Opinion ID: 2804455
Heading Depth: 1
Heading Rank: 3

Heading: Application of the Law to IMC’s Claim

Text: Thus, to recover against Dantzler, IMC must show that Dantzler acted in “bad faith, with malice, or through a wanton disregard of the legal rights of his adversary.” Frontera, 91 F.2d at 297. The district court concluded that because IMC had failed to provide evidence of bad faith, Dantzler was entitled to summary judgment. In contending that there exists a genuine dispute as to whether Dantzler acted in bad faith, IMC points us to various actions that Dantzler failed to take before and after the arrest of the Industrial Fighter. First, in support of its position that Dantzler acted in bad faith in seizing the Industrial Fighter, IMC argues that “Dantzler failed to provide the Brazilian court with information pertinent to the arrest, that is the true identity of the vessel’s owner.” This is misleading. Insofar as it pertains to the initial arrest of the vessel, there is no evidence in the record to support the conclusion that Dantzler knew before the arrest that the vessel belonged to Eris. Indeed, IMC elsewhere recognizes that Dantzler would have known (that is, it did not actually know) that the Industrial Fighter belonged to Eris had Dantzler consulted various maritime publications and resources. But that is just to say that Dantzler proceeded with negligence, that is, “[t]he failure to 9 Case: 14-15130 Date Filed: 05/29/2015 Page: 10 of 18 exercise the standard of care that a reasonably prudent person would have exercised in a similar situation . . . .” Black’s Law Dictionary (10th Ed. 2014). As Frontera makes clear, mere negligence is insufficient for liability. 91 F.2d at 297. As the allegation that Dantzler withheld information pertains to Dantzler’s actions once it had been notified by IMC that the vessel belonged to Eris, this is likewise misleading because, as the record shows, Dantzler did immediately notify Madeira and its United States counsel, those attorneys immediately contacted IMC, and Madeira then notified the court. In one of our few precedents to address the issue of wrongful arrest and bad faith, we explained that the district court did not err in determining that there was no bad faith when the defendant was notified that it was seizing the wrong party’s vessel, but requested from that party further evidence to support that fact, rather than immediately releasing the vessel. Furness Withy (Chartering), Inc., Panama v. World Energy Sys. Assocs., Inc., 772 F.2d 802, 808 n.9 (11th Cir. 1985) (“Furness I”). Thus, as Furness I indicates, there is no duty to do anything beyond diligently investigating the new information. The arresting party need not immediately seek the release of a vessel just because the arrest is contested. Dantzler’s conduct in passing the information on to its counsel shows no negligence and IMC suggests no specific course of action that would have materially hastened the release of the Industrial Fighter. That Dantzler relied on its counsel to handle the matter rather than contact the Brazilian court directly, 10 Case: 14-15130 Date Filed: 05/29/2015 Page: 11 of 18 as IMC suggests it should have done, is no sign of bad faith. Rather, it just shows that Dantzler was doing what people and companies hire lawyers to do: handle their legal affairs. Second, IMC argues that Dantzler had “implied knowledge of the impropriety of the arrest” because it knew of maritime industry resources that had information about vessel ownership, yet failed to consult those resources before seeking the seizure of the Industrial Fighter. As stated, however, IMC is again simply saying that Dantzler was negligent in failing to consult those resources, and negligence is insufficient for liability under the Frontera standard. See Frontera, 91 F.2d at 294, 297. Casting as “implied knowledge” the fact that such resources would have shown that the Industrial Fighter was owned by Eris, not Scan-Trans, does not make Dantzler’s behavior rise above the level of negligence. A district court case relied upon by IMC for this point illustrates the difference between Dantzler’s conduct and bad faith conduct. See Coastal Barge Corp. v. M/V Maritime Prosperity, 901 F.Supp. 325 (M.D. Fla. 1994). There, following a maritime collision, the arrestor arrested the arrestee’s vessel not once, but twice. Id. at 326. After the first arrest, the arrestor, “in exchange for [the arrestee’s] assumption of liability [for a collision], had agreed not to subject [the vessel] to any further arrest as a means of securing [the arrestor’s] claim of damages.” Id. at 327. However, “driven by its conviction that its promise not to 11 Case: 14-15130 Date Filed: 05/29/2015 Page: 12 of 18 rearrest the ship had been given for illusory consideration,” the arrestor rearrested the ship without informing the court of the agreement. Id. at 328. The evidence before the court was unequivocal that the arrestor “knew full well of the ship’s right not to be rearrested by it.” Id. at 329. By gambling that the agreement was invalid, the district court held, the arrestor was proceeding recklessly. Coastal Barge, 901 F.Supp. at 328-29. IMC tries to analogize Dantzler’s behavior to the arrestor’s in Coastal Barge, arguing that in both cases pertinent information was withheld from the courts in seeking to arrest (or rearrest) the vessel. But in Coastal Barge it was clear that the arrestor knew of the previous agreement not to rearrest the vessel—there was a contract, after all—whereas here, the most IMC can point to is information that Dantzler could have, but did not, consult. That is, of course, precisely the difference between negligence and recklessness—that is, “[c]onduct whereby the actor does not desire harmful consequence but nonetheless foresees the possibility and consciously takes the risk.” Black’s Law Dictionary (10th Ed. 2014). This inference is reinforced by another district court case cited by IMC in its “implied knowledge” argument. See Sea Star Line Caribbean, LLC v. M/V Sunshine Spirit, No. 09-1152(JAF), 2009 WL 3878246 (D.P.R. Nov. 13, 2009). In Sea Star, the defendant had the plaintiff’s vessel arrested, despite there being a contract between the parties expressly prohibiting arrest should any dispute arise. 