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DEEP SEA RESEARCH, INC. v. THE BROTHER JONATHAN

March 15, 1995

DEEP SEA RESEARCH, INC., Plaintiff,
v.
THE BROTHER JONATHAN, her appurtenances, furniture, cargo, etc., Defendant, and THE STATE OF CALIFORNIA, STATE LANDS COMMISSION, and the UNITED STATES OF AMERICA, Intervening Defendants.



The opinion of the court was delivered by: LOUIS C. BECHTLE

 BECHTLE, J.

 MARCH 15, 1995

 Presently before the court is the restricted appearance and motion of intervening defendant, the State of California, State Lands Commission ("State"), to dismiss plaintiff Deep Sea Research, Inc.'s ("DSR") admiralty in rem action against defendant, the wreck of the S.S. Brother Jonathan, her appurtenances, furniture and cargo (collectively "Brother Jonathan"), for lack of subject matter jurisdiction. Also before the court is DSR's motion for a warrant for arrest of the Brother Jonathan pursuant to Supplemental Federal Rule of Civil Procedure C(3), and for a court order appointing DSR exclusive salvor of the vessel. For the reasons set forth below, the State's motion will be denied and DSR's motion will be granted.

 I. BACKGROUND

 A. Factual History

 More than 128 years later, in October of 1993, DSR located the wreck of the Brother Jonathan approximately four and one-half miles off the coast of Crescent City, California. (Flohr Decl. at P 5; Siverts Decl. at P 7.) The ship is resting upright on the sea floor in approximately 250 feet of water. (Siverts Decl. at P 7.) A videotape taken of the wreck from a manned submersible confirms that the Brother Jonathan is largely intact -- at least three-quarters of the ship's hull, and all of its surviving superstructure, floors, galley, cabins and other portions of the vessel, are clearly visible above the surface of the ocean floor. *fn1" (DSR Mot. for Issuance of Warrant of Arrest, Ex. B.) In addition, portions of the vessel's cargo, including dishware, are clearly visible resting on the sea floor. (Id.)

 B. Procedural History

 1. DSR's Admiralty In Rem Action

 DSR has recovered several artifacts from the Brother Jonathan, including: two pieces of china; a corked, full champagne bottle; a medicine bottle; an ale bottle; and a brass spike from the ship's hull. (Flohr. Decl. at P 6.) Based on DSR's possession of these items, on April 1, 1994, DSR filed an admiralty in rem action stating a maritime claim against the wreck of the Brother Jonathan under Federal Rule of Civil Procedure 9(h) and 28 U.S.C. § 1333. DSR is seeking an award of title to the ship and its cargo under the common law of finds or, alternatively, to a salvage award under the common law of salvage. DSR also asserts a right of ownership by purchase of subrogation interests from the insurers of the vessel's original owner. At this time, however, DSR is seeking only a warrant for arrest of the Brother Jonathan pursuant to Supplemental Federal Rule of Civil Procedure C(3), and a court order appointing DSR exclusive salvor of the vessel.

 2. The State's Motion to Dismiss

 On April 1, 1994, the State filed a restricted appearance and motion to dismiss DSR's in rem complaint for lack of subject matter jurisdiction. The State asserts that it has title to the Brother Jonathan under the Abandoned Shipwreck Act of 1987 ("ASA" or "Act"), 43 U.S.C. § 2001, et seq., which gives states title to all abandoned shipwrecks which are embedded in their submerged lands, and all abandoned shipwrecks which are not embedded in the submerged lands of the state but are eligible for inclusion in the National Register of Historic Places ("National Register"). As an independent ground for ownership of the Brother Jonathan, the State asserts that it has title to the shipwreck under California Public Resources Code § 6313(a), which declares that the State has title to all abandoned shipwrecks, archaeological sites and historic resources resting on or in the submerged lands of the State. The State argues that the court lacks subject matter jurisdiction to proceed with this matter because the State has a "colorable claim" of ownership to the Brother Jonathan, therefore, DSR's in rem action against the vessel is really an action against the State which is prohibited by the Eleventh Amendment to the United States Constitution.

 The court held two hearings, on September 9, 1994 and September 27, 1994, to determine whether it had jurisdiction to proceed in this matter. *fn3" The first hearing focused on whether the Brother Jonathan was located within California's territorial sea. *fn4" During the second hearing, the State presented evidence in support of its claim that the Brother Jonathan is an abandoned shipwreck embedded in the submerged lands of the State. The State also presented testimony regarding the ship's eligibility for listing in the National Register.

