UNITED STATES COURT OF APPEALS
For the Fifth Circuit
STEVEN HENRY ADAMS, for Himself and as Representative
Underwriters at Lloyd's; INDEMNITY MARINE
ASSURANCE COMPANY LTD; THE YORKSHIRE INSURANCE COMPANY LIMITED; COMMERCIAL
UNION ASSURANCE COMPANY PLC; PHOENIX ASSURANCE PLC; CORNHILL INSURANCE
PLC; NORWICH UNION FIRE INSURANCE SOCIETY LTD; MARITIME INSURANCE COMPANY
LTD; THE NORTHERN ASSURANCE CO, LTD; SKANDIA UK INSURANCE PLC; OCEAN MARINE
INSURANCE COMPANY; FOLKSAM INTERNATIONAL INSURANCE COMPANY (U.K.) LTD;
SCOTTISH LION INSURANCE COMPANY LTD; WURTTEMBERGISCHE FEUERVERSICHERUNG
AG; SPHERE DRAKE INSURANCE PLC; DAI-TOKYO INSURANCE COMPANY (U.K.) LTD
Plaintiffs - Appellees - Appellants - Cross
Appellants - Cross Appellees
UNIONE MEDITERRANEA DI SICURTA; ET AL
AMERICAN EAGLE MARINE, INC
Defendant - Appellee - Appellant -
Cross Appellant - Cross Appellee
AK STEEL CORPORATION, formerly know as, Armco
Steel Company, L P
Defendant - Appellee - Cross Appellant
UMS GENERALI MARINE S.P.A., formerly known
as Union Mediterranea Di Sicurta'
Defendant - Appellant - Cross Appellee
BRITAMCO UNDERWRITERS, INC
Defendant - Appellee - Appellant -
Cross Appellant - Cross Appellee
Appeals from the United States District Court
For the Eastern District of Louisiana
August 14, 2000
Before JONES, DUHÉ, and WIENER, Circuit
DUHÉ, Circuit Judge:
This appeal involves two causes of action
arising out of the sinking of a cargo of 158 steel slabs in the Mississippi
River. The first cause of action is a dispute between two insurers of the
cargo, Steve Henry Adams, et. al. ("the Plaintiffs") and U.M.S. Generali
Marine S.P.A. ("UMS"), over whether the non-paying co-insurer (UMS) should
be required to contribute to the payment of loss. The second action is
a claim by the Plaintiffs for conversion of the cargo against a voluntary
salvor, American Eagle Marine, Inc. ("American Eagle"), and the subsequent
purchaser of the salvaged cargo, A.K. Steel Corp. ("A.K. Steel").
Regarding the dispute between the insurers,
we conclude that UMS did not waive its personal jurisdiction defense, and
we reverse and remand for the district court to determine jurisdiction.
We do not decide the other issues UMS and the Plaintiffs raise on appeal
against each other. As to the conversion dispute, we affirm on all grounds
except one. We reverse and vacate the district court's determination that
American Eagle's general liability insurance policy with Britamco Underwriters,
Inc. ("Britamco") provided coverage for American Eagle's negligent conversion.
We do not decide whether UMS may subrogate against American Eagle and A.K.
While en route from New Orleans to Cincinnati,
Canal Barge Company ("Canal Barge") barges CBX 207 and 214 sank in the
Mississippi River. This case involves a dispute over the 158 slabs of steel
cargo carried to the riverbed aboard those two barges. A.K. Steel of Middletown,
Ohio, had originally agreed to purchase the steel slabs from Duferco, S.A
("Duferco"), a Swiss Company.
The Plaintiffs and UMS concurrently insured
the cargo under open marine cargo policies. Duferco had an open cargo policy
with UMS, an Italian insurance company, which was written and issued in
Italy and delivered to Duferco in Switzerland. Canal Barge had an open
cargo/shippers' interest insurance policy with the Plaintiffs, on which
Duferco was named as an additional insured.
After the accident, Duferco made a claim with
UMS. Duferco, through its agent, the Italian Claims Agency ("ICA"), awarded
a salvage contract to American Eagle to raise the cargo. The contract provided
that it could be canceled with notice and that American Eagle did not have
to perform salvage until the river gauge at Vicksburg fell below 20 feet,
the depth at which salvage could be prudently performed. UMS advanced to
Duferco $191,000 in sue-and-labor costs for the salvage effort. In March
1994, UMS denied the claim primarily because Duferco failed to warrant
proper loading of the cargo. In the meantime, A.K. Steel (the original
intended purchaser) confirmed that it did not own the cargo and assigned
any and all of its rights to Duferco.
The salvage contract remained in effect until
July 6, 1994, when ICA wrote American Eagle advising that Duferco was canceling
the contract. In the letter, an ICA representative wrote that the cargo
"had been abandoned." The parties greatly dispute the meaning of this letter
and the circumstances surrounding it. From July 6, 1994 until it mobilized
its voluntary effort near the end of January 1995, American Eagle did not
salvage the steel, although the river gauges suggested that the months
of September, October and November of 1994, presented optimum times for
salvage because of the low water depths. On February 18, 1995, with the
river gauge just below the minimum depth for prudent operations, American
Eagle voluntarily undertook salvage of the steel.
American Eagle did not negotiate with potential
buyers for the steel before commencing the salvage operation. While it
made some attempt to discover the chemical composition of the steel, it
abandoned those efforts, thereby lowering the potential market value for
the steel. American Eagle first contacted A.K. Steel on January 7, 1995.
A.K. Steel offered to purchase what it described as the "Duferco Steel,
that had sunk in the Mississippi." American Eagle was unaware that A.K.
Steel was the original intended purchaser of the steel. A.K. Steel did
not advise the Plaintiffs or other interested parties of its negotiations
with American Eagle to purchase the steel.
In negotiations, American Eagle refused to
warrant title to the steel as insisted by A.K. Steel. During the salvage
operation, American Eagle also refused to sell the steel to another buyer
because this purchaser demanded that American Eagle warrant title. Instead,
it would only warrant abandonment for salvage, a demand to which A.K. Steel
eventually acceded. On March 8, 1995, American Eagle sold all its rights
in the cargo retrieved to A.K. Steel. In the purchase agreement, American
Eagle sold to A.K. Steel its "rights, and possession in salvage and title
rights, if any."
Salvage operations commenced on February 21,
1995, and continued through April 26, 1995. American Eagle successfully
salvaged 127 steel slabs, relinquishing them to A.K. Steel as they were
placed aboard barges in the river. Pursuant to their contract, A.K. Steel
paid American Eagle $525,424.32. The Plaintiffs did not assert an ownership
interest in the steel until after the salvage operation was completed.
