Recovery Limited Partnership v. The Wrecked and Abandoned Vessell, S.S. Central America, et al.

Filing 192

ORDER Denying 139 Motion for Award of Title by Recovery Limited Partnership. Since the court determines that the admiralty law of salvage, not the common law of finds, applies to the Central America wreck, RLP's Motion is DENIED. Signed by Chief District Judge Rebecca Beach Smith on 8/10/15 and filed 8/11/15. Copies distributed to counsel for RLP 8/11/15. (ldab, )

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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF VIRGINIA Norfolk Division RECOVERY LIMITED PARTNERSHIP, Plaintiff, CIVIL ACTION NO: 2:87cv363 THE WRECKED AND ABANDONED VESSEL, S.S. CENTRAL AMERICA, ET AL. Defendant. OPINION This of Title matter comes ("Motion") before and filed by the Plaintiff, the court Memorandum in on the Support Motion for Award ("Memorandum"), Recovery Limited Partnership ("RLP"), on September 5, 2014. ECF Nos. 13 9, 14 0.l The Motion is now ripe for decision2 and, for the reasons set forth below, is DENIED. 1 The court declared RLP to be the real-party-in-interest in this case in its Memorandum Opinion and Order of July 9, 2014. ECF No. 92. That same day, with Case No. the court consolidated Case No. 2:87cv363. Mem. Order, herein to a pre-consolidation filing, 2:14cvl60 ECF No. 94. Any reference in Case No. 2:14cvl60, is designated as such. 2 Due to the pending appeal of this court's dismissal of thirdparty individual claims against the in rem Defendant, the Motion was not ripe for decision until July 31, 2015. See infra note 6 and accompanying text; see also Order of February 11, 2015, at 2 n.2, ECF No. 179 ("The court has not yet decided the Motion for Award of Title, and will not do so while the claims of Robol and Davidson are pending appeal in the Fourth Circuit."). I. Factual and Procedural History The instant Motion is related to the litigation over the salvage rights to the wreck of the S.S. Central America ("Central America"). This in rem action has resulted in numerous opinions, dating back to 1987. These opinions thoroughly review much of the factual and procedural history relevant to this extended litigation, and that history will not be repeated in detail here. The Central America sank off the coast of Charleston, South Carolina, on September 12, 1857, taking with it approximately 425 persons and $1,219,189 Shortly thereafter, paid claims to in gold (exclusive of passenger gold). insurance underwriters in New York and London the owners of the gold. The underwriters contemplated raising the wreck, but the location of the ship was unknown. ocean The floor Discovery location, Central until Group America 1989, when ("CADG"), approximately and its treasure RLP's agent, discovered 160 miles off the the remained on the Columbus-America wreck's east coast precise of the United States, and some one and one-half miles below the surface. On August 14, 1990, the court found that CADG, already the first salvor with the right to exclude others,3 was the finder and sole owner Unidentified, of the gold. Columbus-America Wrecked & Abandoned Sailing Vessel, 3 CADG had enjoyed the status of salvage the Discovery Central America court's Order of August 18, 198 9. v. 742 F. Supp. first salvor, without Grp. interference, entitled to since the 1327, 1344-48 however, (E.D. Va. 1990) the Court of Appeals the district than the court law of erred salvage, to 468 (1993). (4th Cir. On entitled 1992) remand, to a salvage recovered gold. *32 (E.D. wreck. v. Atl. district of the law Mut. cert, court ninety of Ins. Nov. 18, 1993) No. Co., found 974 F.2d 507 U.S. denied, 1000 that percent Columbus-America Discovery Grp. Va. appeal, rather Wrecked & Abandoned Sailing Vessel, at direct gold recovered from the the award On finds, ("CADG II"), the I"). for the Fourth Circuit held that in applying Columbus-America Discovery Grp. 450, ("CADG (90%) v. 87-363-N, CADG 1993 WL 580900, ("CADG III") . The Fourth Circuit Mut. Ins. Co., 56 F.3d 556, 562, 576 and the underwriters the Unidentified, affirmed this decision. Columbus-America Discovery Grp. CADG of was (4th Cir. eventually agreed 1995) to v. Atl. ("CADG IV") . a settlement, which "eliminate[d] the possibility of claims between the parties over future salvage." Columbus-America Discovery Grp. v. Atl. Mut. Ins. Co., 203 F.3d 291, 300 (4th Cir. 2000) ("CADG V"). From CADG V until 2014, there were only infrequent