In the Matter of the Complaint of A.P. Franz, Jr., TRUSTEE, as owner, et al.

Filing 21

MEMORANDUM-DECISION and ORDER - That the Volks' 16 Motion to Dismiss is DENIED. That Buchanan shall increase the security given by $10,000 to reflect pending freight within fourteen (14) days of this order. That the parties shall contact Magistrate Judge Randolph F. Treece to schedule further proceedings in accordance with this order. Signed by Chief Judge Gary L. Sharpe on 3/17/2014. (jel, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
________________________________
IN THE MATTER OF THE
COMPLAINT OF A.P. FRANZ, JR.,
TRUSTEE, as owner, and
BUCHANAN MARINE, L.P., as
bareboat charterer of the Barge
1:13-cv-411
B-252 FOR EXONERATION FROM
(GLS/RFT)
OR LIMITATION OF LIABILITY.
________________________________
APPEARANCES:
OF COUNSEL:
FOR THE PLAINTIFFS:
Lyons & Flood, LLP
65 West 36th Street, 7th Floor
New York, NY 10018
FOR THE CLAIMANTS:
Wayne Volk and Karen Volk
Melley, Platania Law Firm
24 Closs Drive
Rhinebeck, NY 12572
Tilcon New York, Inc.
Cook, Netter Law Firm
P.O. Box 3939
85 Main Street
P.O. Box 3939
Kingston, NY 12402

EDWARD P. FLOOD, ESQ.

STEVEN M. MELLEY, ESQ.

ERIC M. KURTZ, ESQ.

Gary L. Sharpe
Chief Judge
MEMORANDUM-DECISION AND ORDER
I. Introduction

Plaintiffs A.P. Franz, Jr., Trustee, as owner, and Buchanan Marine,
L.P., as bareboat charterer (hereinafter collectively referred to as
“Buchanan”) of the Barge B-252 commenced this action pursuant to the
Limitation of Liability Act of 18511 seeking exoneration from or limitation of
liability. (Compl., Dkt. No. 1.) Pending is the motion to dismiss2 of
claimants Wayne Volk (“Volk”) and Karen Volk (hereinafter collectively
referred to as “the Volks”). (Dkt. No. 16.) For the reasons that follow, the
motion is denied.
II. Background

1

See 46 U.S.C. §§ 30501-30512.

2

The Volks’ notice of motion identifies Federal Rule of Civil
Procedure 12(b)(1), (6), and (7), Rule F(1) and (7) of the Supplemental
Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions, and
46 U.S.C. §§ 186, 3505(b) (presumably the Volks intended to cite
§ 30505(b)), 30505(a), and 30511(a) as the bases upon which they seek
relief. (Dkt. No. 16 at 1-2.) As clarified in their reply, the Volks specify
that their “motion is one to dismiss under Rule 12(b)(1) and 12(b)(6).”
(Dkt. No. 20 at 1.) Moreover, the Volks explain that, despite Buchanan’s
suggestion, (Dkt. No. 19 at 1, 1 n.2, 5), their motion “is not a summary
judgment motion per se,” and that “[i]t is the [c]ourt’s prerogative under the
Federal Rules to convert the motion to one under Rule 56,” (Dkt. No. 20 at
4-5). The court excludes from its consideration the matters outside the
pleadings presented by the Volks in support of their motion to dismiss for
failure to state a claim, and it declines to convert the Volks’ motion into
one seeking summary judgment under Rule 56. See Fed. R. Civ. P.
12(d).
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A.

Facts3
The Barge B-252 is owned by Franz, as trustee, and Buchanan

Marine has been, at all relevant times, the bareboat charterer of the vessel.
(Compl. ¶¶ 2, 3.) On October 16, 2012, the Volks commenced a state
court action against Buchanan Marine, alleging that Volk was injured while
aboard the vessel. (Id. ¶¶ 4-6; Dkt. No. 1, Attach. 2.) Volk’s injuries were
“not due to any fault, neglect, or want of care on the part of [Buchanan],
nor due to any unseaworthy condition of the Vessel, and occurred without
[Buchanan’s] privity or knowledge.” (Compl. ¶ 8.)
B.

