ODYSSEY MARINE v. UNIDENTIFIED SHIPWRECKED VESSEL Nos. 10-10269, 10-10317, 10-10318, 10-10319, 10-10320, 10-10374 and 10-10375.
657 F.3d 1159 (2011)
ODYSSEY MARINE EXPLORATION, INC., Plaintiff-Appellant, v. The UNIDENTIFIED SHIPWRECKED VESSEL, its apparel, tackle, appurtenances and cargo located within center point coordinates, In Rem., Defendant, Kingdom of Spain, Claimant-Appellee, Republic of Peru, Gonzalo De Aliaga, the Count of San Juan de Lurigancho, Agustin De Aliaga, the current Marques de Zelada del Fuente, Gonzalo Alvarez Del Villar, et al., Claimants. Odyssey Marine Exploration, Inc., Plaintiff, v. The Unidentified Shipwrecked Vessel, its apparel, tackle, appurtenances and cargo located within center point coordinates, In Rem., Defendant, Gonzalo De Aliaga, the Count of San Juan de Lurigancho, Agustin De Aliaga, the current Marques de Zelada del Fuente, Gonzalo Alvarez Del Villar, Ignacio De Colmenares, the 11th Count of Polentinos, Alberto Emilio Thiessen, Enriqueta Pita Duthurburu, Flora Leonor Perales Calderon De Colmenares, Felipe Voyest, Adela Armida De Izcue Bazo, Carola Daireaux Kinsky, Eleonora Daireaux Kinsky, Matilde Daireaux Kinsky, Julio Vega Eurasquin, Inez Marquez Osorio, Javier De Goyeneche, the current Count of Guaqui and Marques de Villafuente, Juan Mariano De Goyeneche Y Silvela, the current Marques of Casa Davila, Claimants-Appellants, Kingdom of Spain, Claimant-Appellee. Odyssey Marine Exploration, Inc., Plaintiff, v. The Unidentified Shipwrecked Vessel, its apparel, tackle, appurtenances and cargo located within center point coordinates, In Rem., Defendant, Elsa Dorca Whitlock, f.k.a. Elsa Dorca Ruiz, Claimant-Appellant, Kingdom of Spain, Claimant-Appellee. Odyssey Marine Exploration, Inc., Plaintiff, v. The Unidentified Shipwrecked Vessel, its apparel, tackle, appurtenances and cargo located within center point coordinates, In Rem., Defendant, Republic of Peru, Claimant-Appellant, Kingdom of Spain, Claimant-Appellee. Odyssey Marine Exploration, Inc., Plaintiff, v. The Unidentified Shipwrecked Vessel, its apparel, tackle, appurtenances and cargo located within center point coordinates, In Rem., Defendant, Santiago De Alvear, Emilio De Alvear, Maria Eugenia Solveyra, Alejandro Julian Pera Barthé, Agustina Solveyra, Ignacio Solveyra, Claimants-Appellants, Kingdom of Spain, Claimant-Appellee. Odyssey Marine Exploration, Inc., Plaintiff, v. The Unidentified Shipwrecked Vessel, its apparel, tackle, appurtenances and cargo located within center point coordinates, In Rem., Defendant, Dr. Jaime Durand Palacios, Claimant-Appellant, Kingdom of Spain, Claimant-Appellee. Odyssey Marine Exploration, Inc., Plaintiff, v. The Unidentified Shipwrecked Vessel, its apparel, tackle, appurtenances and cargo located within center point coordinates, In Rem., Defendant, Jose Antonio Rodriguez-Menendez, a.k.a. Joseph Anthony Rodriguez, Claimant-Appellant, Kingdom of Spain, Claimant-Appellee.
United States Court of Appeals, Eleventh Circuit.
September 21, 2011.
David Jeremy Bederman , Emory University School of Law, Atlanta, GA, Melinda J. MacConnel , Odyssey Marine Exploration, Carl R. Nelson , Fowler, White, Boggs, PA, Eric Christopher Thiel , Allen Von Spiegelfeld, Banker, Lopez, Gassler, PA, Tampa, FL, John D. Kimball , Blank Rome, LLP, New York City, for Plaintiff-Appellant Odyssey Marine Exploration, Inc.
James A. Goold , Enrique Armijo , Jose E. Arvelo , Covington & Burling, LLP, Washington, DC, David Christopher Banker , Keith Dennis Skorewicz, Bush Ross, PA, Tampa, FL, for Claimant-Appellee Kingdom of Spain.
David Peter Buehler , Law Office of David P. Buehler, Richmond, VA, R. Jeffrey Stull , Tampa, FL, Sharon Swingle , Civ. Div.-App. Staff, Barbara B. O'Malley , U.S. Dept. of Justice, Washington, DC, for U.S. Congress and U.S., Amici Curiae.
David Paul Horan , Horan, Wallace & Higgins, LLP, Key West, FL, Jeffrey Carter Andersen , Bush Ross, PA, Tampa, FL, for Claimants-Appellants in No. 10-10317.
William VanDercreek , Marlow V. White, Jr., Lewis & White, PLC, Tallahassee, FL, for Claimant-Appellant in No. 10-10318.
Guy E. Burnette, Jr. , Guy E. Burnette Jr., PA, Marlow V. White , Lewis & White, PLC, Tallahassee, FL, Mark Maney , Burford & Maney, PC, Houston, TX, John McLaughlin , Wagner, Vaughan & McLaughlin, PA, Timothy P. Shusta , Phelps Dunbar, LLP, Tampa, FL, Jose Antonio Rodriguez-Menendez , Davie, FL, for Service in No. 10-10318.
Jeremy Gaston , Burford & Maney, LLP, Houston, TX, for Claimant-Appellant Republic of Peru in No. 10-10319.
Matthew P. Farmer , Farmer & Fitzgerald, PA, Tampa, FL, for Claimants-Appellants in No. 10-10320.
Jose Antonio Rodriguez-Menendez , Davie, FL, pro se, in No. 10-10375.
Before HULL, BLACK and STAPLETON, Circuit Judges.
