In Re: Massman, Traylor, Alberici, a Joint-Venture, and its Joint-Venturers Massman Construction Co., Inc., Traylor Bros., Inc., and Alberici Constructors, Inc.

Filing 23

MEMORANDUM AND ORDER:IT IS HEREBY ORDERED that claimants motion to dismiss [Doc. # 12 ] is denied without prejudice. IT IS FURTHER ORDERED that claimants motion to dissolve stay and injunction [Doc. # 16 ] is granted. IT IS FURTHER ORDERED that the stay and injunction entered on July 17, 2014 is dissolved to permit claimant to proceed with the action styled Jennifer Seyler v. M.T.C. Construction, Inc. d/b/a Kay Bates Steel Company, Cause No. 1322-CC01321, filed in the Twenty-Second Judicial Cir cuit Court of Missouri (City of St. Louis). IT IS FURTHER ORDERED that a stay of entry of judgment and enforcement of recovery in any proceeding pending final judgment in this limitation proceeding is entered. IT IS FURTHER ORDERED that claimants m otion to lift stay and injunction [Doc. # 15 ] is moot.IT IS FURTHER ORDERED t hat claimants motion to increase the limitation fund [Doc. # 13 ] is denied without prejudice. IT IS FURTHER ORDERED that petitioners shall have until April 24, 2015, to file with the Clerk of Court an approved corporate surety bond or other security guaranteeing, without reservation, the satisfaction of a judgment up to the maximum amount of $275,000 that may be entered in favor of claimant and against petitio ners in the action styled Jennifer Seyler v. M.T.C. Construction, Inc. d/b/a Kay Bates Steel Company, Cause No. 1322-CC01321, filed in the Twenty-Second Judicial Circuit Court of Missouri (City of St. Louis). Failure to comply with this order will result in lifting of the stay of entry of judgment and dismissal of this action. ( Response to Court due by 4/24/2015.) Signed by District Judge Carol E. Jackson on 3/23/15. (JAB)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
IN THE MATTER OF:
MASSMAN, TRAYLOR, ALBERICI, A
JOINT VENTURE, AND ITS JOINT
VENTURERS MASSMAN
CONSTRUCTION CO., TRAYLOR
BROS., INC., AND ALBERICI
CONSTRUCTORS, INC.,
for Exoneration from or Limitation
of Liability.

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Case No. 4:14-CV-1204-CEJ

MEMORANDUM AND ORDER
This matter is before the court on claimant’s motion to dismiss the complaint
and to lift the stay of proceedings entered on July 17, 2014. Also before the court
is claimant’s motion to increase the limitation fund. The issues are fully briefed.
I.

Background

Petitioners bring this action for exoneration from or limitation of liability
pursuant to 46 U.S.C. §§ 30501–12. The petitioners are joint venture Massman,
Traylor, Alberici and its members (collectively referred to as “MTA”), who were
involved in constructing a bridge over the Mississippi River near St. Louis, Missouri.
At all relevant times, MTA was the owner of Barge MCC 467.
Claimant Jennifer Seyler was employed by a contractor to work on MTA’s
bridge construction project. On March 19, 2012, Seyler was working on the barge
when she fell from a ladder and was injured. Seyler brought suit against MTA in
the Circuit Court of the City of St. Louis, alleging that MTA knew the barge was
unsafe and unseaworthy.

In the state court action, Seyler asserts a negligence

claim and a claim under the Jones Act, 46 U.S.C. § 30104. MTA denies liability and
contends that the Jones Act is inapplicable because Seyler was not MTA’s employee.