Procedural History
Buchanan commenced this action on April 15, 2013. (See generally

Compl.) The court thereafter granted Buchanan’s motion to approve
security, enjoin suits, and direct issuance of notice. (Dkt. No. 4.) Claimant

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Consistent with the applicable standard of review, see infra Part III,
the facts are drawn from the complaint and presented in the light most
favorable to Buchanan. Moreover, with respect to the Volks’ 12(b)(1)
motion, the court is “permitted to rely on non-conclusory, non-hearsay
statements outside the pleadings, which . . . cannot [be] consider[ed]
under Rule 12(b)(6) unless they are incorporated within or integral to the
complaint.” M.E.S., Inc. v. Snell, 712 F.3d 666, 671 (2d Cir. 2013)
(internal citations omittied). The facts are recited with those standards in
mind.
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Tilcon New York, Inc. thereafter answered and asserted a claim, (Dkt. No.
6), as did the Volks, (Dkt. Nos. 12, 15). On July 17, 2013, Magistrate
Judge Randolph F. Treece granted the Volks permission to file a motion to
dismiss on the issues of timeliness and the court’s jurisdiction by August
16, 2013. (Dkt. No. 14.) Consistent with Judge Treece’s order, the Volks
filed the pending motion to dismiss. (Dkt. No. 16.) Discovery has not
commenced. (Dkt. No. 14.)
III. Standard of Review
The standards of review under Rules 12(b)(1) and 12(b)(6), which
are “substantively identical,” Lerner v. Fleet Bank, N.A., 318 F.3d 113, 128
(2d Cir. 2003), are well settled and will not be repeated. For a full
discussion of those standards, the parties are referred to the court’s
decisions in Unangst v. Evans Law Associates, P.C., 798 F. Supp. 2d 409,
410 (N.D.N.Y. 2011), and Ellis v. Cohen & Slamowitz, LLP, 701 F. Supp.
2d 215, 218 (N.D.N.Y. 2010), respectively.
IV. Discussion
The Volks seek dismissal for a host of reasons. (Dkt. No. 16, Attach.
1 at 3-14.) In arguments that the court largely agrees with, Buchanan
contends that the Volks’ motion should be denied in all respects; however,
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Buchanan concedes that the fund, see 46 U.S.C. § 30511(b), should be
increased $10,000 to reflect the pending freight on the Barge B-252 at the
time relevant to the Volks’ claim. (Dkt. No. 19 at 3-12 & 8 n.9.) Each of
the Volks’ assertions are considered below.
A.