In 2007, Odyssey Marine Exploration, Inc. (Odyssey) discovered the remains of a 19th Century Spanish vessel in international waters west of the Straits of Gibraltar. Odyssey filed a verified admiralty complaint in rem against the shipwrecked vessel and its cargo in the Middle District of Florida and also sought a warrant of arrest. The Kingdom of Spain (Spain), the Republic of Peru (Peru), and twenty-five individuals filed claims against the res. Upon receiving additional information about the vessel's identity, Spain also filed a motion to dismiss. Spain argued, without waiving its sovereign immunity, that the res was a Spanish warship and the district court thus lacked subject matter jurisdiction over Odyssey's claims because the vessel was immune from judicial arrest under the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. §§ 1602-1611. The district court granted Spain's motion to dismiss, concluding the res was the shipwreck of a sunken Spanish warship and was entitled to sovereign immunity. Having determined that the res is "immune from . . . arrest" in United States courts, we affirm. 28 U.S.C. § 1609.
Odyssey is a deep-ocean exploration and shipwreck recovery business. In 2006, Odyssey began what it called the Amsterdam Project, researching ships that sank in a heavily-traveled area, which included an area off the coast of Gibraltar. Odyssey developed a list of target vessels to search for, one of which was the Nuestra Senora de las Mercedes (Mercedes), a Spanish vessel that sank in 1804. According to Odyssey, it "recogniz[ed] that Spain may have had a cultural (if not legal) interest in vessels that may be located within the Amsterdam area, [and] invited Spain to participate in the project." Odyssey's Resp. to Spain's Motion to Dismiss, Dkt. 138 at 3. Odyssey's CEO and counsel then met with a representative from Spain's Ministry of Culture. What occurred at the meeting is disputed, but both Odyssey and Spain agree Spain did not give Odyssey approval to salvage any sunken Spanish vessels.
In March 2007, while Odyssey was surveying the Amsterdam area, Odyssey discovered a shipwreck in international waters 100 miles west of the Straits of Gibraltar at a depth of 1,100 meters. The remains of the shipwrecked vessel were spread over the seabed in an area 368 meters long and 110 meters wide. Odyssey conducted a detailed survey of the shipwreck before disturbing any artifacts on the ocean floor and then began to recover objects from the site. Odyssey ultimately recovered approximately 594,000 coins and a number of other small artifacts.
On April 9, 2007, Odyssey filed a verified complaint against "The Unidentified Shipwrecked Vessel, its apparel, tackle, appurtenances and cargo" in the Middle District of Florida. The complaint listed a possessory and ownership claim pursuant to the law of finds (Count One), as well as a salvage award claim pursuant to the law of salvage (Count Two).
On April 11, Odyssey filed a motion for an order directing the clerk to issue a warrant of arrest in rem against the shipwrecked vessel, its apparel, tackle, appurtenances, and cargo. Odyssey explained its intent to continue to recover artifacts
After Odyssey published a notice of arrest, Spain filed a verified claim to the vessel and its contents and cargo. On June 19, 2007, Spain filed a motion for a more definite statement and for disclosure of other information identifying the vessel and its contents. In the alternative, Spain sought an order dismissing the complaint, vacating the arrest, and terminating Odyssey's appointment as substitute custodian. Spain claimed Odyssey had not complied with the heightened pleading requirements for in rem complaints in admiralty, see Fed.R.Civ.P., Adm. Supp. R. C(2)(b), and had failed to provide information indicating the origin or nationality of the vessel and whether the vessel was a military ship or other sovereign property of a foreign nation. Spain stated that such information was relevant to the court's subject matter jurisdiction, as the property of a sovereign nation would be immune from arrest under the FSIA. In addition, Spain argued the details provided in the complaint were insufficient to allow Spain to determine whether to invoke sovereign immunity of the res from arrest.
Odyssey responded by filing an amended complaint on August 6, 2007. It included the same in rem possessory and salvage claims as Odyssey's original complaint (Counts One and Two).
On September 19, 2007, Spain filed a motion to dismiss Odyssey's amended complaint, claiming Odyssey's in rem claims once again failed to meet the pleading requirements for admiralty actions in rem. Spain also asked the court to vacate the arrest and terminate Odyssey's appointment as substitute custodian. Although the district court ultimately denied this motion, it directed Odyssey to disclose certain information relating to the vessel's possible identity. In response to interrogatories from the court, Odyssey stated there was no confirmation the site represented any specific vessel, but disclosed it was considering the possibility the site was related to the Spanish vessel, the "Nuestra Senora de las Mercedes y las Animas."
The possible identification of the vessel as the Mercedes brought forward a number of additional claimants. Twenty-five claimants filed claims, arguing they had an interest in the cargo aboard the vessel. Twenty-four of the individuals alleged they were descendants of individuals with cargo aboard the Mercedes, and one individual claimed an ancestral interest in any of Spain's treasure in Florida. In addition, Peru filed a claim contending it had sovereign rights to property aboard the Mercedes that originated in its territory or was produced by its people.
On June 3, 2009, the magistrate judge issued a Report and Recommendation finding the res was the Mercedes and was the property of Spain. The magistrate judge concluded that under the FSIA the court was without jurisdiction to adjudicate the in rem salvage and possessory claims against the Mercedes and its cargo. The magistrate judge recommended the district judge grant Spain's motion to dismiss and direct Odyssey, as substitute custodian, to return the res to Spain.
Odyssey, Peru, and the descendant claimants objected to the magistrate judge's report. The United States filed a Statement of Interest as Amicus Curiae in Support of the Kingdom of Spain. It argued the United States had a treaty obligation to afford sunken Spanish warships the same protections and immunities from implied abandonment and uncontested access and salvage as a sunken United States warship would receive in United States courts.
The district court adopted the magistrate judge's report and recommendation in full on December 22, 2009. The district court dismissed Odyssey's amended complaint for lack of subject matter jurisdiction, vacated the in rem arrest, and ordered Odyssey to return the res to Spain. The order to return the res was stayed pending this appeal.
