Bender Shipbuilding & Repair Co., Inc. v. Caterpillar, Inc. et al
ORDER granting #39 Motion to Remand. The court declines to adopt the #60 Report and Recommendation and finds that remand is appropriate. This case is REMANDED to the Circuit Court of Mobile County, Alabama. Signed by Judge Callie V. S. Granade on 4/16/2012. (sdb)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
BENDER SHIPBUILDING &
REPAIR CO., INC.,
CATERPILLAR, INC., et al.,
CIVIL ACTION NO. 10-0092-CG-C
This matter is before the court on the Report and Recommendation of the
Magistrate Judge (Doc. 60), plaintiff’s objection thereto (Docs. 61, 62), defendant
Coverteam Inc.’s response (Doc. 70), the response of defendants Caterpillar Inc. and
Thompson Tractor Co., Inc. (Doc. 71), plaintiff’s reply (Doc. 74), and plaintiff’s notice
of subsequent events (Doc. 75). Upon a de novo review of those portions of the
report and recommendation to which objection is made, the court declines to adopt
the Report and Recommendation and finds that remand is appropriate.
This action was removed to this court from the Circuit Court of Mobile
County, Alabama on February 24, 2010 by defendants Caterpillar Inc.
(“Caterpillar”) and Thompson Tractor Co., Inc. (“Thompson”). (Doc. 1). The case
arises from a fire that occurred in the engine room of the M/V Seacor Sherman
while the vessel was under construction. After the incident, but before this action
was commenced in state court, the plaintiff, Bender Shipbuilding & Repair Co., Inc.
(“Bender”), was named in an involuntary Chapter 7 bankruptcy petition. The case
was later converted to a Chapter 11 proceeding, which was pending at the time
these motions were filed and the Magistrate’s report and recommendation was
entered. However, Bender’s bankruptcy plan has since been confirmed and all
property of the debtor’s estate is revested in the debtor. (Doc. 75).
The Joint Notice of Removal stated that these two defendants filed the
removal notice “with respect to the claims and causes of action asserted against
them.” (Doc. 1, p. 1). The removal notice stated that “[t]hese claims are removable
pursuant to federal bankruptcy jurisdiction, 28 U.S.C. §§ 1334 and 1452” and noted
that “[t]he Court also has maritime jurisdiction pursuant to 28 U.S.C. § 1333(1).
(Doc. 1, p. 1). The notice did not state that the entire case was being removed, but
only that “Caterpillar removes … the claims and causes of action asserted against
Caterpillar in the State Court Suit” and that “Thompson Tractor removes … the
claims and causes of action asserted against Thompson Tractor in the State Court
Suit.” (Doc. 1, pp. 1-2; see also p. 9, ¶ 35).
On March 15, 2010, defendant Coverteam Inc. (“Coverteam”) filed a Notice of
Consent to Removal, citing Bailey v. Janssen Pharmaceutica, Inc., 536 F.3d 1202,
1207 (11th Cir. 2008) (requiring unanimous consent of all defendants for removal).
(Doc. 19). Coverteam’s notice did not include any other information or explanation
supporting removal of the claims against it or of the entire case to this court.
Bender moved for remand or abstention asserting that the case should be
remanded based upon: (1) equitable remand pursuant to 28 U.S.C. § 1452(b); (2)
mandatory abstention under 28 U.S.C. § 1334(c)(2); (3) permissive abstention under
28 U.S.C. § 1334(c)(1); (4) lack of subject matter jurisdiction; and (5) defect in the
removal process under 28 U.S.C. §§ 1441 and 1446. (Docs. 39, 40).
II. The Magistrate Judge’s Report & Recommendation
The Magistrate Judge stated that the sole basis for removal set forth by the
notice of removal is federal bankruptcy jurisdiction pursuant to 28 U.S.C. §§ 1334
and 1452. All parties agreed that the removal is based solely on § 1452, rather than
§§ 1441 and 1446. The Magistrate Judge acknowledged that the notice of removal
filed by Caterpillar and Thompson only stated that the claims against those two
defendants were being removed and that it was not necessary for the entire case to
be removed. Although Coverteam did not follow proper procedure for removing the
claims against it, the Magistrate Judge found that the substance of Coverteam’s
Notice of Consent indicated that it desired to be in federal court as well; and
therefore, that the entire case should be before this court. (Doc. 60, pp. 11-12).