The Plaintiffs were made aware of the salvage
operation in April 1995 by Canal Barge's counsel, who advised Plaintiffs'
counsel that Douglas Adams of American Eagle had inquired about salvaging
the cargo. When the Plaintiffs advised American Eagle and A.K. Steel that
the cargo was theirs and that the salvage should cease, they both refused.
American Eagle and A.K. Steel initially argued that they owned the steel.
Later American Eagle and A.K. Steel asserted defenses based on the laws
II. Procedural History
The Plaintiffs brought this case originally
as an action for declaratory relief to ascertain the proper party to pay
the constructive total loss of cargo under the insurance policy they issued
to Canal Barge. They also sought to determined whether UMS, which also
issued Duferco a similar policy insuring the same cargo, was obligated
to contribute to the payment. Plaintiffs named as defendants Ilva, the
manufacturer of the steel; Duferco; Canal Barge; UMS; and Duferco Steel,
Inc., an American sister company to Duferco. The court voluntarily dismissed
Ilva, Duferco, Duferco Steel, Inc., Canal Barge and A.K. Steel from this
initial action at various times. The Plaintiffs later made A.K. Steel a
co-defendant in the action for conversion of the steel.
In the initial declaratory relief action,
the district court held that Duferco was entitled to recover its loss from
either Plaintiffs or UMS. Since Duferco made demands on the Plaintiffs
first, the Plaintiffs were obliged to pay Duferco before seeking contribution
from UMS. Pursuant to this ruling, the Plaintiffs paid Duferco $986,352.41
in exchange for an assignment of Duferco's rights, if any, against UMS.
Plaintiffs refused Duferco's claim for payment of approximately $191,000
in sue and labor expenses (specifically, investigation expenses, survey
costs, and attorney's fees) advanced by UMS during the preliminary loss
investigation. The district court voluntarily dismissed A.K. Steel, which
had relinquished any claim it may have had, from the suit prior to payment
of the Duferco claim.
The Plaintiffs then discovered the salvage
effort and demanded that American Eagle and A.K. Steel return the cargo
or pay its value. When American Eagle and A.K. Steel refused, the Plaintiffs
filed an amended declaratory judgment action, which asserted a claim to
recover the value of the steel from American Eagle and A.K. Steel. UMS
then filed a cross-claim against A.K. Steel and American Eagle.
At trial on the amended declaratory action,
it was determined that although UMS had initially agreed to pay Duferco's
claim, UMS denied coverage after learning Canal Barge had additional coverage.
The district court rejected every coverage defense raised by UMS.(1)
In rejecting these defenses, the district court found that UMS was obliged
under its policy with Duferco to contribute to the loss in proportion to
the amount its coverage bore to the total amount of insurance (80 percent
of the loss). The district court awarded the Plaintiffs $789,081.93 against
UMS or 80 percent of $986,352.41.
In the conversion action, the district court
found that American Eagle and A.K. Steel had, albeit in good faith, negligently
converted the steel.(2) The court held that
the Plaintiffs had not abandoned the cargo. The court awarded $190,975.68
for the conversion, which it divided on an eighty-twenty basis between
UMS ($152,780.55) and Plaintiffs ($38,195.13). The district court entered
judgment against American Eagle and A.K. Steel in favor of UMS and the
Plaintiffs for these amounts. Finally, the court held that American Eagle's
liability for negligent conversion was covered by its general liability
insurance policy with Britamco.(3)
In calculating the judgment, the district
court determined that the cargo's value, after applying a 20 percent discount
based on the unavailability of the steel's chemistries to Plaintiffs, was
$716,400.(4) The court then offset the value
of the sunken steel by $525,424.32, American Eagle's salvage expenses.
The district court held that American Eagle's and A.K. Steel's right to
assert a salvage claim against the Plaintiffs had lapsed with the passage
of the two-year prescriptive period, but the right could nonetheless be
asserted as an affirmative defense. The $190,975.68 is then the difference
between the discounted value of the cargo and the salvage expense.
No party is happy with the district court
rulings. On appeal, UMS has dropped all coverage defenses. UMS appeals
the district court rulings concerning personal jurisdiction over it, venue,
and the allocation of the loss between insurers. The Plaintiffs contend
that UMS should be barred from receiving any money judgment from A.K. Steel
and American Eagle until it pays them its pro-rata share of the constructive
loss. Plaintiffs also argue that the district court abused its discretion
in not allowing them to recover attorney's fees and expenses from UMS.
Regarding the conversion litigation, American
Eagle and A.K. Steel appeal the district court's finding of negligent conversion,
arguing that the cargo was abandoned. American Eagle also appeals the district
court's ruling on negligent conversion, arguing that it only transferred
its possessory interest and salvage claim to A.K. Steel. In addition, A.K.
Steel appeals the district court's holdings that it was not protected by
the voidable title doctrine, that UMS could subrogate against it, and the
court's exercise of subject matter jurisdiction. Plaintiffs cross-appeal
the district court's ruling that American Eagle and A.K. Steel could assert
the right to a salvage claim as an affirmative defense, its ruling that
they acted in good faith, and its calculating the steel's value and the
salvage award. Finally, American Eagle's insurer, Britamco, alleges that
the district court erred in concluding that its policy covered American
Eagle's negligent conversion.
I. Personal Jurisdiction over UMS
We review de novo the district court's determination
that its exercise of personal jurisdiction over a non-resident defendant
is proper when the relevant facts are not in dispute. Wilson v. Belin,
20 F.3d 644, 647-48 (5th Cir. 1994). When a nonresident defendant timely
questions a federal district court's jurisdiction over it, the plaintiff
bears the burden of establishing jurisdiction. Id. at 648; Travelers
Indem. Co. v. Calvert Fire Ins. Co., 798 F.2d 826, 831 (5th Cir. 1986).
In determining personal jurisdiction, a court is not restricted to a review
of the plaintiff's pleadings. It may resolve a jurisdictional issue by
receiving affidavits, interrogatories, depositions, oral testimony, or
any recognized form of discovery. Jobe v. ATR Marketing, Inc., 87
F.3d 751, 753 (5th Cir. 1996).
In admiralty cases, a federal court may exercise
personal jurisdiction over a foreign defendant, such as UMS, when (1) Louisiana
could have acquired personal jurisdiction over the defendant on the same
cause of action; and (2) the exercise of jurisdiction comports with the
Due Process Clause of the Fourteenth Amendment. Asarco, Inc. v. Glenara,
Ltd., 912 F.2d 784, 786 (5th Cir. 1990). In this case, these two inquiries
merge into one because Louisiana's long-arm statute permits jurisdiction
coterminous with the scope of the Due Process Clause. Id. See La.