Timeliness
In a somewhat jumbled argument, the Volks contend that this action

is untimely pursuant to 46 U.S.C. § 30511 and Rule F(1) of the
Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture
Actions because it was filed more than six months after they provided
written notice of claim to Buchanan. (Dkt. No. 16, Attach. 1 at 3-8.) The
Volks rely on three documents to support their argument. First, the Volks
point to Volk’s application for New York State Workers’ Compensation Law
benefits dated May 20, 2011; second, they cite a July 28, 2011 letter
submitted by counsel for Buchanan to the Workers’ Compensation Board
(WCB) related to Volk’s workers’ compensation claim; and, third, they
implicate a May 27, 2011 Form LS-202, otherwise known as the
“Employer’s First Report of Injury,” which pertains to a report of Volk’s
injury under the Longshore and Harbor Workers’ Compensation Act. (Dkt.
No. 16, Attach. 2 at 14-15, 26-28, 37.) The Volks contend that these
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documents demonstrate that they provided Buchanan with written notice of
claim—or, to use their words, “put the bull’s eye on Buchanan,” and made
it such that Buchanan “certainly knew that . . . Volk was probably going to
sue [them]”—and that the commencement of this action, on April 15, 2013,
was well beyond six months after such notice was provided, in violation of
46 U.S.C. § 30511(a). (Dkt. No. 16, Attach. 1 at 4-6.)
Here, because the Volks did not file a notice of claim of a kind
subject to limitation, and it is undisputed that the first time Buchanan
received such notice was when the Volks served it with summons and
complaint in the underlying state court action on November 27, 2012, the
action is timely. 46 U.S.C. § 30511(a) provides that an action by an owner
of a vessel for limitation of liability “must be brought within [six] months
after a claimant gives the owner written notice of a claim.” See Fed. R.
Civ. P. Supp. R. F(1) (providing a corollary to § 30511(a)). It is clear,
however, that “a notice which starts the running of the six months’ period
must be notice of a claim of a kind subject to limitation.” In re Spearin,
Preston & Burrows, Inc. (The Lavinia D. Luoma v. Spearin, Preston &
Burrows, Inc.), 190 F.2d 684, 686 (2d Cir. 1951). Knowledge of relevant
facts alone is not enough to constitute notice of claim. See In re
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Hutchinson (The Spare Time II), 28 F. Supp. 519, 519-20 (E.D.N.Y. 1938).
Volk’s claim for New York Workers’ Compensation Law benefits,
Buchanan’s July 28, 2011 letter to the WCB, and the May 27, 2011 Form
LS-202 were singularly and collectively insufficient to put Buchanan on
notice of a claim subject to limitation because those documents all related
to claims for workers’ compensation benefits. As one court has aptly
noted:
[a p]etitioner is hardly on notice that he had better act
when he is merely informed that the claimant will look
to him to fulfill his obligations under the Workmen’s
Compensation Laws, for petitioner knows that no
limitation of that claim can be had in any case.
Really, the notice which is thus given is very limited,
and petitioner can rightly feel that it would be a
useless procedure to set out to limit liability at that
point. Of course, the mere fact that a petitioner
knows that an accident has occurred and that
someone has a grievance against him is of no
significance. He must have effective written notice of
a claim before the time limitation starts to run against
him.
In re Am. M.A.R.C., Inc., 224 F. Supp. 573, 576 (S.D. Cal. 1963). Because
Buchanan had no basis to seek exoneration from or limitation of liability
until it was served with the state court action summons and complaint on
November 27, 2012, (Dkt. No. 16, Attach. 1 at 16), this action, filed less

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than six months later, (see generally Compl.), was timely commenced.
Accordingly, the branch of the Volks’ motion seeking dismissal under Rule
12(b)(1) is denied.
B.

Bareboat Charterer
The Volks seek dismissal on the basis that “[e]xcept for the reference

in the caption [of the complaint] that Buchanan Marine . . . is a bareboat
charterer of the B-252, the complaint fails to contain any such allegations
and thus fails to state a ground for which relief can be granted.” (Dkt. No.
16, Attach. 1 at 8.) As explained by Buchanan, (Dkt. No. 19 at 6), the
Volks are simply mistaken. Indeed, Buchanan plainly alleges that
Buchanan Marine “[a]t all relevant times . . . was the bareboat charterer of
the Vessel.” (Compl. ¶ 3.) At this stage of the proceedings, this allegation
is accepted as true and suffices to demonstrate that Buchanan Marine is
an “owner” within the meaning of 46 U.S.C. § 30511(a). See 46 U.S.C.
§ 30501. Accordingly, the Volks’ motion to dismiss for failure to state a
claim is denied with respect to this issue.
C.

“Privity or Knowledge”
The Volks next assert that Buchanan “cannot demonstrate that they

lack privity or knowledge of the unsafe condition of the barges which were
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under the control of Buchanan Marine.” (Dkt. No. 16, Attach. 1 at 8-12.)
This argument relies on a host of evidence that is outside of the pleadings,
including, among other things, photographs and an expert’s affidavit. (Id.)
The Volks’ motion with respect to “privity or knowledge” is denied.
“Whether a vessel owner is entitled to limit its liability requires a
two-step analysis. First, the court must determine what acts of negligence
. . . caused the accident. Second, the court must determine whether the
ship owner had knowledge or privity of those same acts of negligence.”
Otal Invs. Ltd. v. M/V Clary, 673 F.3d 108, 115 (2d Cir. 2012) (internal
quotation marks and citations omitted); see 46 U.S.C. § 30505(b)
(providing for limitation of liability for an owner of a vessel when some
injury occurs “without the privity or knowledge of the owner”). Little
discussion is warranted here. Bearing in mind that the Volks have moved
to dismiss for failure to state a claim, Buchanan’s allegation that the
incident in question “occurred without [their] privity or knowledge,” (Compl.
¶ 8), is sufficient to defeat the motion, see In re Weeks Marine, Inc., Civil
Action No. 10-1794, 2011 WL 3273611, at *4 (E.D. Pa. July 29, 2011).
D.

