Silver Star Enterprises, Inc. v. M/V Saramacca, 92-9572

Citation19 F.3d 1008
Decision Date21 April 1994
Docket NumberNo. 92-9572,92-9572
Parties, 28 Fed.R.Serv.3d 987 SILVER STAR ENTERPRISES, INC., et al., Plaintiffs-Appellees, v. M/V SARAMACCA, Her Engines, Tackle, Apparel, Etc., in rem, Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

Brian D. Wallace, Daniel C. Rogers, and David B. Sharpe, Phelps Dunbar, New Orleans, LA and Luther Munford, Phelps Dunbar, Jackson, MS, for defendant-appellant.

Patrick J. McShane and Andrew S. deKlerk, Lemle & Kelleher, New Orleans, LA, for Silver Star, et al.

C. Gordon Starling, Gelpi, Sullivan, Carroll & Laborde, New Orleans, LA, for World Ship.

K.L. Krishnan, Houston, TX, for Turlak Shipping Box Service Co. and Terminal Ser. Houston.

Cary A. Des Roches and Moise S. Steeg, Jr., Steeg & O'Connor, New Orleans, LA, for Boland Marine.

John C. Person, Montgomery, Barnett, Brown, Read, Hammond & Mintz, New Orleans, LA, for Coastal Cargo.

I. Matthew Williamson and Alfred J. Rufty, III, O'Neil, Eichin, Miller & Breckinridge, New Orleans, LA, for Cargill.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before HENDERSON, * SMITH, and EMILIO M. GARZA, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

Silver Star Enterprises, Inc. ("Silver Star") brought an action in rem to foreclose on two preferred mortgages on the M/V SARAMACCA, a vessel of the Republic of Suriname. Prejudgment arrest of the vessel occurred in the Port of New Orleans. The owner of the M/V SARAMACCA appeals several rulings of the district court regarding the foreclosure action, including the court's order for interlocutory sale of the vessel pursuant to Rule E(9)(b) of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure. We dismiss the appeal of certain rulings pursuant to the separate document requirement of Fed.R.Civ.P. 58, and dismiss the appeal of another ruling for lack of appellate jurisdiction. Consequently, the only issue before us is the propriety of the interlocutory sale. Because it is undisputed that the owner of the M/V SARAMACCA failed to secure the release of the vessel during the seven months between the time of arrest and the sale order, we affirm the court's interlocutory sale order and vacate our prior order which stayed the sale of the vessel pending appeal.

I

Scheepvaart Maatschappij Suriname, N.V. ("SMS"), an agency of the Republic of Suriname, is the owner of the M/V SARAMACCA. In 1989 and 1990, Silver Star took two preferred mortgages on the M/V SARAMACCA as security for certain loans. Those mortgages allegedly secured an amount up to $1.3 million.

When SMS defaulted on the underlying loans, Silver Star brought an action in rem to foreclose on the two foreign ship mortgages. The district court had subject matter jurisdiction over the action pursuant to an exception to the Federal Sovereign Immunities Act ("FSIA"), 28 U.S.C. Sec. 1602 et seq. (1988), which provides that "[a] foreign state shall not be immune from the jurisdiction of the courts of the United States in any action brought to foreclose a preferred mortgage...." 1 28 U.S.C. Sec. 1605(d). As part of its foreclosure action, Silver Star effected the prejudgment arrest of the M/V SARAMACCA on April 15, 1992. 2 On June 8, 1992, SMS moved to dismiss Silver Star's complaint on the ground that Silver Star was a dissolved corporation with no capacity to sue or contract. By minute entry, the district court denied the motion to dismiss. The court did not sign or enter a separate judgment.

On August 18, 1992, Silver Star moved for the interlocutory sale of the M/V SARAMACCA pursuant to Rule E(9)(b) of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure. 3 The district court denied Silver Star's motion without prejudice.

On the same day that it moved for the sale of the vessel, Silver Star also moved for summary judgment. On November 18, 1992, the district court signed a minute entry granting Silver Star partial summary judgment in the amount of $728,600, which the court found due and owing to Silver Star. The court did not sign or enter a separate judgment. By minute entry dated November 25, 1992, the court clarified its earlier minute entry by finding that an amount up to $1.3 million was secured by the two mortgages. The court also stated that the purpose of the non-jury trial would be to determine what amount beyond $728,600 was due and owing to Silver Star. Again, the court did not sign or enter a separate judgment.