After the state court lawsuit was filed, MTA brought this action to limit any
liability to Seyler to the value of the barge, which they claim is $275,000. Pursuant
to 46 U.S.C. § 30511(b) and Fed. R. Civ. P. Supp. R. F(1), MTA filed a Letter of
Undertaking in which MTA’s insurer states that it agrees to pay up to $275,000 plus
interest if Seyler succeeds on her claims, but “strictly subject to the terms,
conditions, and limits of [MTA’s] insurance policy.” [Doc. #6-1, at 2] On July 17,
2014, the court entered an order approving the barge valuation of $275,000 and
staying the state court case pending final disposition of the instant action. [Doc.
#9]
Seyler has filed a stipulation conceding that all issues related to limitation of
liability are to be determined by the district court and consenting to waive any
claim of res judicata relevant to the issue of limitation of liability. She also agrees
that she will not seek to enforce against MTA any judgment that may be entered in
her favor or in favor or any other party in excess of the limitation fund as
determined by the district court. Seyler contends, however, that the value of the
barge is more than $275,000 and she asks the court to order an independent
appraisal. She also seeks to increase MTA’s potential liability up to the value of all
the vessels that were involved in the bridge construction project on the day of the
accident.

Moreover, Seyler disputes that MTA’s letter of undertaking satisfies 46

U.S.C. § 30511(b) and Fed. R. Civ. P. Supp. R. F(1) because (1) MTA did not
provide security until twelve days after it filed the complaint and (2) the insurer
reserved the right to refuse payment based on the terms and conditions of MTA’s
insurance policy.
II.

Discussion

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A. Stay of state court proceedings
“While 28 U.S.C. § 1333(1) does grant to the federal district courts exclusive
jurisdiction over suits brought pursuant to the Limitation Act . . . the same statute
also ‘sav[es] to suitors in all cases all other remedies to which they are entitled.’”
Riverway Harbor Serv., St. Louis, Inc. v. Bridge & Crane Inspection, Inc., 263 F.3d
786, 791 (8th Cir. 2001) (quoting 28 U.S.C. § 1333(1)). Hence, “two jurisdictional
possibilities” are presented: “shipowners desire exclusive federal jurisdiction to limit
their liability and avoid encountering a jury trial, and claimants seek ‘other
remedies’ such as jury trials in state court.” Id. (citing cases).
The Eighth Circuit has recognized that “[i]n two kinds of limitation cases, the
federal courts have permitted claimants to pursue their remedies in a forum of their
own choosing.” Universal Towing v. Barrale, 595 F.2d 414, 418 (8th Cir. 1979).
The first type of case is one in which the limitation fund exceeds the total of all
claims. Id. (citing cases). The second type of case is one in which “there is only
one claim which exceeds the value of the fund.”

Id. (citing cases).

In that

situation, “a claimant may pursue his common-law remedies in state court provided
he files a stipulation in the district court which concedes that all questions of
limitation of liability are reserved for the admiralty court.” Id. at 419 (citing cases).
Here, Seyler is the only claimant, so the single claim exception applies. When one
of the two exceptions applies, “it is an abuse of the court’s discretion to fail to
dissolve the injunction against other legal proceedings, and thus deprive a claimant
of his choice of forum.” Valley Line Co. v. Ryan, 771 F.2d 366, 373 (8th Cir. 1985).
Thus, if Seyler’s stipulation is adequate, the court must lift the stay.

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A claimant’s stipulation is adequate if it includes (1) an acknowledgment that
the district court has exclusive jurisdiction to determine all issues relating to the
shipowner’s right to limit its liability, including determination of the value of the
limitation fund and (2) a waiver of any right to claim res judicata based on a
judgment from another forum. See Magnolia Marine Transp. Co. v. LaPlace Towing
Corp., 964 F.2d 1571, 1575 (5th Cir. 1992) (citing cases); Valley Line, 771 F.2d at
373 & n.3 (citing cases); see also Riverway Harbor Serv., 263 F.3d at 792.
MTA argues that Seyler’s stipulation is inadequate because she does not
agree to forego collecting from putative co-defendants or third parties who, in turn,
might seek contribution from MTA in excess of the liability fund.

But Seyler has

stipulated that she will not enforce any judgment against MTA in excess of the
liability fund, even if that judgment is rendered against a third party and owed to
her from MTA on the third party’s behalf.

