Odyssey Marine Exploration v. The Shipwrecked and Abandoned SS Mantola

Background

The case concerned the SS Mantola, a British ship sunk by a German submarine during World War I. Its cargo once included 536 silver bars. Odyssey Marine Exploration, Inc. filed an action against the shipwreck and its cargo and sought a salvage award—compensation or property awarded to a person who successfully recovers property in marine peril.

On May 1, 2017, the court ordered the arrest of a silk cloth recovered from the Mantola. That arrest gave the court control over the wreck and its cargo for purposes of the in-rem action, meaning an action directed against property. The United Kingdom Department for Transport, referred to as DfT, later made a limited appearance and stated that 526 silver bars had been removed by an unidentified third-party salvor and delivered to the United Kingdom’s Receiver of Wreck. The record included forms stating that the bars’ “Date Found” was April 30, 2017, but did not establish when the bars were removed from the Mantola.

Odyssey’s investigation suggested that the bars may have been removed between April 21 and April 29, 2017, transferred on April 30, and delivered to the Receiver of Wreck on May 5. Odyssey sought discovery from DfT and the Receiver of Wreck, but related proceedings in England were later set aside for lack of jurisdiction, and Odyssey’s Freedom of Information Act requests were denied or produced only limited, redacted records.

Summary-judgment standard

The court explained that summary judgment is proper only when the evidence shows no genuine dispute about a material fact and establishes that the moving party is entitled to judgment under the law. Even though Odyssey’s motion was unopposed, the court still had to determine whether Odyssey met that burden.

The court also discussed adverse inferences. An adverse inference permits a court to assume that missing evidence would have harmed the party responsible for failing to produce it. The court stated that such an inference generally requires an obligation to produce the evidence, a culpable state of mind, and relevance of the missing evidence. An adverse inference cannot replace affirmative evidence on a central element of a claim.

Silk cloth

The court granted partial summary judgment to Odyssey and awarded it title to the silk cloth. To establish a salvage claim, Odyssey had to show three elements: a marine peril, voluntary services not required by a legal duty or contract, and success in whole or in part.

The court found that Odyssey’s assistance to the underwater wreck involved marine peril. Odyssey had voluntarily conducted four series of salvage voyages, and its efforts successfully recovered the silk cloth. The court concluded that Odyssey therefore obtained a maritime lien—a legal claim against the recovered property—for the cloth. Because Odyssey had incurred more than $3.4 million in salvage expenses and a sale of the cloth presumably would not reimburse those expenses, the court exercised its discretion to transfer title to the cloth to Odyssey.

Silver bars

The court denied, without prejudice, Odyssey’s motion for summary judgment seeking title to the 526 silver bars. An in-rem action requires the court to have jurisdiction over the property at issue. The court had jurisdiction over the Mantola and its cargo beginning May 1, 2017, when it took custody of the recovered silk cloth. But if the silver bars had already been removed from the Mantola before that date, they were not part of the property then within the court’s jurisdiction, and the court could not award title to them.

Odyssey did not have affirmative evidence showing that the bars were removed on or after May 1. The available documents stated that the bars were found on April 30, although the court noted that this statement was hearsay and did not establish the actual removal date. Odyssey itself believed, but did not know, that the bars were removed between April 21 and April 29.

The court rejected Odyssey’s request for an adverse inference against DfT and the unknown salvor. First, DfT had not violated a discovery order: it had appeared for a limited purpose, later withdrew with permission, and the court’s informal request that DfT and Odyssey exchange information was not a discovery order. The English court’s later orders requiring production had also been set aside for lack of jurisdiction. Second, the unknown salvor, rather than DfT, was the entity potentially adverse to Odyssey on ownership. The court would not award summary judgment on ownership based on inadequate discovery responses by a third party. Finally, even an adverse inference could not fill the complete lack of affirmative evidence that the bars remained on the wreck when the court obtained jurisdiction.

The court also rejected Odyssey’s argument that its maritime lien began in 2012, when Odyssey first performed salvage services and recovered the silk cloth, and that the court should treat its jurisdiction as reaching back to that year. The court distinguished between when a salvage lien arises and when a court obtains jurisdiction over property. The court held that its in-rem jurisdiction began on May 1, 2017, when it took custody of part of the wreck, and declined to extend that jurisdiction back to 2012.

Disposition

The court granted Odyssey partial summary judgment and awarded it title to the silk cloth. It denied, without prejudice, Odyssey’s motion for summary judgment seeking a salvage award of title to the 526 silver bars. The court allowed Odyssey to move to reopen discovery regarding when the bars were removed and stated that Odyssey could also seek relief in another court with proper jurisdiction. The court directed Odyssey to file any motion to reopen discovery within four weeks, by December 17, 2019; otherwise, Odyssey was to address the future course of the case, including whether its silver-bar claims should be dismissed without prejudice for failure to establish jurisdiction.