 Based on the evidence of record, and for the reasons set forth below, the court finds that the State has failed to demonstrate that it has a "colorable claim" to the Brother Jonathan under the ASA. The court also finds that California Public Resources Code § 6313 is preempted by § 7 of the ASA, which declares "this chapter shall not change the laws of the United States relating to shipwrecks, other than those to which this chapter applies." 43 U.S.C. § 2106(b). Consequently, the law of admiralty applies to this action and the State's motion to dismiss will be denied.

 II. DISCUSSION

 As a preliminary matter, the parties vigorously dispute the meaning of the term "colorable claim," and the evidentiary support necessary for the State to demonstrate the existence of a "colorable claim." *fn5" Since none of the circuits have squarely addressed this issue in a case with similar facts, the court will first attempt to identify the elements of a "colorable claim." The court will then address the applicability of the ASA and its effect on the California Public Resources Code. Finally, the court will address DSR's motion for issuance of a warrant of arrest and motion to be declared exclusive salvor of the vessel.

 A. What is a "Colorable Claim"?

 The State, citing Marx, contends that its mere utterance of a claim to the Brother Jonathan under state or federal law makes it "colorable," and that the State need not prove that the laws actually apply to the vessel before the district court is divested of jurisdiction. The State is incorrect. First, the Ninth Circuit made no such holding in Marx, in which the parties' dispute arose before the effective date of the ASA, and the court refused to apply the terms of the new Act. See Marx, 866 F.2d at 295, 300. Second, the Ninth Circuit's more recent holding in ITSI TV Productions v. Agricultural Assoc., 3 F.3d 1289 (9th Cir. 1993), makes it clear that a party asserting sovereign immunity will have to at least prove, by a preponderance of the evidence, that the privilege applies. See ITSI, 3 F.3d at 1291-92 ("Like any other defense, that which is promised by the Eleventh Amendment must be proved by the party that asserts it and would benefit from its acceptance."). See also Treasure Salvors, 458 U.S. at 683-99 (where the Supreme Court first examined, and then rejected, state's claim of sovereign immunity); Zych v. Unidentified, Wrecked and Abandoned Vessel, Believed to be SB "Seabird", 941 F.2d 525 (7th Cir. 1991) (remanding case to District Court to determine whether shipwreck was "embedded" and applicability of ASA). Thus, to establish the existence of a claim, the State must establish, by a preponderance of the evidence, that the ASA applies to the vessel at issue. *fn6" Once the existence of a "colorable claim" is established, the district court lacks jurisdiction to adjudicate the merits of the State's claim and the action must be dismissed. Treasure Salvors, 458 U.S. at 699-700.

 To establish the existence of a "colorable claim" to a shipwreck under the ASA, the State, as the moving party, must demonstrate that the vessel is abandoned and embedded in the subsurface or coralline formations of the territorial waters of the State. Seabird, 941 F.2d at 530. If the shipwreck is abandoned but not embedded in the submerged lands of the State, the State must demonstrate that the Secretary of the Interior has included the shipwreck in, or has made a written determination that the shipwreck is eligible for listing in, the National Register. *fn7" Id. Once the State establishes that the ASA applies to an abandoned shipwreck, the federal court is divested of jurisdiction pursuant to 43 U.S.C. § 2106(a), and the question of title is settled by 43 U.S.C. § 2105(a) and (c). If a State alleges that it has a "colorable claim" to a shipwreck under state law, the State must demonstrate whether, and to what extent, its law regarding shipwrecks co-exists with, or is preempted by, the ASA. See 43 U.S.C. §§ 2103 and 2106(b). If both the ASA and state law are inapplicable, the federal court is not divested of jurisdiction, and it may properly turn its attention to the merits of the plaintiff's claim in accordance with the laws of admiralty. See 43 U.S.C. § 2106(b).

 B. The Abandoned Shipwreck Act of 1987

 On December 19, 1987, Congress enacted the ASA "to vest title to certain abandoned historic shipwrecks that are buried in State lands to the respective States and to clarify the management authority of the States for these abandoned historic shipwrecks." Pub. L. 100-298, 1988 U.S. Code Cong. and Adm. News at 365-385. Prior to the enactment of the ASA, tremendous confusion had arisen regarding whether states owned and had the authority to manage abandoned shipwrecks located in their territorial waters. Id. at 366.

