In Re: Matter of the Complaint of JWN Consulting, LLC and Jefferson Neal

Filing 35

MEMORANDUM OPINION AND ORDER by Judge David J. Hale on 3/26/2018. Shaws motion to dismiss (D.N. 22 ) is GRANTED. This matter is DISMISSED for lack of subject-matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(h) (3) and STRICKEN from the Courts docket. All pending motions are DENIED as moot. cc:counsel (MEJ)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
IN RE: MATTER OF THE COMPLAINT OF
JWN CONSULTING, LLC and
JEFFERSON NEAL,

Petitioners.
Civil Action No. 3:17-cv-120-DJH

* * * * *
MEMORANDUM OPINION AND ORDER
Petitioners JWN Consulting, LLC and Jefferson Neal filed this action under the
Limitation of Liability Act, 46 U.S.C. §§ 30501-30512, seeking to limit their liability for a
boating accident in which a passenger on their boat was killed. (Docket No. 1) Claimant Joel
Shaw has moved to dismiss the case, arguing that the Court lacks subject-matter jurisdiction
because the accident did not occur on navigable waters. (D.N. 22; see D.N. 22-1) Petitioners do
not dispute that Lake Cumberland, where the accident took place, is non-navigable. (See D.N.
23, PageID # 79, 88) Nevertheless, they maintain that the Court has jurisdiction under the
Limitation of Liability Act. (Id.) The Court agrees with Shaw that it lacks jurisdiction and will
therefore grant his motion to dismiss.1
I.

Discussion
Federal district courts have “original jurisdiction, exclusive of the courts of the States,

of . . . [a]ny civil case of admiralty or maritime jurisdiction.” 28 U.S.C. § 1333(1). Under the

1

Although Shaw seeks dismissal on the ground that the Court lacks subject-matter jurisdiction,
he repeatedly states that his motion is brought pursuant to Federal Rule of Civil Procedure
12(b)(6), as opposed to Rule 12(b)(1) or 12(h)(3). (See, e.g., D.N. 22, PageID # 70; D.N. 22-1,
PageID # 72-73) Regardless of this apparent confusion, the Court has an “independent
obligation” to confirm its jurisdiction, Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006)
(citation omitted), and must therefore determine whether dismissal is required under Rule
12(h)(3).
1

Extension of Admiralty Jurisdiction Act, 46 U.S.C. § 30101, admiralty jurisdiction “extends to
and includes cases of injury or damage, to person or property, caused by a vessel on navigable
waters, even though the injury or damage is done or consummated on land.” § 30101(a). The
general test for admiralty tort jurisdiction requires a party seeking to invoke that jurisdiction to
“satisfy conditions both of location and of connection with maritime activity.”

Jerome B.

Grubart v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 534 (1995). Specifically,
[a] court applying the location test must determine whether the tort occurred on
navigable water or whether injury suffered on land was caused by a vessel on
navigable water. The connection test raises two issues. A court, first, must
“assess the general features of the type of incident involved[]” to determine
whether the incident has “a potentially disruptive impact on maritime
commerce[.]” Second, a court must determine whether “the general character” of
the “activity giving rise to the incident” shows “a substantial relationship to
traditional maritime activity.”
Id. (quoting Sisson v. Ruby, 497 U.S. 358, 363-65 & n.2 (1990)) (internal citations omitted).
Pursuant to the Limitation of Liability Act, “the liability of the owner of a vessel for any
claim, debt, or liability described in [the Act] shall not exceed the value of the vessel and
pending freight.” 46 U.S.C. § 30505(a). Claims and liabilities covered by the statute include
“those arising from . . . any loss, damage, or injury by collision, or any act, matter, or thing, loss,
damage, or forfeiture, done, occasioned, or incurred, without the privity or knowledge of the
owner.” § 30505(b). The Act further provides that “[t]he owner of a vessel may bring a civil
action in a district court of the United States for limitation of liability under [the Act],”
§ 30511(a), as Petitioners have done here.
In Richardson v. Harmon, 222 U.S. 96 (1911), the Supreme Court held that the
Limitation Act (as then codified) extended to “non-maritime” torts. Id. at 106. According to
Petitioners, Richardson remains binding precedent and stands for the proposition that “limitation
applie[s] to all claims arising out of a vessel’s operations, whether the tort occurred on navigable
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water or not.” (D.N. 23, PageID # 79) However, an overwhelming majority of courts have held
that “the Limitation Act does not confer admiralty jurisdiction over petitions that arise from
incidents that . . . did not occur on or over navigable waters.”2 See MLC Fishing, Inc. v. Velez,
667 F.3d 140, 143 (2d Cir. 2011) (collecting cases and joining Fourth, Fifth, Seventh, Eighth,
Ninth, and Eleventh Circuits in so holding). While the Sixth Circuit has yet to address the issue,
district courts within this circuit have generally followed the majority rule.3 See, e.g., Hickam v.
Segars, 905 F. Supp. 2d 835, 841 (M.D. Tenn. 2012); In re Wepfer Marine, Inc., 344 F. Supp. 2d
1120, 1123-24 (W.D. Tenn. 2004); In re Fields, 967 F. Supp. 969, 975 (M.D. Tenn. 1997).4 And
a footnote in Sisson suggests that the Supreme Court does not share Petitioners’ reading of
Richardson. The Sisson Court noted:
Sisson has also argued throughout this litigation that the Limited Liability Act
provides an independent basis for federal jurisdiction. Respondents contend that
the Act does not create jurisdiction, but instead may be invoked only in cases
otherwise within the maritime jurisdiction of § 1333(1). We need not decide
which party is correct, for even were we to agree that the Limited Liability Act
does not independently provide a basis for this action, § 1333(1) is sufficient to
confer jurisdiction.5
2

