Schiffahrtsgesellschaft Leonhardt & Co. v. A. Bottacchi S.A. De Navegacion

• Decision Date: 29 May 1984
• Docket Number: No. 83-8019,83-8019
• Citation: 732 F.2d 1543
• Court: U.S. Court of Appeals — Eleventh Circuit
• Parties: SCHIFFAHARTSGESELLSCHAFT LEONHARDT & CO., Plaintiff-Appellant, v. A. BOTTACCHI S.A. DE NAVEGACION, Defendant-Appellee.

Page 1543

732 F.2d 1543

1984 A.M.C. 2113

SCHIFFAHARTSGESELLSCHAFT LEONHARDT & CO., Plaintiff-Appellant, v. A. BOTTACCHI S.A. DE NAVEGACION, Defendant-Appellee.

No. 83-8019.

United States Court of Appeals, Eleventh Circuit.

May 29, 1984.

Rehearing En Banc Granted Sept. 21, 1984.

Robert S. Glenn, Jr., Savannah, Ga., for plaintiff-appellant.

Lamar Walter, Savannah, Ga., for defendant-appellee.

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

Before TJOFLAT and HILL, Circuit Judges, and LYNNE ^*, District Judge.

LYNNE, District Judge:

This appeal involves the chameleon-like concept of procedural due process. While recent Supreme Court discussions on the subject are devoted to common law garnishment, attachment, and sequestration actions, the court below dealt with Supplemental Rule for Admiralty B(1), Federal Rules of Civil Procedure, which authorizes the attachment of maritime property to obtain jurisdiction over a foreign defendant. In this instance, the appellant, Schiffahrtsgesellschaft, attached an Argentine vessel, the M/V Puntas Malvinas, purportedly belonging to the appellee, Bottacchi, when it docked at Savannah, Georgia, on May 24, 1982.

Consonant with Rule B(1)'s usual application, the appellant sought jurisdiction over Bottacchi to adjudicate a prior dispute wholly unrelated to the port of Savannah or the vessel attached. Its ultimate goal is to enforce the terms of a New York Produce Exchange Charter Party dated March 16, 1982. Under that agreement, Bottacchi time-chartered one of the appellant's own vessels, the M/V Barbara Leonhardt, to deliver goods from St. John's, Canada, to Buenos Aires, Argentina. Heavy weather en route resulted in damage both to cargo and vessel. Upon arrival, Bottacchi refused either to post counter-security for damages or submit to arbitration in accordance with the charter party. Obtaining jurisdiction over Bottacchi is appellant's only means of enforcing these two contractual provisions.

The attachment of the M/V Puntas Malvinas was erroneous. According to documents presented by counsel the following day, Bottacchi did not own the vessel. It instead operated the boat under a bareboat charter and therefore only owned certain bunkers and stores aboard. The appellant's attempt at attachment, though flawed, was by no means unfounded. It initiated process only after consulting the most recent supplement to the Lloyd's Register of Shipping, which listed Bottacchi as the vessel's owner.

The appellant immediately released the vessel and narrowed its action to the limited items owned by the appellee. In each instance, the clerk of the court reviewed the pleadings without judicial assistance. He ordered the Marshal to initiate process based upon the complaint and an affidavit, upon information and belief, that the appellee could not be found within the district. The Marshal, though not required to do so, notified the ship's agent of the impending attachments. Bottacchi obtained immediate release of the property after posting security pursuant to Supplemental Rule for Admiralty E(5). Judge Anthony A. Alaimo granted a post-seizure hearing the following day, at which time Bottacchi assailed the constitutionality of Rule B(1). The parties then filed briefs on the issue and appeared before Judge B. Avant Edenfield on July 22, 1982.

Based on the agent's prior notice of seizure and the hearing conducted by Judge Alaimo, the court declared that Rule B(1), as applied, did not violate procedural due process. It went on to hold, however, that on its face Rule B(1) violates procedural due process guarantees on two grounds: (1) failure to provide procedural safeguards in place of pre-seizure notice and hearing; (2) failure to require a prompt post-attachment hearing. Schiffahrtsgesellschaft v. A. Bottacchi S.A. De Navegacion, 552 F.Supp. 771 (S.D.Ga.1982).