 In 1953, Congress enacted the Submerged Lands Act ("SLA"), 43 U.S.C. § 1301, et seq., which gave states title to the natural resources located within three miles of their coastline. Id. With the growing popularity of SCUBA diving, and advances in underwater technology, there was a corresponding increase in the discovery of ancient shipwrecks off the coast of the United States. Many of these newly discovered shipwrecks were both historically significant and financially valuable. With the increased discovery of shipwrecks came increased controversy over whether the state upon whose land the shipwreck was located owned the vessel, or whether the individual who discovered the shipwreck obtained title to the vessel under the traditional laws of admiralty.

 Between 1953 and 1987, at least 27 states enacted legislation asserting title to, and authority over, shipwrecks located in their territorial waters under authority allegedly granted to the states by the SLA. Id. The SLA, however, did not specifically include abandoned shipwrecks in its definition of "natural resources." *fn8" Id. When states attempted to assert title to shipwrecks claimed by salvors, a majority of the federal courts that considered the issue found: (1) the SLA did not specifically assert title to shipwrecks on behalf of the United States and then transfer that title to the states; and (2) state laws regarding shipwrecks whose provisions were inconsistent with federal common law admiralty principles were superseded by those principles under the Supremacy Clause of the Constitution. Id. at 366, 371 (citing Cobb Coin Co. Inc. v. Unidentified, Wrecked and Abandoned Sailing Vessel, 525 F. Supp. 186 (S.D. Fla. 1981); Treasure Salvors, Inc. v. Unidentified, Wrecked and Abandoned Sailing Vessel, 569 F.2d 330 (5th Cir. 1978)). After lobbying by the states, Congress enacted the ASA to eliminate the confusion generated by this controversy. (State Memo. in Support of Restricted Appearance and Mot. to Dismiss at 7.)

 Under § 6(a) of the ASA, the United States asserts title to three classes of shipwrecks (1) abandoned shipwrecks that are embedded in the submerged lands of a state; (2) abandoned shipwrecks that are embedded in coralline formations protected by a state on its submerged lands; and (3) abandoned shipwrecks that are not embedded, but are located on the submerged lands of a state and are included in or determined to be eligible for inclusion in the National Register. 43 U.S.C. § 2105(a). Under § 6(b), the United States has transferred title to these shipwrecks to the states in or on whose submerged lands the shipwreck is located. 43 U.S.C. § 2105(c). Section 7(a) of the ASA Specifically excludes these three classes of shipwrecks from the law of salvage and the law of finds, the two areas of maritime law traditionally applied by potential salvors to obtain title to shipwrecks. 43 U.S.C. § 2106(a). Section 7(b), however, expressly states that the ASA "shall not change the laws of the United States relating to shipwrecks, other than those to which [the Act] applies." 43 U.S.C. § 2106(b). Therefore, any shipwrecks that do not fit within the three classes of shipwrecks covered by § 6(a) remain subject to the traditional principles of admiralty law, and the federal courts retain exclusive jurisdiction to apply the laws of admiralty to these shipwrecks.

 The ASA, by its terms, applies only to "certain abandoned shipwrecks, which have been deserted and to which the owner has relinquished ownership rights with no retention." 43 U.S.C. § 2101(b). The Act itself does not define the term "abandoned;" however, according to the regulations promulgated under the ASA, the term "abandoned shipwreck" means "any shipwreck to which title voluntarily has been given up by the owner with the intent of never claiming a right or interest in the future and without vesting ownership in any other person." 55 Fed. Reg. 50116, 50120 (Dec. 4, 1990). In addition, the regulations specifically exclude from the definition of "abandoned shipwrecks" vessels upon which insurance claims have been paid:

 
When the owner of a sunken vessel is paid the full value of the vessel (such as receiving payment from an insurance underwriter) the shipwreck is not considered to be abandoned. In such cases, title to the wrecked vessel is passed to the party who paid the owner.

 Id. at 50120-50121.

 The ASA's definition of "abandonment" generally follows established property law. It is well-settled, for instance, that abandonment is the voluntary relinquishment of one's rights to property. Mucha v. King, 792 F.2d 602, 610 (7th Cir. 1986). Abandonment occurs "by an express or implied act of leaving or deserting property without hope of recovering it and without the intention of returning to it." 3A M. Norris, Benedict on Admiralty § 134 (7th ed. 1993). Additionally, it has long been the law that "when articles are lost at sea the title of the owner in them remains." Columbus-America Discovery Group, Inc. v. Atlantic Mut. Ins. Co., 974 F.2d 450, 461 (4th Cir. 1992), cert. denied, 123 L. Ed. 2d 183, 113 S. Ct. 1625 (1993). Once an article has been lost at sea, "lapse of time and nonuser are not sufficient, in and of themselves, to constitute an abandonment." Id. (citations omitted). "In addition, there is no abandonment when one discovers sunken property and then, even after extensive efforts, is unable to locate its owner." Id. (citations omitted). To show abandonment, a party must prove: (1) an intent by the original owner to abandon his property; and (2) physical acts carrying that intent into effect. Id. at 461, 464-65. The act of abandonment "must be proved by a clear and unmistakable affirmative act to indicate a purpose to repudiate ownership." Id. at 461 (citation omitted). Finally, the finding of abandonment must be supported by strong and convincing evidence. Id.