The Magistrate Judge then went on to find that mandatory abstention under
28 U.S.C. § 1334(c)(2) is not required because plaintiff’s tort claims could have been
commenced in federal court absent bankruptcy jurisdiction. (Doc. 60, p. 17). The
Magistrate Judge found that the case could have been brought in federal court
pursuant to federal admiralty jurisdiction. Although a contract for the building of a
ship is considered a non-maritime activity, the Magistrate Judge found that the
docking of an almost-completed vessel at the construction company’s manufacturing
facility on a navigable waterway is a common maritime activity and that the tort
claims had a sufficient maritime nexus for admiralty jurisdiction to apply. (Doc. 60,
pp. 19-23). With regard to discretionary or permissive abstention under
§ 1334(c)(1), the Magistrate Judge recommended that the court decline to abstain
because 1) significant action had not been taken in state court; 2) all claims and
defendants have been removed to this court and thus there is no risk of inconsistent
rulings; 3) federal admiralty jurisdiction applies and this court is in a better
position to handle potentially complex admiralty issues; 4) this court routinely
handles state law contract claims; and 5) due to the bankruptcy and admiralty
issues present in the case, federal jurisdiction is the most logical choice. (Doc. 60,
Lastly, the Magistrate Judge recommended that the court not remand the
case under 28 U.S.C. § 1452(b) for any equitable reasons. The Magistrate Judge
restated that federal court would be better equipped to decide this case since there
are no difficult state law issues and the more difficult questions in this case involve
the application of admiralty principles and perhaps bankruptcy principles. (Doc. 60,
Bender objects to the following: 1) the Magistrate Judge’s finding that the
entire case was removed even though Coverteam’s removal notice did not state a
basis for federal jurisdiction; 2) the finding that admiralty jurisdiction exists over
claims relating to the construction of a vessel; 3) the recommendation that this
court retain jurisdiction based on admiralty jurisdiction where the case was
removed solely on bankruptcy removal grounds and no bankruptcy reason exists to
retain jurisdiction; and 4) the recommendation that the case not be remanded for
equitable reasons when no bankruptcy nexus exists. Bender also objects to the
Magistrate Judge’s finding that Coverteam is the successor in interest to Alstom
A. Scope of Removal
“In removal cases, the burden is on the party who sought removal to
demonstrate that federal jurisdiction exists.” Friedman v. New York Life Insurance
Co., 410 F.3d 1350, 1353 (11th Cir. 2005)(internal quotes omitted). The removal
statute should be construed narrowly, with all doubts resolved against removal.
Diaz v. Sheppard, 85 F.3d 1502, 1505 (11th Cir. 1996); see also Shamrock Oil & Gas
Corp. v. Sheets, 313 U.S. 100, 107-09, 61 S.Ct. 868, 85 L.Ed. 1214 (1941).
In the instant case, Caterpillar and Thompson filed notices of removal which
clearly contemplated removal of only the claims against them. The Magistrate
Judge found, and the undersigned agrees, that § 1452 permits the removing party
to select those claims or causes of action to be removed and to leave the remainder
for litigation in state court. Bender appears to agree that the claims removed by
Caterpillar and Thompson were removable under § 1452. Accordingly, the court
finds that those claims were properly removed to this court. However, the court
disagrees with the Magistrate Judge’s finding that Coverteam’s notice was
sufficient to remove its claims to federal court. The notice did not state a basis for
federal jurisdiction, but merely consented to the removal by Caterpillar and
Thompson, apparently because Coverteam believed at the time that the Notice of
Removal filed by Caterpillar and Thompson removed the entire case and that
unanimous consent was necessary. Since the Notice of Removal filed by Caterpillar
and Thompson only removed the claims against them, and since all doubts are to be
resolved against removal, the undersigned finds that Coverteam’s filing was not
sufficient to remove the claims against it. Although Coverteam’s consent indicates
that Coverteam wanted to be in federal court it simply did not follow the proper
procedure for removal. Both Bankruptcy Rule 9027 and 28 U.S.C. § 14461 require
that a notice “contain a short and plain statement of the facts which entitle the
party filing the notice to remove.” FED. R. BANKR. P. 9027(a); see also 28 U.S.C. §
1446(a) (requiring that the notice of removal contain “a short and plain statement
of the grounds for removal, together with a copy of all process, pleadings, and orders
served upon such defendant or defendants in such action.”). Coverteam’s consent to
removal clearly did not comply with the removal statutes. As such, to exercise
jurisdiction would contradict the guidance of the Eleventh Circuit, which favors
A split of authority exists as to whether Bankruptcy Rule 9027 or 28 U.S.C. § 1446
controls. See Christo v. Padgett, 223 F.3d 1324, 1331 n. 6 (11th Cir. 2000) (“Courts
have split on whether 28 U.S.C. § 1446(b) (governing removals generally) or
Bankruptcy Rule 9027 provides the appropriate time period for filing a notice of
removal in cases related to a bankruptcy proceeding.”).
remand in cases where federal jurisdiction is not absolutely clear.
