In Re: In the Matter of the Complaint of Kirby Inland Marine, LP
ORDER denying the 14 & 38 Motions for an order to increase the limitation fund and security therefor. Signed by Chief Judge William H. Steele on 8/8/2013. (tgw)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
IN RE: THE MATTER OF THE
COMPLAINT OF KIRBY INLAND
MARINE, L.P., etc., PETITIONING
FOR EXONERATION FROM OR
LIMITATION OF LIABILITY
) CIVIL ACTION 13-0319-WS-C
This matter is before the Court on the motion of claimants Casey Tyson,
Justin Kyle Benoit and Maebell Muns Benoit (“the movants”) for an order to
increase the limitation fund and security therefor. (Doc. 14).1 The interested
parties have filed briefs in support of their respective positions, (Docs. 15, 22, 23),
and the motion is ripe for resolution. (Doc. 16).
On April 24, 2013, a fire and explosions occurred on the Mobile River,
with several persons injured as a result. The filings indicate that this calamity
occurred while two barges owned by the plaintiff herein were being cleaned at a
facility run by Oil Recovery Company, Inc. of Alabama (“ORC”). The plaintiff
filed this action for exoneration or limitation along with affidavits that the postincident, salvage value of the barges was $420,000 and the value of pending
freight $9,000, as well as a bond in that amount. (Doc. 1). The Court approved
the security, preserving the right of any claimant to contest the amount or value of
the plaintiff’s interest and apply to have the Court fix a higher value. (Doc. 8 at
2). This latter provision is in accord with Supplemental Admiralty Rule F(7),
Claimants George Hiram Lee Erickson and Althea Marie Erickson have recently
filed an unbriefed joinder in the motion, (Doc. 38), which the Court construes as a second
which provides that “[a]ny claimant may by motion demand that the funds
deposited in court … be increased on the ground that they are less than the value
of the plaintiff’s interest in the vessel and pending freight.” The movants invoke
Rule F(7) along with 46 U.S.C. § 30511(b)(1)(A) and (B). (Doc. 14 at 1).
The movants’ argument is that, since it seeks exoneration on the grounds
that the casualty and “all resultant losses and/or damages … were caused or
occasioned by the acts or omissions of others,” (Doc. 1 at 2-3), the plaintiff must
have a tort claim against one or more “others” for the loss of its barges. (Doc. 15
at 2). The movants assume the “other” is ORC. The value of that claim, they say,
must be included in the value of the barges and thus to the security posted under
Rule F. The plaintiff denies that the value of any such claim must be considered
but maintains that, in any case, the instant motion is premature.
We conclude that the owner who retains the sum of the
damages which have been awarded him for the loss of his ship
and freight has not surrendered “the amount or value” [citation
omitted] of his interest in the ship; that he has not given up the
“whole value of the vessel” [citation omitted]; that he has not
transferred “his interest in such vessel and freight” [citation
O’Brien v. Miller, 168 U.S. 287, 306-07 (1897). “It follows that the shipowner,
therefore, in the case before us, to the extent of the damages paid on account of the
collision, was liable to the creditors of the ship ….” Id. The Supreme Court
offered several rationales in support of this conclusion.
First, the Court noted that, when a vessel has been wrongfully destroyed by
the fault of another, “there exists in the owner a right to require the restoration of
his property, either in specie or by a money payment as compensation for a failure
to restore the property.” 168 U.S. at 303. “Manifestly, if the option was afforded
the owner of the ship to receive back his property or its value, he could not, by
electing to take its value, refuse to surrender the amount as a condition to
obtaining the benefit of the act.” Id. Since the value of the ship as restored by the
tortfeasor would be the proper measure of value for limitation purposes, so too
would be the value of the monetary compensation given by the tortfeasor in lieu of
a physical restoration.
Second, such a rule is “in conformity with the general maritime law of
Europe,” the leading expositors of which served as “the sources from which the
principles embodied in the act of congress were derived.” 168 U.S. at 304. Under
that general maritime law, “the obligation of the owner was to surrender a sum
awarded as damages for the loss of his ship, and, if he did not, he could not avail
himself of the limitation of liability.” Id. In short, “all the maritime writers and
codes accord in the conclusion that a surrender, under the right to limit liability,
must be made of a sum received by the owner, as the direct result of the loss of the
ship, and which is the legal equivalent and substitute for the ship.” Id. at 306.