On November 19, 1992, Silver Star renewed its motion for the interlocutory sale of the M/V SARAMACCA, citing the excessive expense of keeping the vessel under seizure and the unreasonable delay taken by SMS in posting security for the release of the vessel. On November 20, 1992, the district court granted the motion and ordered that the vessel be sold by public auction on December 24, 1992. The court set forth its order for interlocutory sale on a separate document.

On December 1, 1992, one day before trial, SMS filed motions to reconsider the grant of partial summary judgment and the interlocutory sale order, as well as a motion to dismiss for lack of subject matter jurisdiction. All the motions were premised on SMS's argument that it had redeemed the mortgages in Suriname on or around November 27, and that its redemption divested the district court of subject matter jurisdiction since jurisdiction was originally premised upon an action to foreclose on preferred mortgages. By minute entry dated December 2, 1992, the motions were denied. The court did not sign or enter a separate judgment.

At the one-day trial, SMS stipulated to certain amounts due and owing to Silver Star, and preserved for appeal its argument that the alleged redemption of the mortgages divested the district court of subject matter jurisdiction. The only issue at trial was whether $24,800 in interest and finance charges relating to a certain loan were owed to Silver Star. The district court ruled that this item was also recoverable. The court delayed entry of final judgment until such time as the remaining claims of other creditors were resolved.

After trial and before the auction date, SMS sought the release of the vessel by providing substitute security to Silver Star. A dispute between SMS and Silver Star as to the appropriate amount of the security prompted SMS to file a motion to fix security for release of the vessel. The motion was opposed by certain unsecured creditors. By minute entry dated December 22, 1992, the district court ordered that if SMS wanted the vessel released and the sale cancelled, it had to post a bond in favor of all creditors, whether secured or unsecured. The court did not sign or enter a separate judgment.

On December 23, 1992, SMS filed its notice of appeal and filed an emergency motion with this Court to stay the sale of the ship. We granted SMS's motion for stay, pending the resolution of its appeal. On appeal, SMS contends that the district court: (1) erred in denying its motion to dismiss based on Silver Star's alleged lack of capacity to sue and contract; (2) erred in granting partial summary judgment in favor of Silver Star; (3) erred in ordering the interlocutory sale of the M/V SARAMACCA; (4) erred in denying its motions for reconsideration of the partial summary judgment and the interlocutory sale order; (5) erred in denying its motion to dismiss for lack of subject matter jurisdiction; and (6) erred in ordering that SMS post special release bonds in favor of the intervening plaintiffs who held unsecured claims against the M/V SARAMACCA.

II
A

Procedural and jurisdictional defects

We initially address Silver Star's motion to dismiss certain issues on appeal for failure to satisfy the separate document requirement of Fed.R.Civ.P. 58. Rule 58 provides in part that "[e]very judgment shall be set forth on separate document. A judgment is effective only when so set forth and when entered as provided in Rule 79(a)." Rule 79(a) of the Federal Rules of Civil Procedure requires that all judgments and orders filed in each case be entered on the civil docket kept by the clerk of the district court. SMS appeals, inter alia, from the district court's denial of its motion to dismiss based on Silver Star's alleged lack of capacity to sue or contract, the court's grant of partial summary judgment for Silver Star, the court's denial of its motions for reconsideration, and the court's denial of its motion to dismiss for lack of subject matter jurisdiction. The record demonstrates that the district court evidenced those rulings by minute entries only, and never signed or entered a separate judgment regarding those rulings. We therefore hold that the appeal from those rulings is premature under the separate document requirement of Rule 58. 4

The record reflects that the interlocutory sale order was set forth in a separate document and entered on the clerk's civil docket. The interlocutory sale order therefore satisfied the requirements of Rule 58. We also have appellate jurisdiction over the sale order pursuant to 28 U.S.C. Sec. 1292(a)(3) (1988), 5 because the sale order effectively terminated SMS's rights to title and possession of the M/V SARAMACCA. See Salazar v. Atlantic Sun, 881 F.2d 73, 75 (3d Cir.1989) (holding that a district court's confirmation order of its prior interlocutory sale order was appealable under Sec. 1292(a)(3) because the confirmation order effectively terminated the owner's rights to title and possession of the vessel). The district court's interlocutory sale order also falls within the collateral order exception to the final order rule, as the sale order affects rights that will be irretrievably lost in the absence of an immediate appeal. See Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 98 S.Ct. 2454, 2457-58, 57 L.Ed.2d 351 (1978) (stating that to fall within the...

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