DISTRICT COURT’S FAILURE TO DEFINE THE RIGHTS OR OBLIGATIONS OF PARTIES TO A SHIP MORTGAGE UNDER THE SHIP MORTGAGE ACT RESULTS IN DISMISSAL OF APPEAL DUE TO LACK OF SUBJECT MATTER JURISDICTION
State Bank & Trust Co. v. C & G Liftboats, LLC, 906 F.3d 361, 2018 WL 4998233, 2018 U.S. App. LEXIS 29072 (5th Cir., Oct. 16, 2018)
By: Nicole Goots
This action arises from State Bank & Trust Company seeking foreclosure on four ship mortgages and seized three vessels owned by C&G Liftboats, LLC and AMC Liftboats, Inc. Defendants argued that the district court did not have subject matter jurisdiction on the grounds that the plaintiff could not have valid ship mortgages under the Ship Mortgage Act. Specifically, defendants alleged that the underlying mortgages used to secure the vessels were invalid under Louisiana law.
The United States District Court for the Eastern District of Louisiana initially granted in part the summary judgment to State Bank & Trust Company holding that the plaintiff had a preferred ship mortgage under the Ship Mortgage Act even if the chattel mortgage was invalid under Louisiana law. Despite this decision allowing State Bank & Trust Company to proceed in its foreclosure action in federal court, the district court neither granted judgment on the plaintiff’s claim that the defendants defaulted nor held the relevant mortgages as enforceable. Because the district court found that the plaintiff solely possessed a preferred ship mortgage and deferred all other requests for relief (such as not finding that the defendants defaulted on the collateral mortgages), the Fifth Circuit Court of Appeals lacked jurisdiction due to the district court’s failure to determine the rights of the parties. Under 28 U.S.C. § 1292(a)(3), the courts of appeal have jurisdiction of interlocutory decrees which determine “the rights and liabilities of the parties to admiralty cases in which appeals from final decrees are allowed." Here the order of the district court did not determine the “rights and liabilities of the parties” and thus, there was no appellate court jurisdiction.