filings made in this case. On January 3, 2014, substituted as the real-party-in-interest, CADG. ECF No. 1. On July 9, 2014, RLP moved to be for the then-Plaintiff the court granted RLP's Motion to Substitute Party, and named RLP as the salvor-in-possession of the Central America. Mem. Op. & Order at 26, ECF No. 92.4 In that Order, the court noted that "[s]alvors do the salvaged property." Id. RLP recovered has successfully at 8 not receive (emphasis added). thousands of title to Subsequently, artifacts (the "recovered artifacts") from the wreck of the Central America.5 On April 17, 2014, of the action successive and weeks, the court ordered RLP arrest of directing the that Central "any to publish notice America persons for claiming four any interest in the in rem Defendant file their respective claims and 4 Milton T. Butterworth, purportedly on behalf of CADG, filed a Notice of Appeal as to this Order on August 8, 2014. See ECF No. 116. The Fourth Circuit dismissed this appeal for failure to prosecute on October 16, 2014. See ECF Nos. 168, 169. 5 See Decl. & Inventory, September 15, 2014, ECF No. 157; Decl. & Inventory, August 15, 2014, ECF No. 120; Decl. & Inventory, July 17, 2014, ECF No. 101; Letter & Inventory, June 16, 2014, Case No. 2:14cvl60, ECF No. 63; Letter & Inventory, June 6, 2014, Case No. 2:14cvl60, ECF No. 56; Letter & Inventory, May 16, 2014, Case No. 2:14cvl60, ECF No. 23; see also Report to Court, January 23, 2015, ECF No. 176 (2014 End of Year Report); Sixth Report Regarding Salvage Operations, November 25, 2014, ECF No. 175 (detailing RLP's new deep search and survey tool and describing the preservation of already-recovered artifacts); Fifth Report Regarding Salvage Operations, September 25, 2014, ECF No. 163 (summarizing RLP's recovery operations between August 16, 2014, and September 15, 2014); Fourth Report Regarding Salvage Operations, August 25, 2014, ECF No. 130 (summarizing RLP's recovery operations between July 16, 2014, and August 15, 2014); Third Report Regarding Salvage Operations, July 23, 2014, ECF No. 104 (summarizing RLP's recovery operations between June 16, 2014, and July 15, 2014); Second Report Regarding Salvage Operations, June 24, 2014, Case No. 2:14cvl60, ECF No. 90 (summarizing RLP's recovery operations between May 14, 2014, and June 15, 2014); First Report Regarding Salvage Operations, May 15, 2014, (summarizing RLP's and May 13, 2014). Case No. recovery operations 2:14cvl60, ECF No. 21 between April 15, 2014, Answers to the Complaint with the clerk of the Court within 30 days of the Warrant of last publication Maritime Arrest at of 2, such notice." Case RLP complied with the court's Order, Virginian-Pilot May 19, 2014, newspaper and May 26, 2014; hamptonroads.com>, 2:14cvl60, filed on ECF No. 58. timely claims ECF No. 16; Case No. 2:14cvl60, Case No. 2:14cvl60, CADG's claim 2:14cvl60, those ECF No. and online ECF No. 84; Notice, CADG, Case No. Collette Davidson and Milton ECF No. Mem. Davidson, T. 85. Order ECF No. 95. On August 8, 2014, claims of Robol, <http://legals. Case No. four parties came forward and 2:14cvl60, July 9, 2014. 4. May 12, 2014, at dates. court: 76; Issue ECF No. 2:14cvl60, Robol and the Robol Law Office Case No. on to and published notice in The same this 2:14cvl60, May 5, 2014, In response, with Richard T. ("Butterworth"), on No. Order ("Robol"), ("Davidson"), Butterworth Jr. The court denied at 7, Case No. the court dismissed the and Butterworth, for failure to state a claim under salvage law. Mem. Order at 2, ECF No. 114.6 The time 6 Robol, Davidson, and Butterworth each filed a separate notice of appeal as to the court's Memorandum Order of August 8, 2014, dismissing their individual claims. See ECF Nos. 138, 146, & 148. The Fourth Circuit dismissed Butterworth's appeal for failure to prosecute on November 12, February 25, 2015, Fourth Circuit by an dismissed 2014. See Davidson's court's Memorandum Order of August 8, ECF Nos. 180 & 181. Fourth affirmed Circuit ECF Nos. unpublished per Thereafter, this appeal 2014, in a court's 173 & 174. curiam opinion, and as affirmed to Davidson. published opinion, Memorandum Order On the this See the of August 8, 2014, with respect to Robol, finding, among other things, that "Robol had a preexisting duty to return files to his to file additional claims against the in rem Defendant has expired. See Order to Issue Warrant of Maritime Arrest at 2. In the instant recovered from property, and