(a) General Comments
The Local Admiralty and Maritime Rules are promulgated pursuant to this Court's rule making authority under Fed.R.Civ.P. 83, and have been drafted to complement the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure.
The Committee has arranged these Local Admiralty Rules to correspond generally with the ordering of the Supplemental Rules (e.g., Local Admiralty Rule 7.01 corresponds generally with Supplemental Rule A, and each sequentially numbered Local Admiralty Rule addresses the subject matter of the corresponding next-in-order Supplemental Rule.).
(b) Comments on Specific Sections:
7.01(d) continues the "IN ADMIRALTY" designation requirements of former Local Admiralty Rule 7.07(a). Under the revised rule, the "IN ADMIRALTY" designation is required to be posted to all complaints even if the complaint is filed as a Fed.R.Civ.P. 9(h) action and jurisdiction would exist on another basis (e.g., federal question or diversity jurisdiction).
7.01(e) continues the requirements of former Local Admiralty Rule 7.08(a).
7.01(g) enlarges upon former Local Admiralty Rule 7.03(a) which addressed notice by publication only in cases filed pursuant to Supplemental Rule (C)(4). The revised rule extends the publication provisions to all Fed.R.Civ.P. 9(h) actions for which notice by publication is required.
In addition, the exiting provisions have been altered to require that the publication shall be made both in the county where the vessel, or other property, was located at the time of arrest, attachment or seizure; and if different, in the county within the division of this Court in which the suit is pending.
7.01(i) adopts the definition of "Court" provided in the Advisory Notes to the August 1, 1985, amendments to the Supplemental Rules.
As defined in these Local Admiralty Rules, the term "Court" or "judicial officer" shall extend to United States Magistrate Judges assigned to the Middle District of Florida. The Committee notes that the delegation of the duties contemplated by this definition are consistent with the jurisdictional grant to United States magistrate judges as set forth in 28 USC § 636(a).
Where the terms "Court" and "judicial officer" are not used, these rules contemplate that without further order of Court as required by Local Rule 6.01(a), the responsibility of taking the specific action shall be vested with a district judge.
7.01(j) provides for an Appendix of Forms to the Local Admiralty Rules. The former rules attempted to incorporate the text of the form within the specific local rules. The Appendix of Forms provides an alternate method of presenting the format and content of necessary admiralty forms.
As noted in the revised rule, these forms are provided as examples, and are not intended to be mandatory. In addition to the specific forms referred to in the Local Admiralty Rules, the Appendix also includes other commonly used admiralty forms for the use and convenience of counsel.
(c) Other Considerations:
The Committee considered, but declined to recommend, a rule which would set the rate of pre-judgment interest allowed. The case construing pre-judgment interest appears to suggest that the issue is a substantive one in which the rate of pre-judgment interest is intended to compensate the prevailing party for the loss of use of funds during the pendency of the action. As such, the decision as to the rate of pre-judgment interest would appear to require evidentiary support. Therefore, the Committee decided not to incorporate such a rate in these rules. See, Complaint of M/V Vulcan, 553 F.2d 489 (5th Cir. 1977); cert. denied, Sabine Towing & Transportation Co. v. Zapata Ugland Drilling, Inc., 434 U.S. 855 [98 S.Ct.175, 54 L.Ed.2d 127] (1977).
(a) General Comments:
Local Rule 7.02 is intended to enhance and codify the local procedural requirements uniquely applicable to actions of maritime attachment and garnishment under Supplemental Rule (B). Other local procedural requirements involving actions in rem and quasi in rem proceedings can be found in Local Admiralty Rule 7.05.
