In the Matter of the Complaint of Lyon Shipyard, Inc., as Owner of the Barge RIG ONE with mounted Crawler Crane Manitowoc 4000W for Exoneration from or Limitation of Liability

Filing 21

MEMORANDUM OPINION denying 15 Motion to Enter Stipulation and to Lift Injunction and Stay of Proceedings. The parties are DIRECTED to contact the Calendar Clerk within seven (7) days of entry of this Memorandum Opinion to set a Scheduling Conference pursuant to Federal Rule of Civil Procedure 16(b). A copy of this Memorandum Opinion was forwarded to all counsel of record on 3/9/15. Signed by Chief District Judge Rebecca Beach Smith and filed on 3/9/15. (tbro)

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FILED UNITED STATES DISTRICT EASTERN DISTRICT COURT MAR -9 2015 OF VIRGINIA Norfolk Division IN THE MATTER OF THE LYON SHIPYARD, THE BARGE CRAWLER INC., RIG CRANE EXONERATION COMPLAINT ONE AS WITH OR i QUIRT OF OWNER OF ACTION MOUNTED MANITOWOC FROM CI I UK, U :•;. I NO. 2:14cv422 4 0 00W FOR LIMITATION OF LIABILITY MEMORANDUM This Jr.'s Lift matter ("Claimant Injunction October 29, comes before Monroe") and 2014. ECF the Motion Stay of No. OPINION court to on Enter Proceedings 15. This William H. Monroe, Stipulation ("Motion"), matter has and to filed on been fully briefed, and a hearing was held on February 20, 2015. The resolution of this Motion may ultimately determine whether Claimant Monroe's wrongful death suit will be litigated in state court or federal court. See Pickle v. Char Lee Seafood, Inc. , 174 omitted) F.3d ("If, 444, 451 however, the (4th Cir. district 1999) (internal court denies citations limitation of liability, the reason for concursus1 disappears .... With the reason for concursus and restraint of other proceedings removed, no reason would remain to deprive the claimants of their choice A concursus occurs when all claims are marshaled "to ensure the prompt and economical disposition of controversies in which there are often a multitude of claimants." Maryland Cas. Co. v. Cushing, 347 U.S. 409, 415 (1954). This procedure is at the "heart" of the limitation of liability system. Id. at 414. of forum."). Claimant Monroe wants this court to lift its injunction and allow the wrongful death case to proceed in state court, while Lyon Shipyard, Inc. ("Lyon") would litigate the wrongful death suit in federal court. Dredge and Dock, LLC ("Great Lakes"), which has briefings or stipulations related to this issue, issue to be litigated in this court, to remove the proceeding, case from state and through its to pointedly said wrongful death suit to that, federal Great Lakes not filed any would like the court representation to while proceed in to as evidenced by its attempt hearing on February 20, 2015. At that hearing, Lakes prefer in the an earlier court at the counsel for Great this court may allow the state court, its claims for loss of use and ongoing attorneys' fees have only been brought before this court, and that it has no intention of filing crossclaims in state court, as long as there is a pending limitation action before this court. I. FACTUAL AND PROCEDURAL HISTORY On April 16, 2014, Claimant Monroe, John Robert McCullen's estate, pursuant Workers' to 33 U.S.C. filed a wrongful death action § 905(b) Compensation Act as the Administrator of of the (the "LHWCA") Longshore and Harbor in the Circuit Court for the City of Norfolk, Virginia.2 The complaint seeks compensatory Although 28 U.S.C. § 1333(1) gives federal district courts exclusive jurisdiction over Ma]ny civil case of admiralty or 2 and punitive ($12,000,000) Lakes. damages jointly The decedent, totaling and twelve severally McCullen, million against Lyon dollars and Great was a machinist employed by Lyon who was killed while working on a dredge owned and operated by Great Lakes, the DODGE barge owned by Lyon, On May 19, ISLAND, Lyon filed On remove June 2, the 2014, case a Plea in state court claims against that the LHWCA precluded them. 16. collided with a to Great the Monroe's Mem. Lakes United filed States a Bar to case was June 27, 2014, case, assigned Lyon to filed Judge a Motion Supp. at 2, ECF No. Notice of District Raymond to dismiss it on the grounds A. Dismiss Removal Court Eastern District of Virginia. See Case No. 2:14cv264, The derrick the RIG ONE. 2014, Claimant Monroe's when it in for to the ECF No. 1. Jackson. the On federal on the same grounds that it raised in its state court Plea in Bar. Id. , ECF No. 10. Claimant Monroe then filed a Motion to Remand the case to state court on July 2, 2014. Id. , ECF No. 13. maritime jurisdiction," the savings to suitors clause in the same statute qualifies this exclusive jurisdiction by "saving to suitors in all cases other remedies to which they are otherwise entitled." 