Seyler, of course, cannot bind third

parties with her stipulations, and neither 46 U.S.C. § 30511(b) or Fed. R. Civ. P.
Supp. R. F(1) require her to do so.
MTA next argues that the stipulation is inadequate because Seyler disputes
the value of the barge and whether the value of other vessels should be taken into
account in determining the amount of the limitation fund.

MTA’s argument is

unpersuasive, as Seyler has stipulated that the district court has sole authority to
determine whether MTA qualifies for limited liability and, if so, in what amount.
Seyler need not concede that MTA’s proposed limit of $275,000 is correct in order
for her to proceed in state court on the question of whether MTA is liable at all.
Further, the court will enter an order enjoining Seyler from collecting on any state

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court

judgment

until

this

case

is

concluded

and

thereby

address

MTA’s

apprehension that Seyler could collect more than the amount in the limitation fund.
In the stipulation, Seyler agrees not to seek any judgment or ruling as to
MTA’s right to limitation of liability “in any state court or federal court in which a
jury trial has been demanded.” (emphasis added). [Doc. #15, ¶ 2]

MTA argues

that because this waiver is limited to proceedings in which a jury trial has been
demanded, the stipulation is inadequate.

However, elsewhere in the stipulation

Seyler concedes that MTA has “the right to litigate all issues relating to limitation of
liability” in the district court. [Doc. #15, ¶ 1]

That right cannot diminished by

Seyler’s election of a jury trial or a bench trial in the state court proceeding. See In
re Walsh Const. Co., 4:13-CV-2526-HEA, 2014 WL 2956557, at *4 (E.D. Mo. Aug.
13, 2014) (addressing the same concern and deciding that the stipulation was
adequate); In re Massman, 4:12-CV-01665-JCH, 2013 WL 718885 (E.D. Mo. Feb.
27, 2013)(substantially similar stipulation found to be adequate).
Finally, MTA disputes the sufficiency of the stipulation because Seyler does
not consent to waive a present claim of res judicata but only a future claim. That is
a distinction without a difference.

Here, the state court proceeding has not

concluded, so Seyler’s consent to waive any res judicata effect of that proceeding
operates as a complete, present waiver.

The court finds that MTA is adequately

protected by Seyler’s consent to waive any res judicata claims relevant to the issue
of limitation of liability.
For the reasons set out above, the court finds that Seyler’s stipulation is
adequate.

Consequently, the court will lift the stay enjoining the state court

proceedings.

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B. The Limitation Fund
Pursuant to Fed. R. Civ. P. Supp. R. F(7), Seyler seeks an independent
appraisal of the barge, which she claims has been undervalued by MTA. She also
contends that the limitation fund should be increased, based on the “flotilla
doctrine,” to include the combined value of all vessels engaged in the bridge
construction project.

See generally Sacramento Navigation Co. v. Salz, 273 U.S.

326 (1927); Liverpool, Brazil, & River Plate Steam Navigation Co. v. Brooklyn E.
Dist. Terminal, 251 U.S. 48 (1919); Standard Dredging Co. v. Kristiansen, 67 F.2d
548, 551 (2d Cir. 1933) (cases establishing the flotilla doctrine).

“The better

procedure as to [an] increase in the limitation fund is to wait on the conclusion of
the limitation action, and to increase the security if the owner is found entitled to
limitation and the limitation fund is inadequate.”

World Tanker Carriers Corp. v.

M/V Ya Mawlaya, 94-4190, 95-0396, 95-0511, 95-1151, 95-3295, 1996 WL 20874,
at *3 (E.D. La. Jan. 18, 1996), rev’d on other grounds, 99 F.3d 717 (5th Cir. 1996)
(citations omitted); see also In re Massman, 2013 WL 718885. Because Seyler’s
apprehensions about the size of the limitation fund may be rendered moot if she
loses her state court suit or wins a judgment of less than $275,000, it would be
premature to address the merits of her arguments to increase the fund.
Accordingly, the Court denies without prejudice Seyler’s motion for an appraisal of
the barge and to increase the limitation fund.
C. The Letter of Undertaking
Seyler contends that the Letter of Undertaking from MTA’s insurer is not
adequate security under 46 U.S.C. § 30511(b) and Fed. R. Civ. P. Supp. R. F(1).
The statute gives the owner of a vessel seeking to limit its liability the option to

