Seattle First Nat. Bank v. Bluewater Partnership

• Decision Date: 24 September 1985
• Docket Number: Nos. 84-3893,84-4055,SEATTLE-FIRST,s. 84-3893
• Citation: 772 F.2d 565
• Parties: NATIONAL BANK, Trustee, a national banking association, Plaintiff-Appellee, v. BLUEWATER PARTNERSHIP, et al., Defendants, and Pacific Fishermen, Inc., a Washington corporation, Defendant-Appellant.NATIONAL BANK, Trustee, a national banking association, Plaintiff-Appellee, v. BLUEWATER PARTNERSHIP, et al., Defendants, and Ballard Oil Company, Inc.; The Boatyard, Inc.; and Lunde Electric Company, Inc., Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 565

772 F.2d 565

1986 A.M.C. 1296

SEATTLE-FIRST NATIONAL BANK, Trustee, a national banking

association, Plaintiff-Appellee, v. BLUEWATER PARTNERSHIP, et al., Defendants, and Pacific Fishermen, Inc., a Washington corporation,

Defendant-Appellant.

SEATTLE-FIRST NATIONAL BANK, Trustee, a national banking

association, Plaintiff-Appellee, v. BLUEWATER PARTNERSHIP, et al., Defendants, and Ballard Oil Company, Inc.; The Boatyard, Inc.; and Lunde

Electric Company, Inc., Defendants-Appellants.

Nos. 84-3893, 84-4055.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Sept. 3, 1985.

Decided Sept. 24, 1985.

James P. Walsh, Davis, Wright, Todd, Riese & Jones, Seattle, Wash., for plaintiff-appellee.

Michael R. Caryl, Seattle, Wash., for defendant-appellant.

Appeal from the United States District Court for the Western District of Washington.

Before WRIGHT, PREGERSON, and ALARCON, Circuit Judges.

EUGENE A. WRIGHT, Circuit Judge:

This consolidated admiralty appeal requires us to determine the qualifications for trustee status under the Ship Mortgage Act ("Act"), 46 U.S.C. Secs. 911-984. Initially, we must decide whether we have jurisdiction over the appeal brought by Pacific Fishermen, Inc.

FACTS

Appellants Ballard Oil Company, Inc. ("Ballard"), the Boatyard, Inc. ("Boatyard"), Lunde Electric Company, Inc. ("Lunde"), and Pacific Fishermen, Inc. ("Pacific") are Washington corporations that furnished fuel, parts and other supplies to the BLUE OCEAN in 1980 and 1981. The BLUE OCEAN is a fishing and fish processing vessel owned by the Bluewater Partnership of Washington.

In 1980, the BLUE OCEAN was refurbished in the Karmsund Verft & Mek. Versted A/S shipyard ("Karmsund") in Norway. On May 13 and July 16, 1980, Bluewater executed two series of 10 promissory notes in favor of Karmsund. Two Norwegian agencies, Garantie Instituttet for Exportkredit ("GIEK") and Exportfinans, refinanced or guaranteed the loans.

Bluewater executed two ship mortgages of the BLUE OCEAN as security. Seattle-First National Bank ("Sea-First") became the trustee. It had been approved by the Department of Commerce, Maritime Administration, to act as ship mortgage trustee for 1980-1894. Both mortgages were recorded with the Coast Guard.

The notes were endorsed to Bergen Bank A/S by Harry B. McLachlin, Esq., counsel for Sea-First. In April and July 1980, Bergen Bank of Norway ("Bergen"), in trust for Exportfinans, and Sea-First executed Ship Mortgage Trust Agreements.

The vessel remained under Bluewater's ownership and control. The ship mortgage trust agreements provided that: 1) the beneficiary Bergen had no legal title in the mortgages and no right to foreclose or otherwise enforce the mortgages, and 2) upon default, if consistent with its legal duties as trustee, Sea-First would enforce the lien of the mortgages by an admiralty proceeding.

Bluewater defaulted on the notes due to a poor 1980 fishing season. Late in December 1982, Sea-First filed a complaint in admiralty to foreclose the ship mortgages and to obtain in rem jurisdiction over the BLUE OCEAN. Maritime lien claimants, including appellants, intervened.

In February 1983, a Marshal seized the vessel. In April, the court entered a default judgment against Bluewater. It did not appeal the judgment, which exceeded $5.6 million.

The vessel was sold at a Marshal's sale in Seattle on August 31, 1983 for $560,000. Transpacific International Industries, Inc. ("Transpacific") was the only bidder. Before the sale, Sea-First, GIEK and Transpacific had entered into a written agreement (referred to as the "side agreement") which provided that if Transpacific's bid was less than $2.175 million, it would pay to GIEK and Sea-First the difference between $2.175 million and the amount paid the Marshal.

On October 14, 1983, the court ordered disbursement of the sale proceeds from the court's registry upon Sea-First's filing a $560,000 indemnity bond to cover remaining unresolved maritime lien claims.

PROCEEDINGS BELOW

On May 2, 1984, the court granted Sea-First's motion for partial summary judgment against Pacific and other lien claimants. ¹ It issued a brief order that Sea-First's preferred ship mortgage lien is prior and superior to the defendants' liens. Without giving his reasons, Judge Voorhees dismissed with prejudice defendants' in rem claims against the vessel and the sale proceeds.