28 U.S.C. § 1333(a). This clause has been interpreted to "leave[] state courts competent to adjudicate maritime causes of action in proceedings in personam." Offshore Logistics, Inc. v. Tallentire, 477 U.S. 207, 222 (1986). Thus, state courts have concurrent jurisdiction over admiralty cases that can be pursued in personam in state court, although federal law applies because such suits remain admiralty cases. Wrecked, & Abandoned Vessel, Believed F.2d 525, 533 n.12 referred to as the (5th Cir. 1991). "reverse-Erie" Zych to be This doctrine. v. Unidentified, the Seabird, 941 requirement has been Id. On July 8, 2014, Motion to Jackson Claimant Monroe Dismiss. issued a federal case to Id. , ECF No. Memorandum filed an Opposition to 16. On Opinion Lyon's August 5, 2014, and Order the state court for lack of Judge remanding the complete diversity and rendering Lyon's Motion to Dismiss moot. Id., ECF No. 26. On August this court, liability Rule 19, 2014, in which it pursuant seeks 46 filed a limitation complaint exoneration from or U.S.C. in limitation of §§ 3 0501 et seq. Procedure Supplemental Rule of Civil to Lyon and F. Compl. at Federal 1, ECF No. 1. In its limitation complaint, Lyon submitted an ad interim stipulation for $1,200,000, plus Supplemental F, 2014, Lyon and Great Pursuant value $1,000 Rule September 10, No. 6. the of for this the vessel costs. court Id. in at issued the sum of Pursuant to injunction on 5. an staying the state court proceeding against Lakes. Order to this for Supp. injunction Rule F Inj . at Order, the 3, ECF ad interim stipulation of the value of Lyon's interest in the barge RIG ONE with mounted tackle, Crawler Crane appurtenances, Manitowoc fittings and 4 000W freight set to be $1,200,000. Id.3 On the same day, Notice of Liability, Complaint for instructing Exoneration all persons from to and all of its then pending, was the court issued a or file Limitation any claims of by 3 The Order further stated that any party may move the court to increase Supp. or decrease the amount Rule F Inj. at 2. of the stipulation. Order for October 15, 2014, and, if they wished to contest Lyon's right to exoneration from or limitation of to the from limitation complaint. or Limitation directed local Lyon to newspaper, of liability, Notice Liability publish of Compl. 1, ECF at notice in Order for Supp. The Rule parties filed answers No. F Inj. and for an answer Exoneration 7. The court Virginian-Pilot, direction Lyon fully complied. Aff. of Pub., Two to file at 2, the with which ECF No. 14. claims in the limitation action. On September 25, 2014, Claimant Monroe filed his Answer to Complaint in the and Claim, which he concedes that damages of $12,000,000 being sought "will exceed the fund" of $1,200,000. Great Lakes Complaint Great dredge ("Claimant and Lakes Claim seeks DODGE attorneys' fees Lakes' Lakes' Claim Lakes") filed October 15, 2014. $161,000 as in damages well incurred as in its ECF from 8, No. loss action, ECF No. Answer 12. of indemnification this limitation to the Claimant use for 10. of the costs and as of which, was a claimed total of approximately $50,000. Answer is Great on ISLAND, October 15, 2014, Great Monroe's Answer & Claim at the & Claim at $211,000, plus 5-6. Thus, at this any costs and time, attorney's Great fees incurred during the pendency of the McCullen suit. Id.4 Great court. Lakes has not filed any cross-claims in Virginia state On October Motion, ECF Stip. , ECF November 4, 29, No. 15, No. 2014, 2014, Claimant with 15-1. an Monroe attached The filed the stipulation. stipulation was instant Original amended and sets forth: 1) he will not challenge Lyon's right to seek a determination of the privilege of limitation of liability before this court after a trial on the merits in state court, although he specifically reserves the right to deny and contest all allegations made in the complaint for limitation of liability; 2) he will not enforce any judgment obtained in any tribunal in excess of an amount equal to or less than the limitation court, the amount of action the has limitation been fund until heard by this and in no event will he seek to enforce an excess judgment achieved in any tribunal against Lyon or any other liable parties who may make cross-claims or claims of any kind against Lyon if it will expose Lyon to liability in excess of the limitation fund pending the adjudication by this court of the issue of limitation of liability; 3) this court has exclusive and continuing jurisdiction relating to the limitation of liability issue, and that he waives all claims of res judicata regarding Lyon's right to limit liability based on any judgment obtained in either state court or any other tribunal, and that he will not seek a judgment on the issue of Lyon's right to limitation of liability before any other tribunal; 4) the value of Lyon's interest in the barge RIG ONE to be $1,200,000, but reserving the right to move for an increase in value