Rev. Stat. Ann. § 13:3201 (West 1991).
Additionally, a defendant may waive its personal
jurisdiction defense, thereby consenting to jurisdiction. See Travelers
Indem. Co., 798 F.2d at 834. ("Clearly parties can waive lack of personal
jurisdiction."). Usually a party waives personal jurisdiction by failing
to raise the issue when filing a responsive pleading or making a general
appearance. Fed R. Civ. P. 12(h). In rarer circumstances, a defendant may
waive personal jurisdiction if it authorized another to appear or act on
its behalf in court. Reynolds v. International Amateur Athletic Fed'n,
23 F.3d 1110, 1121 (6th Cir. 1994)(citing Federal Deposit Ins. Corp.
v. Oaklawn Apts., 959 F.2d 170, 175 (10th Cir. 1992)).
The district court concluded that UMS waived
personal jurisdiction because it authorized Duferco to appear on its behalf.(5)
The court first determined that the legal representations of UMS and Duferco
were intimately intertwined. The court examined Statements for Professional
Services Rendered submitted by various law firms involved in this litigation.
The court found that those documents indicated that at the time Duferco
filed its answer to the Plaintiffs' complaint, the same attorneys represented
UMS and Duferco. In addition, UMS paid Duferco's legal bills during 1994
and 1995; and a law firm representing Duferco had represented UMS on other
The Court also concluded that not only was
the legal representation intertwined, but the claims were as well:
UMS' attempt to shield itself from the jurisdiction
of this court by relying on Duferco's ostensible obligation to reimburse
them is disingenuous, at best. Indeed, UMS continually argues that Duferco
must reimburse them for the fees expended during the salvage attempt. However,
Duferco has paid UMS nothing despite that the loss occurred over two years
ago. Nor has the Court been given any proof that UMS has instituted suit
against Duferco in Italy for this money.
The court found that UMS attempted to insulate
itself from the court's jurisdiction by hiding behind Duferco. "Duferco
is truly acting for UMS. Thus, this Court finds that UMS has waived its
personal jurisdiction defense through the actions of Duferco." Citing
Reynolds, 23 F.3d at 1121. Because of this finding, it was unnecessary
for the court to consider whether it had specific or general personal jurisdiction
On appeal, UMS raises some legitimate questions
regarding the district court's findings regarding the relationship between
UMS and Duferco. As to the court's determination that UMS had not sought
reimbursement for the sue-and-labor costs from Duferco for nearly two years,
UMS contends that such action was not necessary because UMS already had
a less formal but equally effective means to enforce Duferco's obligation
to pay. A Duferco director testified in a deposition that on July 3, 1995
UMS entered a debit of $191,000 on Duferco's open account.(6)
(R. at 3689-3691). This amount was subtracted from a total premium refund
of $574,342, which was paid to Duferco when the accounting for the 1993-1994
policy year was completed. (See UMS Bench Book of Exhibits 16).
UMS also claims that the District Court misapplied
Reynolds in holding that UMS authorized Duferco's actions. In Reynolds,
the Sixth Circuit reversed the lower court's holding that the International
Amateur Athletic Federation ("IAAF") had waived its jurisdictional defenses
by reason of a Federation member's intervention in a lawsuit filed against
the IAAF by a disgruntled athlete. The Sixth Circuit determined that the
member was carrying out a statutory duty when it intervened, and noted
that there was no evidence indicating the IAAF authorized the member to
do so. Reynolds, 23 F.3d at 1121. To some extent, this case is similar
to Reynolds. Duferco had an obligation under Italian law to reimburse
the expenses to UMS. Italian Civil Code, Article 2041 (Mario Betramo,
et. al., trans.) (1991) ("General cause of action for unjust enrichment.
A person who has enriched himself without cause at the expense of another
shall, to the extent of the enrichment, indemnify the other for his correlative
UMS makes a strong showing that it has been
reimbursed, but we are still left with undisputed evidence that the legal
representations of UMS and Duferco were intimately intertwined. UMS contends
that even this evidence does not amount to consent to personal jurisdiction.
Cases dealing with this factual scenario are
few and far between. Travelers Indem. Co., 798 F.2d at 832-35, involved
a dispute over defendant insurer London Club's indemnity obligations arising
from a maritime collision. In the suit, counsel selected by London Club
had consented, on behalf of the shipowner, to transfer the case to Louisiana.
The Plaintiffs argued that this consent amounted to a waiver of London
Club's personal jurisdiction defenses in federal court in Louisiana. We
held that the consent to transfer did not result in London Club's waiver
of its personal jurisdiction defenses. Id.
One federal district court has rejected the
contention that a foreign defendant waives jurisdiction when it has a controlling
interest in ongoing litigation in the United States. Complaint of Kreta
Shipping, S.A., No. 96 Civ. 1137, 1998 WL 173167 (S.D.N.Y. Jan. 29,
1998), arose out of the abandonment of the M/V AMPHION, which resulted
in damage to a cargo of steel laden on board. Kreta, the owner of the vessel,
commenced a limitation action in federal court seeking exoneration from
or limitation of liability with respect to losses connected with the AMPHION's
Kreta had hired Astron Maritime Company to
provide management services for the vessel in accordance with a standard
managing and agency agreement, which was signed and negotiated in Greece.
Claimants in the limitation proceeding filed actions in federal court against
Astron, which sought to dismiss these claims for lack of personal jurisdiction.
The claimants did not contend that any of the facts presented to the district
court subjected Astron to personal jurisdiction. Rather, they took the
position that jurisdiction came from Astron's conduct in the Kreta Shipping
litigation. They specifically alleged that Astron, rather than Kreta, made
the decision to file the limitation action and had "power over litigation
conferred by the ship management contract." Id. at *3.
The district court rejected this theory and
concluded that Astron did not consent to personal jurisdiction through
its involvement in the Kreta Shipping litigation.
The fact that Astron may be the party ultimately
liable and that Astron may have directed the decision-making behind this
lawsuit does not result in Astron having consented to the Court's jurisdiction.
