Bald Head Island Transportation, Inc. et al

Filing 63

ORDER granting in part 55 Motion to Clarify the Court's Amended Scheduling Order. Counsel is reminded to read the order in its entirety for further information. Signed by US Magistrate Judge Robert B. Jones, Jr. on 12/23/2014. (Edwards, S.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
SOUTHERN DIVISION
IN ADMIRALTY
No. 7:14-CV-77-F
In the Matter of:

)
)
Bald Head Island Transportation, Inc.
)
("Owner"), Bald Head Island Limited
)
LLC ("Manager") and MN ADVENTURE, )
Official No. 916323, together with her
)
Engines, Tackle and Apparel for
)
Exoneration from or Limitation of Liability )

ORDER

This matter comes before the court on motion by Plaintiffs to clarify the court's amended
scheduling order. [DE-55]. Claimants have responded in opposition. [DE-58]. The matter is
ripe for a ruling and for the reasons stated below, the motion is allowed in part.

BACKGROUND
Plaintiffs, Bald Head Island Transportation, Inc., and Bald Head Island Limited LLC, as
the alleged owner and manager/owner pro hac vice of the vessel MN ADVENTURE,
respectively, filed a verified complaint seeking exoneration from or limitation of liability by
vessel owner in this admiralty action. [DE-l] ~~ 2, 4. 1 According to the complaint, on December
17, 2013, the passenger ferry MN ADVENTURE (the "Vessel") ran aground on a sandbar in the
Cape Fear River, North Carolina, southeast of marker 16 and Battery Island, during the course of
its 9:00 a.m. ferry run from Deep Point Marina, Southport, North Carolina, to the Village of Bald
Head Island, North Carolina (the "Voyage").

1

!d.~

5. Plaintiffs have alleged further that the

According to the complaint, Plaintiff Bald Head Island Transportation is a North
Carolina Corporation with its principal place of business in Brunswick County, North Carolina;
Bald Head Island Limited LLC is a Texas limited liability company with its principal place of
business in Brunswick County, North Carolina. [DE-l]~~ 2, 4.

Vessel sustained damage as a result of the Voyage, and that certain passengers and members of
the Vessel's crew have alleged injuries and damages proximately caused by the voyage.

!d.~~

6,

8. Plaintiffs instituted this action on April23, 2014, pursuant to 46 U.S.C. § 30501, et seq., Fed.
R. Civ. P. 9(h) and Rule F of the Supplemental Rules for Admiralty or Maritime Claims
("Supplemental Rules"), seeking exoneration from or limitation of liability of any claim or
damage arising from the Voyage. On April29, 2014, the district court approved as security for
the benefit of Claimants an Ad Interim Stipulation ("Stipulation") of not less than or equal to
Plaintiffs' interest in the Vessel and their pending freight in the amount of$500,000. [DE-9].
As part of its order, the court enjoined the commencement or further prosecution of any action
against Plaintiffs with respect to any claims for which Plaintiffs seek exoneration from and/or
limitation ofliability arising out of the incident alleged in the complaint. Id. On May 1, 2014,
the clerk of this court issued notice of Plaintiffs' complaint pursuant to 46 U.S.C. § 30501 et

seq., directing all persons having claims for loss, destruction or damage arising out ofthe Voyage
to file such claims on or before June 15, 2014 or be defaulted. [DE-11].
The court is unaware of any actions filed in other fora asserting claims arising from the
Voyage, and following the district court's injunction, five individuals ("Claimants") timely filed
answers to Plaintiffs' complaint, and asserted claims against Plaintiffs in this forum. In
particular, Claimants Strickland, Springmeier, Donecker and Scearce filed claims under
Supplemental Rule F(5), the maritime law of the United States and 28 U.S.C. § 1333,
purportedly reserving their rights to proceed in a forum of their choice outside the petition for

2

exoneration/limitation after those issues have been resolved. 2 Each of these Claimants is alleged
to have been a passenger aboard the vessel at the time of the Voyage and each asserts purported
causes of action of negligence and punitive damages. [DE-18]
[DE-25]

~~

49-56; [DE-29]

~~

~~

2, 28-34; [DE-23]

~~

2, 28-34;

2, 28-34. Claimant Cockerell has filed her claim pursuant to

Supplemental Rule F(5), the maritime laws of the United States, 28 U.S.C. § 1333, as well as the
Jones Act, 46 U.S.C. § 30104. [DE-20]

~ 1.

