Odyssey Marine Exploration, Inc. v. Vessel

• Decision Date: 25 September 2013
• Docket Number: Case No. 8:07–cv–614–T–23MAP.
• Citation: 979 F.Supp.2d 1270
• Parties: ODYSSEY MARINE EXPLORATION, INC., Plaintiff, v. The UNIDENTIFIED SHIPWRECKED VESSEL, Defendant.
• Court: U.S. District Court — Middle District of Florida

979 F.Supp.2d 1270

ODYSSEY MARINE EXPLORATION, INC., Plaintiff,

v.The UNIDENTIFIED SHIPWRECKED VESSEL, Defendant.

Case No. 8:07–cv–614–T–23MAP.

United States District Court,

M.D. Florida,

Tampa Division.

Sept. 25, 2013.

Allen K. Von Spiegelfeld, Carl Richard Nelson, Eric C. Thiel, Banker Lopez Gassler, Melinda Joy MacConnel, Odyssey Marine Exploration, Inc., Tampa, FL, John D. Kimball, Blank Rome, LLP, New York, NY, K. Russell Lamotte, Beveridge & Diamond, PC, Washington, DC, for Plaintiff.

Barbara B. O'Malley, U.S. Department of Justice, Washington, DC, for Defendant.

ORDER

STEVEN D. MERRYDAY, District Judge.

This action between Odyssey Marine Exploration and the Kingdom of Spain adjudicates the right to possession and ownership of more than $600,000,000.00 in silver specie.¹ This action presented from the outset not merely the dicey prospects of a damages action; this action presented a claim to ownership by a party holding-in-hand an enormous, historic trove of treasure, holding-in-hand riches “beyond the dreams of avarice.” A contest for $600 million—winner take all—is plenty sufficient to endanger any boundary, to awaken any frailty, and to excite any temptation. Observing this contest evokes an ageless insight on money:

She is the sovereign queen of all delights; For her, the lawyer pleads and the soldier fights.

Richard Barnfield, The Encomion of Lady Pecunia (1598).

Important to understanding the character of this action is that before Odyssey explored the site and recovered the treasure from the seabed south of Cape Saint Mary ( Cabo de Santa Maria ), Portugal, Odyssey asked Spain for permission to explore this sector of ocean and to recover any Spanish treasure discovered, but Spain declined. With reason to suspect the availability of almost unfathomably valuable treasure and with the remote but arresting prospect of prevailing in the expected judicial showdown with Spain, Odyssey undertook both unauthorized recovery of the treasure from the seabed near Cape Saint Mary and furtive removal of the treasure to central Florida, near Odyssey's corporate headquarters in Tampa. Odyssey's calculus of corporate risk emerges writ large from this history: in the event of a litigation win, an upside of $600 million; in the event of a litigation loss, a downside of legal fees and costs of less than 1/2 of 1% of the potential upside (in either event incurring the costs of recovery, removal, archiving, and storage).

* * * * * *

After successfully contesting Odyssey's claim, Spain moves (Docs. 298 and 321) for reimbursement of attorney's fees and costs and alleges in support (1) that Odyssey knew from the time the treasure was recovered and removed and that Odyssey necessarily knew at the outset of this action that the wrecked vessel was Spain's naval vessel Nuestra Señora de las Mercedes, lost in combat in 1804 while in transit to Cadiz, Spain, from Peru; (2) that Odyssey frivolously and in bad faith denied the existence and the identity of the vessel and, in furtherance of the bad faith denial, purposefully withheld evidence establishing beyond reasoned doubt the existence and identity of the vessel; and (3) that, even after issuance of the circuit court of appeals' mandate deciding this action finally against Odyssey and for Spain, Odyssey contemptuously continued a determined course of studied and defiant resistance both to the mandate and to the orders of the district judge and the magistrate judge during Spain's attempt to enforce the mandate.

* * * * * *

In a report (Doc. 340) that includes facts “certified” under 28 U.S.C. § 636(e)(6)(B)(iii), the magistrate judge states:

I make the following recommendations to the district judge: (1) that he find Odyssey in contempt for its post-mandate conduct and its violation of the Court's Orders of April 13, 2007, December 22, 2009, and February 17, 2012 (Docs. 8, 270, 295); (2) that he sanction Odyssey's general counsel, Melinda J. MacConnel, under 28 U.S.C. § 1927 for her vexatious conduct during the post-mandate period; (3) that he require Odyssey and Odyssey's general counsel to pay Spain's attorney fees, expenses, and costs associated with Spain's post-mandate efforts through and including March 20, 2012, aimed at compelling Odyssey's compliance with the Court's Orders of April 13, 2007, December 22, 2009, and February 17, 2012; and (4) that he deny the remaining aspects of Spain's motions.

