RMS TITANIC v. Wrecked and Abandoned Vessel

• Decision Date: 10 May 1996
• Docket Number: Civil Action No. 2:93cv902.
• Citation: 924 F. Supp. 714
• Parties: R.M.S. TITANIC, INC., successor in interest to Titanic Ventures, limited partnership, Plaintiff, v. The WRECKED AND ABANDONED VESSEL, its engines, tackle, apparel, appurtenances, cargo, etc., Located within one (1) nautical mile of a point located at 41° 43' 32" North Latitude and 49° 56' 49" West Longitude, believed to be The RMS Titanic, in rem, Defendant.
• Court: U.S. District Court — Eastern District of Virginia

924 F. Supp. 714

R.M.S. TITANIC, INC., successor in interest to Titanic Ventures, limited partnership, Plaintiff, v. The WRECKED AND ABANDONED VESSEL, its engines, tackle, apparel, appurtenances, cargo, etc., Located within one (1) nautical mile of a point located at 41° 43' 32" North Latitude and 49° 56' 49" West Longitude, believed to be The RMS Titanic, in rem, Defendant.

Civil Action No. 2:93cv902.

United States District Court, E.D. Virginia, Norfolk Division.

May 10, 1996.

F. Bradford Stillman, Mark S. Davis, David M. Young, McGuire, Woods, Battle & Boothe, Norfolk, VA, for Plaintiffs, R.M.S. TITANIC, INC., etc.

Jonathan M. Epstein, James T. Shirley, Jr., Haight, Gardner, Poor & Havens, Washington, DC, Lawrence G. Cohen, Anne B. Shumadine, Mezzullo & McCandlish, Norfolk, VA, for John A. Joslyn, Movant.

MEMORANDUM OPINION AND ORDER

CLARKE, District Judge.

At issue before the Court is a challenge to its Order of June 7, 1994, granting salvor-in-possession status to R.M.S. Titanic, Inc. For the reasons stated from the bench and elaborated on more fully below, the Court's ruling from the bench being made a part hereof, the Court DENIES Joslyn's Motion requesting a rescission of the June 7, 1994 Order.

I. PROCEDURAL HISTORY

On August 23, 1993, RMS Titanic, Inc. (RMST) filed a verified complaint asking the Court to declare it to be the sole and exclusive owner of any items salvaged from the RMS TITANIC (TITANIC).¹ As required by the Court, notice to other potential salvors and interested parties was given via publication. Liverpool and London Steamship Protection and Indemnity Association (LLSP) was the only party to file a claim. RMST and LLSP subsequently entered into a settlement agreement, and the Court dismissed LLSP's claim with prejudice. Because there were no other outstanding claims against the vessel, the Court entered an Order on June 7, 1994, conferring salvor-in-possession status of the TITANIC to RMST and granting it the exclusive rights over any items salvaged from the TITANIC while it remained salvor in possession.²

Following the entry of this Order, RMST successfully completed a salvage expedition to the TITANIC during the 1994 "weather window."³ On August 10, 1994, RMST presented its Periodic Report of Salvor in Possession on the Progress of Recovery Operations to the Court. The Court entered an Order filing the Periodic Report, and also noted that RMST had previously conducted successful salvage operations in June of 1987 and June of 1993. Order of Aug. 10, 1994. While the present action was pending in this Court, RMST filed a second periodic report.

On February 20, 1996, John A. Joslyn (Joslyn or Intervenor) filed a motion pursuant to Rule 60(b) of the Federal Rules of Civil Procedure asking the Court to rescind its order naming RMST salvor in possession of the TITANIC. Joslyn claimed that RMST's status should be rescinded because it has failed to diligently salvage the TITANIC, has evidenced no intention to salvage it in the future, and, at this time, is financially incapable of utilizing its rights. In its response, in addition to refuting Joslyn's claims, RMST asserted that Joslyn had no standing to bring his motion. Thus, before the Court could hear the merits of the claim, the Court was obliged to resolve the issue of the Joslyn's standing. By Order of April 1, 1996, the Court held that Joslyn did have standing and that, even if he did not, the Court had the power to reconsider its prior Order either sua sponte under Rule 60(b) of the Federal Rules of Civil Procedure or under its inherent power to modify and interpret its original order. See Order of Apr. 1, 1996.

An evidentiary hearing was held from April 29 to May 1, 1996. The Court heard testimony from a number of witnesses concerning both RMST's salvage-related activities since its 1994 expedition and RMST's present financial situation. Because the summer "weather window" was approaching and a quick determination of the parties' status was necessary, the Court ruled from the bench after closing arguments. The Court more fully discusses the basis for its ruling below.

