NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT

____________ N os . 09- 2314 and 09- 2399

____________ G O L D F IS H S H IP P IN G , S .A ., A ppel l antN o. 09- 2314

v. HS H NOR DB ANK AG A ppel l antN o. 09- 2399

____________ O n A p p ea l from the U n it ed S tat es D istri ct C o u rt f o r th e E a ste rn D istric t o f P e n n sy lv a n ia ( D . C . N o. 2- 07- cv- 03518) D i s tr i ctJ udge: H onor abl e J ohn R . Padova

____________ Subm i tt ed Pur s uantt o T hi r d C i r cui tL A R 34. 1( a)

A pr i l 12, 2010 B e f o re : F IS H E R , H A R D IM A N a n d C O W E N , C i r cui tJudges .

( Fi l ed: A pr i l 21, 2010)

____________ OPI NI ON O F THE COURT

____________ F IS H E R , C i r cui tJudge . G o ldf ish S h ipp ing , S . A . (“G o ldf ish” ) ap p ea ls from an o rde r of the D istri ct C o u rt g ra n tin g H S H N o rd b a n k A G ’s ( “ N o rd b a n k ” ) m o tio n to d ism iss f o r f a ilu re to sta te a c laim2

upon w hi ch r el i ef maybe gr ant ed underFeder al R ul e of Ci vi l Pr ocedur e 12( b) ( 6) and an order r ej ect i ng G oldfi sh’s M oti on t o fil e a S econ d A m end ed C om plai nt. N ordban k crossappea l s the D i s tr i ctC our t ’ s or derdeny i ng att orney ’ s fee s t o N or dbank. Forthe r eas ons sta ted h e re in , w e w ill a f f irm th e D istric t C o u rt in f u ll. I. W e w r i t e exc l us i vel yforthe part i es , w ho ar e fa m i l i arw i th the fa ctual cont extand l egal hi s t oryof the ca s e. T her efor e, w e w i l l s etforth onl ythos e fa ct s nece s s aryt o our analy si s. N or dbank hel d a fi r s tm or t gage on the M / V A H M E T B E Y ( “the ves s el ”) atthe t i me i ta rr i ve d i n the Portof Phi l a de l ph i a . The mor t ga go rw a s O di n Deni z c i l i k, A . S. ( “O di n”) , a Turki s h corpor at i on. T he ves s el fl ew the Turki s h fl ag and appear ed on the T u rkish R eg istryo f S h ipp ing (“T u rkish R eg istry ”), w ith O d in li sted as th e o w n er. O n J une 6, 2003, N or dbank i ni t i at ed for ecl os ur e pr ocee di ngs on the ves s el i n the U ni t ed St at es D i s tr i ctC our tforthe East ern D i s tr i ctof Penns y l vani a al l egi ng defa ul ton the partof O di n. N or dbank had the U ni t ed St at es M ar s hal arr es tthe ves s el i n the Por tof P h i l a d e l p h i a p u r s u a n tt o th e Co mme r c i a l I n s tru me n t s a n d M a r i t i me Li e n Ac t , 4 6 U. S . C. § 31325 ( “Shi p M or t gage A ct ”) . O di n ent er ed a r es tr i ct ed appe ar ance w i th the D i s tr i ct C our tt o defe nd i t s i nt er es t . T he C our tul t i m at el yfound i n favorof N or dbank and or der ed that the v essel be sold t o sat i sfythe m ort gag e. A j ud i ci al sal e w as hel d w i th G oldfi sh emer gi ng as the w i nni ng bi dder . O n N ovember14, 2003, the D i s tr i ctC our tconfi r m ed3