Procedural Due Process Inherently Flexible

Due process, in its original form, requires that a property owner be given notice and an opportunity to be heard prior in time to the seizure of his possessions. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 313-316, 70 S.Ct. 652, 656-58, 94 L.Ed. 865 (1950). However, the Supreme Court embarked on a four case dialogue on modern day procedural due process in Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969). See Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972); Mitchell v. W.T. Grant Co., 416 U.S. 600, 94 S.Ct. 1895, 40 L.Ed.2d 406 (1974); North Georgia Finishing, Inc. v. Di-Chem, Inc., 419 U.S. 601, 95 S.Ct. 719, 42 L.Ed.2d 751 (1974). While retaining many former views, the Court acknowledged that prior notice could undermine the desired end of seizure in cases where the property is susceptible to ready disposal, concealment, or removal from the jurisdiction. ¹ Mitchell, 416 U.S. at 610, 94 S.Ct. at 1901. Accordingly, the opportunity to be heard may be delayed until immediately following the seizure if "other procedural safeguards" are imposed during initiation of the process leading to seizure. These safeguards include: (1) posting of bond by the plaintiff prior to execution; (2) particularized factual showings in the pleadings indicating entitlement to relief, (3) judicial review of the pleadings and authorization of proceedings. Id. at 605-06, 616-18, 94 S.Ct. at 1904-05. See also Polar Shipping, Ltd. v. Oriental Shipping Corp., 680 F.2d 627, 643-44 (9th Cir.1982).

None of these safeguards, which are intended to compensate for the bypassed pre-seizure hearing, surrounded the attachment of the Puntas Malvinas. Additionally, as emphasized by the court below, Rule B(1) does not explicitly provide for either prior notice or a hearing of any kind. These latter deficiencies, however, are not germane to the current dispute. Bottacchi undisputedly received prior notice and a prompt, subsequent opportunity to be heard. The lower court, therefore, opened Pandora's box by isolating its examination of Rule B(1) from the facts. At the same time, its unfortunate statement that Rule B(1) is constitutional, as applied, is rendered a non-sequitur by the disclosure that Nevertheless, the awkward approach below helps define the very narrow issue before this court: must an attachment of maritime property under Supplemental Rule B(1) for Admiralty be cloaked with the other procedural safeguards found essential in actions peculiar to the common law?

other safeguards were not applied to the attachment proceeding. ²

We think not. Here we are confronted not with legislation regulating procedure in land-based commercial transactions, but with a procedural rule promulgated by the Supreme Court providing for the attachment of maritime vessels, primarily for jurisdictional purposes.

Above all else, Sniadach and its progeny affirm that flexibility remains the most significant trait of procedural due process. In Mitchell, the Court reiterated its view that "the very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation." 416 U.S. at 610, 94 S.Ct. at 1901 (quoting Cafeteria Workers v. McElroy, 367 U.S. 886, 895, 81 S.Ct. 1743, 1748, 6 L.Ed.2d 1230 (1969)). Earlier, it found a garnishment of wages procedurally deficient only after balancing the creditor's desire to collect against the debtor's deprivation of income. Sniadach, 395 U.S. at 339, 89 S.Ct. at 1821.

Justice White's finding of a "constitutional accommodation of the conflicting interests of the parties," Mitchell, 416 U.S. at 610, 94 S.Ct. at 1901 (majority opinion), harks back to an approach suggested years earlier for procedural due process cases:

Due process is not a mechanical concept. It is not a yardstick. It is a process. It is a delicate process of adjustment inescapably involving the exercise of judgment...

Joint Anit-Fascist Refugee Committee v. McGrath, 341 U.S. 123, 162-63, 71 S.Ct. 624, 643-44, 95 L.Ed. 817 (1951) (Frankfurter, J., concurring). The Supreme Court's continued recognition of this attribute clearly transcends whatever factual limitations these recent cases otherwise suggest.

Paradoxically, the most immutable characteristic of procedural due process is that it constantly changes. To impose specific procedures found essential in drastically different fact situations, as the lower court did, ignores the one precept that insulates procedural due process, like all other constitutional doctrines, from susceptibility to black letter law formulation. Accordingly, constitutional review of Rule B attachments is not governed by the unyielding guidelines promulgated in Sniadach and cases which followed. That approach simply does not hold water in the context of maritime commerce.

Rule B Ground In Legal, Historical, and Practical Differences

We are not alone in withholding application of procedural due process guidelines established in other contexts to admiralty rules of procedure. The Ninth Circuit, as yet the only appellate court to address the issue, has already rejected constitutional attack on Rule B attachments. ³ Polar Shipping, Ltd. v. Oriental Shipping Corp., 680 F.2d 627 (9th Cir.1982). The Fourth and Fifth Circuits seized upon the flexible nature of procedural due process to uphold the constitutionality of arrests of property pursuant to Rule C. Amstar Corp. v. S/S Alexandros T., 664 F.2d 904 (4th Cir.1981); Merchants National Bank v. General G.L. Gilespie, 663 F.2d 1338 (5th Cir.1981).

Those decisions attack head on the complex question of the two Rule's facial constitutionality. ⁴

Each court relied upon the distinct legal foundation of admiralty law, the historical application of the two procedures, and the transient nature of maritime property to scrutinize the procedural safeguards of Rules B and C under more lenient standards. While this court is concerned only with the absence of other procedural safeguards, we nonetheless find their analytical...