In Phillips v. Clyde Steamship Co., 17 F.2d 250 (4th Cir. 1927), the owner
filed a limitation action after recovering a sum for damage to its vessel. The
owner conceded that the O’Brien rule governs when the owner’s vessel has been
sunk by another’s fault but insisted the rule is inapplicable when the vessel retains
salvage value. The Fourth Circuit rejected the suggestion, based on O’Brien itself
and “[a] careful study of the statute,” which “fails to disclose a single word or
phrase suggestive of the idea that a different rule should apply in a case of partial
loss of, or injury to, a vessel from the case of a total destruction.” Id. at 252.
The rule thus seems clear enough as to claims for a lost or damaged vessel
when the claim has already resulted in a monetary recovery: to obtain limitation,
the owner must deposit the recovery or provide adequate security in lieu thereof.
But the plaintiff has received no such recovery; indeed, it has not brought a formal
claim against ORC or anyone else. (Doc. 22 at 1, 3). The movants argue that such
claims nevertheless must be considered.
“The clear purpose of congress was to require the shipowner, in order to be
able to claim the benefit of the limited liability act, to surrender to the creditors of
the ship all rights of action which were directly representative of the ship and
freight.” O’Brien, 168 U.S. at 303 (emphasis added). The same general maritime
authorities on which the O’Brien Court relied for the proposition that recovered
damages must be surrendered are also quoted by the Court for the proposition that
“it suffices for [the owner’s] discharge to surrender all claims in respect of the
ship and its freight” and that “it is sufficient for exoneration of the owners if all
claims and causes of action having reference to the vessel and freight are
abandoned by them.” Id. at 304 (emphasis added; internal quotes omitted).
“Indeed, that a right of action for the value of the owner’s interest in a ship and
freight is to be considered as a substitute for the ship itself was decided in this
court in the case of Sheppard v. Taylor, 5 Pet. 675.” Id. at 305 (emphasis added).
These pronouncements are dicta, since the owner in O’Brien had received a
monetary recovery, but they are the best evidence the parties have provided of the
Supreme Court’s position.
In Guillot v. Cenac Towing Co., 366 F.2d 898 (5th Cir. 1966), the limitation
plaintiff impleaded third parties and asserted against them claims for indemnity
and/or contribution should the owner be cast in judgment as to any of the
limitation claimants. Id. at 910. The claimants asserted that the owner’s action
required it to increase its valuation and security by the amount of their claims
(since this would be the amount the owner would seek as indemnity or
contribution). Id. The former Fifth Circuit did not reject the claimants’ position
on the grounds that the owner had yet to recover on its indemnity/contribution
claim. On the contrary, the Court quoted the first sentence of O’Brien quoted in
the preceding paragraph. Id. The Guillot Court also quoted a leading treatise for
the proposition that “[t]he shipowner’s collateral rights against tortfeasors arising
out of the accident or voyage must also be accounted for and added to the
stipulation or assigned to the trustees,”2 which proposition, the Court pronounced,
“correctly states” the rule. Id. This portion of Guillot is dicta (since the panel
ultimately rejected the claimants’ position on the ground that claims for indemnity
or contribution are not claims for loss of or damage to the vessel), but of the cases
cited by the parties it provides the clearest expression of the view taken by the
Court of Appeals covering this district.
But not the only one. In Geotechnical Corp. v. Pure Oil Co., 196 F.2d 543
(5th Cir. 1952), “[i]t is conceded that [the owner’s pending] claim against [a third
party for loss of the vessel] is a part of the vessel to be covered by stipulation or
transfer.” Id. at 201 (citing O’Brien). The Geotechnical Court also cited In re:
Petition of Navigazione Libera Triestina, 34 F.2d 150 (E.D.N.Y. 1929). In that
case, the Court reviewed O’Brien, Phillips and other authorities, then concluded
that “if the petitioner has any right of action against the shipwright it should be
assigned to the trustee.” Id. at 152. Other decisions cited by the movants are to
Against this armada of cases, the plaintiff sends only D&L Marine
Transportation, Inc. v. Suard Barge Service, Inc., 2002 WL 126644 (E.D. La.
2002). Because the opinion does not specify whether the limitation plaintiff’s
claim was for damage to its vessel, the Court’s decision not to require the value of
the claim to be accounted for is not necessarily inconsistent with the movants’
cases, and the opinion’s exclusive reliance on Guillot suggests the claim was for
indemnity or contribution, as in that case. Even could D&L be read as involving a
claim for damage to the owner’s vessel, its result would depend on a misreading of
Guillot and thus be unpersuasive.