These facts make Astron no different than the typical maritime (or other)
insurer - an insurer will often be the party ultimately financially liable,
may provide for the insured's legal representation and legal strategy,
and often effectively controls the conduct of the lawsuit. Insurers do
not, however, consent to personal jurisdiction through such activities
(absent state "direct action" or similar insurance legislation).(8)
The district court's reasoning in Kreta
Shipping is compelling; in particular the court's recognition that
insurers often must take an active role in an insured's legal problems.(9)
UMS has continually argued that it is accepted industry custom world-wide
for an insurer to retain the same attorneys to act for itself and its insured
when investigating loss. While UMS' actions may be somewhat suspect, the
evidence does not support a finding that UMS has relied on these tactics
to insulate itself from jurisdiction of the district court. The evidence
equally supports a finding that UMS acted like any other insurer would
when its insured faces legal liability. In addition, our standard of review
places the burden on the plaintiff, and not the defendant, to support finding
personal jurisdiction. See also C. Wright & A. Miller,
Federal Practice and Procedure § 3522 at 60 (1984) ("It is
a principle of first importance that the federal courts are courts of limited
For these reasons, we conclude that UMS did
not waive its personal jurisdiction defenses and we reverse the district
court. Because of its decision on waiver, the district court did not decide
whether it had specific or general jurisdiction over UMS.(10)
Since the parties dispute whether the district court has jurisdiction over
UMS, we remand the case for a further determination of jurisdiction. Because
jurisdiction over UMS is unresolved, we do not address the other issues
the Plaintiffs and UMS raise on appeal: The Plaintiffs claim attempting
to block UMS from receiving its money judgment and their claim seeking
attorney's fees and expenses from UMS; and UMS claims of improper venue
and improper allocation of loss between insurers. We also do not address
whether UMS may subrogate against American Eagle and A.K. Steel.
II. Salvage and Title Dispute
A. Abandonment of the Cargo
We review findings of fact for clear error
and legal conclusions de novo. Ivy v. Jones, 192 F.3d 514, 516 (5th
Cir. 1999). Under the clearly erroneous standard, we look first to whether
there is substantial evidence supporting the findings. We will not set
aside the district court's factual findings when they are supported by
substantial evidence, unless, after a review of the record as a whole,
we are left with the unyielding belief that a mistake has been made. Anderson
v. Bessemer City, 470 U.S. 564, 573 (1985).
The district court held that the Plaintiffs
had title to the salvaged steel. The court determined that the law of salvage
applied to this case, rather than the law of finds. Therefore, A.K. Steel
did not possess title to the salvaged steel, which it acquired from American
Eagle. On appeal, American Eagle and A.K. Steel contend that title to the
cargo was abandoned pursuant to the law of finds, therefore, American Eagle
and subsequently A.K. Steel should be considered the rightful titleholders.
We review whether the sunken cargo comes within
the law of salvage or the law of finds.(11)
One commentator has noted that "[t]here appears to be no clear line of
demarcation between property that is 'salvaged' and 'finds.'" Frank L.
Maraist, Admiralty in a Nut Shell 130 (West 3d ed. 1996). Generally
speaking, "[m]arine salvage occurs when marine property is successfully
saved by a volunteer from marine peril. By performing a voluntary and successful
act, the salvor obtains a maritime lien on the salved property, which he
can enforce in rem in an admiralty court." Martin J. Norris, Benedict
on Admiralty § 802[A] at 8-4 (1998).
The owner of the distressed goods on navigable
waters does not lose title even though the property may become the subject
of salvage services. Id. § 150 at 11-1.(12)
"The salvor obtains a right of possession; he does not acquire ownership
or title to the salved property." Id. § 150 at 11-1 to 11-2.
The maritime lien allows the salvor to secure compensation for his voluntary
services. "All that the salvor can do is to enforce his lien by making
his claim to an award. He thus has a lien and he has the right of possession.
He also has the duty of properly caring for the property while it is in
his possession." Id. at 11-2.
A find, on the other hand, differs from salvage
in that the property has either been abandoned (as further defined below)
or never owned by any person. The property belongs to the finder. Benedict
on Admiralty notes:
The common law of finds treats property that
is abandoned as returned to the state of nature and thus equivalent to
property, such as fish or ocean plants, with no prior owner. . . . Admiralty
favors the law of salvage over the law of finds because salvage law's aims,
assumptions, and rules are more consonant with the needs of maritime activity
and because salvage law encourages less competitive and secretive forms
of conduct than finds law. . . . [A] finding that title to such property
has been lost requires strong proof, such as the owner's express declaration
abandoning title." Id. § 158 at 11-16 (quoting Hener
v United States, 525 F. Supp. 350 (S. D. N. Y. 1981) (emphasis added)).
Several courts favor salvage instead of finds,
and have applied the law of finds only when supported by strong evidence.
The Fifth Circuit has noted that even when a vessel is abandoned the original
owner is not divested of title "except in extraordinary cases. . . where
the property has been lost or abandoned for a very long period." Treasure
Salvors, Inc. v. The Unidentified Wrecked and Abandoned Sailing Vessel,
640 F.2d 560, 567 (5th Cir. 1981).
The more important question, however, is what
must an owner do to affirmatively release title to the property - forever
abandoning it under the law of finds. As the Fourth Circuit has noted there
are only a handful of cases applying the law of finds. These cases fit
into two categories. "First, there are cases where owners have expressly
and publically abandoned their property. In the second type of case, items
are recovered from ancient shipwrecks and no owner appears in court to
claim them." Columbus-America Discovery Group v. Atlantic Mutual Ins.
Co., 974 F.2d 450, 461 (4th Cir. 1992) (internal citations omitted).
In the first context, a party may show abandonment only by a clear and
unmistakable affirmative act indicating a purpose to repudiate ownership.
Id. A federal district court has said that abandonment under the
law of finds must be proven by "clear and convincing evidence,"
such as the owner's express declaration abandoning title. Falgout Brothers,
Inc. v. S/V Pangaea, 966 F. Supp. 1143, 1145 (S.D. Ala. 1997) (citing
Columbus-America Discovery Group, 974 F.2d at 461) (emphasis added).
Therefore, we must apply the law of salvage
unless American Eagle and A.K. Steel demonstrate through clear and convincing
evidence that the owner of the steel, Duferco or later the Plaintiffs,
made an express declaration abandoning title. We now review the pertinent
On July 6, 1994, ICA Representative Victor
Bruzzone (Duferco's agent) wrote a letter to American Eagle stating, "[w]ith
reference to the aforementioned salvage contract and in conformity with
paragraph 6, we are instructed by Duferco, S.A., to cancel said contract
of salvage as cargo has been abandoned." Duferco then sent a letter on
July 28, 1994 to Canal Barge saying:
We hereby advise you and your cargo underwriters
that the 'steel slabs' in question have been abandoned by us. It has been
our understanding for some time that you and representatives of your cargo
underwriters were aware that the salvage of the cargo in question was impossible
due to river conditions, and that the cost of possible salvage operations
would exceed the possible market value for the steel commodity in question.