On appeal, Odyssey, Peru, and the twenty-five individual claimants contend the district court erred by: (1) failing to use a Rule 56 summary judgment standard when analyzing Spain's Rule 12(b)(1) motion to dismiss; (2) failing to conduct an oral evidentiary hearing before ruling on the motion to dismiss; (3) finding the res is the Spanish warship the Mercedes and holding the FSIA grants it sovereign immunity; (4) failing to distinguish between the Mercedes and the private cargo aboard; and (5) ordering the recovered res returned to Spain's custody.
II. STANDARD OF REVIEW
When evaluating a district court's conclusions on a Rule 12(b)(1) motion, "[w]e review the district court's legal conclusions de novo and its factual findings for clear error." Carmichael v. Kellogg, Brown & Root Servs., Inc., 572 F.3d 1271, 1279 (11th Cir.2009); see also Lawrence v. Dunbar, 919 F.2d 1525, 1530 (11th Cir. 1990) ("The usual standard of reviewing a district court's findings of jurisdictional facts is the clearly erroneous standard."). "As we have repeatedly held, the `clearly erroneous' standard is highly deferential." Carmichael, 572 F.3d at 1280. We must affirm the district court's determination "so long as it is plausible in light of the record viewed in its entirety." Merrill Stevens Dry Dock Co. v. M/V YEOCOMICO II, 329 F.3d 809, 816 (11th Cir.2003) (quotation marks omitted); see also Univ. of Ga. Athletic Ass'n v. Laite, 756 F.2d 1535, 1543 (11th Cir.1985) ("While the `clearly erroneous' standard of review is less stringent than the well-known sports rule, `The referee is always right,' it nevertheless presents a formidable challenge to appellants who . . . seek to overturn the factual findings of a district court.").
We review a district court's decision not to hold an evidentiary hearing for an abuse of discretion. See Moran v. Kingdom of Saudi Arabia, 27 F.3d 169, 171-72 (5th Cir.1994) (reviewing a district court's failure to conduct an evidentiary hearing on a party's Rule 12(b)(1) motion for lack of subject matter jurisdiction under the FSIA for an abuse of discretion).
A. Did the district court apply the correct standard in evaluating Spain's motion to dismiss?
The district court evaluated Spain's Fed.R.Civ.P. 12(b)(1) motion to dismiss for lack of subject matter jurisdiction under the standard applied to Rule 12(b)(1) motions asserted on factual grounds. This Court has explained that when a party raises a factual attack to subject matter jurisdiction—as opposed to a facial challenge based merely on the allegations in the complaint—the district court is not obligated to take the allegations in the complaint as true. Carmichael, 572 F.3d at 1279. Instead, the "court may consider extrinsic evidence such as deposition testimony and affidavits." It may independently weigh the facts and is not constrained to view them in the light most favorable to the non-movant. Id. Applying this standard, the district court weighed the facts and determined that the res was a sunken Spanish warship over which it lacked jurisdiction. As we explain in Part III. C. 1, we conclude the district court did not clearly err in its factual determinations.
Odyssey argues the district court should not have independently weighed the facts under the Rule 12(b)(1) standard, but instead should have evaluated the facts under the standard applied to a motion for summary judgment under Fed.R.Civ.P. 56. Under this standard, Odyssey asserts, the court should have viewed the evidence in the light most favorable to Odyssey and drawn all justifiable inferences in its favor. Odyssey argues the Rule 56 standard is necessary because a motion to dismiss implicates the merits of the underlying claim in the case.
This Court has explained "[w]hen the jurisdictional basis of a claim is intertwined with the merits [of the claim], the district court should apply a Rule 56 summary judgment standard when ruling on a motion to dismiss which asserts a factual attack on subject matter jurisdiction." Dunbar, 919 F.2d at 1530. "[J]urisdiction becomes intertwined with the merits of a cause of action when a statute provides the
In this case, jurisdiction is not intertwined with the merits of the cause of action. Although the FSIA governs the subject matter jurisdiction of the federal courts to hear this case, Odyssey has two substantive claims for relief: an in rem salvage claim, which is governed by salvage law; and an alternate claim of possessory rights and ownership under the law of finds. Since the FSIA provides only subject matter jurisdiction, and is not the basis for Odyssey's substantive claims, the same statute does not provide the basis for both the subject matter jurisdiction of the court and the plaintiff's substantive claims for relief such that jurisdiction is intertwined with the merits of the claim. Although Odyssey contends the motion to dismiss implicates the merits of the underlying claim, that a lack of subject matter jurisdiction bars a party's claim does not mean the jurisdictional question is itself related to the cause of action. See Moran, 27 F.3d at 172-73. Accordingly, the district court correctly applied the Rule 12(b)(1) standard for factual challenges to jurisdiction to Spain's motion for dismissal.
B. Should the district court have held an evidentiary hearing when ruling on Spain's Rule 12(b)(1) motion?
Odyssey contends the district court erred by failing to conduct an evidentiary hearing when deciding the Rule 12(b)(1) motion. Odyssey claims it should have been given an opportunity to orally cross examine Spain's experts.
"When a party challenges subject matter jurisdiction, the court is given the authority to resolve factual disputes, along with the discretion to devise a method for making a determination with regard to the jurisdictional issue." Id. at 172; see also Land v. Dollar, 330 U.S. 731, 735, 67 S.Ct. 1009, 1011 n. 4, 91 L.Ed. 1209 (1947) ("As there is no statutory direction for procedure upon an issue of jurisdiction, the mode of its determination is left to the trial court."(quotation marks and citation omitted)). When resolving factual disputes underlying a Rule 12(b)(1) motion, a court "`may' consider oral evidence along with written, but an evidentiary hearing is not required." Moran, 27 F.3d at 173.
Both the magistrate judge and the district court had before them what the district court referred to as "an encyclopedic treatment of the issues attendant to this controversy." Spain's motion to dismiss, Odyssey's response and Spain's reply were accompanied by a combined total of 125 attachments, including affidavits of multiple historians, counter-affidavits, copies of original Spanish documents from the Nineteenth Century with translations, photographs from the shipwreck site, and photographs of the artifacts recovered. Further, Odyssey introduced even more exhibits with its objections to the magistrate judge's report, including copies of original historical documents, translated documents, articles, and excerpts from histories. Each party had a full opportunity to present evidence, including the ability to present counter-affidavits. The district court did not abuse its discretion by evaluating Spain's Rule 12(b)(1) motion based on the extensive record before it.