 In this case, the State contends that the Brother Jonathan is abandoned because the vessel's owners have not attempted to salvage the vessel since 1865. On the other hand, DSR maintains that the Brother Jonathan is not abandoned because there has never been an affirmative act of abandonment on the part of the vessel's owners, and the technology did not exist to either find or safely salvage the vessel until recently. DSR also maintains that insurance claims were paid on the vessel in 1865; therefore, the insurers obtained title to the vessel through rights of subrogation. DSR asserts that it now holds title to the Brother Jonathan because the successors in interest to two of the vessel's original insurers have assigned their subrogation interests to DSR.

 The only evidence that the State has presented on the issue of abandonment is the testimony of Rand Frank Herbert ("Herbert"), an historian, regarding the factual circumstances of the Brother Jonathan's sinking and the results of his research regarding salvage efforts and insurance claims paid for the loss of the vessel. (Herbert, Tr. 9/27/94 at 6.) During the September 27, 1994 hearing, Herbert testified, erroneously, that the Brother Jonathan was carrying between 200 and 225 passengers and 50 crew when it sank, and that 19 persons survived. *fn9" (Id. at 10-11.) Herbert also testified that he was unable to locate any reference to salvage efforts undertaken by the ship's owners, but he did find references to other salvage attempts. (Id. at 12-14, 17-18.) Finally, Herbert testified that, although he found evidence that insurance claims were paid for the loss of the vessel, he was unable to determine from his research which portion of the ship or its cargo was covered by insurance. (Id. at 15-17.)

 During cross-examination, Herbert admitted that he was retained by the State just eight days before the second hearing, despite the fact that the State had more than five months to prepare for the court's hearing on its motion to dismiss. (Id. at 21.) Herbert testified that he conducted just 22 hours research, which consisted almost entirely of reviewing newspaper articles during three visits to the library. (Id. at 21-22, 23.) He admitted that he did not research any insurance records, nor did he attempt to contact any of the underwriters who paid claims for the loss of the Brother Jonathan. (Id. at 25-26.) Herbert also admitted that he did not know, one way or another, whether the owner of the Brother Jonathan or the insurance underwriters attempted to salvage the vessel. (Id. at 23-24, 26.) More importantly, Herbert admitted that he did not find any evidence that the owner of the Brother Jonathan, or the insurance underwriters, had publicly disclaimed any further ownership interest in the vessel. (Id. at 22.)

 Herbert's testimony, by itself, does not provide a sufficient basis for the court to conclude that the owners of the Brother Jonathan have taken a "clear and unmistakable affirmative act to indicate a purpose to repudiate ownership" in the Brother Jonathan, or its cargo. In addition, the State has failed to provide sufficient evidence to demonstrate that the Brother Jonathan has been abandoned due to the lapse of time, or because the owners of the vessel have failed to undertake salvage efforts.

 The facts of this case are similar to two recent cases where courts have been called upon to decide the issues of abandonment and competing claims of ownership in the era of insurance: Columbus-America Discovery Group v. Atlantic Mut. Ins. Co., 742 F. Supp. 1327 (E.D. Va. 1990), rev'd, 974 F.2d 450 (4th Cir. 1992), cert. denied, 123 L. Ed. 2d 183, 113 S. Ct. 1625 (1993); and Zych v. Unidentified, Wrecked and Abandoned Vessel, Believed to be SB "Lady Elgin", 755 F. Supp. 213 (N.D. Ill. 1991), rev'd on other grounds, 960 F.2d 665 (7th Cir. 1992).

 In Columbus-America, a consortium of insurance companies filed competing claims of ownership against a salvor who discovered the S.S. Central America, a wooden-hulled, side-wheeled steamship which sank 160 miles off the coast of South Carolina in 1857. The District Court held that the successors in interest to the original insurance companies who paid claims for the loss of the vessel obtained ownership interests in the S.S. Central America and its cargo by right of subrogation, but the insurance companies affirmatively abandoned their ownership interests by failing to undertake salvage efforts and deliberately destroying certain documentation. 742 F. Supp. at 1343-48. Applying the common ...


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