Mullane v. Chambers

Decision Date27 June 2003
Docket NumberNo. 02-2043.,No. 02-1791.,02-1791.,02-2043.
Citation333 F.3d 322
PartiesDavid E. MULLANE; Joan-Leslie Mullane, Plaintiffs, Appellees/Cross-Appellants, v. Adele CHAMBERS; Jean Farese, Defendants, Appellants/Cross-Appellees, Frank Cousins, Sheriff, Essex County Sheriff's Department; M/Y Cent'Anni, (O.N.967917) her engines, tackle, equipment and furnishings, in rem., Defendants. David E. Mullane; Joan-Leslie Mullane, Plaintiffs, Appellants, v. Adele Chambers; Jean Farese; Frank Cousins, Sheriff, Essex County Sheriff's Department; M/Y Cent'Anni, (O.N.967917) her engines, tackle, equipment and furnishings, in rem., Defendants, Appellees.
CourtU.S. Court of Appeals — First Circuit

Paul L. Kenny, with whom Salim Rodriguez Tabit and Broadhurst, Lakin & Lakin, were on brief for appellants.

Thomas E. Clinton, with whom Robert E. Collins and Clinton & Muzyka, P.C., were on brief for appellee Mullane.

Robert Ciampitti, Jr., with whom Law Offices of Robert Ciampitti, Jr., P.C., was on brief for appellee Sheriff's Department.

Before LYNCH, Circuit Judge, CYR, Senior Circuit Judge, and STAHL, Senior Circuit Judge.

STAHL, Senior Circuit Judge.

This case requires us to determine whether an unrecorded bill of sale purporting to convey a federally documented yacht, the M/Y Cent'Anni, is valid as against a judgment creditor and to review an award of $100,000.00 in punitive damages and an assessment of $43,720.44 in attorneys' fees. We reverse and remand for further proceedings consistent with this opinion.

I

On November 24, 1997, Dr. John J. Walsh, Jr. and Beatrice M. Walsh conveyed the vessel, the M/Y Lady B., to David and Angela Murphy, who, on December 8, 1997, documented the conveyance with the Department of Transportation ("DOT") pursuant to the United States Vessel Documentation System, 46 U.S.C. §§ 12101-12124 and 31321 (2002), and changed the vessel's name to "Lady B Gone." On July 2, 1998, Dr. David Mullane, plaintiff-appellee/cross-appellant, purchased the vessel from the Murphys but failed to record the bill of sale or conveyance with the DOT until September 2, 1998.

In the meantime, Adele Chambers and Jean Farese, defendants-appellants/cross-appellees, sought to levy on the vessel to satisfy two Massachusetts state court writs of execution they held against the Murphys whom they believed to still own the vessel.1 On August 28, 1998, the Essex County Sheriff's Department ("Sheriff's Department"), defendant-appellee, with the two executions in hand, seized the vessel, which at this point had the name Cent'Anni painted on it, at the Seaport Marina in Lynn, Massachusetts. The Murphys were on the vessel at the time of the seizure. When asked by the Sheriff's Department whether they owned the vessel, the Murphys responded that they had conveyed the vessel back to the previous owners, i.e., the Walshes. The Mullanes were never mentioned.

The Sheriff's Department was accompanied by a member of the United States Coast Guard, who verified that the DOT records showed that Angela and David Murphy were the registered owners. As we noted, the July 1998 conveyance to the Mullanes (and the change in the vessel's name from Lady B. Gone to Cent'Anni) was not recorded with the DOT until September 2, 1998 — five days after the seizure.

On September 4, 1998, the Mullanes filed an amended complaint2 in admiralty against Chambers, Farese, Sheriff Frank Cousins, the Sheriff's Department, and the Cent'Anni seeking repossession of the vessel and compensatory damages for harm to the vessel allegedly sustained as a result of the seizure. Pursuant to Rules D and E, the Mullanes also filed an emergency motion for immediate arrest of the vessel and a motion to appoint substitute custodian, which the court allowed. The United States Marshals Service arrested the vessel, and after the Mullanes posted security in the amount of $125,000.00, the vessel was released to them. Chambers and Farese filed an answer and counterclaim on October 5, 1998. In their counterclaim, Chambers and Farese sought to have the transfer to the Mullanes set aside as a fraudulent transfer to defraud creditors under the Uniform Fraudulent Transfer Act, Mass. Gen. Laws ch. 109A, §§ 1-12.