the s al e of the ves s el i n acc or dance w i th the Shi p M or t gage A ctand or der ed thatthe U nit ed S t at es M ars hal transfert i t l e t o the vessel t o G oldfi sh free and c l ear of al l cl ai m s, l i ens, or encu m brances. A ft erthe D i s tr i ctC our t ’ s di s pos i t i on i n the for ecl os ur e pr ocee di ng, the ves s el re m a in e d o n th e T u rk ish R e g istry , w ith O d in listed a s its o w n e r. O d in c o n tac ted b o th N or dbank and G ol dfi s h t o i nform them t hati tw oul d cont i nue t o fi ghtforow ner s hi p of th e v e ss e l. O d in h a d th e v e ss e l ar re ste d in B a rc e lo n a , S p a in , alle g in g th a t th e sa le in P hil adelphi a w as i l l egal und er Tu rki sh l aw . G oldfi sh al l eges a l oss of $ 58 1, 04 8. 34 as a r es ul tof thi s i nci dent . G ol dfi s h s ubs equent l ybegan a n act i on agai ns tO di n forw r ongful arr es tbyatt achi ng the pr i ors al e pr ocee ds , w hi ch w er e bei ng hel d bythe U ni t ed St at es M ars hal. P ursuantt o a co nsent or der bet w een N ordban k an d G oldfi sh, G oldfi sh r ecove r ed $327, 546. 82 fr om the s al e pr ocee ds . O di n agai n caus ed the ves s el t o be arr es t ed on J une 4, 2004, i n R avenna , I t al y . G ol dfi s h al l eges thati ti ncurr ed l os s es of $ 5 0 7 ,3 6 9 .0 0 d u e to th is a rre st. G o ld f ish a rg u e s th a t th e a rre sts w e re th e d ire c t re su lt o f th e f a c t th a t N o rd b a n k d id noteff ectthe del et i on of the ves s el fr om the Turki s h R egi s tryunderA r t i cl e 851 of the T ur ki s h C om m er ci al C ode. G ol dfi s h r eques t ed thatN or dbank pr ovi de cons entt o the d e letio n , an d N o rd b a n k se n t an A p ril 3 0 , 2 0 0 4 lette r to th e T u rk ish R e g istryc o n se n tin g to th e d e letio n f

ro m th e T u rk ish R e g istry , b u t as se rtin g th e c o n tin u e d e x iste n c e o f its m or t gage.4

G o ldf ish su b seq u en tl yfil ed su itag ains t N o rdb an k in the D istri ct C o u rtfo r E astern D i s tr i ctof Penns y l vani a. G ol dfi s h’ s Fi r s tA m ended Com pl ai ntas s ert ed ni ne cl ai m s and r efl ect ed G ol dfi s h’ s ar gum entthatN or dbank s houl d be hel d l i abl e forfai l i ng t o del i ver th e v e ss e l “f

re e a n d c lea r o f

a ll l ien s a n d e n c u m b ra n c e s” b e c a u se it d id n o t su c c e ss f u lly d e l e t e th e v e s s e l f

r o m th e T u r k i s h R e g i s try. T he D i stri ctC ou rtgrant ed N ordban k’s M oti on t o D i sm i ss, bu tden i ed it s r equ est foratt orney ’ s fee s fr om G ol dfi s h. G ol dfi s h then fi l ed a M ot i on t o A m end the J udgm ent and s oughtl eave t o fi l e a Sec ond A m ended Com pl ai nt . T he D i s tr i ctC our tdeni ed G o ld f ish ’s M o tio n to A m e n d th e Ju d g m e n t an d its a c c o m p a n y in g re q u e st f o r le a v e to f

ile a Second A m ended Com pl ai ntbeca us e of G ol dfi s h’ s undue del ayand the fut i l i tyof the S e c o n d A m e n d e d C o m p lain t. G o ld f ish f iled a tim e lyn o tice o f

a p p e a l. II. T he D i s tr i ctC our thad j ur i s di ct i on under28 U . S. C . § 1331, and w e have juri sd ict ion p u rsua n t t o 2 8 U . S . C . § 1 2 9 1 . O u r st an d ard o f re v iew o f th e D istri ct C o u rt ’s o rd e r g ra n tin g N o rd b a n k ’s M o tio n to D is m is s th e F ir s t A m e n d e d C o m p la in t is p le n a ry. AT& T v . J