Cockerell alleges that at all relevant times she was a

seaman under the Jones Act acting as a crew-member and deck-hand aboard the Vessel. Id.

~

3.

Cockerell has purportedly reserved her right to proceed in the forum of her choice outside the
petition for exoneration/limitation after such issues have been resolved. Id.

~

4. Cockerell

asserts purported claims of negligence under the Jones Act, unseaworthiness, maintenance and
cure and punitive damages. !d.

~~

30-49. All Claimants admit to the admiralty and maritime

jurisdiction of the court for purposes of determining the exoneration/limitation action, but
specifically demand the right to a jury trial in a forum of their choice. [DE-35, 42, 43, 45, 46].
Furthermore, each Claimant disputes the sufficiency of the Stipulation and that Plaintiffs are
entitled to limitation or exoneration. [DE-35]; [DE-42] ~~ 11, 16; [DE-43] ~~ 11, 16; [DE-45] ~~
11, 16; [DE-46]

~~

11, 16. All Claimants reside in Brunswick County except Donecker who

resides in New Hanover County. [DE-29]

~

2; [DE-23]

~

2, [DE-18]

~

2; [DE-25]

~

2; DE-20]

~2.

In support of their claims, Claimants allege that Plaintiffs' senior management

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Claimant Scearce was dismissed from this action upon the court's approval of a
settlement agreement between Plaintiffs and Scearce which was unopposed by other Claimants
with the understanding that settlement with Scearce would not reduce the limitation fund. [DE62].
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encouraged and directed its captains to operate their vessels outside marked navigation channels
in order to shorten the distance and time required for the voyage, to reduce fuel and to make up
for late departures from the marina. [DE-18]
31-34; [DE-29]

~~31-34.

~~

11, 31-24; [DE-20]

~~

12-13, 46-49; [DE-23]

~~

According to Claimants, members ofPlaintiffs' management were

actually aboard the Vessel at the time of the Voyage allegedly condoning the captain's negligent
operation ofthe Vessel. See Cl.'s Brf. [DE-58] at 2 (citing Pl.'s Initial Discl. [DE-58-1]).
Claimants further describe Plaintiffs' purported policy of directing their captains to depart from
marked channels for reasons including "fuel savings [and] making up time, etc." !d. at 3 (citing
Ex. E. [DE-58-5]).
On July 25, 2014, the parties submitted their Joint Rule 26(f) Report ("Discovery Plan")
[DE-47] in which the parties agreed that the discovery and trial schedule should be bifurcated
into two phases: a liability phase (Phase I) and a damages phase (Phase II). !d. at 2. 3 On August
21, 2014, after having conferred with the parties, this court entered a scheduling order, adopting
the parties' bifurcation proposal. [DE-51]. In particular, the court's order stated:
As described by the parties in the Discovery Plan, this action will be bifurcated
into two phases, wherein the primary focus of Phase I will be issues related to
exoneration and limitation of liability under Rule F of the Supplemental Rules; in
the event there are parties remaining in this action at the conclusion of Phase II
and who proceed in this court, the focus of Phase II will be Claimants' respective
damages.