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either: (1) deposit with the court “an amount equal to the value of the owner’s
interest in the vessel and pending freight, or approved security; and [] an amount,
or approved security, that the court may fix from time to time as necessary”; or (2)
transfer to a court-appointed trustee “the owner’s interest in the vessel and
pending freight; and [] an amount, or approved security, that the court may fix
from time to time as necessary . . . .” 46 U.S.C. § 30511(b). Supplemental Rule
F(1) mirrors § 30511(b)’s requirements and adds that an owner “shall also give
security for costs and, if the [owner] elects to give security, for interest at the rate
of 6 percent per annum from the date of the security.”
MTA elected to submit security in the form of the Letter of Undertaking. The
letter, however, contains two limitations on the insurer’s obligation to pay any
judgment obtained by Seyler. First, the insurer agrees to pay up to $275,000 plus
interest “in accordance with and strictly subject to the terms, conditions, and limits
of its insurance policy . . . .”

[Doc. #6-1, at 2]

Second, the insurer is not

“responsible for payments in excess of the available limits of its respective
insurance policy.”

Id.

Thus, the insurer has not guaranteed without reservation

that it will satisfy a judgment against MTA.

Rather, its obligation to pay any

judgment arises from and is limited by the terms and conditions of an insurance
policy that is not before the court.

Continental’s letter is, therefore, not an

unreserved guarantee of payment and is not adequate security.

MTA will be

required to submit adequate security or risk dismissal of the complaint.
Because the court finds the Letter of Understanding to be inadequate
security, it is unnecessary to address Seyler’s alternative argument regarding the
timeliness of the letter.

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D. Motion to dismiss
Seyler moves to dismiss this action on the grounds that she has the right to
a jury trial in the state court and that her injury was caused by MTA’s negligence
and the unseaworthiness of its barge. Because the stay will be lifted, Seyler will be
allowed to proceed with her negligence claim in the state court. Her assertion that
she is entitled to prevail is not only unsupported by any facts but is also premature.
*****
For the reasons discussed above,
IT IS HEREBY ORDERED that claimant’s motion to dismiss [Doc. #12] is
denied without prejudice.
IT IS FURTHER ORDERED that claimant’s motion to dissolve stay and
injunction [Doc. #16] is granted.
IT IS FURTHER ORDERED that the stay and injunction entered on July 17,
2014 is dissolved to permit claimant to proceed with the action styled Jennifer
Seyler v. M.T.C. Construction, Inc. d/b/a Kay Bates Steel Company, Cause No.
1322-CC01321, filed in the Twenty-Second Judicial Circuit Court of Missouri (City of
St. Louis).
IT IS FURTHER ORDERED that a stay of entry of judgment and
enforcement of recovery in any proceeding pending final judgment in this limitation
proceeding is entered.
IT IS FURTHER ORDERED that claimant’s motion to lift stay and injunction
[Doc. #15] is moot.
IT IS FURTHER ORDERED that claimant’s motion to increase the limitation
fund [Doc. #13] is denied without prejudice.

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IT IS FURTHER ORDERED that petitioners shall have until April 24, 2015,
to file with the Clerk of Court an approved corporate surety bond or other security
guaranteeing, without reservation, the satisfaction of a judgment up to the
maximum amount of $275,000 that may be entered in favor of claimant and
against petitioners in the action styled Jennifer Seyler v. M.T.C. Construction, Inc.
d/b/a Kay Bates Steel Company, Cause No. 1322-CC01321, filed in the TwentySecond Judicial Circuit Court of Missouri (City of St. Louis). Failure to comply with
this order will result in lifting of the stay of entry of judgment and dismissal of this
action.

CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE
Dated this 23rd day of March, 2015.

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