Flotilla Doctrine
The Volks also assert that dismissal is warranted under the “Flotilla
9

Doctrine,” or, “at the very least,” that doctrine requires an increase in the
security given by Buchanan. (Dkt. No. 16, Attach. 1 at 12-13.) So far as
their alternative argument is concerned, the Volks argue, without any
citation to legal or factual authority, that “the court must require the
additional disclosure of the number and value of all 200 of [Buchanan’s]
barges, all of the 5 tugboats and the value of the freight, i.e., loads of many
many tons of quarried, mined materials on all the vessels, in the
aggregate.” (Id.) To this contention, Buchanan responds that the flotilla
doctrine is not applicable and the Second Circuit has “specifically rejected”
the kind of argument made by the Volks; Buchanan nonetheless concedes
that the fund should be increased by $10,000, the value of the pending
freight on the Barge B-252. (Dkt. No. 19 at 8-9.) The court rejects the
Volks’ arguments. For reasons explained below, while the flotilla doctrine
could have some application here, the factual record is insufficient at this
juncture—given the procedural posture of the case—to support the relief
sought by the Volks.
The flotilla doctrine or flotilla rule, as it is sometimes called, is an
apparent creation of the revered Judge Learned Hand. See Standard
Dredging Co. v. Kristiansen, 67 F.2d 548 (2d Cir. 1933). Generally
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speaking, the flotilla doctrine, if applicable, requires that the owner of a
vessel deposit in the limitation fund its interest in an entire flotilla of vessels
plus pending freight, as opposed to the default rule that only the owner’s
interest in the offending vessel plus pending freight be deposited. See 2
Thomas J. Schoenbaum, Admiralty & Maritime Law § 15-7 (5th ed. 2011);
see also 46 U.S.C. § 30511(b)(1)(A). In Kristiansen, Judge Hand
explained that, in an action for limitation, when the vessel owner and
injured party are in a master-servant relationship, or some other
consensual relationship, “the owner must surrender all those vessels which
share in the execution of the venture.” Id. at 551; see id. at 550. That
decision, which has been the subject of some harsh criticism, has also
generated confusion about the application of the rule. See 2 Schoenbaum
§ 15-7 n.13 (explaining that Kristiansen suffered “from an erroneous
reading of” Sacramento Nav. Co. v. Salz, 273 U.S. 326 (1927), and has
“led to an erroneous and highly misleading distinction between ‘pure tort
cases’ and ‘consensual relationship’ cases”).
Not long after Kristiansen, the Second Circuit made clear that the
scope of the flotilla rule was not so broad “as to mean that all the vessels
used successively in performing a contract are to be deemed collectively
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one vessel for purposes of surrender in limitation of liability.” The George
W. Pratt, 76 F.2d 902, 903 (2d Cir. 1935). The Court explained “that the
vessels to be surrendered are those devoted to performance of the
contract at the particular time when the fault which causes the loss is
committed.” Id. A subsequent Second Circuit case, also authored by
Judge Hand, hints that Kristiansen was flawed in drawing a distinction
between an owner’s relationship with the claimant, but nonetheless upheld
a district court’s application of the flotilla rule where there was a contractual
obligation between owner and claimant and the vessels at issue “were
necessary to the performance of their owner’s contract with [a third party].”
In re U.S. Dredging Corp. (U.S. Dredging Corp. v. Krohmer), 264 F.2d 339,
341 (2d Cir. 1959) (“As a new question it is hard to see why the
shipowner’s liability should be broader when it presupposed a consensual
relation with the claimant than when it rests upon the invasion of the
interest of a person with whom the owner has had no preceding relation.”).
Buchanan relies upon Murray v. New York Central Railroad
Company, 287 F.2d 152, 154-55 (2d Cir. 1961), in support of its contention
that the Second Circuit has “specifically rejected” the argument advanced
by the Volks. (Dkt. No. 19 at 9.) Murray involved the movement of a single
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barge from one slip to another by a single tug; during the maneuver, the
two vessels violently collided and threw the injured party into the Hudson
River. See 287 F.2d at 152-53. The court held “that only the tug and
barge involved in the accident were required to be surrendered” despite the
injured seaman’s contention that the entire maritime unit, all of the tugs
and barges upon which he was carried, or, at least, the barges in the area
of the collision should have been surrendered. Id. at 154-55. The court
also specifically acknowledged that the factual scenario in U.S. Dredging,
which resulted in the surrender of six vessels in a flotilla, “b[ore] no
resemblance to” the facts of Murray. Id. at 155.
Here, having outlined the basic history and parameters of the flotilla
rule, there is no basis to require the surrender of Buchanan’s entire fleet
based upon the arguments raised by the Volks. See The George W. Pratt,
76 F.2d at 903. That is not to say, however, that the flotilla rule is
necessarily inapplicable. Given the motion by which this argument is
raised—dismissal for failure to state a claim—the reality is that facts are
not now properly before the court such that it can make a determination as
to the applicability of the flotilla doctrine. For that reason, the motion to
dismiss is denied.
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E.