In a second report (Doc. 358) that calculates attorney fees and costs attributable to pertinent intervals in this action (and that undertakes to resolve every remaining computational issue necessary to the complete resolution of this action not later than the next appeal, if any), the magistrate judge determines that $158,102 is Spain's reasonable attorney's fee incurred for necessary services rendered as a result of Odyssey's post-mandate contempt during the intervals recommended for reimbursement in parts (1) and (3) of the paragraph above but determines that Spain's account of costs lacks the requisite precision, which precludes an award of costs. Any objection by either party to the recommendations in parts (1), (2), or (3) of the above paragraph and the supporting paragraphs in the first report (Doc. 340) or to any part of the second report (Doc. 358) is OVERRULED (although, using the magistrate judge's computation, this order elsewhere awards Spain an assessment for fees and costs calculated by, but not awarded by, the magistrate judge; to the extent necessary to accomplish that end, Spain's objection to the second report is SUSTAINED). On the legal basis cited by the magistrate judge, I might have awarded Spain a larger fee and additional costs arising from Odyssey's post-mandate misconduct and, although I find the magistrate judge's order quite generous in narratingOdyssey's post-mandate actions, I defer to the magistrate judge's first-hand observation and to his consequent judgment to the extent of parts (1), (2), and (3).

Part (4) of the paragraph above recommends “that [the district judge] deny the remaining aspects of Spain's motions.” In other words, the magistrate judge recommends that Spain receive from Odyssey no reimbursement for the attorney's fees and costs incurred in securing success in the district court in the first instance—in securing discovery about the identity of the vessel; in procuring evidence, including expert evidence, in an attempt to determine conclusively the identity of the vessel; in addressing the array of legal and factual obstacles erected by Odyssey in resisting Spain's motion for summary determination of the vessel's identity and for dissolution of the order of arrest; and in otherwise litigating athwart Odyssey's resistance.

Although my admiration for his thorough and thoughtful work in this action stands, I cannot agree finally with the magistrate judge's conclusion that the scope and intensity of Odyssey's bad faith before the February 10, 2012, mandate fails to rise to a level that requires a sanction. For example, the magistrate judge's report includes his determination that, with respect to Odyssey's conduct in the district court:

I cannot say based on the record before me that Odyssey, prior to the Court's Order of December 22, 2009, acted in bad faith, although I consider Odyssey's inconsistent representations troubling and its denial of a vessel's existence frivolous.¹⁸

Footnote 18 states, “Odyssey's denial of a vessel's existence was not its sole argument.” Apparently, the magistrate judge concludes either (1) that Odyssey's advancing one or more non-frivolous arguments—even if only an argument about a non-dispositive issue—excuses, counter-balances, or supersedes Odyssey's liability for advancing in bad faith one or more frivolous arguments about the central and dispositive issue or (2) that Odyssey's advancing one or more non-frivolous secondary arguments precludes an award to Spain for the cost of contending with the bad faith maintenance of the frivolous primary argument. On the contrary, a litigant cannot advance in bad faith—without risk of sanction—any knowingly meritless, false, or frivolous claim or defense or other litigation position (a merely unsuccessful argument, yes; a reasonable argument for a change in the law, yes; a reasoned but novel application of established law, yes; but an assertion advanced in bad faith, based on nothing, and maintained by evasion or deceit, absolutely not). In litigation, neither the meritless, nor the false, nor the frivolous, nor the vexatious should progress in safety and for free. In this instance, Spain's objection appearing at pages 18 through 23 of Spain's objection (Doc. 344) to the report and recommendation (Doc. 340) (and appearing at pages 3 through 7 of Spain's motion (Doc. 321)) is SUSTAINED. Spain's explanatory narrative and commentary (again, including both pages 18 through 23 of Spain's objection and pages 3 through 7 of Spain's motion (Doc. 321)), which is undoubtedly correct both factually and legally is ADOPTED.

* * * * * *

This action began in April, 2007, when Odyssey filed an action in rem in admiralty and asserted under the law of “finds” and the law of salvage a claim against a purportedly “unidentified” wreck “about 100 miles west of the Straights of Gibraltar.” In an August 7, 2007, motion for preliminary injunction, Odyssey denied possessing “evidence which would confirm the existence of a particular ship, or in fact, any ship at all” and stated:

Odyssey first located the Defendant Site in March, 2007 using sophisticated sonar and magnetometer equipment. At the time of filing of the initial Complaint, Odyssey had not discovered evidence of a ship, but based upon its research, it believed that the vessel associated with the wreck site was a nineteenth century ship. At the time of filing of this Amended Complaint, Odyssey still has not recovered evidence which would confirm the existence of a particular ship, or in fact, any ship at all.

(...