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Dynamic Marine Consortium, S.A. v. Latini, Mv, Her Engines, Tackle, Apparel, Furniture, Etc., in Rem Fka Polyxeni, Mv, Ensenata Shipping, Ltd., Movant-Appellant v. Esco Marine, Inc., Movant-Appellee, and Imacasa Maritime and Trading, Ltd., Intervenor and World Vision, Inc. Cooperative for American Relief Everywhere, Inc., Also Know as Care, Inc., Intervenors-Appellees. Anz Grindlays Bank, Limited v. Latini, Mv, Her Engines, Tackles, Apparel, Furniture, Etc., Ensenata Shipping, Ltd., Movant-Appellant
Citations: 179 F.3d 278; 1999 WL 402709Docket: 99-30256
Court: Court of Appeals for the Fifth Circuit; June 22, 1999; Federal Appellate Court
The appeal challenges the district court's decision to vacate the auction of the vessel M/V LATINI due to collusion during the bidding process. The LATINI had been seized by Dynamic Marine Consortium, S.A. following a fire and grounding, and ANZ Grindlays Bank Ltd. sought to foreclose on its $7 million mortgage. The vessel was auctioned on January 28, 1999, with a minimum bid of $340,000, which was successfully bid by Ensenada Shipping, Ltd., as there were no other bidders. Post-auction, Esco Marine, Inc. and World Vision, Inc. contested the sale, leading the district court to invalidate the auction on February 17, 1999, citing collusion. The court found that Tadros, representing both ANZ Grindlays and Ensenada, failed to disclose his change in representation during the auction, leading to a chilling effect on other potential bidders who were misled regarding ANZ Grindlays' intentions to bid. The court concluded that there was an agreement between Ensenada and ANZ Grindlays to prevent competitive bidding, defining "collusion" as a lawful means to achieve an unlawful purpose, but determined that there was no fraud and the auction price was not grossly inadequate. Ensenada's argument that collusion necessitates fraudulent conduct was rejected. The appeal was ultimately dismissed as moot and alternatively affirmed. On March 25, 1999, the district court ordered a second auction for the LATINI, which Dr. Chand Kewalramani won with a bid of $1,010,000. Ensenada objected to the sale confirmation, but the district court denied this objection and confirmed the sale on April 9, 1999. Ensenada has appealed the confirmation separately. The confirmation transferred title and possession of the LATINI to Kewalramani, rendering Ensenada's appeal regarding the annulment of the first sale moot. If the appeal were not moot, the district court would have upheld its decision to set aside the first sale based on the reasons outlined in its previous orders. The court stated that auction sales may be invalidated prior to confirmation due to fraud, collusion, or gross inadequacy of price. Once confirmed, an auction sale is considered complete, and any subsequent appeals may become moot if the vessel has been resold to a third party. Consequently, the appeal was dismissed.