3

The parties also agreed in their Discovery Plan that all other issues raised by the
pleadings, except as noted elsewhere within the plan, including the nature, sum and quantum of
damages, medical issues, impairment, disability, losses, pain and suffering, lien rights will be
subject to discovery during Phase II. [DE-4 7] ~ 3(iv). The Discovery Plan provided also that the
parties reserved the right to seek leave of court to expand the scope of discovery conducted in
Phase I. !d.~ 3(v). The court's scheduling order did not disturb this portion of the parties
agreed-to plan. [DE-51] at 2.
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!d. at 1. On September 25, 2014, upon the parties' joint motion, certain dates in Phase I of the
scheduling order were modified without effecting the bifurcation of the issues as set out in the
scheduling order. [DE-54].
According to Plaintiffs' instant motion and Claimants' response, the parties disagree
whether, pursuant to the scheduling order, Plaintiffs' liability for punitive damages is an issue
that may be determined along with all issues of liability within Phase I before this court, or in
Phase II, either in this court or in the forum of Claimants' choice. [DE-55]. In other words, the
issue has been framed should the court's adjudication ofliability related to exoneration and
liability within Phase I of this lawsuit include determining Plaintiffs liability for punitive
damages.
DISCUSSION

The dispute between the parties results from the friction created by the nature of the
claims before the court. In re Hill, 935 F. Supp. 710, 711 (E.D.N.C. 1996). Plaintiffs bring their
petition in admiralty pursuant to the Limitation of Liability Act, 46 U.S.C. §§ 30501 et seq.
According to the Act, a vessel owner's liability for a personal injury claim may be limited to the
value of the vessel and its pending freight if the act or condition giving rise to the alleged injury
occurred without the privity or knowledge of the owner. !d.§ 30505(a)-(b). Once a limitation
action is filed, the district court must enjoin the prosecution of any claims subject to the
limitation action. Fed. R. Civ. P. Supplemental Rule F(3). Sitting in admiralty the court then
conducts a concursus, in which the court determines whether there was negligence and, if so,
whether it was without the privity and knowledge ofthe vessel owner. Hill, 935 F. Supp. at 711
(citing In re Great Lakes Dredge & Dock Co., 895 F. Supp. 604, 608 (S.D.N.Y. 1995)).

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Because no right to a jury trial exists in actions in admiralty and because the court has
enjoined claimants from prosecuting any state court action on their claims arising from the
Voyage, this procedure denies claimants their right to pursue their claims before a jury. 4 Id.
(citing Fitzgerald v. United States Lines Co., 374 U.S. 16,20 (1963)). This result necessarily
conflicts with 28 U.S.C. § 1333, providing that district courts shall have exclusive original
jurisdiction of"[a]ny civil case of admiralty or maritime jurisdiction, saving to suitors in all cases
all other remedies to which they are otherwise entitled." 28 U.S.C. § 1333(1).
As recognized by several courts, the Limitation of Liability Act was intended to be a
shield for vessel owners to limit liability for losses occasioned without privity or knowledge,
rather than a sword to deprive claimants of their common law rights. Wheeler v. Marine
Navigation Sulphur Carriers, Inc., 764 F.2d 1008, 1011 (4th Cir. 1985); In re Complaint of
Cameron Boat Rentals, Inc., 683 F. Supp. 577,582 n.6 (W.D. La. 1988) (citations omitted); see
also Pickle v. Char Lee Seafood, Inc., 174 F.3d 444, 449-50 (4th Cir. 1999) (remanding to the
district court with instructions, in the event that limitation is denied, to lift the stay and provide
claimants a choice to pursue their claims in the limitation action or revive their original actions
wherein they demanded jury trials).
It has been recognized under some circumstances, however, that the court in which the
limitation action is pending has equitable discretion in choosing the course of action where

4

Each claimant asserts that once the limitations action has concluded, if limitation is
denied, they wish to pursue claims in the forum of their choice and before a jury. There is no
dispute that Claimants are entitled a jury trial on their claims arising under North Carolina tort
law. Claimant Cockerell's admiralty claims of unseaworthiness and maintenance and cure
arising from the same nucleus of operative fact as her Jones Act claim may be heard before a
jury. See Hill, 935 F. Supp. at 712 n.3 (citations omitted).

