956 F2d 276 United States of America, v. S.S. American Merchant

956 F.2d 276

UNITED STATES of America, Plaintiff-Appellee,
Sea-Land Service, Inc. Claimant-Appellee,
S.S. AMERICAN MERCHANT, (Official No. 457288), her engines,
boilers, tackle, apparel, appurtenances,
furnishings, etc., in rem, etc. Defendant
Richard J. MACKENSWORTH Plaintiff-intervenor-Appellant

NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.

No. 90-16412.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Jan. 14, 1992.
Decided Feb. 27, 1992.

Before GOODWIN, FLETCHER and BRUNETTI, Circuit Judges.

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Richard Mackensworth, intervenor-appellant, appeals pro se the district court's distribution of the vessel sale proceeds in an action by the United States to foreclose a first preferred ship mortgage on the vessel. Mackensworth's intervention arose from alleged maritime personal injuries. He also appeals the transfer of his personal injury action to the Southern District of New York and various interlocutory orders made during distribution of the vessel's proceeds.



On June 12, 1984, Appellant Mackensworth filed a personal injury claim against United States Lines (USL),1 the charterer of the SS American Merchant (Vessel) and employer of Mackensworth, in personam, and against the Vessel, in rem, in the District of New Jersey. When USL filed a Chapter 11 bankruptcy petition on November 24, 1986, Mackensworth's claim was stayed.


On September 23, 1987, the United States subsequently brought an admiralty action in rem in the United States District Court for the Northern District of California to foreclose a First Preferred Ship Mortgage it held in the Vessel. The Vessel thereafter was arrested by the United States Marshal, pursuant to Rule C of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure, and sold. The proceeds of the sale were then deposited in the district court's registry as a substitute res.


Mackensworth, as well as the other maritime lien claimants, ultimately was granted relief from the bankruptcy stay and permitted to intervene in the admiralty action in the District Court of Northern California by filing an action against the Vessel, in rem. Mackensworth intervened on December 17, 1987.


On February 22, 1988, after previously having given notice of its intent to do so, the district court entered a default against all persons claiming an interest in the Vessel who failed to file a complaint in intervention against the Vessel. The total claims against the Vessel filed by all intervenors amounted to $891,094.45 and the proceeds from the Vessel's sale amounted to 5 million, leaving an excess of $3,829,050.32. Based on the fact that a surplus existed for the intervenors, the district court disbursed approximately 3.8 million dollars to the United States on July 29, 1988 in partial satisfaction of its claim. On June 8, 1990, the district court ordered entry of final judgment in favor of the United States pursuant to Rule 54(b) of the Federal Rules of Civil Procedure and ordered a disbursement to the United States in final satisfaction of its remaining claims not resolved by the first disbursement.


Finally, Sea-Land moved for the final distribution of the entire remnants of the last of the proceeds of the Vessel because no claimants to the Vessel remained in the district court. On August 11, 1989, Mackensworth's claim had been transferred to the Southern District of New York after Sea-Land posted a substitute security2 covering the full amount of the claim Mackensworth had asserted. The remaining intervenors' claims had been satisfied from the Vessel's proceeds. On July 16, 1990, the court entered its Final Order for Distribution on August 1, 1990, and ordered the entire remaining sale proceeds disbursed to Sea-Land. None of the res remains in the registry of the Northern District of California.

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Mackensworth filed this appeal on October 1, 1990.



I. Standard of Review.


This court exercises its independent judgment with respect to questions of appellate jurisdiction, Pride Shipping Corp. v. Tafu Lumber Co., 898 F.2d 1404, 1406 (9th Cir.1990), and must dismiss the suit whenever it lacks jurisdiction. Billingsley v. Commissioner, 868 F.2d 1081 (9th Cir.1989).

II. Jurisdiction


It is well settled that in rem jurisdiction exists only where the subject matter of the action, or an appropriate substitute thereof, is within the jurisdiction of the court in which the action lies. American Bank of Wage Claims v. Registry of the Dist. Court of Guam, 431 F.2d 1215, 1218 (9th Cir.1970). This principle applies in admiralty actions. Id. The release or complete disbursal of the vessel or substitute res destroys subject matter jurisdiction and renders moot any appeal concerning the res. Id.; Alyeska Pipeline, 703 F.2d at 384; Pride Shipping, 898 F.2d at 1408; Stevedoring Servs. of Am. v. Ancora Transport, N.V., 941 F.2d 1378, 1382 (9th Cir.1991) (court lost jurisdiction over a Rule B maritime attachment when the plaintiff failed to obtain a stay of execution of the judgment before the district court properly released the security).