C. Did the district court have subject matter jurisdiction over the res?
The Constitution empowers the federal courts to hear "all Cases of admiralty and maritime Jurisdiction." U.S. Const. art. III § 2, cl. 1. "`An in rem suit against a vessel is . . . distinctively an admiralty proceeding, and is hence within the exclusive province of the federal courts.'" Bd. of Comm'rs of the Orleans Levee Dist. v. M/V Belle of Orleans, 535 F.3d 1299, 1314 (11th Cir.2008) (quoting Am. Dredging Co. v. Miller, 510 U.S. 443, 446-47, 114 S.Ct. 981, 985, 127 L.Ed.2d 285 (1994)).
Although federal courts have the exclusive power to adjudicate in rem suits against a vessel, that power is dependent on the court's jurisdiction over the res, the property named as the defendant. R.M.S. Titanic, Inc. v. Haver, 171 F.3d 943, 964 (4th Cir.1999) (citing Pennoyer v. Neff, 95 U.S. 714, 724, 24 L.Ed. 565 (1877), overruled in part by Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977)). "Only if the court has exclusive custody and control over the property does it have jurisdiction over the property so as to be able to adjudicate rights in it that are binding against the world." Haver, 171 F.3d at 964. Therefore, when a party files an in rem complaint, the court issues a warrant for the arrest of the res and the res remains in the court's custody for the remainder of the proceedings. Crimson Yachts v. Betty Lyn II Motor Yacht, 603 F.3d 864, 868 (11th Cir.2010); see also United States v. $38,570 U.S. Currency, 950 F.2d 1108, 1113 (5th Cir.1992) ("No in rem suit can be maintained without a valid arrest of the res by the marshal.")
If the res at issue is the property of a foreign state, the federal courts only have jurisdiction to arrest the res if authorized by the FSIA. See 28 U.S.C. § 1609; see also Beg v. Islamic Republic of Pakistan, 353 F.3d 1323, 1324 (11th Cir.2003) ("Federal courts have jurisdiction to hear claims against foreign governments only if authorized by the Foreign Sovereign Immunities Act."). Therefore, in order to determine if we have jurisdiction in this in rem action, we must determine first whether the res at issue is the property of a foreign state, and second, if it is, whether the federal courts have jurisdiction over the res under the FSIA.
1. Is the res the shipwreck of the Mercedes?
Odyssey argues there was insufficient evidence for the district court to conclude the res was the Mercedes. After an extensive review of the record, we conclude the evidence before the district court supports its factual determination that the res is the shipwreck of the Mercedes for the purposes of sovereign immunity.
a. The Mercedes and its historical context
To determine whether the res is the Mercedes for the purposes of sovereign immunity, it is necessary to first understand the history of the Mercedes and the facts surrounding its final mission.
Spain and Great Britain fought as allies against revolutionary France in the War of Convention from 1793 to 1795. In 1795, Spain signed the Peace of Basel with France, ending the hostilities between Spain and France. While they were technically at peace, Spain still feared French
In 1803, Spain entered into a secret agreement with France where Spain agreed to pay France a large monthly sum equivalent to and in lieu of its military obligation to France under the Treaty of San Ildefonso. Spain hoped this agreement would allow it to maintain its alliance with France without provoking the British, thereby staving off a potential French invasion of Spain. However, Great Britain informed Spain it considered the financial support of France as grounds for attacking Spain.
In light of its extensive monetary obligations to France and the tenuous peace with Great Britain, Spain needed to marshal its funds and resources in peninsular Spain. Spain thus utilized the peace from the Treaty of Amiens as an opportunity to collect funds from its various Viceroyalties. The Spanish Generalisimo of sea and land forces, Manuel Godoy, ordered warships be dispatched to the port of El Callao in Lima, part of the Spanish Viceroyalty of Peru, to collect and bring back to peninsular Spain specie
The Mercedes was built by Spanish Navy engineers in 1788 at the Spanish Navy shipyard in Havana, Cuba. It had a distinguished naval career and took part in multiple military missions, including fighting against the British in both the Battle of the Cape of Saint Vincent in 1797 and in the defense of El Ferrol, Spain in 1800. It also conducted multiple missions transporting valuable Spanish effects, including transporting 500,000 pesos fuertes of the King and other valuables of Spanish citizens from the Spanish Viceroyalties of New Grenada and New Spain to peninsular Spain in 1798.
The Mercedes and the Clara set sail for Lima on February 27, 1803, from the Spanish naval base in El Ferrol. After stopping for repairs at the Spanish naval base in Montevideo, in present day Uruguay, the Mercedes reached Lima on August 7, 1803.
In Lima, the Mercedes took on board an extensive amount of specie and other cargo, including copper and tin ingots of the Royal Treasury, products of the Royal Revenue of Mails, proceeds of patriotic loans, ecclesiastic funds, military payroll and tree husks. It also took aboard specie of Spanish citizens. According to Spanish naval historians, it was an accepted practice at this time for a country to provide military transport for private property when the transport would pass through areas patrolled by hostile nations' warships. In all, the Mercedes was loaded with approximately 900,000 silver pesos, 5,809 gold pesos, and almost 2000 copper and tin ingots. The Mercedes was also loaded with two obsolete bronze cannons,
Shortly after the Mercedes arrived in Lima, the Viceroy of Peru was informed the Treaty of Amiens had been abrogated and France and Great Britain were once again at war. In light of the resumed hostilities between France and Great Britain, the Mercedes' departure from Lima was delayed. The Mercedes ultimately left Lima on March 31, 1804, along with the Clara and another Spanish Navy frigate, the Asuncion. The three ships stopped in Montevideo on June 5, 1804. There, the Clara and the Mercedes were placed under the command of Royal Navy Commander General Jose de Bustamente y Guerra and joined a squadron of two other Spanish Navy frigates, the Medea and the Fama. The squadron thereafter consisted of four frigates: the Mercedes, the Clara, the Medea, and the Fama.