the Motion, wreck because RLP RLP asserts are wholly has reduced that "[t]he derelict these and artifacts abandoned artifacts to its possession, it is entitled to ownership of the recovered items." Mot. (emphasis at 3 added). In support, RLP cites CADG II, claiming that "the Fourth Circuit ruled in 1992 that CADG may be declared the finder and sole owner of any of those items that it recovered." Mem. Supp. Mot. at 2 (emphasis added).7 RLP argues former clients, notwithstanding the fact that the clients had not paid him all of the legal fees to which he claimed entitlement, and therefore that his action was not voluntary." Recovery Ltd. P'ship v. Wrecked & Abandoned Vessel S.S. Cent. Am., No. 14-1950, 790 F.3d 522 (4th Cir. June 22, 2015). Robol filed a petition for rehearing or rehearing en banc; however, no judge requested a poll under Federal Rule of Appellate Procedure 35 on the petition for rehearing Accordingly, See ECF No. or rehearing en banc. See ECF Nos. 188, 190. the Fourth Circuit mandate issued on July 31, 2015. 191. 7 The court notes both that the Fourth Circuit's ruling was, in fact, more narrow on this point, and that the Fourth Circuit was considering the specific issue of "whether the district court correctly found that the insured shipments of gold were abandoned by the underwriters." CADG II, 974 F.2d at 465. Specifically, in holding "that the lower court clearly erred when it found an abandonment and applied the law of finds" and in directing the district court to apply the law of salvage to determine the proper salvage award for CADG, the Fourth Circuit stated: "Columbus-America may be declared the finder and sole owner, as to any recovered parts of the ship, all passenger possessions, and any cargo besides the insured shipments." Id. (emphasis added). However, the Fourth Circuit made no ruling in this regard, and was not addressing the issue of declaring CADG as the finder and owner of the salvaged artifacts. This ruling by the that be "all of recovered by RLP, abandoned, be the artifacts and RLP, awarded title and as to that have been or may in the reduced the them." to its possession, have finder of abandoned property, Id. at 4. RLP further future been should asserts that its "intent to acquire title to the recovered artifacts has been affirmatively pursued since 1989, when the first motion for an award of title was granted." Id. at 7. Robol, Order of whose claim this August 8, 2014, court filed a dismissed Response to in the RLP's Memorandum Motion for Award of Title on September 7, 2014, arguing that "any award of title should be Claimants." Resp. subject at September 15, 2 014, 1, to the ECF No. salvage 143. RLP award requested by filed its Reply on in which it states that "Robol has failed to respond substantively in opposition to the motion for award of title." Reply at 3, ECF No. 156. No other party has filed a responsive pleading to RLP's Motion for Title, and the deadline to respond to the Motion has expired. II. Analysis A. The Law of Finds and the Law of Salvage This Motion presents the threshold question of whether the maritime law of salvage or the common law of finds should apply Fourth Circuit was twenty-three years ago, prior to any renewed salvage operations, which did not occur until 2014, and prior to this court's ruling that RLP was the real-party-in-interest, not CADG. See Mem. Op. & Order of July 9, 2014, ECF No. 92. to the recovered artifacts.8 If the law of finds applies to the Central America treasure, Title. However, artifacts, if then then RLP may maintain its Motion for the law of RLP will salvage applies instead need to to move the recovered for a salvage award. The those the incentives associated created by with the law nature and purpose of the of law of finds. salvage law, salvage "In differ stark from contrast to which is an ancient and time-honored part of the maritime jus gentium, the law of finds is a disfavored common-law doctrine incorporated into admiralty but only Abandoned rarely Vessel, I") . Whereas aid, applied." 435 salvage R.M.S. F.3d law 521, Titanic, 532 is based on (4th Inc. Cir. the a short active piracy and pillaging." Id. at 533. Thus, "applied sparingly — only when no interest would Further, the be adversely affected by application of 2006) Wrecked ("Titanic step from the law of finds private or public its application." either doctrine & principle of mutual "a free finders-keepers policy is but should be v. is also Id. influenced by the rights granted to a salvor-in-possession and the rights granted to a finder. A salvor-in-possession enjoys exclusive access to a shipwreck, with the concomitant right to exclude other would-be 8 RLP is seeking title to the thousands of artifacts that have been recovered, "including many gold and silver coins, and other historical artifacts." Mem. Supp. Mot. at 3. 