As noted in Shaw’s reply, Petitioners’ counsel recognized this imbalance of authority in a
published article. (See D.N. 24, PageID # 92 (citing James K. Mondl, Litigating Recreational
Boating Cases, 55 St. Louis Bar Journal, no. 2 (Fall 2008)))
3
Contrary to Shaw’s assertion, however, this Court did not hold in Lynch v. McFarland, 808 F.
Supp. 559 (W.D. Ky. 1992), “that the Limitation Act does not apply to incidents occurring upon
non-navigable waterways.” (D.N. 24, PageID # 90) Lynch was not a limitation-of-liability case;
rather, it was a personal-injury case brought by a plaintiff allegedly injured on the defendants’
boat. See 808 F. Supp. at 560. The Court did find in Lynch that Cumberland Lake is nonnavigable, id. at 563, a point not in dispute here. (See D.N. 23, PageID # 79, 88)
4
Petitioners cite In re Houseboat Starship II, No. 2:05-0086, 2005 U.S. Dist. LEXIS 36237
(M.D. Tenn. Dec. 12, 2005), as an example of a court within the Sixth Circuit following
Richardson. (See D.N. 23, PageID # 23, PageID # 81-82) However, while the In re Houseboat
Starship II decision did state that “[the] Richardson rule retains its viability,” it did so only
briefly and in dictum, having already concluded that the incident at issue—which occurred on
navigable waters—gave rise to admiralty jurisdiction. 2005 U.S. Dist. LEXIS 36237, at *6; see
id. at *3-*6.
5
Sisson arose out of an incident that occurred when a boat was docked at a marina on “a
navigable waterway.” 497 U.S. at 360.
3

Id. at 359 n.1 (internal citation omitted). If Richardson provided the answer to this question,
presumably the Sisson Court would have said so. See MLC Fishing, 667 F.3d at 142-43 (“The
Supreme Court has indicated that whether the Limitation Act provides an independent basis for
federal subject matter jurisdiction is an open question, but has declined t[o] resolve the issue.”
(citing Sisson, 497 U.S. at 359 n.1)).
Petitioners rely heavily on In re Bernstein, 81 F. Supp. 2d 176 (D. Mass. 1999), which,
like this case, arose out of a boating accident on a non-navigable lake. See id. at 177, 179. The
court there concluded that although “the age of Richardson, the Supreme Court’s arguable
disregard for its own holding, and the overwhelming disapproval by the Courts of Appeals
present[ed] a compelling rationale for rejecting a theory of independent jurisdiction under the
[Limitation of Liability] Act” and “the manifest history of the Act demonstrate[d] its
inapplicability to the circumstances of” the case at hand, the court was bound by stare decisis to
follow Richardson, which dictated a finding of independent jurisdiction under the Act. Id. at
182.
The Court is not persuaded by the reasoning of In re Bernstein. As discussed above, no
fewer than seven circuit courts of appeals have analyzed this issue at length and reached the
opposite conclusion, and the Supreme Court itself has indicated that it does not view Richardson
as requiring the Limitation Act to be treated as an independent source of jurisdiction. See Sisson,
497 U.S. at 359 n.1. Unlike many other statutes, the Act does not contain language clearly
conferring—or even suggesting that it confers—jurisdiction. Cf., e.g., 28 U.S.C. § 1346(b)
(providing that “the district courts . . . shall have exclusive jurisdiction of civil actions on claims
against the United States”); 29 U.S.C. § 185(a) (providing that suits for violation of labor
contracts “may be brought in any district court of the United States having jurisdiction of the
4

parties, without respect to the amount in controversy or without regard to the citizenship of the
parties”). Rather, it merely provides for limitation of liability in certain instances, 46 U.S.C.
§ 30505, and creates a cause of action for vessel owners to enforce that limitation, § 30511(a).
Moreover, since Richardson, Congress has enacted the Extension of Admiralty
Jurisdiction Act, which specifies that admiralty jurisdiction extends to cases involving damage or
injury on land if the harm was “caused by a vessel on navigable waters.” 46 U.S.C. § 30101(a).
This extension of jurisdiction covers the factual scenario at issue in Richardson, where the
owners of a barge sought to limit their liability after the barge collided with a bridge. See 222
U.S. at 99-100. Thus, it appears that the Extension of Admiralty Jurisdiction Act “subsumed
Richardson’s expansion of the [Limitation] Act within the greater aegis of admiralty
jurisdiction,” with the result that “the reach of the [Limitation] Act and admiralty jurisdiction are
once more coextensive.” Seven Resorts v. Cantlen, 57 F.3d 771, 773 (9th Cir. 1995) (declining
to “extend the scope of the [Limitation] Act beyond the parameters of modern admiralty
jurisdiction . . . . to encompass torts occurring on non-navigable waterways with no relation to
commercial shipping”); see also MLC Fishing, 667 F.3d at 144 (concluding that “the Limitation
Act does not confer federal admiralty jurisdiction over any action not already encompassed
within the Extension Act’s jurisdictional grant”). The Court thus concludes, consistent with the
weight of authority, that because the accident giving rise to this case occurred on non-navigable
waters, subject-matter jurisdiction is lacking.
II.

Conclusion
For the reasons set forth above, and the Court being otherwise sufficiently advised, it is

hereby

5

ORDERED that Shaw’s motion to dismiss (D.N. 22) is GRANTED. This matter is
DISMISSED for lack of subject-matter jurisdiction pursuant to Federal Rule of Civil Procedure
12(h)(3) and STRICKEN from the Court’s docket. All pending motions are DENIED as moot.

March 26, 2018

David J. Hale, Judge
United States District Court

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