When read in conjunction with Supplemental Rule (B) and (E), Local Admiralty Rules 7.02 and 7.05 are intended to provide a uniform and comprehensive method for constitutionally implementing the long-standing and peculiar maritime rights of attachment and garnishment. The Committee believes that Local Admiralty Rules 7.02 and 7.05 correct the deficiencies perceived by some courts to exist in the implementation of this unique maritime provisions. Schiffahartsgesellschaft Leonhardt & Co. v. A. Bottacchi S.A. de Navegacion, 552 F. Supp. 771
(S.D. Ga. 1982); Cooper Shipping Company v. Century 21, 1983 A.M.C. 244 (M.D. Fla. 1982); Crysen Shipping Co. v. Bona Shipping Co., Ltd., 553 F. Supp. 139 (M.D. Fla. 1982); and Grand Bahama Petroleum Co. v. Canadian Transportation Agencies, Ltd., 450 F. Supp. 447 (W. D. Wa. 1978), discussing Supplemental Rule (B) proceedings in light of Fuentes v. Shevin, 407 U.S. 67 [92 S.Ct. 1983, 32 L.Ed.2d 556] (1972) and Sniadach v. Family Finance Corp., 395 U.S. 337 [89 S.Ct. 1820, 23 L.Ed.2d 349] (1969).
Although the Committee was aware of the Eleventh Circuit's decision in Schiffahartsgessellschaft Leonhardt & Co. v. A. Bottacchi S.A. de Navegacion, 732 F.2d 1543 (1984), the Committee believes that from both a commercial and legal viewpoint, the better practice is to incorporate the pre-seizure scrutiny and post-attachment review provisions provided by this rule. These provisions protect the rights of any person claiming an interest in the seized property by permitting such persons to file a claim against the property, and thereafter permitting a judicial determination of the propriety of the seizure.
(b) Comments on Specific Sections:
7.02 (a) codifies the governing law of this circuit as set forth in LaBanca v. Ostermunchner, 664 F.2d 65 (5th Cir., Unit B, 1981).
7.02 (b) codifies the verification requirements of Supplemental Rule (B)(1) and former Local Admiralty Rule 7.08.
7.02 (c) incorporates the "pre-seizure" and "exigent circumstances" provisions of the August 1, 1985, revision to Supplemental Rule (B)(1). In the routine case, the rule contemplates that issuance of the process of attachment and garnishment be preconditioned upon the exercise of judicial review. This ensures that plaintiff can make an appropriate maritime claim, and present proof that the defendant cannot be found within the district. The rule also contemplates that upon a finding of probable cause, a simple order directing the clerk to issue the process shall be entered by the Court.
This rule also incorporates the "exigent circumstances" provision of Supplemental Rule (B)(1). Read in conjunction with Local Admiralty Rule 7.02 (e)(2), this rule requires that the plaintiff carry the burden of proof at any post-attachment proceedings to establish not only the prima facie conditions of a maritime attachment and garnishment action under Supplemental Rule (B), but also that "exigent circumstances" precluded judicial review under Local Admiralty Rule 7.02 (c)(1). The Committee believes that this additional requirement will place upon plaintiff's counsel a burden of extra caution before invoking the "exigent circumstance" provision of the rule.
7.02 (e) establishes the post-attachment review provisions potentially applicable to maritime attachment and garnishment proceedings. These proceedings may be invoked by any person claiming an interest in the seized property.
7.03(b): The August 1 1985, revisions to Supplemental Rule (C)(3) provides for an arrest in rem either following a "pre-arrest" judicial review, or upon the showing of "exigent circumstances" by plaintiff's attorney. Well reasoned authority has upheld Supplemental Rule (C), specifically holding that a pre-seizure judicial hearing is not required where a vessel, freight, or intangible property is proceeded against to enforce a maritime lien. Amstar Corporation v. S/S. Alexandros T, 664 F.2d 904 (4th Cir. 1981); Merchants Nat'l Bank v. Dredge Gen. G. L. Gillespie, 663 F.2d 1338 (5th Cir., Unit A, 1981); Schiffahartsgesellschaft Leonhardt & Co. v. A. Bottacchi S.A. de Navegacion, 732 F.2d 1543 (11th Cir. 1984).