We immediately request that you put your cargo underwriters on formal notice
of our abandonment of the cargo.
Both sides dispute the meaning of these letters.
Bruzzone testified that he was instructed to cancel the salvage contract
so that Duferco could declare the cargo a constructive total loss. Bruzzone
said that Duferco had not told him they were "abandoning" the cargo; rather
Bruzzone picked up the term "abandon" from a Duferco attorney. Bruzzone
claimed the purpose of the letter was to cancel the salvage contract. American
Eagle contends that Plaintiffs' witness Michael Garin testified that the
Plaintiffs considered Duferco's abandonment to be a total abandonment to
the world, and the Plaintiffs had no intent of salvaging the cargo or asserting
ownership until it did so in April 1995.
Based on the above letters the district court
concluded that Duferco had abandoned the cargo on July 28, 1994. The Plaintiffs
refused to accept the abandonment in August 1994. Then, in response to
the court's declaratory judgment ruling, the Plaintiffs made a partial
payment to Duferco in the amount of $986,352.41 in exchange for an assignment
of Duferco's rights, if any, against UMS. On February 1, 1995, Plaintiffs
and Duferco executed an Assignment and Subrogation Receipt in return for
payment on the claim. The Assignment and Subrogation Receipt provided that,
"[the Plaintiffs] are entitled at [their] option to take over [Duferco's]
interest in whatever may remain of goods, it being understood that delivery
to [the Plaintiffs] of the document of title relating to goods shall not
be construed as an exercise of such option."
Based on this agreement, the court concluded
that Plaintiffs had title to the steel. It held that, even though the Plaintiffs
initially rejected the abandonment, they subsequently obtained title to
the cargo pursuant to the Assignment and Subrogation Receipt. The court
found that there was no "clear and convincing" proof presented at trial
that the Plaintiffs expressly abandoned title.
On appeal, American Eagle and A.K. Steel focus
on the district court's finding that the Assignment and Subrogation Receipt
transferred title to the Plaintiffs. A.K. Steel argues that because Duferco
abandoned the steel in July 1994 it no longer had ownership rights which
it could transfer to the Plaintiffs on February 1, 1995.(13)
Both A.K. Steel and American Eagle note that the Assignment only gave the
Plaintiffs an option to take control of the sunken steel. However, the
Plaintiffs did not attempt to exercise the option until it learned of the
salvage in late April 1995.
Even though the transfer of title from Duferco
to the Plaintiffs is not entirely clear, we agree with the district court
that there is no clear and convincing evidence that Duferco expressly abandoned
title to the cargo before the Assignment to the Plaintiffs. The district
court did not commit clear error in its factual findings that Duferco maintained
title to the cargo until the Plaintiffs entered into the Assignment and
Subrogation Receipt with Duferco. We agree that A.K. Steel did not receive
title to the steel slabs when it purchased the salvaged cargo from American
B. Conversion by American Eagle and A.K. Steel
The district court concluded that American
Eagle and A.K. Steel were liable for negligent conversion of the cargo
because they exercised control by sale, purchase and consumption of the
steel. These acts totally interfered with the Plaintiffs' right to the
steel. American Eagle argues that it should not be held liable for conversion
because it had the right to transfer its possessory right and salvage interest
to A.K. Steel. Again, we review the district court's findings of fact for
clear error and legal conclusions de novo.
American Eagle correctly states that through
a successful salvage effort it obtained a right of possession in the steel.
To support this proposition, American Eagle suggests that "[o]ne so appropriating
abandoned property, or any third person whom he may allow to take it, has
a right to the property superior even to that of the former owner, and
may hold it against him." Wiggins v. 1100 Tons, More or Less, of Italian
Marble, 186 F. Supp. 452, 456 (E.D. Va. 1960). American Eagle concludes
that it had the right to transfer its possessory right and salvage interest
to A.K. Steel, which it did on April 26, 1995.
The district court properly concluded that
American Eagle and
A.K. Steel committed negligent conversion.
As already noted, the Plaintiffs maintained ownership and title over the
steel under the law of salvage. The law of salvage prescribes how American
Eagle must act as salvor of the Plaintiffs' steel. "Salvage law specifies
the circumstances under which a party may be said to have acquired, not
title, but the right to take possession of property (e.g., vessels, equipment,
and cargo) for the purposes of saving it from destruction, damage, or loss,
and to retain it until proper compensation has been paid." Columbus-America
Discovery Group, 974 F.2d at 460 (quoting Benedict on Admiralty
§ 158 at 11-15 to 11-16.).
While American Eagle had a right of possession,
it did not become the owner of the salved property by virtue of its services
and could not transfer title to it. American Eagle "merely has a maritime
lien granted by the general maritime law to ensure that [its] reward for
saving property will be satisfied out of the property saved." Benedict
on Admiralty § 157 at 11-13. Therefore, the district court's conclusion
that American Eagle and A.K. Steel were liable for negligent conversion
is correct. American Eagle and A.K. Steel had the duty to protect the salved
property for the owner and the right to assert a claim against it for the
cost of the salvage.(15)
C. Issues Raised by A.K. Steel on Appeal
1. Choice of law regarding the contract
A.K. Steel argues that the trial court erred
by failing to perform an adequate choice of law analysis to determine what
law should govern the contract between American Eagle and A.K. Steel. A.K.
Steel asserts that Ohio law should govern because Louisiana conflicts of
law analysis requires that a contractual choice of law provision be given
effect unless there is statutory or jurisprudential law to the contrary.
Delhomme Industries, Inc. v. Houston Beechcraft, Inc., 669 F.2d
1049, 1058 (5th Cir. 1982) (quoting Associated Press v. Toledo Investors,
389 So.2d 752, 754 (La. App. 3d Cir. 1980)). It contends that as a purchaser
of salvaged goods, and not the salvor, maritime law should not apply.
We review choice of law questions de novo.
Woodfield v. Bowman, 193 F.3d 354, 358 (5th Cir. 1999). Claims arising
out of salvage operations are clearly within the admiralty jurisdiction
of the federal courts. Treasure Salvors, Inc., 640 F.2d at 566.
We have noted that "[d]isputes concerning the surveillance and sale of
cargo are subject to being treated in admiralty." Coastal (Bermuda)
Ltd. v. E.W. Saybolt & Co. Inc., 761 F.2d 198, 202 n.4 (5th Cir.
1985). Therefore, since the criteria for admiralty jurisdiction are met,
we must apply federal admiralty and maritime laws and not state law.