On February 29, 2000, Cousins and the Sheriff's Department filed a motion for summary judgment, contending that they had exercised due diligence in determining the record owner of the vessel by relying upon the DOT records and by confirming ownership through the Coast Guard. The Mullanes opposed the motion on the grounds that the arrest was improper under state law and that the Sheriff's Department was liable for the claimed damages to the vessel under a bailment theory. While the motion was under advisement, on March 22, 2000, the Sheriff's Department filed a motion to enter and inspect the vessel, which the court allowed. Claiming that the Mullanes had engaged in bad faith conduct by failing to launch the vessel or provide adequate electrical supply as required by the March 22 order, on June 1, 2000, the Department filed a motion to bar the Mullanes' claims regarding claimed damages to the mechanical, electrical, and plumbing systems of the vessel. On June 21, the court allowed the motion for summary judgment and the motion to bar such claims. The Sheriff's Department also filed a motion for attorneys' fees, seeking $43,720.44, an amount equal to the all of the Department's litigation expenses accrued up to that point in the case. The court allowed the fee motion on March 9, 2001.

In December 2001, the court conducted a four-day bench trial, and on June 6, 2002, issued an opinion and order and entered final judgment. It determined that the Mullanes were bona fide purchasers of the vessel as of July 2, 1998 and thus took the vessel free of any interests held by Chambers and Farese. The court also found that the vessel was damaged while in the Sheriff's Department's care, but that the Mullanes had failed to prove the amount of damages, and that, in any event, the Sheriff's Department was immune from damages. Finally, the court imposed $100,000.00 in punitive damages against Chambers and Farese, finding that they had intentionally disregarded the Mullanes' rights to the vessel by continuing to assert a claim to the vessel after learning of the Mullanes' unrecorded bill of sale.

Chambers and Farese appeal from the district court's judgment and award of punitive damages, and the Mullanes cross-appeal from the district court's order of attorneys' fees and costs.3

II

As an initial matter, Chambers and Farese challenge the district court's jurisdiction, which we review de novo. See Bull HN Info. Sys., Inc. v. Hutson, 229 F.3d 321, 328 (1st Cir.2000). The amended complaint invoked the district court's admiralty jurisdiction pursuant to 28 U.S.C. § 1333(1). Subsection 1333(1), 28 U.S.C. § 1333(1), grants to federal "district courts ... original jurisdiction, exclusive of the courts of the States, of: (1) Any civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled."4 It is beyond dispute that admiralty jurisdiction extends to possessory and petitory actions. Ward v. Peck, 59 U.S. (18 How.) 267, 267, 15 L.Ed. 383 (1855) ("In this country ... the ancient jurisdiction over petitory suits or causes of property has been retained [by courts of admiralty]."); Matsuda v. Wada, 128 F.Supp.2d 659, 669 (D.Haw.2000) (collecting cases); see also 1 S.F. Friedell, Benedict on Admiralty § 201, at 13-3 (7th ed.2002). A possessory action is one in which a party seeks to recover possession of a vessel of which she has been wrongfully deprived. Gallagher v. Unenrolled M/V River Queen, 475 F.2d 117, 119 (5th Cir.1973); Friedell, supra, § 201, at 13-2. A petitory suit, on the other hand, is one to assert legal title to a vessel. Jones v. One Fifty Foot Gulfstar Motor Sailing Yacht, 625 F.2d 44, 47 (5th Cir.1980); Matsuda, 128 F.Supp.2d at 669; Friedell, supra, § 201, at 13-1. The procedure to be followed in such cases is set out in Rule D of the Supplemental Rules of the Federal Rules of Civil Procedure, which provides, in relevant part, "In all actions for possession, partition, and to try title ... with respect to a vessel, ... the process shall be by a warrant of arrest of the vessel."

Here, the Mullanes asserted legal title and sought immediate repossession of their vessel, which allegedly had been wrongfully taken by Chambers, Farese, and Cousins. And pursuant to Rule D, they successfully moved the district court to arrest the vessel. The district court, therefore, had original subject matter jurisdiction under 28 U.S.C. § 1333(1).

Chambers and Farese rely upon a line of cases holding that actions seeking original possession of the vessel premised upon breach of a purchase agreement for the sale of a vessel fall outside admiralty jurisdiction. See, e.g., Richard Bertram & Co. v. The Yacht, Wanda, 447 F.2d 966, 967 (5th Cir.1971). Chamber's and Farese's reliance on those cases is misplaced. Those cases stand for the "well established general rule that admiralty will not entertain suits where the substantive rights of the parties flow from a contract to sell or construct a vessel." Jones, 625 F.2d at 47. By contradistinction, the Mullanes had no contractual relationship with Chambers and Farese and alleged that they held legal title to the vessel and sought immediate repossession of and damages for harm caused to their vessel. Cf. id.

Chambers and Farese also contend that the court lacked admiralty jurisdiction because the vessel no longer had status as a "vessel," as it was "out of service" at the Windward Yacht Yard in Newburyport, Massachusetts, and thus "not operating commercially or otherwise on a maritime venture or purpose." Chambers and Farese appear to be invoking the "dead ship doctrine," under which a ship loses its status as a vessel...

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