B. Mandatory Abstention
Under the mandatory abstention provision, the Court must refrain from
hearing the action if: “(1) the claim has no independent basis for federal jurisdiction,
other than § 1334(b); (2) the claim is a non-core proceeding. That is, it is related to a
case under title 11 but does not arise under or arise in a case under title 11; (3) an
action has been commenced in state court; and (4) the action could be adjudicated
timely in state court.” Silliman v. GMC, No. 09-1603, 2009 WL 3063371, *1 (N.D.
Ga. Sept. 22, 2009) (citations omitted). The Magistrate Judge found that the action
could have been brought in federal court pursuant to federal admiralty jurisdiction
and thus, that the requisites for mandatory abstention were not met because
Bender’s tort claims could have been commenced in federal court absent bankruptcy
To fall under admiralty jurisdiction, the claim must satisfy the nexus test.
The nexus test involves two queries: (1) Did the incident have a
“potentially disruptive impact on maritime commerce”? Sisson [v.
Ruby], 497 U.S.  at 363, 110 S.Ct.  at 2896, 111 L.Ed.2d 292
[ (1990) ]; and (2) Does a “substantial relationship” exist “between the
activity giving rise to the incident and traditional maritime activity”?
Id. at 364, 110 S.Ct. at 2897.
Sea Vessel Inc., v Reyes, 23 F.3d 345, 350 (11th Cir. 1994). Bender argues that the
second prong has not been met. To determine whether a sufficient maritime
We ask whether a tortfeasor’s activity, commercial or non-commercial,
on navigable waters is so closely related to activity traditionally
subject to admiralty law that the reasons for applying special
admiralty rules would apply in the suit at hand.
Jerome B. Grubhart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 534, 115
S.Ct. 1043, 1051, 130 L.Ed.2d 1024 (1995). It is well settled that “neither contracts
for construction nor for sale of a vessel are maritime in nature.” Hatteras of
Lauderdale, Inc. v. Gemini Lady, 853 F.2d 848, 850 (11th Cir. 1988); see also
F.W.F., Inc. v. Detroit Diesel Corp., 308 Fed.App’x. 389, 391 (11th Cir. 2009) (“It is
well-established that a contract for the original construction of a vessel arises under
non-maritime, state law, while an agreement to repair a vessel is a federal maritime
contract.”); Richard Bertram & Co. v. The Yacht, Wanda, 447 F.2d 966, 967 (5th
Cir. 1971) (noting the “prevailing rule” that “a contract for the sale of a ship is not a
maritime contract”). “Until a vessel is completed and launched it does not become a
ship in the legal sense, and therefore admiralty jurisdiction does not exist.”
Hatteras, 853 F.2d at 849-850. However, the claims at issue in the instant case are
tort claims, rather than contract claims and the vessel, although still under
construction, was docked and afloat upon the navigable waters of the United States
at the time of the fire.
Defendants argue that under Bunge Corp. v. Freeport Marine Repair, Inc.,
240 F.3d 919 (11th Cir. 2001), the vessel does not have to be completed for maritime
jurisdiction to apply to a tort claim occurring in connection with the vessel. In
Bunge Corp, a casino vessel, under construction and moored in a waterway, broke
free and caused damage to the plaintiff’s grain loading facility. The Eleventh
Circuit found that admiralty jurisdiction applied, reasoning as follows:
Although a pre-nexus case, the Supreme Court in Tucker v.
Alexandroff, 183 U.S. 424, 438-39, 22 S.Ct. 195, 46 L.Ed. 264 (1901),
addressed whether a vessel under construction may be subject to
admiralty jurisdiction. In essence, the Court held that a vessel in its
stocks could not be made liable in admiralty, either in rem or in
personam. The Court did state, however, that “[i]n the baptism of
launching she receives her name, and from the moment her keel
touches the water she is transformed, and becomes a subject of
admiralty jurisdiction.” Id. at 438, 22 S.Ct. 195. Like the vessel in
Tucker, Hull No. 40 was launched and floating in a navigable water
way. Moreover, in Bender Shipbuilding & Repair Co., Inc. v. Brasileiro,
this court held that a partially constructed drydock that broke its
moorings during a sudden storm and collided with a vessel was subject
to maritime jurisdiction. Bender, 874 F.2d 1551, 1555-56 (11th
Cir.1989). While a drydock is generally not considered a vessel, “the
drydock arguably became a ‘vessel’ when it entered the navigable
waters of the Mobile River.” Id. at 1555. The Bender court determined
that jurisdiction properly vested through the tort branch of admiralty.
