Folkstone Maritime, Ltd. v. CSX Corp., s. 88-2064

• Decision Date: 09 March 1989
• Docket Number: Nos. 88-2064,88-2137,s. 88-2064
• Citation: 866 F.2d 955
• Parties: FOLKSTONE MARITIME, LTD., a Cyprus Corporation, Plaintiff and Counterdefendant- Appellee, v. CSX CORPORATION, a corporation, and CSX Transportation, Inc., a corporation, Defendants and Counterplaintiffs-Appellants, v. The M/V PONTOKRATIS, a vessel, Counterdefendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 955

866 F.2d 955

1989 A.M.C. 867

FOLKSTONE MARITIME, LTD., a Cyprus Corporation, Plaintiff and Counterdefendant- Appellee, v. CSX CORPORATION, a corporation, and CSX Transportation, Inc., a corporation, Defendants and Counterplaintiffs-Appellants, v. The M/V PONTOKRATIS, a vessel, Counterdefendant-Appellee.

Nos. 88-2064, 88-2137.

United States Court of Appeals Seventh Circuit.

Argued Dec. 5, 1988.

Decided Jan. 26, 1989.

Rehearing Denied March 9, 1989.

Michael W. Rathsack, Chicago, Ill., for CSX Corp.

Michael A. Snyder, Snyder & Gerard, Chicago, Ill., for Folkstone Maritime, Inc.

Before BAUER, Chief Judge, EASTERBROOK, Circuit Judge, and GRANT, Senior District Judge. ^*

BAUER, Chief Judge.

On May 6, 1988, the M/V Pontokratis was passing through the navigable channel of the Calumet River in Chicago when it ran into a railroad bridge. On May 9, Folkstone Maritime, Ltd. ("Folkstone"), a Cyprus corporation and the owner of the Pontokratis, a vessel under Cyprus registration, sued CSX Corporation and CSX Transportation, Inc. ("the Railroad"), the bridge's owners, alleging negligence in its operation. On May 11, the Railroad answered and asserted a counterclaim against Folkstone, alleging negligence in navigation. The Railroad also counterclaimed in rem against the Pontokratis and had the vessel arrested. The in rem action is the subject of this appeal.

Soon after the filing of the counterclaims, Folkstone sought a hearing in the district court to determine the amount of security required to release the Pontokratis from arrest. Folkstone requested the hearing pursuant to Rule E(5)(a) of the Supplemental Rules for Certain Admiralty and Maritime Claims, which limits the amount of security necessary to release a vessel in these circumstances to the lesser of twice the amount of the plaintiff's claim or the duly appraised value of the ship. The Railroad, on the other hand, asked the district court to set the amount of the release bond pursuant to 28 U.S.C. Sec. 2464, which provides for security of twice the amount of plaintiff's claim. As the parties' positions suggest, it was clear that the Railroad's claimed damages of over $12 million far exceeded the value of even the pre-collision Pontokratis.

After conducting a hearing on the question of the Pontokratis 's value, the district court on May 27, 1988 held that Supplemental Rule E(5)(a) superseded 28 U.S.C. Sec. 2464 and controlled the determination of the amount of the release bond. The court also held that the determination of the Pontokratis 's value for purposes of Supplemental Rule E(5)(a) should be based on the ship's damaged condition on the date of its arrest, not on its pre-collision condition. Pursuant to these conclusions, the district court set the principal sum of the release bond at $4.58 million. On June 2, the court denied the Railroad's motion for reconsideration or, in the alternative, for certification under 28 U.S.C. Sec. 1292(b). On June 3, 1988, the Railroad filed the first of these consolidated appeals.

On June 6, Folkstone filed its release bond and requested the clerk to issue a Writ of Restitution ordering the Marshal to release the Pontokratis. The clerk refused, so on June 9, Folkstone asked the district court for an order directing the clerk to issue the Writ of Restitution. The court denied Folkstone's motion, holding that it no longer had jurisdiction over the dispute because of the Railroad's appeal filed on June 3. We reversed that ruling on June 15, however, and on June 16 the district court issued the Writ of Restitution and denied the Railroad's motion to stay the Pontokratis 's release pending appeal, prompting the latter to file the second of these consolidated appeals. That same day, the Pontokratis was released from custodia legis and is no longer within the district court's territorial jurisdiction.

That the Pontokratis is now far away is a problem, although not one discussed in the parties' briefs. They instead battle at length over the issues of whether the district court erred in setting the release bond pursuant to Supplemental Rule E(5)(a) rather than 28 U.S.C. Sec. 2464 or, in the alternative, whether the court should have set the bond in an amount equal to the value of the Pontokratis as it existed immediately before it met the bridge, not after. The significant question now, however, is whether resolution of these issues would mean anything in light of the vessel's departure. If not, the issues are moot and we lack subject matter jurisdiction over the appeal. DeFunis v. Odegaard, 416 U.S. 312, 316, 94 S.Ct. 1704, 1705, 40 L.Ed.2d 164 (1974) (noting the "familiar proposition that 'federal courts are without power to decide questions that cannot affect the rights of the litigants in the case before them' " (quoting North Carolina v. Rice, 404 U.S. 244, 246, 92 S.Ct. 402, 404, 30 L.Ed.2d 413 (1971))); In re Hilligoss, 849 F.2d 280,282 (7th Cir.1988) (noting our obligation to consider jurisdictional issues regardless of whether they are raised by the parties).

The Railroad wants from us a determination, in one form or another, that the district court should have set the...