The plaintiff next argues that, whatever the import of the cited cases and
others like them, the 2006 amendments to Title 46 “clearly d[o] not allow for the
366 F.2d at 910 (quoting 3 Benedict on Admiralty at 451 (6th ed.)). The current
version of this treatise contains the same statement, unaltered. 3 Benedict on Admiralty,
§ 62 at 7-5 (7th rev. ed. 2012).
inclusion of tort claims within the limitation fund.” (Doc. 22 at 8-10). The
plaintiff notes that Section 30505(a) provides that the liability of a successful
limitation plaintiff “shall not exceed the value of the vessel and pending freight”
and contrasts this language with previous versions capping such liability at “‘the
amount or value of the interest of such owner in such vessel, and her freight then
pending.’” (Doc. 22 at 8-9 (quoting Navigazione Libera Triestina, 34 F.2d at 150)
(emphasis added by the plaintiff)). The plaintiff suggests, with no accompanying
analysis or examples, that the movants’ cases relied on the highlighted term to
justify their decisions and cannot be sustained under the present version of the
statute. The Court declines to undertake on the plaintiff’s behalf a detailed
examination of the cases or of the legislative history of the 2006 revision. But
much less is required to reject the plaintiff’s unsupported position.
First, the O’Brien Court emphasized the “amount or value” requirement of
the previous version of the statute, not the “interest of such owner” language. See
168 U.S. at 306-07 (an owner that retains damages awarded for the loss of its ship
“has not surrendered ‘the amount or value’ (section 4283) of his interest in the
ship”). Indeed, the Court noted that “Section 4284 describes the liability as ‘the
whole value of the vessel …,’” and one who retains such damages “has not given
up the ‘whole value of the vessel (section 4284).’” Id. at 307. Plainly the Court
did not consider the “interest of such owner” language to be dispositive or even
Nor did the revisers. The notes accompanying the 2006 revision state that
the language the plaintiff finds so critical was omitted “for consistency and to
eliminate unnecessary words,” not to accomplish any substantive change or to
undermine longstanding precedent. Indeed, Section 30505(a) actually retains a
reference to an owner’s interest, specifying that “the proportionate share of the
liability of any one owner shall not exceed that owner’s proportionate interest in
the vessel and pending freight.” As the accompanying notes explain, this is a
restatement of the “interest of such owner” language the plaintiff believes is
missing, and it makes clear that the significance of that language all along has
been only to restrict an owner’s exposure to his own, perhaps limited interest –
which explains why the O’Brien Court found it immaterial to its discussion.
But the movants are not home yet. As noted, the plaintiff has filed no claim
against ORC or anyone else in this or any other forum. The Court has carefully
reviewed the authorities cited by the movants and, with one exception, they
involve a claim that had at least been formally advanced by the owner, if not
resolved in favor of the owner. The exception is Navigazione Libera Triestina,
but even there the owner had “admitted that there were many indications of
negligence and liability on the part of” a shipwright. 34 F.2d at 150.
The plaintiff argues the instant motion is premature because it has neither
identified nor pressed any claim against a third party. (Doc. 22 at 1-3). The
movants retort that their motion cannot be premature because posting security is
“the very first thing that is supposed to happen.” (Doc. 23 at 1 (emphasis
omitted)). But this is a non sequitur. Security has already been posted under Rule
F(1), and the question before the Court is whether, under Rule F(7), that security
must be increased to account for a theoretically possible but unidentified,
unasserted claim against some person or entity that may have wrongfully damaged
the vessel in the course of the subject incident. Unless this question is answered in
the affirmative, any effort to increase the security on that ground is necessarily
As reflected above, the movants have offered cases for the proposition that
“claims,” “causes of action,” “rights of action” and “collateral rights” must be
accounted for in the limitation fund and associated security. They have not,
however, made a showing that any time a claimant suspects another’s fault in
damaging or losing the owner’s vessel, the owner must, on that account alone, post
security reflecting the supposed value of what may or may not turn out to be a
claim or cause of action at all.
There are reasons to question such a proposition. For one, it could hold an
owner hostage to any creative claimant capable of identifying fanciful causes of
action against which security must be posted. For another, it could force an owner
to pursue absurd “claims” because it has already been forced to post security
concerning them and must include the assigned value of the imagined claims in
any ultimate limitation payout.
The present case affords an example. The movants, given two tries to
articulate the plaintiff’s claim, manage only this: “Oil Recovery Inc. of Alabama
has not filed for limitation and cannot. Does Kirby have a claim against them?
Yes.” (Doc. 23 at 11). No facts are asserted, no law is cited, and the movants
acknowledge they are unprepared to say whether ORC is liable. (Doc. 15 at 2).