Such is the case here. Since the allision occurred in navigable waters
due to the imperfect mooring of a nearly complete vessel, the incident
bore a substantial relationship to traditional maritime activity and
was properly within admiralty jurisdiction.
Bunge Corp, 240 F.3d at 924 (footnotes omitted). In the instant case, the Seacor
Sherman, like the vessel in Bunge Corp., had not been in use on navigable waters
prior to the incident and, although mostly complete, it was still under construction.
However, the Seacor Sherman did not break free and cause damage by floating
along the waterway. The fire occurred on the Seacor Sherman while it was still
docked. It never became detached from the dock and did not move out across
navigable waters. As such, the Bunge Corp. case does not appear to be analogous to
the instant action.
In support of its argument that a maritime nexus exists, Coverteam cites
Kennedy Engine Co. v. Dog River Marina & Boatworks, Inc., 432 So.2d 1214 (Ala.
1983). However, in Kennedy Engine, the Court found there was a significant
relationship to a traditional maritime activity because the vessel in question had
been in use on navigable waters prior to the fire and was being repaired at the time
of the fire. As noted above, “[i]t is well-established that a contract for the original
construction of a vessel arises under non-maritime, state law, while an agreement
to repair a vessel is a federal maritime contract.” F.W.F., Inc. v. Detroit Diesel
Corp., 308 Fed.App’x. 389, 391 (11th Cir. 2009) (emphasis in original). In the instant
case, the Seacor Sherman had not been in use on navigable waters prior to the fire
and was not being repaired, but was still under construction. Thus, Kennedy Engine
Co. is not analogous to the instant case.
In Hollister v. Luke Const. Co., 517 F.2d 920 (5th Cir. 1975) (per curiam),2
the Former Fifth Circuit found that the plaintiff in that case had no tort claim
sounding in admiralty where the barge on which plaintiff's injury allegedly
occurred, although afloat, was still under construction. 517 F.2d 920, 921 (5th Cir.
Decisions of the Former Fifth Circuit filed prior to October 1, 1981, constitute
binding precedent in the Eleventh Circuit. Bonner v. City of Prichard, 661 F.2d
1206, 1209 (11th Cir. 1981) (en banc).
1975). The former Fifth Circuit found that the plaintiff could not recover under the
Jones Act, on a theory of unseaworthiness, or under general maritime law because
the barge was not a vessel in navigation at the time of the plaintiff's injury. 3
Likewise, in Casas v. U.S. Joiner, LLC, 372 Fed.App’x. 440 (5th Cir. 2010), the Fifth
Circuit found that the alleged negligence aboard an amphibious transport dock that
was under construction was not significantly related to a traditional maritime
activity. In Casas, a maritime situs was conceded and the plaintiff argued that the
logic in Hollister was flawed. However, the Court disagreed, finding that Hollister
remained good precedent4 and that the plaintiff could not sustain a maritime tort
claim. The court finds that the Hollister and Casas cases make clear that torts
occurring aboard a ship that is afloat, but still under construction, are activities
Defendants assert that Hollister does not apply because it is a Jones Act case.
However, the Hollister Court stated that there were unseaworthiness and general
maritime claims asserted as well and clearly found that all claims failed.
The Casas Court stated the following in support of Hollister:
Hollister has been repeatedly relied upon by this court. See Cain v. Transocean
Offshore USA, Inc., 518 F.3d 295, 298 (5th Cir.2008) (noting the “historical tradition
that vessels under construction give rise to neither a maritime contract nor a
maritime tort”); Lowe v. Ingalls Shipbuilding, 723 F.2d 1173, 1187 (5th Cir.1984)
(rejecting admiralty jurisdiction and citing Hollister for the proposition “that an
injury to a ship construction worker on board a ship under construction and lying in
navigable waters is not a maritime tort”); see also Owens-Illinois, Inc. v. U.S. Dist.