According to the official registry of the Mercedes, when it arrived at Montevideo its crew of 337 included eight Spanish naval officers, 63 marines, 69 artillerymen and gunners, 51 sailors, 103 sailors-in-training, and various other men performing different jobs aboard the ship. It was also armed according to Spanish Navy regulations for war frigates and carried 12-pounder and 6-pounder cannons, as well as 24-pounder and 3-pounder obuses or pedreros.
The day before the squadron left Montevideo, the second in command of the squadron fell ill and had to be replaced. Captain Diego de Alvear, who was aboard the Mercedes and was returning to Spain with his family, was moved from the Mercedes to the Medea to replace the second in command. Captain Alvear's family, including his wife, four daughters, three sons, and one nephew, stayed aboard the Mercedes.
The squadron set sail from Montevideo for Cadiz on August 9, 1804. On the morning of October 5, 1804, when the Spanish squadron was only one day's sail from Cadiz, it was intercepted by a British squadron. Four Royal British Navy ships, under the command of Commodore Graham Moore, had been sent by the British Navy Admiralty to intercept Spanish warships transporting treasure back to Spain. The Spanish frigates, having sighted the British frigates headed towards them, assumed a combat formation. A British officer was sent aboard the Medea and informed the Spanish that the British King had ordered the British Navy to detain the Spanish squadron and take it to England. The Spanish refused the British order, and what was to become known as the Battle of Cape Saint Mary soon commenced.
Only a few minutes after the battle began, the Mercedes exploded. Captain Alvear, whose family was aboard the Mercedes, later wrote "The Mercedes jumped through the air making a horrible racket, covering us [on the Medea] with a thick rain of debris and smoke." Except for fifty sailors, everyone aboard the Mercedes was killed, including Captain Alvear's entire family. The remaining three Spanish frigates surrendered and were taken by the British squadron to England. Partly as a consequence of the Battle of Cape Saint Mary, Spain declared war against Great Britain and entered into the Napoleonic Wars as an ally of France.
b. The res is the Mercedes
In this historical context, the entirety of the record evidence supports the district court's conclusion that the res is the Mercedes. The res was found within the zone
Despite this evidence, Odyssey contends the artifacts recovered do not match the cargo of the Mercedes. It points out that the Mercedes was carrying 900,000 coins and 33-50 cannons, whereas Odyssey has only recovered 595,000 coins and seventeen cannons. We find this argument unconvincing. The failure to fully recover all artifacts carried by the Mercedes is understandable considering the Mercedes exploded at the surface, sank 1,100 meters, scattered over a large area, and has been sitting on the ocean floor for more than 200 years.
Odyssey also argues the res cannot be the Mercedes because Odyssey did not find an intact vessel. Although it is undisputed the shipwreck site does not contain an "intact" vessel, this fact is not determinative. As one of Odyssey's own experts acknowledged, the site is consistent with a vessel that broke up at the surface and descended through the water. There is evidence of an actual vessel at the site, including copper plates like those used to sheath a hull. The site and thus the res is a shipwreck, even though no intact vessel was found.
Furthermore, Odyssey acknowledged when it found the shipwreck that it was the remains of a vessel. Odyssey filed both its original complaint against and a motion seeking the arrest of "The Unidentified Shipwrecked Vessel, its apparel, tackle, appurtenances and cargo." The district court, at Odyssey's request, issued a warrant for the arrest of "The Unidentified Shipwrecked Vessel, its apparel, tackle, appurtenances and cargo." Therefore, the evidence in the record fully supports the finding of the district court that the res is the Mercedes for the purposes of sovereign immunity.
2. Does the FSIA apply to the Mercedes?
As we previously noted, in order for the federal courts to have jurisdiction over this in rem action, we must first determine whether the res at issue is the property of a foreign state, and second, if it is, whether the federal courts have jurisdiction over it under the FSIA. The district court did not err in determining the res is the Mercedes. It is uncontested the Mercedes is the property of Spain. We must now determine if the district court correctly decided that FSIA immunity applies to the arrest of the Mercedes.
a. Section 1609 provides the Mercedes with presumptive immunity from arrest
Section 1609 of the FSIA states: "Subject to existing international agreements to which the United States is a party at the time of enactment of this Act the property in the United States of a foreign state shall be immune from attachment[,] arrest[,] and execution except as provided in sections 1610 and 1611 of this chapter." 28 U.S.C. § 1609. The Mercedes is Spain's sovereign property that is within the United States. While the Mercedes itself is not within the United States, that alone does not defeat the court's ability to obtain jurisdiction over it. A court may have either actual or constructive possession over the res. See The Brig Ann, 13 U.S.(9 Cranch) 289, 291, 3 L.Ed. 734 (1815). A court can exercise constructive possession over a shipwreck when part of the shipwreck is presented to the district court. See, e.g., California v. Deep Sea Research, Inc., 523 U.S. 491, 494, 118 S.Ct. 1464, 1467, 140 L.Ed.2d 626 (1998). A salvor is thus able to bring a shipwreck found in international waters constructively within a court's territorial jurisdiction by having a portion of the shipwreck within the jurisdiction. R.M.S. Titanic, Inc. v. Haver, 171 F.3d 943, 967-69 (4th Cir.1999) (concluding a shipwreck found in international waters can "constructively" be considered within the jurisdiction of the district court, although the district court's sovereignty over the wreck is a "`shared sovereignty,' shared with other nations enforcing the same [law of all nations]"). Odyssey has deposited parts of the Mercedes with the district court, constructively bringing the shipwreck within the court's territorial jurisdiction. Because this is an in rem action based on the arrest of sovereign property, § 1609 provides the Mercedes with presumptive immunity from arrest.