II. FINDINGS OF FACT

A. RMS Titanic, Inc.

RMST, the present salvor in possession of the RMS TITANIC is incorporated in Florida and is a public corporation with sixteen million outstanding shares. The largest shareholders of RMST include Titanic Ventures Limited Partnership (TVLP) (with approximately 43% of the shares), Mr. Arnold Geller (with approximately 12% of the shares), and Mr. William Gasparrini (with approximately 12% of the shares). TVLP, the largest shareholder, is a Connecticut limited partnership with one general partner and fifteen limited partners. Another corporation, Oceanic Research and Exploration (ORE), a Delaware corporation, is the general partner of TVLP.⁴

Mr. George Tulloch, the current president of RMST, testified that since its inception, RMST has lost $9.8 million.⁵ RMST also has a number of outstanding liens and encumbrances against certain TITANIC artifacts. A Virginia law firm has a lien against two artifacts located in Virginia for legal services rendered. These two artifacts are to be exhibited in the Tidewater, Virginia area until the attorneys' fees are paid. RMST also has an agreement with Electricité de France (EDF), the conservator of the 1987 artifacts, which gives EDF the right to exhibit fifteen TITANIC artifacts for ten years in lieu of collecting $70,000.00 which RMST still owes EDF for its conservation work.

In addition to the attorneys' fees owed for litigation over salvage rights, RMST has also been a party in at least two other actions. Although one of these lawsuits has been dropped, RMST's potential liability in the other is unclear.

Additionally, RMST has a number of outstanding debts. It still owes money to LP3, a conservation laboratory in France, for past conservation efforts. Moreover, Mr. Stéphane Pennec, the director of LP3, testified that to merely store and preserve the artifacts currently at LP3 will cost RMST an additional $23,000.00. RMST also has a few "friendly" debts, which their creditors are not collecting at the moment. In fact, Mr. Tulloch's testimony, which was uncontradicted, indicated that these creditors may prefer to be official sponsors of RMST-run TITANIC events in lieu of being repaid.

Despite its debt load, RMST remains a financially viable entity. Although RMST appears to have little cash on hand, RMST presented evidence that it has a number of exhibition contracts signed or pending. A few companies have also signed contracts with RMST to obtain advertising rights. A contract for the production of a two-hour documentary is also pending. RMST, through its marketing partner, has been making money through the sale of videos and coal. See discussion infra part II.B. Finally and most significantly, RMST's marketing partner has organized two cruises to the wreck site in order to generate income to finance the 1996 salvage operations.⁶ Ticket prices range from $1,800 to $6,950. As of the date of the hearing, 60% of the cabins had been booked on one ship and 10% had been booked on the other.⁷ Michael R. Giorgio, the marketing company's chief financial officer, testified that RMST would net $2.4 million dollars from the cruises. He also testified that if the receipts for the cruise sales are insufficient to cover IFREMER's⁸ charges, the marketing company would cover the costs. Furthermore, RMST has been attempting to pay some of its debts. IFREMER, one of RMST's major creditors, was recently paid the money owed it from the 1994 expedition.

The Court was not surprised that RMST was suffering some financial difficulties. This type of salvage operation is highly speculative and the expedition costs are high. Because RMST does not sell the artifacts it recovers, it is even more difficult to raise money to support its salvage and conservation activities.

B. RMST's Salvage-Related Activities

RMST and its predecessor in interest, Titanic Ventures, L.P., have conducted salvage operations at the wreck site of the TITANIC in 1987, 1993, and 1994. To date, over 3,600 artifacts have been recovered from the wreck. Two artifacts, one from the June 1993 expedition and one from the July 1994 expedition, remain within the geographic boundaries of the Eastern District of Virginia.

Since the 1994 expedition, RMST has not visited the site of the wreck. RMST has, however, been involved in a number of onshore activities since that time. From October 1994 to October 1995, over 150 artifacts were exhibited at the National Maritime Museum of Great Britain located in Greenwich, England. This museum is the largest museum of its kind in the world. The exhibition was originally scheduled to be held for six months, but, because of the large turnout,⁹ it was extended for another six months. Catalogs detailing the TITANIC wreck and salvage activities were produced and sold at the exhibition. There have also been several smaller exhibitions during the past few years, including one currently at the Science and Industry Center in Paris, France.

In addition, during 1994, an International Advisory Committee was established to address issues related to the future of both the wreck site and the retrieved artifacts. This committee consists of approximately twelve individuals, including representatives of European and American maritime museums, TITANIC historical societies, and RMST. One of the committee's major tasks is to plan an international memorial museum which will house all the artifacts retrieved from the site.

Although RMST has promised not to sell any of the artifacts recovered from the site,¹⁰ the company recently began selling the coal retrieved from the vessel to the public.¹¹ RMST, as well as other interested parties including the National Maritime Museum of Great Britain, do not consider the coal lumps to be "artifacts," as the coal is natural and not man-made. Because of the practical and...