In this case, the proceeds of the Vessel, deposited in the district court's registry, acted as the substitute res. See American Bank, 431 F.2d at 1218. When the proceeds were distributed to the various parties, leaving nothing in the district court's registry, the in rem jurisdiction was destroyed. Mackensworth never attempted to stay the distribution of any of the proceeds. Although he did make informal oral objections to the disbursements made to the United States during two separate hearings, he never moved for or even mentioned a stay. Although he made one attempt at appealing the July 29, 1988 interlocutory disbursement order to the United States, he voluntarily dismissed the appeal when the district court refused to certify the appeal pursuant to 28 U.S.C. § 1292.


Under an exception to the prevailing rule, the release or disbursement of the res will not terminate jurisdiction if the res is released accidentally, fraudulently, or improperly. Pride Shipping, 898 F.2d at 1409; Farwest Steel Corp. v. Barge Sea-Span 241, 769 F.2d 620, 621 (9th Cir.1985); American Bank, 431 F.2d at 1219. Stevedoring, 941 F.2d at 1382. It is clear that the district court did not release the res accidentally or fraudulently. All disbursements were made pursuant to the court's orders. It is also clear that the district court did not release the res improperly. As discussed above, the court disbursed the funds pursuant to the legitimate, settled claims of the United States and other maritime lienors. Its final disbursement to Sea-Land was made after it determined it no longer had any claimants before it. See Stock West, Inc. v. Confederated Tribes of the Colville Reservation, 873 F.2d 1221, 1225 (9th Cir.1989) (clearly erroneous standard of review applies to factual findings on jurisdictional issues). Thus we cannot rely on the exception to support our jurisdiction and must dismiss this appeal.3 We note that Mackensworth has not been harmed by the district court's proceedings. If he should prevail fully on his personal injury claim in the District Court of New York, there is an adequate monetary fund from which to satisfy his injury.


III. Remaining Interlocutory Orders.


We note that even if we had jurisdiction over this appeal, we would not be able to review the district court's transfer of Mackensworth's claim to the Southern District of New York. The decision in the transferee court is not yet final. The rule in this circuit is clear: transfer orders under 28 U.S.C. § 1404(a) are not appealable until final judgment has been rendered in the transferee district. In Re Kemble, 776 F.2d 802, 806 (9th Cir.1985); Kasey v. Molybdenum, 408 F.2d 16, 18 (9th Cir.1969). The proper avenue for review of transfer orders under § 1404(a) is by a writ of mandamus. American Fidelity Fire Ins. v. United States Dist. Court, 538 F.2d 1371, 1374 (9th Cir.1976). Nor will we construe this appeal as a writ of mandamus. Mackensworth already has sought a writ of mandamus regarding this transfer order which we denied as being without error in an Order filed April 3, 1990.


Likewise, we cannot review the district court's denial of Mackensworth's Motion to Enjoin USL and Sea-Land from defending against his complaint in intervention, filed on November 7, 1988, or his Motion to Amend a Complaint, submitted as a Motion to Join a Complaint, filed on July 10, 1989. The district court's denials of each motion are interlocutory and therefore not appealable. 28 U.S.C. § 1292.




This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Circuit Rule 36-3


The Vessel was under a "bareboat" charter, or lease, to USL who thus acted as the owner "pro hac vice." Legal title to the vessel was held by Continental Illinois National Bank and Trust Co. of Chicago as trustee for the owners, HFC Leasing Inc., Great American Insurance Co., and the Provident Bank. Prior to the commencement of the United States' mortgage foreclosure action, Sea-Land Services, Inc. (Sea-Land) had been granted the right to purchase the Vessel. It was assigned all of the ownership rights, including any and all of the ultimate recovery of the judicial sale of the Vessel


Letters of Undertaking traditionally have been used in admiralty as a means of securing release from arrest of a vessel or its proceeds of sale. See Alyeska Pipeline Serv. Co. v. Vessel Bay Bridge, 703 F.2d 381, 384 (9th Cir.1983), cert. dismissed by, 467 U.S. 1247 (1984); J.K. Welding Co. v. Gotham Marine Corp., 47 F.2d 332 (S.D.N.Y.1931). The stipulation for value or other security is substituted for the vessel or vessel's proceeds and becomes the res subject to the court's jurisdiction. Fed.R.Civ.P. E(5) (Supplemental Rules for Admiralty and Maritime Claims)


Mackensworth's suggestion that we "recall" the disbursements made by the district court and "make the res reappear" already has been rejected emphatically in our circuit. See American Bank, 431 F.2d at 1219. The district court ordered disbursements of the res to eleven parties over a two-year period. This court would be forced to trace, identify, recover, and then redistribute the disbursed funds--a time-consuming endeavor, and one brought on by Mackensworth's failure to seek a stay of any of the disbursements