b. The Mercedes does not fall within any of the FSIA exceptions to in rem immunity
Because § 1609 provides the Mercedes with presumptive immunity from arrest on these facts, the only way a federal court can obtain jurisdiction is if an exception to § 1609 applies. Odyssey has the burden of overcoming the presumption that the Mercedes is immune from arrest. See S & Davis Int'l, Inc. v. The Republic of Yemen, 218 F.3d 1292, 1300 (11th Cir. 2000) ("To establish subject matter jurisdiction under the FSIA, a plaintiff must overcome the presumption that the foreign state is immune from suit in the United States' courts. . . . In order to overcome the presumption of immunity, a plaintiff must prove that the conduct which forms the basis of its complaint falls within one of the statutorily defined exceptions.") (citing Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 610-11, 112 S.Ct. 2160, 119 L.Ed.2d 394 (1992)). If Odyssey offers evidence one of the FSIA exceptions to immunity applies, the burden shifts to Spain to show, by a preponderance of the
Although §§ 1610 and 1611 are the only statutory exceptions to a sovereign property's immunity from arrest, see § 1609, Odyssey fails to invoke either of these exceptions. Because Odyssey has failed to satisfy its burden by proving that either § 1610 or § 1611 applies, we would normally end the analysis at this point. Odyssey, however, argues the Mercedes was engaged in commercial activity and is exempt from any FSIA protection by virtue of the FSIA's incorporation of existing international agreements that exempt commercial vessels from sovereign immunity. See 28 U.S.C. § 1609 (explaining that immunity from arrest is "[s]ubject to existing international agreements which the United States is a party at the time of enactment."). Specifically, Odyssey points to language in the 1958 Geneva Convention on the High Seas stating, "Ships owned or operated by a state and used only on government non-commercial service shall, on the high seas, have complete immunity from the jurisdiction of any State other than the flag State." Art. 9, entered into force Sept. 30, 1962, 13 U.S.T. 2312, 450 U.N.T.S. 11.
The FSIA defines a "commercial activity" as: "[e]ither a regular course of commercial conduct or a particular commercial transaction or act. The commercial character of an activity shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose." 28 U.S.C. § 1603(d).
Odyssey points to several facts suggesting the Mercedes was serving in a commercial capacity. Specifically, Odyssey claims the Mercedes was carrying goods and specie for freight, 75% of the cargo measured by value was privately owned, private merchants were charged a 1% freight rate to ship their goods aboard the Mercedes, and Spain was not at war when the Mercedes sunk. In addition, Odyssey argues the Mercedes was serving as a commercial transport vessel for the Spanish Correos Maritimos (Maritime Mail Service).
After reviewing the record evidence, we conclude the Mercedes was not "act[ing] like an ordinary private person" in the marketplace. See id. At the time it sank, the Mercedes was a Spanish Navy vessel. According to the 1804 official registry of ships of the Royal Spanish Navy, the Mercedes was assigned to the Spanish Navy fleet based at El Ferrol as one of nine frigate class ships. It was under the command of a Spanish Navy captain both when it left El Ferrol and when it was sunk. It delayed its departure from Lima to comply with Spanish Navy orders to prepare for war with the British. The crew was made up of Spanish Navy officers, sailors and marines, its armament was the standard armament of Spanish warships, and Captain Alvear's family and servants were traveling with official authorization. It was also carrying a substantial amount of Spanish Government specie and cargo, including money at the Minister of the Treasury's disposal, war donations, and copper and tin ingots.
Although the Mercedes did transport private cargo of Spanish citizens for a charge, the transport was of a sovereign nature. According to Spanish naval historians, providing protection and safe passage to property of Spanish citizens was a military function of the Spanish Navy, especially in times of war or threatened war. This function was particularly important during the late 18th and early 19th Centuries, when ships traveling between Spain and its American Viceroyalties had to pass through areas patrolled by hostile nations' warships. Therefore, the Mercedes was "act[ing] . . . like a sovereign" by transporting specie during a time of threatened war. Guevara, 468 F.3d at 1298.
In support of its position that the Mercedes was engaged in commercial activity, Odyssey also contends the Mercedes was a part of the Correos Maritimos, an official entity of the Spanish government dedicated to handling and transporting mail. The Correos Maritimos generally consisted of small, fast and lightly armed vessels that sailed to Spain's overseas Viceroyalties from their home base in La Coruna, Spain. Spain presented ample evidence the Mercedes was not part of the Correos Maritimos, including: historical records listing the Mercedes as part of the Spanish Navy and a warship; records listing vessels that were part of the Correos Maritimos, which do not include the Mercedes; and records
Because Spain was acting like a sovereign, not a private person in the marketplace, we conclude the Mercedes was not conducting commercial activity and is immune from arrest under the FSIA.
c. Section 1605(b) does not apply to the Mercedes
Odyssey also attempts to circumvent § 1609 by arguing that § 1605(b), which refers to the immunity of a foreign state from claims when a suit is brought to enforce a maritime lien, provides this court with jurisdiction. This interpretation is inconsistent with the plain language of the FSIA.
The FSIA establishes two broad grants of immunity, which apply to different types of claims and are subject to different sets of exceptions. Section 1609, which we have explained applies to Odyssey's in rem claims, provides the property of a foreign state with immunity from arrest, attachment, and execution and states that exceptions are provided in §§ 1610 and 1611. 28 U.S.C. § 1609. In contrast, § 1604 provides immunity to the foreign state itself and states that exceptions are provided in §§ 1605 to 1607. 28 U.S.C. § 1604. The structure of the statute and the clear language of § 1609 and § 1604 thus preclude reading § 1605(b) to control the in rem arrest in this case. See Mangattu v. M/V IBN HAYYAN, 35 F.3d 205, 209 (5th Cir.1994) (stating the plain language of § 1609 precludes reading the language of §§ 1605 and 1606 to control an issue of attachment). Section 1605(b) is an exception only to the general immunity of the foreign state itself from claims under § 1604 and thus does not apply to Odyssey's in rem claims against Spain's property. 28 U.S.C. § 1604.
d. The FSIA does not contain a possession requirement
Finally, Odyssey posits the Mercedes is not immune from arrest because the FSIA only applies when sovereign property is in the sovereign's possession, and Spain was not in possession of the res. This argument does not rest on any language in the statute, but on Odyssey's interpretation of California v. Deep Sea Research, 523 U.S. 491, 118 S.Ct. 1464, 140 L.Ed.2d 626 (1998), and Aqua Log, Inc. v. Georgia, 594 F.3d 1330 (11th Cir.2010), two cases that addressed the sovereign immunity of a state's property under the Eleventh Amendment. Odyssey claims these cases establish a sovereign may claim immunity in an in rem admiralty action only when the sovereign is in possession of the res.