The desirability of providing by local admiralty rule an available avenue for reasonably prompt and effect post-arrest judicial relief is indicated. See, Merchants Nat'l Bank v. Dredge Gen. G.L. Gillespie, supra, at 1344, 1350. This provision is incorporated in Local Admiralty Rule 7.03(g). The procedure made available through this rule has proven effective. Maryland Ship Building & Dry-Dock Co., v. Pacific Ruler Corp., 201 F. Supp. 858 (SDNY 1962). In fact, the procedure established by this local rule goes beyond that encountered in Merchants Nat'l Bank v. Dredge Gen. G.L. Gillespie, supra, or Maryland Ship Building & Dry-Dock Co. v. Pacific Ruler Corp., supra.
Under this rule, the claimant or intervenor may petition the Court to order the plaintiff to establish probable cause for the arrest of the property. Therefore at an early stage of the litigation, plaintiff can be required to establish a prima facie case that he is asserting a claim which is entitled to the dignity and status of a maritime lien against the arrested property. This rule contemplates the entry of an order with conclusory findings following the post-arrest proceedings. More detailed findings may be requested by any party.
The rule is not intended to provide a method for contesting the amount of security to be posted for the release of the vessel. Once a prima facie case for the maritime lien has been established, or the question of lien status remains uncontested, the matter of security is left to the provisions of Local Admiralty Rule 7.05.
7.03(c): Supplemental Rule (C)(3) also addresses the less commonly encountered action in rem to enforce a maritime lien against freights, proceeds or other intangible property. The revision to this rule designates the U. S. Marshal to take custody of all tangible and intangible properties arrested in accordance with this rule, and to bring these properties under the control of the Court. This is the practice in many other districts, and when implemented will provide the greatest uniformity in the treatment of tangible and intangible property.
7.03(e): Although this section is new to the local rules, it reflects the current local practice with respect to undertakings and stipulations in lieu of arrest. Such undertakings and stipulations have been held effective to permit a Court to exercise its in rem admiralty jurisdiction so long as either at the time the undertaking or stipulation is given, or at any subsequent time prior to the filing of the action, the vessel or other property is, or will be, present within the district.
7.03(h) and (i): These sections are designed to mesh Supplemental Rule (C) with Fed.R.Civ.P. 55. For purpose of default and default judgments, the rule recognizes two distinct groups of in rem claimants.
The first category of claimants include those who by ownership or otherwise, would, but for the arrest of the property, be entitled to its possession. Pursuant to Supplemental Rule (C)(6), these claimants must file a claim setting forth their interest in the property, demand their right to receive possession, and to appear and defend the action. In the case of such claimants, the operation of standard default procedures foreclose their rights to contest positions of the party in whose favor the default is rendered, and the entry of default judgment is both fair and appropriate.
The second category of claimants embodies a potentially numerous and varying class of claimants. The claims of these other claimants do not give rise to a right of possession of the vessel from the marshal or other appropriate custodian, but rather invoke the power of the Court in admiralty to foreclose against the property by the ultimate rendering of a judgment in rem against property entitlements. Such judgments would be predicated upon non-possessory liens.
The time in which the second category of claimants may intervene is governed by the provisions of Local Admiralty Rule 7.05. Such lien claimants are not obligated, and indeed are probably not entitled to file a claim of possession to the vessel, or to answer and defend in the name of the vessel. As to them, in accordance with Fed.R.Civ.P. 8, the essential averments of all the complaints are taken as automatically denied.
No default judgment entered pursuant to this rule will operate to adjudicate priorities among competing non-possessory lien claimants.
In attempting to reconcile the traditional notions of default and default judgments with the concept of in rem proceedings, the final language has been formulated to maintain the efficacy of the default procedure without resulting in premature adjudication effecting priorities and distributions. The default procedure establishes in favor of the holder of such a default judgment, a lien position against the proceeds of the property, resulting from any sale or disposition, or, if currency is involved, the ultimate adjudication, inferior to all other competing priorities, except the otherwise escheating right of the property owner to the remnants and surpluses after all full-claims satisfactions. At the same time, the right of a person obtaining a default judgment to contend and compete with other claimants for priority distribution remains unaffected.
This rule recognizes the equity in allowing for a prompt resolution in possessory actions. Since a possessory action is brought to reinstate an owner of a vessel alleging wrongful deprivation of property, rather than to allow original possession, the rule permits the Court to expedite these actions, thereby providing a quick remedy for one wrongfully deprived of his rightful property. Silver v. Sloop Silver Cloud, 259 F. Supp. 187 (SDNY 1966).