2. Ohio Voidable Title Doctrine
A.K. Steel argues that the district court
erred when it held that A.K. Steel had no claim or defense pursuant to
the Ohio voidable title doctrine. However, because admiralty jurisdiction
includes issues related to the sale of cargo, we apply federal admiralty
law and not the Ohio voidable title doctrine in reviewing American Eagle's
sale of the cargo to A.K. Steel.
Even if Ohio law did apply, A.K. Steel does
not make a valid claim. The district court found that pursuant to a purchase
order, American Eagle sold its possession and salvage interests to A.K.
Steel and only warranted documentation of abandonment by owners to underwriters.
The court said "American Eagle neither possessed nor transferred nor warranted
title to the salvaged slabs to A.K. Steel."
The court then noted that the Ohio Voidable
Title Doctrine could not apply in this case. The statute provides that:
"A purchaser of goods acquires all title which his transferor had or had
power to transfer. . . . A person with voidable title has power to transfer
good title to a good faith purchaser for value." Ohio Rev. Code §
1302.44(A). Because American Eagle did not purport to transfer title of
any kind, the court found the statute to be inapplicable.
We review the court's factual findings under
a clearly erroneous standard and its legal conclusions de novo. American
Eagle never had title to the salvaged steel. Therefore, it could neither
transfer nor warrant title to A.K. Steel. In addition, American Eagle never
purported to transfer title. American Eagle's agreement with A.K. Steel
transferred rights, interest, and possession of slabs retrieved to A.K.
Steel, including "rights, and possession in salvage and title rights, if
any." The agreement included a warranty which provided "that the slabs
have been abandoned for salvage by the owners/underwriters." Under the
terms of this agreement, A.K. Steel should have expected to possess the
steel but not receive title to it. Therefore, we agree that the voidable
title doctrine is inapplicable.
3. Breach of warranty
A.K. Steel next argues that American Eagle
breached its expressed warranty with A.K. Steel. A.K. Steel says that American
Eagle warranted that the owners/underwriters had abandoned title to the
steel allowing it to transfer full title to A.K. Steel, when in fact the
steel had only been abandoned for salvage, thus American Eagle could not
transfer title. A.K. Steel contends that under Ohio law a purchaser that
relies on the express warranty of a seller of goods and suffers injury
may sue to recover damages for breach of express warranty. Plastic Moldings
Corp. v. Park Sherman Co., 606 F.2d 117 (6th Cir. 1979). Again, because
this issue involves the sale of marine cargo, we must apply federal admiralty
law and not state law.
Even if state law did apply, we conclude that
there was no breach of warranty. First, American Eagle stated in its purchase
order that it was selling "possession in salvage and title rights, if any"
and that the "slabs had been abandoned for salvage." In addition, American
Eagle refused to sell the steel to a buyer that demanded warranty of title,
even though that buyer offered to pay more for the steel. Because American
Eagle did not purport to transfer anything but the rights it had "if any,"
it likewise did not expressly warrant to A.K. Steel that it was transferring
title. Moreover, A.K. Steel, as the original purchaser, knew that the steel
belonged to Duferco. Therefore, American Eagle cannot be liable for breach
D. Issues Raised by Plaintiffs on Appeal
1. The salvage claim
The Plaintiffs first argue that the district
court erred in finding that American Eagle and A.K. Steel possessed a valid
salvage claim. With this valid claim, the district court subsequently granted
American Eagle and A.K. Steel an award for salvaging the steel slabs, which
was offset by the conversion judgment. Plaintiffs contend that American
Eagle and A.K. Steel performed neither of the requirements to establish
the right to a claim. They neither filed for a salvage lien nor returned
the cargo to the owners. Since they failed to preserve the right to a claim,
the right never existed.
The Plaintiffs do not dispute the court's
finding that an initial salvage claim existed. A salvage claim exists when
there is: (1) a maritime peril to the property; (2) voluntary service by
the salvor; and (3) the salvage effort is successful in whole or in part.
Schoenbaum, Admiralty and Maritime Law § 16-1 at 324. However,
Plaintiffs correctly point out that the two defendants failed to preserve
the right to the salvage claim within the two-year statute of limitations
Although the statute of limitations period
for filing a salvage claim had passed, the district court concluded that
A.K. Steel and American Eagle were entitled to assert a salvage claim as
an affirmative defense and as a basis for recoupment in response to Plaintiffs'
claim to quiet title. Citing Basic Boats, Inc. v. United States,
311 F. Supp. 596, 597 (E.D. Va. 1970), the court noted that "there is ample
authority to the effect that the counterclaim should be treated as an affirmative
defense by way of recoupment, and this is true even though as an affirmative
cause of action it may be barred by limitation."
Plaintiffs argue that the district court misapplied
Basic Boats because in that case the U.S. Navy defended against
a damage claim with the shield of an expired salvage claim because it preserved
the salvage right by returning the vessel to its owners. American Eagle
and A.K. Steel, however, did not return the salvaged property to its owners.
We conclude that the court did not err in
relying on Basic Boats. Although the two defendants did not preserve
a salvage claim in the traditional manner, they did properly assert such
a right as an affirmative defense and recoupment to Plaintiffs' claims.
We must now determine whether or not A.K. Steel and American Eagle should
receive a salvage award for their efforts. This question turns on a determination
whether or not they acted in good or bad faith during the salvage and subsequent
transfer of the steel.
2. Did American Eagle and A.K. Steel act in
A salvor has an obligation to bring aided
property to a safe place for the eventual return to the owner. A salvor
may not keep the salved property and, if she did so, would become liable
for conversion. Benedict on Admiralty § 157 at 11-13. Justice
Story noted that "[i]n cases of salvage, the party founds himself upon
a meritorious service, and upon the implied understanding, that he brings
before the court, for its final award, all the property saved with the
entire good faith; and he asks a compensation for the restitution of the
uninjured, and unembezzled by him." The Boston, 3. F.Cas. 932, 937
A salvor obviously will not receive an award
if he loses the property or acts in bad faith. But it is not entirely clear
what constitutes bad faith. Storey noted that embezzlement by salvors must
be punished by forfeiture of the salvage claim. Id. More recently
this Circuit has said that admiralty courts must be vigilant in protecting
mariners from unscrupulous and dishonest salvors. "[T]he law cannot tolerate
salvors [sic] dishonesty, corruption, fraud, falsehood, either in rendering
service, or in their proceedings to recover the salvage." Jackson Marine
Corp. v. Blue Fox, 845 F.2d 1307, 1309 (5th Cir. 1988) (citing Church
v. Seventeen Hundred and Twelve Dollars, 5 F.Cas. 669 (S.D. Fla. 1853)).