The Court thus has no basis for concluding there is a legitimate factual and legal
basis for the plaintiff to sue ORC, yet the movants would have the plaintiff pungle
up security to cover the “value” of this hypothetical claim – of which lagniappe
the claimants then could partake if limitation is granted, even though no
supportable claim ever existed.
The movants respond that their ipse dixit is enough because the burden is
on the plaintiff to demonstrate that its security is sufficient, not on them to show it
is not. (Doc. 23 at 11). There is authority to the contrary,3 but even if the ultimate
burden is on the plaintiff, the movants must carry their threshold burden of making
a colorable showing that the existing security is insufficient. A bare rhetorical
question does not carry even that burden.4
In re: Complaint of Marquette Transportation Co., 2011 WL 1486119 at *2
(E.D. La. 2011) (the movants bear the burden on a Rule F(7) motion).
See Cal Dive International, Inc. v. Johnson, 2001 WL 823728 at *2 (E.D. La.
2001) (without “any evidence in support of his contention that the limitation fund is
inadequate and should be increased,” the claimant’s motion for an increase in security
was denied); In re: D.N.H. Towing Co., 1998 WL 51835 at *5 (E.D. La. 1998) (“The
mere allegation that the valuation is inaccurate is insufficient to create a fact issue on the
value of the limitation fund.”).
But suppose it did. How in the world could the Court assess the value of
such a nebulous claim so as to arrive at a figure by which the security must be
increased? The movants propose that the value of the claim be deemed to be the
difference in the barges’ post-incident salvage value and their pre-incident fair
market value. (Doc. 15 at 10). That is, they assume the plaintiff’s shadowy claim
against ORC has a 100% chance of being 100% successful – an assumption that
has about a 0% chance of being true. The truth is that, with absolutely no
information concerning what occurred and why, assigning any particular
probability of success or degree of success5 to the plaintiff’s purported claim could
not be based on anything more than speculation. In such a circumstance, the only
appropriate judicial valuation of the claim would appear to be zero.
There is another aspect to the plaintiff’s prematurity argument. (Doc. 22 at
3-4). Unsurprisingly, the plaintiff carries hull insurance on the barges, and the
claims process is still underway. Once the insurer pays (and there is no indication
it will not), any claim against ORC that the plaintiff might otherwise have will be
subrogated to the insurer by operation of law.6
The movants deny any prematurity. At this moment, they insist, the
plaintiff has a claim against ORC, and until the insurer pays and receives the claim
by subrogation, it is the plaintiff’s property and must be accounted for by posting
security reflecting its value. (Doc. 23 at 12-13).
Perhaps the movants’ motion is not, due to the pending insurance claim,
technically premature in the sense of being unripe. But it is practically premature,
since it apparently will be rendered moot shortly by the payment of insurance
proceeds. Other than perhaps intellectual purity, the movants suggest no reason
For all the Court has been shown, any claim by the plaintiff against ORC would
be governed by admiralty principles, including comparative fault.
As the movants acknowledge, (Doc. 15 at 4 n.1), insurance proceeds are not
part of the value of the vessel for limitation purposes. O’Brien, 168 U.S. at 306 (“[T]he
proceeds of an insurance policy need not be surrendered by the shipowner ….”) (citing
The City of Norwich, 118 U.S. 468 (1886)).
the parties, and the Court, should be put to the considerable inconvenience of
resolving an issue doomed to become irrelevant almost before the ink is dry. The
Court concludes that they should not. Cf. Shewchun v. United States, 797 F.2d
941, 942 (11th Cir. 1986) (the general rule divesting a trial court of jurisdiction
over matters at issue in an appeal serves the “important interes[t] [of] judicial
economy, for it spares the trial court from passing on questions that may well be
rendered moot by the decision of the Court of Appeals”).
The Court’s ruling does not leave the claimants without recourse. Should
the insurer deny coverage, they may be able to argue that the issue is unlikely to
become moot. Should they collect adequate evidence of ORC’s potential liability
to the plaintiff, they may be able to assert that the plaintiff has more than a merely
hypothetical cause of action with more than a merely speculative chance of more
than merely nominal success. And should the plaintiff unreasonably delay in
bringing an available, supportable claim against ORC, they may be able to request
appropriate relief to ensure the plaintiff does not obtain the benefit of limitation at
the present funding level and subsequently pursue a claim against ORC without
fear that any recovery will be diverted to the claimants.
For the reasons set forth above, the two motion for an order to increase the
limitation fund and security therefor, (Docs. 14, 38), are denied.
DONE and ORDERED this 8th day of August, 2013.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE
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