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Key Bank of Puget Sound v. Oceanida One Inc.

filed*fn*: January 14, 1992.

KEY BANK OF PUGET SOUND, A WASHINGTON BANKING CORP., AS TRUSTEE FOR CHRISTIANIA BANK OG KREDITKASS, A BANK CHARTERED UNDER THE LAWS OF NORWAY, ET AL., PLAINTIFF-APPELLEE,
v.
OCEANIDA ONE, INC., DEFENDANT, V. GREENWOOD TRAVEL; WESTERN PIONEER, INC., PLAINTIFF-INTERVENORS-APPELLANTS.



Appeal from the United States District Court for the Western District of Washington. William L. Dwyer, District Judge, Presiding. D.C. No. CV-89-0504-WD

Before: Wright, Norris, and Hall, Circuit Judges.

MEMORANDUM

Appellants Western Pioneer, Inc. ("Western Pioneer") and Greenwood Travel ("Greenwood") appeal the district court's grant of summary judgment in favor of Appellee Key Bank of Puget Sound ("Key Bank") in this foreclosure action brought by Key Bank against Oceanida One, Inc. ("Oceanida") and its sole asset, the F/V Oceanida One ("Oceanida One"). The district court had subject matter jurisdiction pursuant to 28 U.S.C. § 1333. This court has jurisdiction over this timely appeal under 28 U.S.C. § 1291. We affirm.

I

On April 3, 1989, Key Bank, the holder of a preferred ship mortgage on the Oceanida One, filed this foreclosure action against Oceanida and the Oceanida One. Key Bank claimed priority over the proceeds from the sale of the Oceanida One pursuant to 46 U.S.C. § 953 (current version at 46 U.S.C. § 31326), which establishes the priority of preferred maritime liens over other claims to the proceeds from the sale of a ship. On July 28, 1989, the Oceanida One was sold at a public auction for $350,000. On June 28, 1990, Key Bank moved for partial summary judgment to determine the validity and priority of its preferred mortgage, and for partial distribution of the proceeds of the sale.

Western Pioneer and Greenwood opposed the motion on the ground that a material issue of fact existed regarding whether Key Bank had complied with 46 U.S.C. § 922 (current version at 46 U.S.C. § 31322), which establishes the prerequisites for obtaining a preferred ship mortgage under section 953. Specifically, Western Pioneer and Greenwood claimed Key Bank had failed to show that section 922 (a)(5), which requires that the mortgagee under a preferred mortgage be a citizen of the United States, had been satisfied. They maintained that affidavits and deposition testimony offered by Key Bank to establish the citizenship of Oceanida's majority shareholder, Hui Cha Boice, were insufficient to satisfy Key Bank's burden under Federal Rule of Civil Procedure 56(c) of showing the absence of any material issue of fact.

On July 30, 1990, the district court granted summary judgment in favor of Key Bank.

II

Section 922(a) provides that a ship mortgage may obtain preferred status under section 953 if, among other things, "the mortgagee is a citizen of the United States" as defined in 46 U.S.C. § 802. See 46 U.S.C. 922(a) (1982). Section 802 states:

no corporation, partnership, or association shall be deemed a citizen of the United States unless the controlling interest therein is owned by citizens of the United States, and, in the case of a corporation, unless its president or other chief executive officer and the chairman of its board of directors are citizens of the United States and unless no more of its directors than a minority of the number necessary to constitute a quorum are non-citizens and the corporation itself is organized under the laws of the United States or of a State, Territory, District or possession thereof

46 U.S.C. § 802(a) (1982); see also 46 C.F.R. § 67.03-9 (defining corporate citizenship in substantially similar terms).

Oceanida was a California corporation whose sole asset was the Oceanida One. In 1987, Key Bank loaned Oceanida one million dollars secured by a preferred ship mortgage on the Oceanida One. At the time, Boice owned 75% of the outstanding stock in Oceanida and was also one of the corporations only two stockholders. Thus, under section 802, Oceanida would not have qualified as a United States citizen if Boice had not been a United States citizen.

In support of its motion for summary judgment, Key Bank offered several documents showing that Boice was a United States citizen. Among these were Boice's affidavit and deposition testimony, in which she claimed to have been a citizen since 1974.

Western Pioneer and Greenwood submitted no documents contradicting Boice's claim that she was a citizen. Rather, they claimed that Boice's own deposition testimony demonstrated that a material issue of fact existed regarding her citizenship. Boice testified that she moved to the United States from Korea with her husband, an American serviceman, in 1973 and that she had become a citizen in 1974. Western Pioneer and Greenwood claim that under the naturalization laws, it was legally impossible for Boice to have become a citizen of the United States within a year after arriving in this country. ...


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