In addition, a salvor forfeits any award where he is guilty of gross negligence,
looting or spoilage of the salved property. Admiralty and Maritime Law
16-4 at 329.
Based in part on these legal standards the
district court found no bad faith on the part of American Eagle or A.K.
Steel for salvaging and transferring the steel:
First, [Douglas] Adams' testimony confirms
that he knew that the salvaged steel had been abandoned by Duferco in July
1994. Adams knew that if he salvaged the steel he could claim a possessory
right of salvage only since he did not own the steel. Adams specifically
chose the one purchaser who agreed to this term, namely that American Eagle
only warrant abandonment of the cargo but not warrant title. Adams accepted
a significantly lower bid in order to obtain this term because the higher
bidder insisted on warranty of title, which Adams knew he could not do.
Likewise, A.K. Steel purchased the salvaged steel without warranty of title,
assuming the risk that its title to the steel could be challenged by plaintiffs.
The Court is critically aware that the cargo
would not have been salvaged but for the efforts of American Eagle and
the American Eagle would not have bothered to salvage the cargo were it
unable to line up an acceptable purchaser in advance of its efforts. American
Eagle successfully salvaged 128 slabs of steel, and did so in good faith,
notwithstanding American Eagle's failure to halt delivery of the salvaged
steel to plaintiffs on April 27, 1995, upon their assertion of ownership.
A.K. Steel purchased the salvaged steel in good faith without warranty
of title and immediately consumed the steel into production.
The Court finds no 'bad faith' on either American
Eagle or A.K. Steel based on their unresponsiveness to plaintiffs' demand
that sale, delivery and consumption of the salvaged steel should halt at
the instant it asserted its ownership interest. The letter of July 6, 1994,
stated that the cargo was abandoned. Significantly, the letter did not
provide that the cargo was abandoned to the underwriters or anyone else.
The Plaintiffs argue that the court erred
in these conclusions. Plaintiffs reiterate many of their earlier arguments
against American Eagle and A.K. Steel, which Plaintiffs suggest all point
to bad faith. First, American Eagle attempted to sell the steel even though
it knew it did not have title. American Eagle and A.K. Steel were both
knowledgeable salvors and should have known that the cargo belonged to
someone else. They bought and sold property that was not theirs even after
the Plaintiffs wrote them insisting that they cease salvaging the cargo.
Finally, the district court concluded that American Eagle and A.K. Steel
were liable for negligent conversion. These acts, the Plaintiffs argue,
all point to bad faith.
We review the district court's factual findings
for clear error. The record reveals that American Eagle and A.K. Steel
may not have acted entirely in good faith. Perhaps, they did not act in
good faith when they ignored the Plaintiffs' request that they halt the
sale, delivery and consumption of the salvaged steel.
Nevertheless, the district court did not commit
clear error in determining that American Eagle and A.K. Steel did not act
in bad faith nor commit gross negligence, embezzlement, fraud, or corruption.
Until the April 1995 letter from the Plaintiffs asking them to cease the
sale of the cargo, the only other communication regarding the cargo stated
that it had been "abandoned." As discussed above, the purpose of ICA's
abandonment letter was not crystal clear. American Eagle had some basis
to believe it could salvage the steel and at least transfer a possessory
interest. Consequently, A.K. Steel could expect to receive a possessory
interest in the steel. American Eagle knew that it did not have title to
the steel and never attempted to transfer title. We agree with the district
court that American Eagle and A.K. Steel acted negligently but their behavior
did not rise to bad faith under the law.
3. The 20 percent discount
The district court reduced the cargo's value
by 20 percent because the steel was salvaged, which would cause concern
about possible damage from submergence, and because American Eagle did
not have the steel's chemistries. The Plaintiffs contend that it was clearly
erroneous for the district court to apply this discount, and this court
should reverse and amend the judgment to reflect the steel's true value
The court applied this discount based on the
testimony of Plaintiffs' value expert George Hynson. He testified that
if the chemistries of the steel were unavailable the price could be reduced
by 5 to 20 percent. Hynson testified that the discount was based on the
seller not possessing the composition chemistries of the steel, which placed
the seller at a disadvantage in negotiations to sell the cargo. However,
Plaintiffs argue that they had the chemistries to the steel.
The district court reduced the spot market
price of the steel not only because a purchaser would not have the chemistries;
but in addition, because a purchaser would be concerned about the possible
damage from submergence or salvage. This is a realistic concern. Therefore,
we conclude that the court did not commit clear error in reducing the price
of the steel.
4. The sunken tug
Plaintiffs also argue that the district court
committed clear error in not permitting testimony on whether the salvage
claim should be reduced by the cost of an additional salvage recovery during
the salvage operation. The court refused to permit the Plaintiffs to cross-examine
Douglas Adams on the additional $66,000 salvage award he received for raising
a tug sunk during the salvage operation. Plaintiffs argue that this amount
should be deducted from the court's salvage award of $525,424.32 in order
to mitigate damages. We conclude that the court did not err. The Plaintiffs
and American Eagle stipulated to a dollar amount for salvage services.
This stipulated amount controls.
E. Coverage Under Britamco's Insurance Policy
Britamco argues that the district court erred
as a matter of law in holding that the general liability insurance policy
issued by Britamco to American Eagle covered American Eagle's negligent
conversion. The court concluded that the policy's exclusion from coverage
for "property damage expected or intended from the standpoint of the insured"
did not apply to American Eagle. The court said that there was no evidence
that American Eagle intended to deprive the Plaintiffs of their property.
Subsequently, the court entered a judgment for the Plaintiffs against Britamco.
We review a district court's interpretation
of an insurance policy de novo. FDIC v. Mijalis, 15 F.3d 1314, 1319
(5th Cir. 1994). We interpret the provisions in this insurance policy under
Louisiana law since the contract was delivered in Louisiana. The extent
of coverage is determined by the words of the policy. We construe the policy's
words and phrases using their plain, ordinary and generally prevailing
meaning, unless the words have acquired a technical meaning. When the language
is clear, the agreement must be enforced as written. Reynolds v. Select
Properties, Ltd., 634 So.2d 1180, 1183 (La. 1994).
The policy's coverage provision states, "[i]nsurers
agree to pay those sums that the Insured becomes legally obligated to pay
as damages because of . . . 'property damage' to which this insurance applies.
. . . The . . . 'property damage' must be caused by an 'occurrence.'"
(Emphasis added). The policy defines 'occurrence' as: "an accident
including continuous or repeated exposure to substantially the same general
conditions, which first take place during the policy period." (Emphasis
We look first to see if the events constituting
conversion are within the coverage clause of this policy. Only if they
are, do we consider the exclusionary provisions. We note that to have coverage
the conversion of the steel must be an occurrence and to be an occurrence
under this policy it must be an accident.