8 treasure hunters. A finder, however, "cannot exclude others from their attempts to obtain first possession of artifacts recovered from an abandoned wreck." promises the finder Id. at 535. Although the law of finds title to the recovered property, "'if the property is ultimately found not to have been abandoned the law of finds permits no property that have at 533 F. Supp. stated (emphasis 350, that 356 "we recover the been partly or completely successful.'" Id. (S.D.N.Y. are even (quoting added) salvage-in-possession supervision, reward, 1981)). unaware status of to for efforts Hener United Moreover, any a v. court salvor changed the salvor's role to to States, 525 the Fourth Circuit that and, has after that of awarded years finder, of even though we have recognized in the abstract the legal possibility of this occurring under different circumstances." Id. at 534. In sum, "the salvage law is much better suited to supervise the salvage of a historic wreck," due in part to the public interest in what salvors can do with recovered artifacts and how treasure hunters treat the wreck site. However, to ancient some courts shipwrecks. Id. at 536. have applied See, e.g., the common law of Treasure Salvors, Unidentified Wrecked & Abandoned Sailing Vessel, finds Inc. v. 569 F.2d 330, 337 (5th Cir. 1978) ("Disposition of a wrecked vessel whose very location has been lost for centuries as though its owner were still in existence stretches a fiction to absurd lengths."). In a proceeding more Circuit even than two decades ago found that Columbus-America may be "an in CADG II, abandonment may be the Fourth found, and declared the finder and sole owner, to any recovered parts of the ship, as all passenger possessions, and any cargo besides the insured shipments." 974 F.2d at 465.9 In order for the law of finds to be applied to property lost at sea, "the treasure-hunter must establish property by clear and convincing evidence." v. Wrecked & Abandoned Vessel, 2004) ("Titanic II") 323 F. Supp. 'abandonment' R.M.S. of Titanic, 2d 724, 735 435 F.3d 521 to prove such abandonment is high. (4th Cir. Inc. (E.D. Va. (citing CADG II, 974 F.2d at 464-65), in part on other grounds, the rev'd 2006) . The bar See CADG II, 974 F.2d at 464. An owner's express declaration abandoning title would constitute abandonment, insufficient. Marble, id., but Wiggins mere v. 186 F. Supp. 452, "lapse 1100 456 Tons, of time More (E.D. Va. or 1960) and nonusef]" Less, of (noting, is Italian however, that lapse of time and nonuse "may, under certain circumstances, give rise to an implication of intention to abandon") . If "items are recovered from ancient shipwrecks and no owner appears in court to claim them," an inference of abandonment is allowed. CADG II, 974 F.2d at 461; see also Titanic I, 435 F.3d at 532. However, the Fourth Circuit more recently has affirmed the application of salvage law to historic shipwrecks. See Titanic I, 9 See supra note 7 10 435 F.3d at 538. explicitly the In Titanic I, the appropriateness to historic wrecks such as of Fourth Circuit "recognize [d] applying maritime the Titanic." Id. at 524. salvage law The wreck of the Central America is certainly a "historic wreck," considering the substantial loss of life and property and the storied history of the shipwreck. See CADG II, 974 sinking of the Central America as American maritime history"); F.2d at 4 55 "one of the worst disasters in CADG I, 742 (recounting a contemporary newspaper report the Central America was considered, the (describing the richest ship, F. Supp. that at 1329 "recorded that passengers and cargo that was ever engulfed in the waves of the sea, when her rich freight of gold was lost"). A finder property found acquires has ownership never been over owned a by "find" a because person, the whereas salvor acquires possession over salvaged property in order a to save it from destruction. According to the Fourth Circuit: Historically, courts have applied the maritime law of salvage when ships or their cargo have been recovered from the bottom of the sea by those