Pan American Bank of Miami v. Oil Screw Denise, 79-1759

• Decision Date: 14 March 1980
• Docket Number: No. 79-1759,79-1759
• Citation: 613 F.2d 599
• Parties: PAN AMERICAN BANK OF MIAMI, Plaintiff-Appellee, and Tracor Marine, Inc., Intervening Plaintiff-Appellee, v. The OIL SCREW DENISE, her engines, etc., et al., Defendants, The OIL SCREW DENISE, her engines, etc., the OIL SCREW TAMMY W., etc., the BARGE MECI 8, her apparel, etc., the BARGE MECI 9, her apparel, etc. and Marine Exploration Company, Inc., a corporation, Defendants-Appellants. Summary Calendar. *
• Court: U.S. Court of Appeals — Fifth Circuit

Page 599

613 F.2d 599

PAN AMERICAN BANK OF MIAMI, Plaintiff-Appellee and Tracor Marine, Inc., Intervening Plaintiff-Appellee, v. The OIL SCREW DENISE, her engines, etc., et al., Defendants The OIL SCREW DENISE, her engines, etc., the OIL SCREW TAMMY W., etc., the BARGE MECI 8, her apparel, etc., the BARGE MECI 9, her apparel, etc. and Marine Exploration Company Inc., a corporation, Defendants-Appellants.

No. 79-1759

Summary Calendar. ^*

United States Court of Appeals, Fifth Circuit.

March 14, 1980.

E. S. Ned Nelson, New Orleans, La., for defendants-appellants.

Rodney Earl Walton, Miami, Fla., for Pan American Bank of Miami.

Appeal from the United States District Court for the Southern District of Florida.

Before GEE, RUBIN and POLITZ, Circuit Judges.

POLITZ, Circuit Judge:

Invoking admiralty jurisdiction the Pan American Bank of Miami (Bank) foreclosed on a first preferred ship's fleet mortgage against Marine Exploration Company, Inc. (Marine). Tracor Marine, Inc. (Tracor) intervened asserting an In rem claim for a repair bill against a Marine vessel, the Tammy W. After a bench trial the district court rendered judgment in favor of the Bank against Marine In personam and several Marine vessels In rem, and in favor of Tracor against the Tammy W. in rem. We affirm.

This litigation involves several consolidated actions. The Bank first filed in the Southern District of Florida naming Marine In personam and eight of its vessels In rem. Two of the vessels were seized in the jurisdiction. Simultaneously, the bank intervened In rem against the vessel Denise which was already under arrest in the Middle District of Florida. Shortly thereafter an In rem action was filed against the Tammy W. in the District Court of Puerto Rico. Tracor intervened to collect a repair bill. The defendants posted a bond in lieu of the vessels. The Puerto Rico and Middle District actions were transferred and consolidated with the Southern District action.

The record is replete with discretionary acts by the district judge extending opportunities to defendants to prepare and present their case. This included setting aside default judgments, excusing responsive pleadings in the Puerto Rico action and enlarging the time for discovery way beyond the cut-off date noted in the pretrial stipulation.

After entry of final judgment Marine appealed. Motions to dismiss the appeal for Marine's failure to timely comply with procedural requirements were denied. A motion to this court to dismiss the appeal as frivolous and non-meritorious has been ordered carried with the case. Marine's brief asserts no error in the judgment in favor of Tracor.

The facts as found by the district court are not clearly erroneous, to the contrary, they are quite clearly correct. The Bank made two loans to Marine, evidenced by a $350,000 note, a $100,000 note, two first preferred ship's fleet mortgages and a loan and security agreement. The $100,000 note was payable on demand. The $350,000 note was a term note calling for monthly payments. The loan and security agreement, made a part of both notes by reference, required Marine to, inter alia, maintain a certain amount of working capital, a certain ratio of current assets to current liabilities and a certain ratio of net worth to company debt. From and after May 31, 1976, as reflected by financial statements Marine furnished the Bank, these conditions were violated. Marine's year end consolidated financial statement (ending November 30, 1976) contained an acknowledgment of these violations and that the Bank could declare all indebtedness due and payable. In February, 1977, the Bank made demand on the $100,000 note which was to be paid in full by April 28, 1977. This was not done. The monthly payment due on the term note on May 3, 1977, was not paid. Insurance on the vessels would have lapsed on May 15, 1977, but for the Bank paying the underwriter $18,000 to avoid cancellation.

Suit was filed on May 16, 1977. The district court made the following findings, most of which were admitted by Marine:

(1) Payments on both the term and demand notes were past due on May 16, 1977.

(2) The mortgages had been breached by virtue of Tracor's placing of a lien on the vessel Tammy W.

(3) The loan and security agreement had been breached in that:

a. working capital was below the agreed minimum of $140,000;

b. current assets were less than 100% Of current liabilities;

c. Marine's net worth was less than 1.3 million dollars.

Issues on Appeal

Appellant presents three issues for review. The first challenges the district court's finding that one of the defaults was the violation of the underlying agreement when the complaint made reference to negative covenants in the Mortgage rather than in the loan and security agreement. Marine contends it did not have adequate notice that breaches of the loan agreement would be at issue.

The notes, attached to the complaint, incorporated the loan agreement by reference. The agreement was listed as Exhibit No. 33 for the Bank in the pretrial order and was incorporated into Marine's own pretrial exhibit list. It was introduced at trial without objection. The appellant's contention that it did not have adequate notice is totally without merit. Fed.R.Civ.P. 8(a) (2), Mann v. Realty Co., 556 F.2d 288 (5th Cir. 1977); Wright & Miller, 5 Federal Practice and Procedure § 1215. Even if there were inadequate initial notice, the listing of the exhibit in the pretrial order and the introduction without objection cured any defect.

The second issue is whether the maritime lien attached to the motor vessel Tammy W. when it left the Tracor yard...