Since a petitory and possessory action can be joined to obtain original possession, The Friendship, Fed.Cas.No. 5,123 (CCD Maine, 1855), this rule contemplates that an expedited hearing will only occur in purely possessory actions.
7.05(a): This section continues the provisions of former Local Rule 7.07(c).
7.05(b): The rule continues, expands and clarifies the intervention provisions of former Local Rule 7.09.
The rule does not require an intervening plaintiff to undertake the formal steps required to issue the original process of arrest or attachment pursuant to Local Admiralty Rule 7.02(c) or 7.03(b); rather the Committee believes that intervening parties need only apply for supplemental process, which in accordance with the August 1, 1985, amendments to Supplemental Rule (B) and (C), may be issued by the clerk without further order of the Court. The Committee recommends the re-arrest or re-attachment provisions of this rule in order to accommodate the administrative and records keeping requirements of the marshal's office.
The revision also contemplates that the marshal will normally not require the initial security deposit otherwise required by Local Admiralty Rule 7.05(e). The marshal shall, however, access custodial costs against the intervening plaintiff in accordance with Local Admiralty Rule 7.05(f)(2).
7.05(c): This section continues the provision of former Local Rule 7.07(d).
7.05(f): The marshal, as an officer of the Court whose fiscal affairs are regulated by statute and order, is precluded by law from expending funds of the United States to maintain custody of vessels or other property pursuant to claims being asserted by the several states, any foreign sovereigns, or any private parties. This prohibition extends to incurring obligations which, if not satisfied, otherwise might be asserted as a claim against the United States. Consequently, before undertaking to arrest or attach property, the marshal must receive funds in advance of incurring such obligations sufficient to satisfy them.
Past experience indicates that not infrequently vessels or other properties arrested for nonpayment of incurred obligations will be ultimately sold for satisfaction, to the extent possible, of pending claims. In such cases, substitute security is never given, and the property must be retained in custody for a sufficient period of time to permit the Court to determine the status of the situation and to order appropriate procedures. In such instances, custodial costs tend to be substantial and, by the very nature of the circumstances, the claimants and potential claimants can be both large in number and will vary markedly in the amounts of their respective individual claims. Apportioning the obligation to make advances against custodial costs over this range of claims and claimants has resulted in frequent calls for judicial intervention.
It was the Committee's view that a system initially self-executing and ministerial would minimize situations calling for judicial intervention while affording the marshal the protection of assured and certain procedures. At the same time, the Committee was strongly of the opinion that the rules should do substantial equity as between claims showing wide variation in amounts and potential priorities and, at the same time, should be so structured as to require all potential claimants to come forward and share in the cost of custody, discouraging the sometime practice of claimants' waiting to intervene until the last moment in order to allow other parties to bear the burdens of making such advances.
The Committee had for a model, a practice embodied in an order entered in a Jacksonville Division case providing essentially the features incorporated in this section.
A concern was expressed about the position of parties having large, but clearly inferior claims, who, in equity should not be required to share on a prorated value-of-the-claim-asserted basis with claimants who have obvious priority. A typical example of such a situation would involve a mortgagee of a foreign-flag vessel appearing as a claimant in an action along with lien claimants alleging to have supplied necessaries to a vessel in ports of the United States, the mortgagee's position being subordinated by virtue of 46 USC § 951. After considering all possible alternatives, it was obvious that this limited range of situations could not be addressed through a mechanism for automatic administration and, consequently, the provision providing for judicial relief in the event of hardship or inequity was included.
7.05(g): Section (g) is new. It reflects the approach embodied in the local rules of those districts which have addressed the question of properties subject to arrest but already in the possession of an officer of the United States.