We note first that neither of these cases contain any holding regarding the immunity of a foreign sovereign's property. Rather, these cases concerned state property and the Eleventh Amendment. See Deep Sea Research, 523 U.S. at 494, 507-08, 118 S.Ct. at 1467, 1473 (holding the Eleventh Amendment does not bar jurisdiction over vessels that are not in the State's possession and stating the case "requires us to address the interaction between the Eleventh Amendment and the in rem admiralty jurisdiction of the Federal Courts"); see also Aqua Log, 594 F.3d at 1335 (holding the Eleventh Amendment does not bar jurisdiction over a case where Georgia claimed to own logs sunk at the bottom of a river that were not within Georgia's actual possession). Regardless of any possession requirement the courts have imposed on a U.S. state claiming immunity of its property, there is no support
Moreover, it is clear we look only to the FSIA to determine if any possession requirement exists. Subject matter jurisdiction of the "lower federal courts is determined by Congress in the exact degrees and character to which Congress may seem proper for the public good." Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 433, 109 S.Ct. 683, 688, 102 L.Ed.2d 818 (1989) (quotation marks omitted). Congress has mandated "[c]laims of foreign states to immunity should  be decided by courts. . . in conformity with the principles set forth in [the FSIA]." 28 U.S.C. § 1602. The Supreme Court has made clear the FSIA "provides the sole basis for obtaining jurisdiction over a foreign state." Amerada Hess Shipping Corp., 488 U.S. at 443, 109 S.Ct. at 693 (emphasis added); see also Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 497-98, 103 S.Ct. 1962, 1973, 76 L.Ed.2d 81 (1983) (stating "deciding whether statutory subject matter jurisdiction exists under the Foreign Sovereign Immunities Act entails an application of the substantive terms of the Act to determine whether one of the specified exceptions to immunity applies") (emphasis added).
An examination of the FSIA reveals no possession requirement exists in any part of the statute.
Finally, Odyssey, as well as Peru, cites to Compania Espanola De Navegacion Maritima, S.A. v. The Navemar, 303 U.S. 68, 58 S.Ct. 432, 82 L.Ed. 667 (1938), as holding a foreign government cannot claim sovereign immunity over a vessel not in its possession.
D. Is the cargo aboard the Mercedes severable from the shipwreck of the Mercedes in determining immunity?
Odyssey, Peru, and all twenty-five individual claimants assert that even if the Mercedes is immune from arrest, the cargo aboard the Mercedes, and therefore the treasure that has been salvaged from the shipwreck, is not immune. The individual claimants argue they have a right to the cargo because they are descendants of
No party has pointed us to any case or statute that directly answers the question of whether cargo aboard a sunken military vessel is entitled to the same sovereign immunity as the sunken vessel. None of the cases cited by Odyssey in support of its argument that cargo is separate from a vessel concern cargo aboard a sunken military vessel.
As we discuss below, we are persuaded that in the context of a sunken Spanish military vessel, the cargo and the shipwreck are interlinked for immunity purposes. Two reasons support this conclusion: first, other statutes governing shipwrecks, including the Sunken Military Craft Act (SMCA), Pub.L. No. 108-375, §§ 1401-08, 118 Stat. 1811, 2094-98 (2004), which would govern the salvage claims against the Mercedes, treat cargo as part of the shipwreck; and second, the principles of comity discussed in the Supreme Court's decision in Republic of the Philippines v. Pimentel, 553 U.S. 851, 128 S.Ct. 2180, 171 L.Ed.2d 131 (2008), lead us to consider the potential for injury to the interest of the sovereign.
1. Cargo treated as part of the shipwreck
In 1902, the United States and Spain signed a treaty mandating "[i]n cases of shipwreck . . . each party shall afford to the vessels of the other, whether belonging to the state or to individuals, the same assistance and protection and the same immunities which would have been granted to its own vessels in similar cases." 1902 Treaty of Friendship and General Relations Between the United States of America and Spain, art. X, July 3, 1902, 33 Stat. 2105. Under this treaty, the United States must afford the Mercedes, as a shipwrecked Spanish warship, the same protection it would give a shipwrecked United States military vessel.
The United States considers the cargo of a shipwrecked U.S. military vessel part of the shipwreck and gives it the same immunities as the shipwreck. Under the SMCA, the rights, title and interest of the United States in any sunken military craft are protected absent an "express divestiture of title." § 1401, 118 Stat. at 2094. The definition of a "sunken military craft" includes a sunken warship or other military vessel, as well as "all or any portion of. . . the associated contents of a craft." § 1408(3)(C), 118 Stat. at 2098. "Associated contents" are defined as "the equipment, cargo, and contents of a sunken military craft that are within its debris field . . . [and] the remains and personal effects of the crew and passengers of a sunken military craft that are within its debris field." § 1408(1), 118 Stat. at 2097 (emphasis added). Thus, under the 1902 treaty, the Mercedes and its cargo are entitled to the same immunities provided by the SMCA.
Treating the cargo as part of the shipwrecked Mercedes is also consistent with the Abandoned Shipwreck Act (ASA), Pub.L. 100-298, § 2102(d), 102 Stat. 432 (1988). Under the ASA, the Federal Government asserts and transfers title of any "abandoned shipwreck" to the state in whose submerged lands the wreck is embedded. Like the SMCA, the ASA defines "shipwreck" as "a vessel or wreck, its cargo
While the SMCA and the ASA do not state cargo is part of the vessel for immunity purposes, they show the protections awarded to a sunken sovereign vessel also extend to the cargo aboard that vessel. As evidenced by the SMCA, those protections are heightened when the sunken vessel is a military vessel. We grant the cargo on a sunken Spanish military vessel the same sovereign immunity protection we grant the vessel.