M C Tel e c om, LLC , 470 F. 3d 525, 530 ( 3d C i r . 2006) . W e mustacc eptas t rue a ll o f th e a lleg a tio n s c o n tain e d in th e c o m p lain t an d d ra w a ll i n f e re n c e s f ro m th e f a c ts all eg ed in the li g h t m o st fav o rab le t o the p lai n ti ff. U p o n rev iew o f th e D istri ct C o u rt ’s deci s i on of the deni al of G ol dfi s h’ s M ot i on t o A m end, w e w i l l onl yr ever s e i f the D i s tr i ct C o u rt a b u s e d its d is c re tio n . R am s gat e C our tTow nhom e Ass ’ n v. W es tC hes t erB or ough ,5

313 F. 3d 157, 161 ( 3d C i r . 2002) . O urs t andar d of r evi ew of the D i s tr i ctC our t ’ s deci s i on n o t to a w a rd a tto rn e y ’s f e e s to N o rd b a n k is a ls o f o r a n a b u s e o f

d is c re tio n . D oer i ng v. U nion C ou nty Bd . O

f C ho sen Freeholders , 85 7 F . 2d 19 1, 19 5 (3d C i r. 19 88 ). “A n ab use of di s cr et i on exi s t s w her e the di s tr i ctcourt ’ s deci s i on r es t s upon a cl ear l yerr oneous fi ndi ng of fa ct , an err antconcl us i on of l aw oran i m pr operappl i cat i on of l aw t o fac t . ” U A W v. Mack Tr ucks , I

nc. , 8 2 0 F . 2 d 9 1 , 9 5 (3d C ir . 1 9 8 7 ).

III . A . N or dbank’ s M ot i on t o D i s m i s s G ol dfi s h’ s Fi r s tA m ended Com pl ai nt G ol dfi s h does notal l ege a nydefe cti n the s al e of the ves s el i t s el f buti ns t ead c laim s th a t N o rd b a n k w a s re q u ire d to tak e a c tio n b e y o n d th e sa le in o rd e r to e n su re tit le fre e a n d clea r of

all en cu m b ran ce s w o u ld b e p rese n ted to the b u y er. T h e S u p rem e C o u rt h a s n o te d th a t th e “ d o m in io n o f th e s u it in a d m ir a lty o v e r t h e v e s s e l o r t h in g its e lf . . . gi ves t o the t i t l e made underi t s decr ees val i di tyagai ns tal l the w or l d. ” The Mos es Tayl or , 71 U . S. 411, 427 ( 1866) . I n O il Sh ip p in g(B u n ke rin g

) B .V . v. S o n m ez D e n izc ili k V e Ti car et A . S. , 10 F. 3d 1015, 1022 ( 3d C i r . 1993) , thi s C our texami ned the cons equenc es of a j udi ci al s al e underthe Shi p M or t gage A ct . Par t i cul ar l y , w e not ed that C ongr es s i nt ended f

ors al es underthe A ctt o pr ovi de for“an e xpedi t i ous pr ocedur e by w hi ch a U ni t ed St at es courts i t t i ng i n admi r al tym ayfor ecl os e a s hi p m or t gage on a for ei gn- fl ag ves s el and gi ve t i t l e good aga i ns tthe w or l d t o the new pur chas er . ” I d. (q u o tin g H .R . R e p . N o . 1 6 6 2 , 8 3 d C o n g ., 2 d S e s s . re p rin tedin 1954 U . S. C . C . A . N . at6

