Beluga Holding v. Commerce Capital Corp.

• Decision Date: 24 May 2000
• Docket Number: No. 99-4017,99-4017
• Citation: 212 F.3d 1199
• Parties: (11th Cir. 2000) BELUGA HOLDING, LTD., a foreign corporation, Plaintiff-Appellee, v. COMMERCE CAPITAL CORPORATION, Russell Reed, Louise Reed, Defendants-Third-Party- Plaintiffs-Appellants, John Outerbridge, Douglas Murray Tufts, Norman David Anfossi, Dawson Cheesman, Third-Party Defendants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1199

212 F.3d 1199 (11th Cir. 2000)

BELUGA HOLDING, LTD., a foreign corporation, Plaintiff-Appellee, v. COMMERCE CAPITAL CORPORATION, Russell Reed, Louise Reed, Defendants-Third-Party- Plaintiffs-Appellants, John Outerbridge, Douglas Murray Tufts, Norman David Anfossi, Dawson Cheesman, Third-Party Defendants.

No. 99-4017.

United States Court of Appeals Eleventh Circuit.

May 24, 2000.

Appeal from the United States District Court for the Southern District of Florida.(No. 92-07263-CV-WDF), Wilkie D. Ferguson, Jr., Judge.

Before TJOFLAT, Circuit Judge, and RONEY and FAY, Senior Circuit Judges.

TJOFLAT, Circuit Judge:

In this case, the district court granted summary judgment on a common law tort claim for conversion (of stock certificates) and then directed the clerk of the court to "close" the case. The court did so without disposing of other claims that remained to be litigated. The losing party now appeals the summary judgment. It suggests, and the prevailing party agrees, that since the clerk "closed" the case, we are presented with a final judgment within the meaning of 28 U.S.C. § 1291 (1994) and therefore have jurisdiction over this appeal.¹ We disagree. To be a final judgment, the judgment must have disposed of all claims as to all parties.² The judgment before us plainly does not.

Although we do not have jurisdiction under section 1291, because this case began as a suit in admiralty, we must consider (at appellants' request) whether we should treat this appeal as an interlocutory appeal under 28 U.S.C. § 1292(a)(3) (1994), which provides that "the courts of appeals shall have jurisdiction of appeals from ... [i]nterlocutory decrees ... determining the rights and liabilities of the parties to admiralty cases in which appeals from final decrees are allowed." Having done so, we conclude that the district court's summary judgment did not determine the rights and liabilities of the parties to an admiralty case. We therefore lack jurisdiction to review the judgment, and dismiss this appeal.

I.

On September 30, 1992, Commerce Capital Corporation ("Commerce") entered into a written agreement with Beluga Holdings, Limited ("Beluga") to purchase all of the common stock of Sando, Ltd. ("Sando"), which Beluga owned, for the sum of $535,000.³ The agreement provided that Beluga would surrender its stock certificates to Sando, have Sando issue replacement stock certificates in the names of Commerce and its two shareholders, Russell and Louise Reed, and then deliver those certificates to an escrow agent, which would hold them until Commerce paid the full purchase price. Upon delivery of the certificates to the escrow agent, Commerce would pay Beluga $200,000 in cash, execute a promissory note for $335,000, and, to secure payment of the note, cause Sando to give Beluga a ship's mortgage on Sando's sole asset, the vessel LADY BELUGA.

After the parties signed the contract, things did not go forward as planned. Beluga had Sando issue stock certificates in the names of Commerce and the Reeds, and delivered them to its escrow agent. The escrow agent, however, did not hold them as provided in the agreement because it perceived a "conflict of interest." The agent delivered the certificates to Commerce's attorney (instead of returning the certificates to Beluga), who gave them to Commerce and the Reeds. Armed with the Sando stock certificates, the Reeds obtained possession of the LADY BELUGA and, accompanied by some friends, set course for the Bahamas. Commerce, like the escrow agent, also failed to do what it had promised. It had Sando give Beluga a ship's mortgage (to secure Commerce's $335,000 note to Beluga), but refused to make the $200,000 cash payment. In short, Commerce breached the parties' contract.

Concluding that Commerce had no intention of making the cash payment, Beluga took action. First, Beluga's agents flew to the Bahamas, seized the LADY BELUGA, and piloted the vessel to Fort Lauderdale, Florida. Then, it brought the instant lawsuit in rem to foreclose the ship's mortgage. In an amended complaint, it added three parties as defendants in the action, Commerce and the Reeds, and, invoking the district court's diversity-of-citizenship jurisdiction, asserted two in personam counts against them. In the first count (Count II of the amended complaint), Beluga brought a possessory and petitory action under Supplemental Rule D of the Federal Rules of Civil Procedure,⁴ alleging that it was the rightful owner of the LADY BELUGA and, as such, was entitled to immediate possession, ownership, and title.⁵ The second count (Count III of the amended complaint) alleged that Commerce and the Reeds had tortiously converted the Sando stock certificates Beluga had delivered to its escrow agent.