12 Case: 14-15130 Date Filed: 05/29/2015 Page: 13 of 18 Id. at -5. In granting summary judgment to the plaintiff, the district court noted that the defendant “is charged with implied actual knowledge of the . . . clause, and it is a sophisticated business entity engaged in the trade of carriage of goods by sea.” Id. at . IMC reads Sea Star for the proposition that “bad faith may be presumed where the arrestor is a sophisticated business entity engaged in the carriage of goods by sea and has implied knowledge of the impropriety of the arrest.” The facts of Sea Star—involving a contract between sophisticated parties that expressly forbade the arrest of the vessel—allowed the imputation of “implied knowledge” to the defendant. But those factors are quite different from the facts of this case, in which, again, IMC simply argues that Dantzler should have consulted more resources before being satisfied that the Industrial Fighter was owned by Scan-Trans. To repeat, bad faith may be found in acting in disregard of what one knows; failing to take reasonable precautions leads only to a conclusion of negligence. Coastal Barge and Sea Star, upon which IMC relies heavily, therefore do not support the conclusion that Dantzler’s conduct was anything more than negligent. Instead, the facts of those cases illustrate the gulf between what amounts to bad faith in wrongful arrest cases and what Dantzler is alleged to have done here. 13 Case: 14-15130 Date Filed: 05/29/2015 Page: 14 of 18 Finally, IMC argues that Dantzler and its president, Godinez, should have exercised more supervision of Madeira, rather than permit him to pursue the attachments of vessels on his own. But even if Dantzler had a duty to supervise its attorney, IMC points to no facts that could support the conclusion that Dantzler should have known that Madeira was acting inappropriately (or even a conclusion that Madeira was indeed acting inappropriately), except for the fact that the arrest of the Industrial Fighter turned out to be erroneous. Moreover, IMC cites nothing specific that Dantzler, whose headquarters are in Florida, should have been doing to supervise its Brazilian attorney in his representation of Dantzler’s interests in Brazil. As such, it has therefore failed to place any facts in dispute. Clients routinely rely on their attorneys to handle their legal affairs. Our “wrongful arrest” jurisprudence emphasizes this point by making honest reliance on advice of counsel an absolute defense. See Frontera, 91 F.2d at 297. The district court therefore did not err in deciding that IMC had put into reasonable dispute no facts that would preclude summary judgment for Dantzler. What IMC has provided at most shows Dantzler’s or Madeira’s negligence in pursuing the recovery of the debt owed to it by Monsted. It shows no malice, recklessness, or bad faith toward IMC, because IMC has cited no evidence that would indicate that Dantzler had knowledge that Madeira’s conduct was infringing on the rights of IMC. 14 Case: 14-15130 Date Filed: 05/29/2015 Page: 15 of 18 The jurisprudence of other circuits supports this conclusion. For example, in Marastro, a judgment creditor seized cargo it believed to belong to an alter ego of its judgment debtor, which, because the subject cargo was aboard a chartered vessel and there was no place to unload it, necessitated the arrest of the vessel as well, forcing it to remain in port for several days. 959 F.2d at 50-51. Although the cargo owner turned out not to be an alter ego of the judgment debtor, and therefore the seizure was improper, the Fifth Circuit affirmed the district court’s denial of the wrongful arrest claims of the cargo owner and the vessel charterer because the mistake about ownership was, however erroneous, not in bad faith. Id. at 53. Similarly, courts have not found an arresting party liable just because it turns out that it had the losing legal argument in the underlying dispute leading to the attachment. For example, the First Circuit affirmed a grant of summary judgment to the defendant on a wrongful arrest claim where that defendant, anticipating a breach of a contract to provide fuel, attached the plaintiff’s vessel prior to the payment due date on the contract, claiming that it feared the vessel would be gone from United States’ waters by the time the payment would be due. Central Oil Co. v. M/V Lamma-Forest, 821 F.2d 48, 51 (1st Cir. 1987). Likewise, where an attachment arose from a disagreement between the parties as to whether Canadian or United States maritime lien law applied to their dispute, the Fourth Circuit found no bad faith, even though it determined that the attachment was illegal under 15 Case: 14-15130 Date Filed: 05/29/2015 Page: 16 of 18 the governing (Canadian) law. Ocean Ship Supply, Ltd. v. MV Leah, 729 F.2d 971, 974 (4th Cir. 1984). As these cases make clear, wrongful arrest is not a tool to redress good-faith mistakes of a party’s identity (Marastro) or the law (Central Oil, Ocean Ship), even though these mistakes may turn out to be costly. These are the types of mistakes that our admiralty procedures anticipate and accept as a necessary evil to be suffered in the interests of preventing parties from fleeing a court’s jurisdiction before the dispute can be adjudicated. Leonhardt, 773 F.2d at 1538. These cases further make clear that the sort of error made by Dantzler in attaching the Industrial Fighter is well within what the courts have held to be, at most, negligent error. No facts that IMC has produced could be reasonably construed as evidence of bad faith. Rather, they are the sorts of mistakes routine in maritime attachments. Thus, because we agree with the district court that IMC has failed to carry its burden in raising issues of material fact, summary judgment was appropriate. 3