Home Port Doctrine
Finally, in two sentences, the Volks argue, without explaining why or

how, that “the home port doctrine requires dismissal.” (Dkt. No. 16, Attach.
1 at 13.) Buchanan retorts that there is no such doctrine in the context of
limitation actions. (Dkt. No. 19 at 7.) As explained below, the Volks’
motion is denied as to this issue.
Two cases are cited by the Volks in support of their conclusion that
the home port doctrine mandates dismissal: Haney v. Miller’s Launch, Inc.,
773 F. Supp. 2d 280 (E.D.N.Y. 2010), and In re J.R. Nicholls, LLC, Civil
Action No. H-10-449, 2012 WL 1802588 (S.D. Tex. May 17, 2012). (Dkt.
No. 16, Attach. 1 at 13.) In passing, Haney expresses its doubts about
whether limitation ought to be permissible where the policy underlying
limitation actions—“to encourage investment in risky, long sea
voyages”—is absent because the vessel at issue “meander[ed] within . . .
sight of its home port.” 773 F. Supp. 2d at 289-90. J.R. Nicholls quotes
Haney at length and concludes that limitation was not warranted where a
vessel remained “within a few miles of its own dock” because “the purpose
of the Act would [not] be served by a limitation of liability, and, in any event,
the facts do not support limitation.” 2012 WL 1802588, at *5.
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Here, the Volks have failed to show that dismissal is required. Even
if there were binding precedent regarding what the Volks have called the
home port doctrine, which the court has not discovered nor have the Volks
provided, again the argument is constrained by the fact that it is raised
under Rule 12(b)(6). The complaint makes no reference to the relationship
between the Barge B-252 and its home port, nor do the Volks point to any
evidence, not even materials outside of the pleadings, that would support
the conclusion that B-252 remained within view of its home port. For these
reasons, the Volks’ motion is denied on this ground.
V. Conclusion
WHEREFORE, for the foregoing reasons, it is hereby
ORDERED that the Volks’ motion to dismiss (Dkt. No. 16) is
DENIED; and it is further
ORDERED that Buchanan shall increase the security given by
$10,000 to reflect pending freight within fourteen (14) days of this order;
and it is further
ORDERED that the parties shall contact Magistrate Judge Randolph
F. Treece to schedule further proceedings in accordance with this order;
and it is further
15

ORDERED that the Clerk provide a copy of this MemorandumDecision and Order to the parties.
IT IS SO ORDERED.
March 17, 2014
Albany, New York

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