2. The promotion of Spain's comity interest
Granting the cargo on a sunken Spanish military vessel the same sovereign immunity protection as the vessel is also consistent with the heightened protection we grant sovereigns when there is a potential of injury to the sovereign's interest. In Pimentel, the Republic of the Philippines and a sovereign Filipino Commission were dismissed as defendants in an interpleader action pursuant to the FSIA. 553 U.S. at 859, 128 S.Ct. at 2186. The action concerned various parties' claims against assets in a Merrill Lynch brokerage account, which included funds allegedly illicitly obtained by an ex-President of the Philippines. Id. at 857, 128 S.Ct. at 2185. After the Philippines and the Commission were dismissed, the district court awarded the assets to another party, reasoning the Philippines' and the Commission's claims against the assets had so little likelihood of success on the merits that the action could proceed without them. Id. at 860, 128 S.Ct. at 2187. The Supreme Court reversed, concluding that when a sovereign that is a required party in an interpleader action asserts sovereign immunity and raises non-frivolous claims, "dismissal of the action must be ordered where there is a potential for injury to the interest of the absent sovereign." Id. at 867, 128 S.Ct. at 2191. The Court explained that in failing to dismiss the action, the district court failed to give full effect to sovereign immunity and the promotion of the comity interest that underlies that doctrine. Id. at 865-66, 128 S.Ct. at 2190. It stated the "Republic and the Commission have a unique interest in resolving the ownership of or claims to the  assets," and a "specific affront  could result to the Republic and the Commission if the property they claim is seized by the decree of a foreign court." Id. at 866, 128 S.Ct. at 2190.
Because the cargo aboard the Mercedes is treated as part of the shipwreck of the Mercedes for sovereign immunity purposes, the Mercedes' immunity precludes Peru's attempt to institute an action in United States courts against any part of the Mercedes or any cargo it was carrying when it sank. This applies whether or not Peru has a patrimonial interest in the cargo. This also applies to the claims against the res by the twenty-five individual claimants.
E. Did the district court err when it ordered the res released to the custody of Spain?
The district court vacated the arrest and ordered Odyssey, as the substitute custodian, to return the recovered res to Spain. Odyssey argues this order serves as a substantive ruling on the merits that is beyond the district court's power because the court lacks subject matter jurisdiction. Odyssey contends the court is only empowered to return the parties to their positions prior to the arrest of the res and, therefore, the recovered res should be returned to Odyssey because Odyssey was in possession of the res immediately prior to the arrest. It argues the district court's order "transferred" the property from Odyssey to Spain, which the district court had no authority to do. We disagree.
When this action was initiated, Odyssey filed a motion for an order directing the clerk to issue a warrant of arrest in rem against the shipwrecked vessel, its apparel, tackle, appurtenances, and cargo. Odyssey stated "[a]ny further artifacts recovered from the Defendant Shipwrecked Vessel will be recovered under the jurisdiction of this Court, and will be within the actual and/or constructive possession of this Court or its duly-appointed substitute custodian during the pendency of this action." Odyssey's Verified Complaint in Admiralty In Rem at 4-5, Dkt. 1. The court issued a Warrant of Arrest In Rem against the shipwrecked vessel and its apparel, tackle, appurtenances, and cargo. The warrant commanded the U.S. Marshal to take possession of the res and any future artifacts recovered from the shipwrecked vessel. The district court appointed
By virtue of the issuance of the arrest warrant, the court is currently in possession of approximately 594,000 recovered coins and other artifacts. It necessarily follows that the court, after determining the res was immune from arrest, must have the ability to release the res from its custody. A contrary conclusion would lead inexorably to court custody in perpetuity. We have determined the arrest of the recovered res must be vacated, and therefore the district court must now release the property.
The Fed.R.Civ.P. Supplemental Admiralty Rules provide little instruction on how a court should release previously arrested property when the court does not have subject matter jurisdiction over the property. Supplemental Rule E(5)(d) states "the property arrested shall be released only by order of the court, on such terms and conditions . . . as the court may require." The rule does not state to whom the res should be released, only that it should be released according to the "terms and conditions" best seen fit by the court.
We note, the release from custody sought by Odyssey would not, as Odyssey contends, return matters to the status quo at the commencement of this suit. The U.S. Marshal seized the res approximately one month after Odyssey discovered the site in March of 2007. Odyssey continued recovery operations after the order of arrest. While Odyssey may have had prior custody of some items from the site, the remainder of the recovered res was received in Odyssey's capacity as custodian for and under the authority and protection of the court.
Moreover, releasing the res to the custody of Spain is not, as Odyssey attempts to characterize it, a "transfer." Odyssey holds the res as a substitute custodian of the district court; the res remains in custodia legis (in the court's possession). By ordering Odyssey, as substitute custodian, to release the res into Spain's custody, the court is relinquishing its control of the res and releasing it to the party that has a sovereign interest in it. Further, Spain's sovereign interest in the res existed before Odyssey initiated this action and deposited the parts of the res it had salvaged from the shipwreck.
In fact, releasing the res to Odyssey rather than Spain would be inconsistent with Spain's rights under the 1902 Treaty of Friendship and General Relations between the United States of America and Spain. As discussed previously, this treaty requires the United States to extend to Spanish shipwrecked vessels the same protection and immunities afforded to its own shipwrecked vessels in similar circumstances. 1902 Treaty of Friendship and General Relations Between the United States of America and Spain, art. X, July 3, 1902, 33 Stat. 2105. The United States protects its sunken warships from unauthorized private party access and possession. See SMCA, §§ 1402(b), 1408, 118 Stat. 2094. Thus, the 1902 Treaty requires the Mercedes be afforded the same protection and immunities from unauthorized access and salvage.
Finally, the Supreme Court's reasoning in Pimentel, which led us to conclude the cargo recovered from the Mercedes must receive the same sovereign immunity protection as the Mercedes itself, also supports our decision to affirm the district court's order to release the res into Spain's custody. The Supreme Court noted the "specific affront that could result" to a foreign state "if property they claim is seized by the decree of a foreign court." Pimentel, 553 U.S. at 866, 128 S.Ct. at 2190. The same affront would result here
For the foregoing reasons, the district court did not err when it ordered Odyssey to release the recovered res to the custody of Spain.
We AFFIRM the district court's grant of Spain's motion to dismiss.
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