Commerce and the Reeds denied the allegations of Beluga's amended complaint, and presented several counterclaims, all sounding in common law tort. Among other things, they alleged that, in seizing the LADY BELUGA in the Bahamas, Beluga's agents physically assaulted the Reeds; that prior to entering into the agreement for the sale of the Sando shares, Beluga fraudulently misrepresented that it owned Sando; and that Beluga had unlawfully converted the LADY BELUGA to its own use. In addition to these counterclaims, Commerce and the Reeds brought a third party complaint against the Beluga agents who had allegedly committed these common law torts. In response, the third party defendants moved the district court to dismiss the third party complaint for failure to state a claim for relief.

Following some discovery, Beluga and Commerce both moved the district court for summary judgment. The court granted Beluga's motion on its claim that Commerce and the Reeds had tortiously converted the Sando stock certificates. After reaching this decision, the court apparently concluded it was unnecessary for it to adjudicate Beluga's mortgage foreclosure and possessory and petitory actions, because they were simply "alternative theories seeking the same relief" as Beluga's claim for conversion of the Sando stock certificates.

After finding Commerce and the Reeds liable to Beluga on the conversion claim, the district court ordered Commerce and the Reeds to surrender their Sando stock certificates to Beluga. Turning to the issue of damages, the court, in a subsequent order, held that Beluga was entitled to recover "all of the reasonable costs and fees incurred in recovering a vessel which the defendants' [sic] had converted to their own possession and use under claim of title."⁶ The court stated that although it had not analyzed the admiralty claims, admiralty jurisdiction existed;⁷ thus, Beluga could recover admiralty damages in addition to damages for the tort of conversion. Accordingly, it awarded Beluga$110,000 plus interest in conversion damages, $82,686.87 for substitute custodian fees and dock charges (for the storage of the LADY BELUGA while under arrest), $100,000 in attorney's fees, $36,158.60 in accounting and management fees, and $2,750 in air flight and crew charges (incurred in bringing the vessel to Fort Lauderdale). On entering this order, the court directed the clerk of the court to "close" the case. The clerk did so, thereby removing the case from the court's docket. Commerce thereafter lodged this appeal.

II.

As we stated at the outset, because the district court's summary judgment did not dispose of all of the claims in this case (including the counterclaims and the third party claims), we do not have a final judgment within the meaning of 28 U.S.C. § 1291; thus, we cannot entertain this appeal under that statute. The only statutory provision that might give us jurisdiction is 28 U.S.C. § 1292(a)(3). We therefore consider whether section 1292(a)(3) provides us with jurisdiction.

The Ship's Mortgage Act allows a mortgagee to bring a cause of action in rem for the foreclosure of a preferred ship's mortgage⁸ and gives federal district courts exclusive original jurisdiction to hear that cause of action. 46 U.S.C. § 31325(b)(1), (c) (West Supp.1999). It is uncontested that Sando executed a preferred ship's mortgage in favor of Beluga, creating a lien on the LADY BELUGA in the sum of $335,000. Because an action to foreclose a ship's mortgage is cognizable in admiralty, see Ost-West-Handel Bruno Bischoff GmbH v. Project Asia Line, Inc., 160 F.3d 170, 173 (4th Cir.1998); see also Maryland Nat'l Bank v. The Vessel Madam Chapel, 46 F.3d 895, 898 (9th Cir.1995); 1 Steven F. Friedell, Benedict on Admiralty § 106 (7th ed.2000), the district court had admiralty jurisdiction over Beluga's cause of action to foreclose the mortgage Sando had executed.

Commerce and the Reeds do not, however, appeal a ruling in the foreclosure action because the court did not enter judgment in that proceeding. What the court entered was summary judgment awarding Beluga damages against Commerce and the Reeds for conversion (the difference between the price Commerce agreed to pay for the Sando shares, $535,000, and the sum Beluga received when it sold the shares, $425,000), various expenses, costs, and attorney's fees. To qualify as an interlocutory appeal under section 1292(a)(3), Beluga's cause of action for the conversion of the Sando stock certificates must have been cognizable in admiralty, or the district court's admiralty jurisdiction over the suit to foreclose the ship's mortgage must have somehow extended to the conversion action.

The tortious conversion of stock certificates is not a cause of action cognizable in admiralty because it does not occur on navigable waters and does not have any connection with traditional maritime activity. See Jerome B. Grubart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 534, 115 S.Ct. 1043, 1048, 130 L.Ed.2d 1024 (1995) (stating that for admiralty jurisdiction to exist over a tort claim, the tort must satisfy both the location and the connection tests). Rule 9(h) of the Federal Rules of Civil Procedure,...