other than their owners. Under this law, the original owners still retain their ownership interests in such property, although the salvors are entitled to a very liberal salvage award. Such awards often exceed the value of the services rendered, come forward to claim the and if no owner should property, the salvor is normally awarded its total value. CADG II, 974 F.2d at 459. Regarding the common law of finds, Fourth Circuit continues: 11 the A related legal doctrine is the common law of finds, which expresses "the ancient and honorable principle of 'finders, keepers.'" Martha's Vineyard Scuba Headquarters, Inc. v. Unidentified, Wrecked & Abandoned Steam Vessel, 833 F.2d 1059, 1065 (1st Cir. 1987). Traditionally, the law of finds was applied only to maritime property which had never been owned by anybody, such as ambergris, whales, and fish. Id. at 459-60. Further, salvage law, the the Fourth salvor Circuit receives has a recognized lien in the that "under property, not title to the property, and as long as the case remains a salvage case, the lienholder cannot assert a right to title even though he may end up with title following execution or foreclosure of the lien." R.M.S. Titanic, 286 F.3d 194, 204-05 Inc. (4th Cir. v. Wrecked & Abandoned Vessel, 2002) ("Titanic III") (refusing to apply the common law of finds to the salvor-in-possession of the Titanic wreck). B. Application of Common Law of Finds, This court will apply the maritime the Maritime Law of Salvage, Not the to the Recovered Artifacts follow law of the Fourth Circuit's direction salvage to the wreck of and the Central America. See Titanic I, 435 F.3d at 532. To grant RLP's Motion for Title would change RLP's status from that of salvor-in-possession to that of finder, which action would "open the way to justified claims of unfairness by other would-be finders who are excluded from the wreck site." Id. at 533. This court will not permit RLP to enjoy its right to exclude 12 others title from to the the salvage site while recovered artifacts. the current salvor-in-possession, artifacts it has Were simultaneously this court moving for to allow RLP, to enjoy immediate title to the recovered since early 2014,10 then the court would risk an "unsupervised rush to the site to recover anything that could be grabbed." Id. The shipwrecks would be diminished, sunken treasure were attempts from artifacts their recovered from an interest in historic if such an "unsupervised rush" to to result. others public Since to "[a] obtain abandoned finder cannot first exclude possession wreck," id. at of 535, likewise, RLP cannot be both a salvor-in-possession and a finder. In addition, RLP fails salvage-in-possession supervision, to mention status to a "any court salvor and, that has after awarded years of changed the salvor's role to that of finder." Id. at 534. 10 As previously indicated, RLP was granted salvor-in-possession status by this court by Memorandum Opinion and Order of July 9, 2014. See ECF No. 92. RLP actively engaged in the salvage of the Central America in 2014. See supra note 5 and accompanying text regarding the inventory logs of the salvaged artifacts and the salvage status reports for 2014. The court does note, however, that salvage operations were suspended in late 2014 for the winter months and apparently have not restarted, as no required reports of any salvage operations by RLP have been made to the court since January 23, 2015. See Report to Court, ECF No. 176 (2014 End of Year Report) ; see also supra note 5 and accompanying text; Order of May 9, 2014, at 2-3, ECF No. 41 ("RLP is DIRECTED to file with the court regular monthly reports on the current salvage operations . . . .") 13 (bold in original). Moreover, claims of this Robol, court granted Butterworth, RLP's and Motion Davidson, to based Dismiss in the part on RLP's assertion that "none of them constitutes a claim cognizable in admiralty under this Court's in rem jurisdiction." Mot. Dismiss at 2, ECF No. 98.1X In filing the Motion to Dismiss, RLP specifically (emphasis stated added). allow the salvor, years, under proper that "[t]his Similarly, in is a salvage Titanic II, case." this Id. court at 3 did not who enjoyed salvor-in-possession status for ten to argue that it should be awarded title to the artifacts the law of course of finds. 