Court for the W. Dist. of Wash., 698 F.2d 967, 970 (9th Cir.1983) (tort claims arising
from asbestos exposure during new ship construction do not bear a significant
relationship to traditional maritime activity); Keene Corp. v. U.S., 700 F.2d 836,
844 (2d Cir.1983) ( “a tort arising out of work on an uncompleted vessel has been
held to fall outside admiralty jurisdiction.”).
Casas, 372 Fed.App’x. at 441.
that are not traditionally subject to admiralty law. In the instant case, the damages
incurred did not arise from the uncompleted ship breaking away from its mooring
and traveling in open waters, but were incurred while it was still attached to the
dock. Accordingly, the court finds that this action could not have been brought in
federal court pursuant to federal admiralty jurisdiction. Furthermore, the court
finds that the requisites for mandatory abstention have been met and the case
should therefore be remanded.
C. Discretionary Abstention and Equitable Remand
Even if admiralty jurisdiction applied to this case, the court finds that the
case should be remanded for discretionary and equitable reasons in light of the
above findings and because the circumstances that have changed since the
Magistrate Judge entered his Report and Recommendation. “The equitable
considerations relevant to determine the appropriateness of equitable remand and
permissive abstention under Sections 1452(b) and 1334(c)(1), respectively, are
essentially identical, and, therefore, a court's analysis is substantially the same for
both types of relief.” Vision Bank v. Platinum Investment, LLC, No. 11-00093, 2011
WL 2144547, *4 (S.D. Ala. May 11, 2011) (quoting McKee v. Lemons, 1999 U.S.
Dist. LEXIS 8735, *18 (S.D. Ala. Mar. 31, 1999)(quoting In re Donnington, 194 B.R.
750, 759 (Bankr. D.N.J. 1996)). Specific grounds include:
1) Forum non-conveniens; 2) that the entire action of a bifurcated
matter should be tried in the same court; 3) that a state court is better
able to resolve state law questions; 4) expertise of a particular court; 5)
judicial economy; 6) prejudice to the involuntarily removed party; 7)
comity; and 8) the lessened possibility of an inconsistent result.”
Vision Bank, 2011 WL 2144547 at *4-5 (quoting St. Vincent's Hospital v. Norrell
(In re Norrell), 198 B.R. 987, 997 (N.D. Ala. 1996)).
In addition to the reasons discussed above, the interests of judicial
comity and economy strongly favor remand in this case. Not
surprisingly, state courts have long been considered the preferred
arbiters of state law claims, and the abstention powers have been
interpreted broadly. Baggett v. First National Bank, 117 F.3d 1342,
1353 (11th Cir.1997)(“State courts, not federal courts, should be the
final arbiters of state law.”)(citing Hardy v. Birmingham Bd. of Educ.,
954 F.2d 1546, 1553 (11th Cir.1992)); In re Republic Reader's Service,
Inc., 81 B.R. 422, 427 (S.D. Texas 1987) (“State courts afford the best
forum for deciding issues whose resolution turns on interpretation of
state law; consequently I interpret the abstention powers granted by
Vision Bank, 2011 WL 2144547 at *5.
The court found above that not all of the parties and claims were removed to
this court. Thus, the court can not dispose of this case in its entirety and there
exists a risk of inconsistent rulings in state court. Additionally, the court has found
that federal admiralty law does not apply and thus, state law issues will determine
the resolution of this action. While there are no difficult or novel questions of state
law that would make the state court particularly suited to decide the action, state
courts routinely hear these types of matters and are best suited to provide a quick
resolution. Hatcher v. Lloyd's of London, 204 B.R. 227, 233 (M.D. Ala. 1997).
Furthermore, Bender’s bankruptcy plan has now been confirmed and all property of
the debtor’s estate is revested in the debtor. Thus, the resolution of this case no
longer has any impact on the administration of Bender’s bankruptcy. These factors
favor remand and the court finds that the motion to remand (Doc. 39), should be
After due and proper consideration of all portions of this file deemed relevant
to the issues raised, and a de novo determination of those portions of the report and
recommendation to which objection is made, the undersigned declines to adopt the
Report and Recommendation of the Magistrate Judge. It is ORDERED that the
motion of Bender Shipbuilding & Repair Co., Inc., to remand (Doc. 39) is
GRANTED and this case is hereby REMANDED to the Circuit Court of Mobile
DONE and ORDERED this 16th day of April, 2012 .
/s/ Callie V. S. Granade
UNITED STATES DISTRICT JUDGE
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