pursuant to Rule F if the limitation of liability issue is litigated before this court; 5) if and/or Lyon is held attorneys' responsible fees and for costs loss against of use a co- on liable defendant or party seeking indemnification attorneys' fees and costs, that such claim will have priority over his own; for 6) that the amount of his claim for damages exceeds the ad interim stipulation for Lyon's interest in the barge RIG ONE, and that the limitation fund in this proceeding is inadequate to compensate him for the injuries and damages in this case; and 7) he will immediately supplement, modify, or amend his stipulation to cure any deficiencies and to adequately protect Lyon from the risk of any excess judgment or impairment to its right to seek limitation of liability exclusively before this court. Am. Stip. 1-7, ECF No. 17;5 see also Original Stip. 1-6.6 On November 4, 2 014, Claimant Monroe submitted a Memorandum in Support of his Motion to Lift the Injunction Support") , arguing that Lyon is adequately ("Memorandum in protected by his stipulations against a finding of liability greater than that of the limitation fund of $1,200,000. Mem. Supp. at 4, ECF No. 16. On November 18, 2014, Opposition to Motion to and Stay of Proceedings" it that argues limitation 5 Despite a its "Memorandum claimant with as Monroe's in a insufficient a "block amended in Injunction ("Memorandum in Opposition"), formatted paraphrase of Claimant three pages long. filed Enter Stipulations and Lift single proceeding being Lyon in which multiple-claimant funds quote," may this stipulation, not is which a is 6 The only difference between the original stipulation and the amended stipulation amended stipulation. is the inclusion of Stipulation 4 in the unilaterally draft proceedings. Mem. stipulations Opp'n at his Reply Memorandum to lift 3, ECF No. ("Reply") a 18. stay of state Claimant Monroe filed on November 21, 2014, asserting that the court may lift the stay because the shipowner, adequately protected by his court stipulations despite the Lyon, is fact that Claimant Great Lakes has not made stipulations of its own. Reply at 5, ECF No. 19. Claimant Great Lakes has not submitted any filings beyond its Claim in the instant proceeding. The court held February 20, 2 015, a hearing ECF No. 20, after on which the it Motion took the on matter under review. II. " [D]istrict under courts STANDARD have the Limitation Act, OF REVIEW jurisdiction over actions arising and they have discretion to stay or dismiss Limitation Act proceedings to allow a suitor to pursue his claims in state court." Lewis v. Lewis & Clark Marine, 531 U.S. 438, 454 (2001) . If the court concludes Inc., that the shipowner's right to limitation will not be adequately protected if the stay is lifted, the merits limitation. and Id. the court decide both However, if limitation is protected, should proceed to adjudicate the the issues of shipowner's liability right to the decision to grant or dissolve and seek the injunction and stay of state court proceedings is one within the court's discretion. Id. 8 III. The key issue ANALYSIS here is whether Claimant Monroe's stipulations, in particular Stipulation 5, which gives any claim of Great Lakes priority over Monroe's Claim, are sufficient to protect Lyon. Am. Stip. 5. The court finds that they are not. Shipowners facing potential liability from an accident may file a complaint in federal court seeking protection under the Limitation of Liability Act, in relevant part, vessel . . . intended to not protect right 531 U.S. to the at 446. Federal Rule of Civil value of § 30505(a).7 Thus, shipowners limitation by of Liability). exceed 46 U.S.C. liability may exceed the Lewis, §§ 30501 et seq., which, states that "the liability of the owner of a shall pending freight." 46 U.S.C. value of from cases the vessel the vessel this statute is in which and its their freight. Shipowners are allowed to protect their following the procedures enumerated Procedure Supplemental Rule F suitors" "[t]he in (Limitation Id. at 441. As the United States Supreme Court recognized in Lewis, Limitation of and Liability Act clause district of 28 is U.S.C. courts exclusive of the courts of shall in tension with the § 1333(1), have the States, which original of the "saving to provides that jurisdiction, . . . any civil case 7 However, the shipowner is only protected by this statute if the circumstances causing any injury or loss occurred "without privity or knowledge of the owner." 