the Complaint of BOWOON SANGSA CO., LTD.,

as Owner of the M/T Bowoon No. 7 for Exoneration

From or Limitation of Liability.

BOWOON SANGSA CO., LTD., Complainant and Appellant,

v.

MICRONESIAN INDUSTRIAL CORPORATION, Appellee.

No. 81-4174.

United States Court of Appeals, Ninth Circuit

October 25, 1983

Argued March 9, 1982.

Submitted Aug. 1, 1983.

Page 596

Erich P. Wise, Graham & James, Long Beach, Cal., for complainant and appellant.

George L. Waddell, Dorr, Cooper & Hays, San Francisco, Cal., for appellee.

Appeal from the District of Guam, Territory of Guam.

Before HAYNSWORTH, [*] TRASK, and WALLACE, Circuit Judges.

WALLACE, Circuit Judge:

Appellant Bowoon Sangsa Co. (Bowoon) is a Korean corporation with its principal place of business in Seoul, Korea. Appellee Micronesian Industrial Corp. (MIC) is incorporated under the laws of the Trust Territory of the Pacific Islands and conducts business in Palau. Coconut oil belonging to MIC was loaded onto Bowoon's vessel in Koror, Palau, for shipment to ports in California. While leaving the harbor, the ship grounded on a reef. In order to free the vessel, the Master jettisoned approximately 1,530 metric tons of coconut oil--over one-half of the shipment. After she was refloated, the ship proceeded to Korea for repairs.

MIC immediately filed suit for the loss of its cargo in the Trial Division of the High Court of the Trust Territory, Palau District. Six months later, Bowoon filed a petition in the District of Guam for limitation of liability pursuant to 46 U.S.C. Secs. 183(a), 185. The district court issued a temporary restraining order against the commencement or continued prosecution of any actions against Bowoon resulting from the grounding of its ship. MIC moved for modification of the restraining order to allow it to continue with the suit filed earlier against Bowoon in Palau. After examining the geographic relationship of the parties, as well as the location of the accident and the vessel, the court indicated the claims resulting from the grounding of the Bowoon ship were not within the jurisdiction of any United States judicial district. Consequently, Bowoon's limitation petition was dismissed for lack of venue and failure to state a claim for limitation of damages. MIC's suit against Bowoon was subsequently transferred from the Trust Territory High Court to the Supreme Court of the Republic of Palau, where it is now pending.

Page 597

We conclude that the district court misinterpreted the venue rules relating to limitation complaints, and erred in refusing to enjoin MIC's lawsuit pending before the court in Palau. We therefore reverse the judgment of the district court.

I

As a threshold question we must determine if the district court order is reviewable. The denial, modification, or dissolution of an injunction in a limitation proceeding is appealable as a matter of right under 28 U.S.C. Sec. 1292(a)(1). Complaint of Mucho Kay, Inc., 578 F.2d 1156, 1157 (5th Cir.1978). Here, however, Bowoon appeals from the dissolution of a temporary restraining order, a decision that ordinarily is not appealable under section 1292(a)(1). Sohappy v. Smith, 529 F.2d 570, 572 (9th Cir.1976) (per curiam). The question, therefore, is whether the temporary restraining order in this case may be characterized as a preliminary injunction for purposes of appeal under section 1292(a)(1).

Courts examine the effect of an interlocutory order rather than its terminology in determining reviewability under 28 U.S.C. Sec. 1292(a)(1). E.g., Sampson v. Murray, 415 U.S. 61, 86-87, 94 S.Ct. 937, 951, 39 L.Ed.2d 166 (1974); Tagupa v. East-West Center, Inc., 642 F.2d 1127, 1129 (9th Cir.1980); Hotel & Restaurant Employees and Bartenders International Union v. Rollison, 615 F.2d 788, 793 n. 15 (9th Cir.1980). The two factors generally considered determinative are: (1) whether the order extends beyond the twenty-day limit established by Federal Rule of Civil Procedure 65; and (2) whether the district court's decision was preceded by notice and an adversary hearing. Sampson v. Murray, 415 U.S. at 86-87 & n. 58, 94 S.Ct. at 951 & n. 58; Lewis v. S.S. Baune, 534 F.2d 1115, 1121 (5th Cir.1976); 16 C. Wright, A. Miller, E. Cooper & E. Gressman, Federal Practice and Procedure, Sec. 3922, at 32-36 (1977).