323 action was F. Supp. 2d at to pursue a 734-35. salvage Rather, award. the Id. at 741.12 Although RLP asserts that its "intent to acquire title to the recovered 1989," Mem. artifacts Supp. Mot. has at 7, been affirmatively RLP and its agent pursued since CADG have long enjoyed their status as the exclusive salvor-in-possession of the Central America wreck, and it would be inappropriate at this time to reclassify RLP as a "finder." 11 The Fourth Circuit has affirmed this court's dismissal of these claims. See supra note 6; see also supra note 4. 12 For example, court found, in the R.M.S. Titanic litigation, and the Fourth Circuit affirmed, the district that the law of salvage, and not the law of finds, governed the case. See Titanic I, 435 F.3d at 533-35. Accordingly, the salvor-in-possession of the R.M.S. Titanic filed a motion for a salvage award. R.M.S. Tetanic, Inc. v. Wrecked & Abandoned Vessel, 742 F. Supp. 2d 784, 808 (E.D. Va. 2010) ("Titanic IV"). See infra Part III. 14 Thus, case, the court declines to apply the law of finds to this because RLP exclusive currently and salvor-in-possession, has "explicitly acknowledge[d] historic wrecks." Titanic actively enjoys and because the the status of Fourth Circuit the application of salvage law to I, 435 F.3d the exclusive salvor-in-possession of at the 538. RLP's status as Central America wreck effectively precludes an application of the law of finds to the recovered artifacts. See Titanic II, 323 F. Supp. 2d at 734-35. III. Conclusion To apply the law of salvage does not mean that RLP will not be fairly and justly rewarded for the time and resources it has invested in its recovery efforts. Even under salvage law, owner should come forward to claim the property, normally awarded its total value." the Titanic litigation, CADG II, 974 "if no the salvor is F.2d at 459. In the salvor-in-possession was eventually awarded a salvage award of one hundred percent (100%) the fair market value of the recovered artifacts, in part because of the salvor-in-possession's dedication, both in "unprecedented the salvage conservation and exhibition." Abandoned Vessel, ("Titanic IV"). 742 The R.M.S. F. Supp. 2d Titanic of feats the skill artifacts Titanic, 784, of 808 Inc. and and their v. Wrecked & (E.D. Va. 2010) salvor-in-possession was later granted title to the artifacts because the amount of the salvage award could be satisfied only by conveying title. R.M.S. Titanic, 15 Inc. v. Wrecked (E.D. Va. 2011) & Abandoned Vessel, ("Titanic V"). 804 the recovered artifacts. efforts Central America. and also CADG IV, 509 CADG, in locating the as well as the salvaging and the preservation of ("[S] ubstantial Scientific 508, This court has previously remarked upon the efforts invested by RLP's agent, Central America, F. Supp. 2d See were CADG made I, to 742 F. Supp. locate the at wreck 1329 of the Such efforts were expensive and time consuming. historical 56 F.3d at research 571 required many ("[I]t is apparent hours."); see that Columbus- America's effort was monumental."). RLP is, therefore, ADVISED that it may move this court for a salvage award under maritime law. RLP is further advised that any motion for a salvage award factors: should address the following seven (1) the labor expended by the salvors in rendering the salvage service; (2) the promptitude, skill, and energy displayed in rendering the service and saving the property; (3) the value of the property employed by the salvors in rendering the service, and the danger to which such property was exposed; incurred by the impending peril; salvors (5) in securing the (4) property the value of the property saved; the risk from the (6) the degree of danger from which the property was rescued; and (7) the degree to which the salvors have worked to protect the historical and archeological value of II, the wreck and the items salved. 974 F.2d at 468; Titanic IV, 16 CADG 742 F. Supp. 2d at 794-95. The first six factors Supreme Court award for (1869), as have the salvage, been described "main ingredients" The Blackwall, 77 by the to use U.S. United States when fixing an (10 Wall) 1, 13-14 and the seventh factor was added by the Fourth Circuit in CADG II, 974 F.2d at 468. Since salvage, the not America wreck, court the determines common RLP's law of that the finds, Motion is DENIED. admiralty applies The to the IS SO ORDERED. Uj>VftA(0';$gft^S^ REBECCA BEACH CHIEF JUDGE 10. August \U , 2015 17 SMITH of Central Clerk is DIRECTED forward a copy of this Opinion to counsel for RLP. IT law to

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