7.05(h): The provisions of section (h) are new. Paragraph (1), following rules promulgated in other districts, states what is understood by the advisory committee to have been the practice in this district. Paragraph (2) is designed to mesh the concept of process held in abeyance with the requirements of Local Rule 7.05(b) regarding intervening claims, and is designed to foreclose the possibility of a vessel or other property being arrested or attached in the district as a result of more than one civil action. Since under Local Rule 7.05(b), the automatic, permissive intervention is not triggered until the vessel or other property has been arrested, attached or seized, a suit in rem in which process is held in abeyance will not form the basis for such an intervention. On the other hand, once the property is arrested, attached or seized, the issuance of process in the earlier suit would be destructive of the "only one civil action" concept, and, consequently paragraph (2) requires a party whose process was held in abeyance to refile as an intervenor pursuant to 7.05(b), making provision for the proper disposition of the earlier action.
7.05(i): Section (i) continues, with editorial and stylistic changes, the provisions of Local Rule 7.11 (1984). In formulating the text of paragraph (1), due regard was given to, and concerning expressed about the Eleventh Circuit decision in Industria Nacional del Papel, C.A. M/V. Albert F., 730 F.2d 622 (1984). Reasonable economic projections indicate that the six percent per annum will be insufficient to provide full security, and it was the view of the Advisory Committee that a higher figure, subject to adjustment by application to the Court or stipulation, should be specified. However, in light of the express provision of Supplemental Rule (E)(5), the implementation by local rule of a figure higher than six percent per annum was precluded. Consequently, the period of time was increased to 48 months, an effort on the Committee's part to at least mitigate the effects of the interaction of decisional law. The supplemental rule provision limiting such interest to six percent per annum needs to be addressed at the appropriate level.
7.05(j): Section (j) continues in effect the provisions of former Local Rule 7.05(c) (1984), relocated so as to make the relationship between Section (i) and Section (j) more readily apparent. The provisions of Section (j) are expressly authorized by Supplemental Rule (E)(6) and offer some potential for relief from the automatic operations and other provisions of Supplemental Rule (E) regarding security for value and interest. The decision in Industria Nacional del Papel, C.A. M/V Albert F., 730 F.2d 622 (1984) indicates that such an application must be made prior to the entry of judgment.
7.05(k): Section (k) is new. It is designed to reflect the actual practice in the district, and follows the rules promulgated in several other districts. In formulating this rule, the Committee studied Section 6.3 of the "Marshal's Manual", the internal operating guide for the United States Marshal's Service.
7.05(l): Section (l) is new. It addresses areas which in recent litigation in the district have called excessively for interim judicial administration. While the subject matter is covered in the rules promulgated in other districts, section (l) differs from the approach of other districts in providing for a more positive control of expenses being incurred in connection with vessels or other property in the custody of the Court, and is designed to avoid accumulated costs being advanced for the first time well after having been incurred.
7.05(m): Section (m) is new. It addresses a situation which has arisen in the district in the past and which can be foreseen as possibly arising in the future. While the subject is not addressed in other local rules studied by the Committee, nor has it been the subject of any oft-cited leading cases, it was the opinion of the Committee that the area should be addressed by local rule and that the provisions of Section (m) are both consistent with the general maritime laws of the United States and designed to permit efficient administration without the necessity for undue judicial intervention. As with the claims of intervenors and the allocation of deposits against custodial costs, the provisions of Section (m), in keeping with the design of these local rules, are intended to be essentially self-executing, with the emphasis on the ministerial role of Court officers and services.
7.05(o): Section (o) continues the provisions of former Local Rule 7.12 (1984).
7.05(p): Section (p) incorporates the provisions of former Local Rule 7.13(a) (1984).
7.05(q) and (r): The provisions of former Local Rule 7.04(a) (1984) have been expanded to provide a standardized procedure governing sales of property, which procedure the Court, at its option, may utilize, in whole or in part, thus shortening and simplifying orders related to sales and accompanying procedures.
7.06(a): This section incorporates the publication provisions of Local Admiralty Rule 7.01(g), and applies them to limitation of liability actions. The rule provides for the publication of the notice required by Supplemental Rule (F)(4) without further order of the Court. The Committee believes that this self-executing aspect of the rule will save judicial time and at the time will not impair the rights of any party or claimant.