Here, both factors are present. The order continued in effect for approximately four months. The parties received a substantial adversary hearing on the motion for modification of the restraining order. We conclude that for purposes of section 1292(a)(1) the order appealed from was a preliminary injunction, and we therefore have jurisdiction to consider Bowoon's appeal. 1

II

We turn next to the issue of venue. A complaint for limitation pursuant to the Limitation of Liability Act, ch. 43, 9 Stat. 635 (1851) (codified as amended at 46 U.S.C. Secs. 181-189) (the Act), permits a vessel owner to limit its liability for damage or loss arising out of a particular voyage to the value of the vessel plus pending freight charges (compensation for the carriage of goods) at the termination of the voyage. 2 See, e.g., Black Diamond Steamship Corp. v. Robert Stewart & Sons, Ltd. (The Norwalk Victory), 336 U.S. 386, 69 S.Ct. 622, 93 L.Ed. 754 (1949). The Act permits both American and foreign shipowners facing multiple suits arising out of one voyage to bring the claimants into one proceeding to apportion the owner's liability. Provided their lawsuits are subject to the orders of a district court, all damage claimants may be enjoined from maintaining separate suits and required instead to file their claims in the limitation proceeding. Jung Hyun Sook v.

Page 598

Great Pacific Shipping Co., 632 F.2d 100, 103 (9th Cir.1980).

We find that the district court erred in its interpretation of the rule governing venue of limitation petitions. Under rule F(9) of the Supplemental Rules for Certain Admiralty and Maritime Claims, 3 if a ship has been lost or is in a foreign country and no suit has been commenced nor attachment made in any district, the complaint may be filed in any district. Venue for Bowoon's petition is proper in the Guam district court under this provision because Bowoon's vessel is in Korea and no damage suits have been filed nor attachments made in any United States district. We find that the court erred in holding that venue was improper in Guam.

III

MIC argues that even if the district court erred in dismissing the case on venue grounds, its decision may be sustained on an alternative ground. MIC claims that an order from the district court cannot restrain the proceedings in Palau because the courts of Palau are independent foreign courts. Bowoon responds that the Trust Territory is not a foreign jurisdiction for purposes of limitation of damages in admiralty cases. 4 The district judge recognized this issue, but because he decided the case on venue grounds he was not required to pass on it. To resolve this question we must review not only legal precedent on the effect of limitation proceedings, but also the recent history of Palau and its judicial institutions.

A.

The nature and effect of limitation proceedings were first explored by the Supreme Court in Oceanic Steam Navigation Co. v. Mellor (The Titanic), 233 U.S. 718, 34 S.Ct. 754, 58 L.Ed. 1171 (1914). There, the owner of the British flagship Titanic filed a petition in the United States to limit its liability. American and English claimants alike argued that English limitation law should govern. Unlike the federal statute, English law provided a fund for recovery even though the ship was lost. The Court, however, held that litigants who chose to sue the owner of the Titanic in this country were limited in their recovery by American limitation laws. The Court stated:

It is true that the act of Congress does not control or profess to control the conduct of a British ship on the high seas.... [and] that the foundation for a recovery upon a British tort is an obligation created by British law. But it also is true that the laws of the forum may decline altogether to enforce that obligation on the ground that it is contrary to the domestic policy, or may decline to enforce it except within such limits as it may impose. It is competent therefore for Congress to enact that in certain matters belonging to admiralty jurisdiction parties resorting to our courts shall recover only to such extent or in such way as it may mark out.

Id. at 732, 34 S.Ct. at 755 (citations omitted). Significantly, the Court held that American limitation law "might be applied to foreign ships if sued in this country although they were not subject to our substantive

Page 599

law." Id. at 733, 34 S.Ct. at 756. The Court's ruling indicates that a limitation proceeding is procedural rather than substantive in nature and that the forum should apply its own law. 5 See id. at 733-34, 34 S.Ct. at 756; G. Gilmore & C. Black, The Law of Admiralty, 939 (2d ed. 1975) (hereinafter Gilmore & Black).

As a corollary to these propositions, "the decree in a limitation proceeding is given merely a domestic and not an international recognition." Gilmore & Black, at 944; see British Transport Commission v. United States, 354 U.S. 129, 142, 77 S.Ct. 1103, 1110, 1 L.Ed.2d 1234 (1957); Jung Hyun Sook v. Great Pacific Shipping Co., 632 F.2d at 102 & n. 7; In re Bloomfield Steamship Co., 422 F.2d 728, 736 (2d Cir.1970); In re Bloomfield Steamship Co., 227 F.Supp. 615, 617 (E.D.La.1964), aff'd, 363 F.2d 872 (5th Cir.1966) (per curiam), cert. denied, 386 U.S. 913, 87 S.Ct. 864, 17 L.Ed.2d 785 (1967). As the Supreme Court stated in The Titanic, 233 U.S. at 732, 734, 34 S.Ct. at 755, 756:

The question is not whether the...

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