2 4 5 2 ). T h e c o n se q u e n c e s o f th e ju d icia l sa le itse lf

a re to e x tin g u ish a n yp re v io u s rig h ts in the v essel and t o d el i ver t i t l e t o the purchaser fr ee and cl ear of anyencu m brances as a m att er o f law . A ll ri g h ts N o rdb an k an d O d in h ad in the v esse l bef o re the sale w ere ext i ngui s hed, and G ol dfi s h’ s cl ai m t o ow ner s hi p w as fr ee a nd cl earof anyencumbr ance s any w here i n the w orl d. T he fa ctthat the v essel had no tbeen delet ed from the T urki sh R e g istryh a s n o b e a rin g o n th e leg a l sta tu s o f G o ld f ish ’s c laim . O d in ’s ille g a l ac tio n s in arr es t i ng the ves s el on m ul t i pl e occ as i ons do notal t erthe fa ctthatthe l egal and r i ght ful o w n er o f th e v esse l w as G o ldf ish. T h e p artyat fa u ltin the interfe ren ce o f G o ldf ish’s ow ner s hi p of the ves s el w as O di n, notN or dbank. G ol dfi s h ar gues thatthe s al e of the ves s el cr eat ed a dutyforN or dbank t o t ake aff i r m at i ve s t eps t o eff

ectthe ves s el ’ s del et i on fr om the Turki s h R egi s try . G ol dfi s h ci t es n o c a s e s in a d m ir a lty e v id e n c in g s u c h a d u ty b u t in s te a d tu rn s to a n a lo g o u s s ta te la w . W hi l e fe der al court s s i t t i ng i n admi r al tyw i l l s om et i m es borr ow l aw fr om the s t at es and i ncorpor at e i ti nt o gener al m ar i t i m e l aw , G ol dfi s h has notpr es ent ed ana l ogous l aw w hi ch im p o s e s a n yd u ty to ta k e f u rt h e r a c tio n to c le a r t itle a f te r a ju d ic ia l s a le h a s ta k e n p la c e . See East R i verS. S. C or

p. v. Trans am er i ca D elaval I nc. , 4 7 6 U . S . 8 5 8 , 8 6 4 (19 8 6 ). T o s uppor tthe conc l us i on thattr ans fer s of t i t l e i n courtcan gi ve r i s e t o cont i nui ng dut i es on the tr ans fer orof the pr operty , G ol dfi s h r el i es s ol el yon St er l i ng v. B lackwelder , 302 F. Supp. 1125 ( E . D . V a. 1968) . I n St er l i ng , the tra n sf e r w a s e f f e c ted b ya c o n tra c t, a n d th e c o u rt re lied u p o n th e lan g u a g e o f th e c o n tra c t th a t p u rp o rte d to c o n v e yp ro p e rty7

“fr ee f r om al l encumbr ance s . ” I d. a t 1 1 2 8 -2 9 . C o n tra c tin g p a rties in a re a l es tate tr ans act i on do nothave the pow ert o ext i ngui s h al l otheri m pai rm ent s of t i t l e the w ayt hat the fe deral cou rt s do u nd er the S hip M ort gag e A ct , and thu s St er l i ngc a n n o t b e re a d to i m pos e the s ame dut i es on for ecl os i ng cr edi t or s i n an admi r al tycas e thati tw oul d on part i es t o a r eal es t at e tr ans act i on, even i f underthe s upervi s i on of a s t at e court . U nl i ke St er l i ng , w h e n th e D istric t C o u rt in th is c a se tra n sf e rre d tit le to G o ld f

ish u n d e r th e S h ip M or t gage A ct , i tal s o ext i ngui s hed al l encumbr ance s as a mat t erof l aw and del i ver ed clea r t it le. A n yatt em p t byO d in to e n fo rce ri g h ts i n the v esse l after the D istri ct C o u rt ’s d e c re e w a s w ith o u t leg a l m e rit. B eca us e i ti s cl earthat , upon the dec r ee of the D i s tr i ctC our t , G ol dfi s h hel d fr ee a n d c lea r titl e a n d th a t N o rd b a n k h a d n o d u tyto d o tak e a d d iti o n a l ste p s to c lea r titl e , all of G ol dfi s h’ s cl ai m s fai l . G ol dfi s h’ s as s ert ed ca us es of ac t i on agai ns tN or dbank r el yon the as s um pt i on thatG ol dfi s h di d notr ece i ve cl eart i t l e and thatN or dbank i n s om e w ay p re v e n ted G o ld f

ish f ro m re c e iv in g th a t to w h ich it w a s e n tit led . W h ile it is q u ite u n f o rtu n a te th a t G o ld f