Pacific moved for reconsideration on May 11. It joined Ballard, the Boatyard, and Lunde in a trial brief filed the same day. It participated in the pretrial order filed May 14 and in the trial held May 14 and 15. The court ruled for Sea-First in an oral decision announced May 15 and by memorandum decision filed May 17.

The court reasoned that Sea-First met "the five [statutory] requirements imposed by Congress upon any entity seeking to act as a trustee." Memorandum Decision filed May 17, 1984, at 3. Judge Voorhees found that those were the only requirements of a ship mortgage trustee. He ruled that Sea-First held valid preferred ship mortgages which had priority over defendants' maritime liens under 46 U.S.C. Sec. 953(b).

On May 31, Pacific filed a notice of appeal from the court's May 2 partial summary judgment order. It assumed, however, that the order was not appealable.

In mid-June, Sea-First and appellants moved for entry of judgment. The differences in the proposed judgments involved exoneration of the bond and a statement of the court's reasoning. Appellants desired to set forth the court's reasoning as to both partial summary judgment and final judgment.

On July 18, 1984, Judge Voorhees entered judgment in the form proposed by defendants. Paragraph seven makes clear that "the court's ruling on partial summary judgment against these defendants is identical to that set forth in the court's Memorandum Decision of May 17, 1984." The court then confirmed the earlier ruling and denied Pacific's motion for reconsideration.

On July 26, Ballard, the Boatyard, and Lunde filed a notice of appeal from judgment entered July 18. Pacific did not appeal from the final judgment.

STANDARD OF REVIEW

The court's findings of fact are reviewed under the clearly erroneous standard. Anderson v. City of Bessemer, --- U.S. ----, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985); Fed.R.Civ.P. 52(a). The issue of Sea-First's trustee duties under the Ship Mortgage Act involves the application of legal principles "in the mix of fact and law" and is reviewed de novo. See United States v. McConney, 728 F.2d 1195, 1202 (9th Cir.) (en banc), cert. denied, --- U.S. ----, 105 S.Ct. 101, 83 L.Ed.2d 46 (1984).

ANALYSIS

I. Jurisdiction Over Pacific's Appeal

The central issue of this case, the validity of the trust relationship between Sea-First and Bergen, was resolved by partial summary judgment as to some defendants and by trial on the merits as to appellants. Pacific straddled the fence. Its claims were dismissed by partial summary judgment, but it continued to participate in the proceedings which followed.

We agree with Sea-First's assertion that this court lacks jurisdiction over Pacific's appeal because the requirements of 28 U.S.C. Sec. 1292(a)(3) are not met.

Section 1292(a)(3) provides:

Sec. 1292. Interlocutory decisions

(a) Except as provided in subsections (c) and (d) of this section, the courts of appeals shall have jurisdiction of appeals from:

* * *

* * *

(3) Interlocutory decrees of such district courts or the judges thereof determining the rights and liabilities of the parties to admiralty cases in which appeals from final decrees are allowed.

The primary purpose of this provision is well-settled. Professor Moore states:

It was a common practice for the admiralty court to determine first the issue of liability and, if it found liability, to refer the parties to a commissioner for the determination of damages. The purpose of Sec. 1292(a)(3) was to permit a party found liable to take an immediate appeal from that finding and thereby possibly avoid an oftentimes costly and protracted trial of the damages issue.

9 Moore's Federal Practice p 110.19, at 209-210 (1985).

The section permits appeals only when the order appealed from determines the rights and liabilities of the parties. Astarte Shipping Co. v. Allied Steel & Export Co., 767 F.2d 86, 88 (5th Cir.1985). See also Patton-Tully Transportation Co. v. Ratliff, 715 F.2d 219, 222 (5th Cir.1983) (no interlocutory appeal from order determining plaintiff is a Jones Act seaman because it permitted the claim to proceed against defendant); Gave Shipping Co., S.A. v. Parcel Tankers, Inc., 634 F.2d 1156, 1157 (9th Cir.1980) (no appellate jurisdiction because order granting motion to stay arbitration does not finally determine rights and liabilities of the parties).

Section 1292(a)(3) is an exception to the final judgment rule and, therefore, is construed narrowly. See Hollywood Marine, Inc. v. M/V ARTIE JAMES, 755 F.2d 414, 416 (5th Cir.1985). But see 16 Wright, Miller, Cooper & Gressman, Federal Practice and Procedure Sec. 3927, at 113 (1977) (some expansion has crept into the section's application).

Rule 54(b) certification is not a prerequisite to appellate jurisdiction under Sec. 1292(a)(3). Gulf Towing Co., Inc. v. S/T AMOCO NEW YORK, 648 F.2d 242, 244 (5th Cir.1981) (per curiam). We would have jurisdiction over Pacific's appeal if the May 2 order finally determined its claims as to Sea-First. See Walter E. Heller & Co. v. O/S SONNY V., 595 F.2d 968, 971 (5th Cir.1979) (Sec. 1292(a)(3) jurisdiction from partial summary judgment order). It does not.

Pacific continued to litigate its claims after the May 2 order. It was not until entry of final judgment against appellants on July 18 that Pacific's claims finally were determined. Pacific should have appealed from that judgment.

Pacific's reliance on the rule that subsequent events may cure premature notices of appeal is misplaced. See Anderson v. Allstate Insurance Co., 630 F.2d 677, 680-81 ...