Black's Law Dictionary 15 (6th ed.
1990) defines an accident as "a fortuitous circumstance, event, or happening;
an event happening without any human agency, or if happening wholly or
partly through human agency, an event which under the circumstances is
unusual and unexpected by the person to whom it happens . . . ." As a salvor,
American Eagle had the right to possess the steel and the duty to either
return the steel to the Plaintiffs or file a salvage lien to obtain compensation.
American Eagle did not do that. Instead, American Eagle intentionally transferred
possession of the steel to A.K. Steel, who subsequently consumed the steel.
This transfer, purchase and consumption negligently interfered with the
Plaintiffs' ownership of the steel. Therefore, American Eagle and A.K.
Steel committed negligent conversion.
This act was not an accident or a fortuitous
event. American Eagle's and A.K. Steel's interference constituted more
than an accidental or unexpected event. A reasonable person would not transfer,
purchase and consume the steel without regard for the true owner's interest.
Given the facts of this case, we conclude that American Eagle's and A.K.
Steel's negligent conversion was not an accident, and thus is not covered
by Britamco's insurance policy.
A.K. Steel contends that we should interpret
American Eagle's negligent conversion pursuant to the policy's first exclusion
to coverage, which provides that insurance does not apply to "'Property
Damage' expected or intended from the standpoint of the insured."
(Emphasis added). A.K. Steel notes that under some Louisiana law an occurrence
clause includes intentional acts when the results of the acts are unintended
or unexpected. The Alert Centre, Inc. v. Alarm Protective Services,
Inc., 967 F.2d 161, 164 (5th Cir. 1992). Therefore, it argues, the
policy covers American Eagle's unintended negligent conversion. This argument
is unpersuasive. First, because we concluded that negligent conversion
was not an occurrence under the policy's coverage section, there is no
need to apply the policy's exclusions. There is no coverage in the first
place. Second, A.K. Steel cites case law which concerns policies having
a broader definition of occurrence than Britamco's policy. See Id.;
Auster Oil & Gas, Inc. v. Stream, 891 F.2d 570, 580 (5th Cir.
We reverse the district court and find no
coverage under the Britamco policy. We therefore vacate the Plaintiffs'
judgment against Britamco.
For the foregoing reasons, we affirm in part,
reverse and remand in part, and reverse and vacate in part.
1. The district court earlier
had granted the Plaintiffs' motion to compel substitution of real party
in interest. This motion requested the district court to make UMS an involuntary
Plaintiff in Duferco's cross-claim against Canal Barge.
2. The district court and
the parties treat both American Eagle and A.K. Steel as salvors. For this
reason, we likewise do so in certain portions of our opinion.
3. During the course of
this litigation, American Eagle filed for bankruptcy. The court then ordered
an automatic stay. The court lifted the stay and substituted Britamco as
the real party in interest.
4. The district court reached
this amount by reducing the per net ton of the steel from $300 to $240
and then presumably multiplying that figure by the tonnage of the salvaged
5. The court denied UMS'
motion to dismiss for lack of jurisdiction and later denied UMS' motion
to reconsider and order seeking certification pursuant to 28 U.S.C. §
1292(b). The court denied UMS' motion to reconsider for the same reasons
stated in its earlier order.
6. The Plaintiffs contend
that this deposition only reinforces the district court conclusion. The
director testified that he did not regard the expenses to be owed by Duferco.
Instead, he expected full recovery of its losses and expenses from UMS.
7. Plaintiffs contend that
this argument rings hollow in light of UMS' failure for nearly two years
to attempt to recover the expenses from Duferco in an Italian forum.
8. Id. at *7 (internal
citations omitted). The direct action statute in Louisiana is not a legislative
assertion of jurisdiction over insurance companies. McKeithen v. M/T
FROSTA, 435 F. Supp. 584, 586 n.6 (E.D. La. 1977).
9. The Plaintiffs argue
that the factual circumstances in Kreta Shipping are critically
different from those in this case because the shipping agent in Kreta
Shipping was not attempting to assert a cause of action for funds owed
to the agent. Whereas, UMS was asserting its claim disguised as Duferco.
The Plaintiffs, however, do not dispute the central holding of Kreta
Shipping. Moreover, based on the analysis above, it is impossible to
discern what motives, if any, UMS had as to the funds in question.
10. The parties submitted
motions to the court addressing the personal jurisdiction/minimal contacts
inquiry and the district court conducted a hearing, but ruled only on the
11. A.K. Steel argues
that the trial court incorrectly determined that it had admiralty jurisdiction
over the title issue and state law should apply because the steel slabs
were abandoned and embedded in the river bed. It contends that this case
does not come within the jurisdiction of federal courts under the Abandoned
Shipwrecks Act. In California v. Deep Sea Research Inc., 118 S.Ct.
1464, 1473 (1998), the Supreme Court held that the Eleventh Amendment does
not bar federal jurisdiction to adjudicate the status of a wreck under
the Abandoned Shipwrecks Act, 43 U.S.C. §§ 2101-2106. In addition,
the Abandoned Shipwrecks Act does not govern this case. As a rule, claims
arising out of salvage operations are within the admiralty jurisdiction
of federal courts. Treasure Salvors, Inc. v. The Unidentified Wrecked
and Abandoned Sailing Vessel, 640 F.2d 560, 566 (5th Cir. 1981).
12. "When articles are
lost at sea the title of the owner in them remains, even if they are found
floating on the surface or after being cast upon the shore. Should a vessel
be abandoned without hope of recovery or return, the right of property
still remains in her owner." Benedict on Admiralty § 150 at
13. A.K. Steel notes that
the Plaintiffs failure to accept the abandonment in August 1994 resulted
in titled not passing to them. See Jones Towing, Inc. v. United
States, 277 F. Supp. 839, 849 (E. D. La. 1967). Nevertheless, this
argument does not defeat the presumption that Duferco retained title.
14. We find no basis for
A.K. Steel's claim that under choice of law rules the Plaintiffs' assertion
of title should be governed by the laws of the United Kingdom.
15. American Eagle's citation
to Wiggins, 186 F. Supp. at 456, is unpersuasive as that case concerned
property whose owners had abandoned title. In this case, the court properly
found that the cargo was only abandoned for salvage purposes.
16. This figure is based
on a $300 per net tonnage for the steel multiplied by the total tonnage
of the steel. The district court reduced this figure by 20 percent to $240,
thereby arriving at the $716,400 value.