ish ’s e n jo ym e n t o f

th e v e ss e l h a s in d e e d b e e n in ter f e re d w ith , this i nt er fer ence has nothi ng t o do w i th anydefe cti n t i t l e as a mat t erof l aw , buti s i ns t ead due t o the i l l egal act i ons of O di n. B . G ol dfi s h’ s M ot i on forL eave t o A m end the C om pl ai nt T he D i s tr i ctC our tr efus ed t o gr antl eave t o amend bas ed on both fut i l i tyand i nequi ty . I n G r ays on v. M ayvi ew Stat e H

os p. , 2 9 3 F .3 d 1 0 3 , 1 0 8 (3 d C ir. 2 0 0 2 ), w e h e ld8

thatan amendm entm us tbe perm i t t ed unl es s i nequi t abl e orfut i l e. W e fi nd thati tw as not an abus e of di s cr et i on forthe D i s tr i ctC our tt o fi nd thatG ol dfi s h’ s Second A m ended C om pl ai ntw as fut i l e. Fut i l i tym eans thatthe compl ai nt , “as amended, w oul d fai l t o s t at e a c l ai m upon w hi ch r el i ef c oul d be gr ant ed. ” I n r e Burl i ngt on C oatFactor y Sec . Li t ig. , 114 F. 3d 1410, 1434 ( 3d C i r . 1997) . T he D i s tr i ctC our tbel ow opi ned thatthe Second A m ended C om pl ai nti s es s ent i al l ythe s ame as the Fi r s tA m ended Com pl ai ntexce ptthati tpl ace d m o re e m p h a s is o n th e b e lie f th a t N o rd b a n k h a d a d u ty to ta k e f u rt h e r a c tio n a f

te r t h e s a le . Si nce the C our thad hel d i n i t s pr evi ous opi ni on that , as a mat t erof l aw , a for ecl os i ng cre d it o r at a sale u n d er the S h ip M o rt g ag e A ct ha d n o fu rth er d u tyto clea r t it le, the C o u rt d e ter m in e d th a t G o ld f

ish ’s S e c o n d A m e n d e d C o m p lain t w o u ld still fa il t o sta te a c laim upon w hi ch r el i ef c oul d be gr ant ed. I n the l i ghtof ourhol di ng thatN or dbank had no fur therdut i es , i ti s cl earthatthe D i s tr i ctC our tdi d notabus e i t s di s cr et i on i n deny i ng G ol dfi s h’ s M ot i on t o A m end. C . N or dbank’ s M ot i on forA w ar d of A t t orney ’ s Fees I n i t s M ot i on t o D i s m i s s , N or dbank as ked the D i s tr i ctC our tt o us es i t s i nher ent pow er s i n admi r al tyt o or derG ol dfi s h t o payN or dbank’ s att orney ’ s fee s . T he D i s tr i ct C our tw as notconvi nced thatG ol dfi s h i ni t i at ed thi s act i on foran i m pr operpurpos e and deni ed N or dbank’ s m ot i on. T he Second Ci r cui ti n In g e rs o ll Mill in gMa c h . C o . v. M /V B odena , 8 2 9 F . 2 d 2 9 3 , 3 0 9 (2d C ir . 1 9 8 7 ), stat ed that “the g en era l ru le i s tha t th e a w ard9

of fe es and expe ns es i n admi r al tyact i ons i s di s cr et i onaryw i th the di s tr i ctj udge upon a fin d ing o f b ad fa ith . ” T h ere is no thing in the rec o rd to ind icate tha t th e D istri ct C o u rt abus ed i t s di s cr et i on i n concl udi ng thatG ol dfi s h di d notbr i ng s ui ti n bad fa i th, and thus i t s deci s i on s houl d s t and. I V. Foral l the for egoi ng r eas ons , w e w i l l aff i r m the D i s tr i ctC our t ’ s or derdi s m i s s i ng fo r fa il u re to state a c lai m , d en y ing leav e to a m en d the c o m p lai n t, an d d en y ing att o rne y ’s fees.