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litigation arising out of the same mishap is ongoing in another court. See Cameron Boat Rentals,

Inc., 683 F. Supp. at 581 (collecting cases); In re Mississippi Limestone Corp., No. 4:09-CV00036-SA-DAS, 2010 WL 4174631, at *2 (N.D. Miss. Oct. 7, 2010). In Cameron, the district
court sitting in admiralty tried the limitation action having enjoined the claimants' suits pending
in another forum and, within the limitation action determined the viability of a punitive liability
claims. In noting its equitable discretion in choosing the course of action in the limitation action,
the court identified two situations where the failure to modify its injunction to permit the outside
actions to resume is an abuse of discretion:(!) where there is a single claimant and (2) where
multiple claimants are not competing because the limitation fund is adequate. 683 F. Supp. at
581. The court went on to recognize that "once limitation is denied it is up to the Claimants
rather than the court whether the proceedings will continue in place or the injunction will be
dissolved to permit resumption ofthe other action." !d. (citing Wheeler, 764 F.2d at 1101)). Yet
the court held that the scope of the limitation action may include a determination of punitive
liability. !d. In fact, the court opined that in the interest of judicial economy, some admiralty
courts may keep the suit, even after limitation is denied and that the court is within its discretion
to do so. Other factors to be considered by the court in deciding whether trial of liability would
encompass punitive liability include the preclusive effect of its proceedings on any jury rights the
parties may have. !d. at 582 n.6. The court should also consider "the likelihood that the same
witnesses would, to their inconvenience, be called upon to give the same testimony in another
court or be recalled for additional testimony in this court if all liability issues were not tried at
once." !d. Ultimately, the Cameron court denied limitation and exoneration of liability finding
negligence within the privity of the boat owners. !d. at 585. The court also found that Plaintiff's
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liability included punitive liability and that they should respond accordingly in an amount to be
determined by the court deciding damages. The court dissolved the injunction to permit
claimants to pursue their claims for damages including punitive damages filed elsewhere.
Applying these principles to the instant case, this court finds that the interests of judicial
economy weigh in favor of this court deciding whether Plaintiffs may be subject to punitive
liability as part of this court's overall determination ofliability, similar to that court's treatment
of the issue in Cameron. For one, the factual bases of Claimant's punitive liability appear similar
to that ofthe evidence of Plaintiffs' privity and knowledge. Moreover, there appears to be a
likelihood that witnesses will be called for the same or similar testimony in another court or
recalled here to this court if all liability issues are not tried at once. Finally, a determination on
whether Plaintiffs may be subject to punitive liability will have a preclusive effect on the issue
and thereby avoid the risk of inconsistent verdicts on the issue if Claimants were to pursue such
claims separately in other fora. See Hill, 935 F. Supp at 712. To the extent Claimant's argument
may be construed to mean that any ruling on punitive damages must be made by a jury, such
argument is unfounded. See Cl.s' Br. at 8 (citing N.C. Gen. Stat. § 1D-30). Rather, the court's
determination on punitive liability will be a legal determination of whether Claimants have
satisfied the elements to take the issue of punitive damages to a trier of fact. See e.g., Russ v.
Causey, 732 F. Supp. 2d 589, 609 (E.D.N.C. 2010) (finding plaintiffs had put forward sufficient
evidence of deputies' willful and wanton conduct to create a genuine issue of material fact
thereby allowing plaintiffs punitive damages claim under § 1D-15 to go forward to trier of fact);
George v. Greyhound Lines, Inc., 210 N.C. App. 388, 393, 708 S.E.2d 201, 205 (2011) (trial
court's finding that plaintiff failed to prove willful or wanton conduct by clear and convincing
8

evidence was implicit in court's finding that plaintiffhad failed to make prima facie case for an
award of punitive damages). Claimants' jury rights are therefore not infringed. Going forward,
in the event limitation is allowed, this court shall determine Claimants' damages consistent with
the Limitation Act. However, if limitation is denied, the court shall lift the injunction and permit
Claimants' remaining issues to be determined in the forum of their choice. Accordingly, to the
extent Claimants show that Plaintiffs are subject to punitive liability, Claimants will be entitled
to have a jury determine whether to award punitive damages and the amount of any such
damages in the forum of their choice.

CONCLUSION
For the reasons stated above the Plaintiffs' motion is allowed in part.
So ordered, the 23rd day of December 2014.

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