46 U.S.C. § 30505(b). the of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled." Id. at 444 (emphasis in original) "Thus, saving to the suitors concurrent jurisdiction of maritime claims." Id. (quoting 28 U.S.C. clause preserves § 1333(1)). remedies and the state courts over some admiralty and at 445. The tension between the savings to suitors clause and the Limitation of Liability Act is apparent, because one gives plaintiffs the right to including, in court, allows a as here, shipowner a to suit avail state itself of choose the their remedy, while federal the other courts to limit liability. Id. at 448. In proper order forum whether, if dissolved, liability district to to the resolve hear court protected, tension, case, a and district to determine court must the assess injunction against alternative proceedings were the would the this shipowner's be "right adequately determines to seek protected." that the Id. shipowner limitation at is then the injunction should be dissolved, federal court may nevertheless jurisdiction over shipowner's would not be it. Id. at If the adequately although the stay the limitation of action and retain right 4 51. of liability 453-54. If the adequately protected, then the district court must proceed to adjudicate, without a jury, the claims of liability. Id. at 448. 10 The Supreme shipowner's they are "where Court rights not. there stipulations] are The is in Lewis sufficiently shipowner's only a group of two examples protected, rights single are claimant and where two a where adequately protected [who made sufficient ... or where the total claims do not exceed the value of the limitation fund." shipowner's noted rights would claimants not Id. be at 451. On the other hand, adequately protected where cannot agree on appropriate a "a stipulations or there is uncertainty concerning the adequacy of the fund or the number of claims." single claimant, did not abuse Id. at 454. In Lewis, which involved only a the Supreme Court held that the district court its discretion in finding that the shipowner was adequately protected when the claimant stipulated that his claim would not exceed the res judicata with limitation fund, respect to he waived any defense of limitation of liability, and the district court stayed the limitation proceedings while retaining jurisdiction to act "if the state court proceedings jeopardized the rights vessel owner's under the Limitation that multiple Act." Id. at 453-54. It is generally accepted claimants transform their case into the functional equivalent of claim situation through the use of re Beiswenger 1996); Enters. Gorman v. Corp., Cerasia, 2 86 appropriate F.3d F.3d 519, 11 1032, 526 may a single stipulations. 1038 (3d Cir. In (11th Cir. 1993). In a case involving multiple these stipulations claimants, in order all to claimants must adequately shipowner's right to limit liability. Lewis, This Great case Lakes, involves has protect Lyon's argues that stipulation claims, its are claimants, entered right to into Claimant sufficient to of whom, Although Lakes adequately that proceedings may owner's Great not Lakes, be right the protect injunction lifted. to Id. at limitation 4 54 over Lyon, Monroe and be own plain without a stay not the his the of (holding will would particularly the Supreme Court makes it apparent that, stipulation by the Claimant Claimant priority to at 454. stipulations stipulations, Great protect 531 U.S. one any limitation. unilateral giving language of vessel not two agree state that "the adequately protected - where for example a group of claimants cannot agree on appropriate stipulations"). The Court extensive of Appeals experience in for the Fifth admiralty Circuit, law, has a court with that one held claimant's unilateral stipulations are not sufficient to lift an injunction and stay of state court proceedings when other claimants have not entered into stipulations of their own. Odeco Oil & Gas Co., Cir. 1996) . claimants' In Drilling Div. Odeco, claims take precedence for one v. Bonnette, claimant indemnification over any claim of 12 his 74 F.3d 671, stipulated of own. that defense Id. at 675 (5th his co- costs 673 would n.4. He also stipulated that he would not pursue any claim against these co-claimants that would expose the limitation plaintiff to any liability in excess of the ad interim 673. Despite these stipulations, co-claimants' that the failure shipowner claimants "ha[d] potential to file was only not stipulations protected Id. fund. Id. at the Fifth Circuit held that the partial liability." limitation their because control at of over 675. In the [the own meant stipulating shipowner's] other words, the stipulations made by one claimant would not protect against the non-stipulating defense the costs, co-claimants' which had the limitation fund. Id. variable potential (noting that attorneys' to the fees exceed the court was and value "not of in a position to predict the possible developments in the state court proceedings"). Thus, the rule in the Fifth Circuit is clear: "When the aggregate of the damages being sought by all claimants exceeds cannot that the value the concursus, unless proceed of all claimants adequately protects Towing Co., 42 F.3d 312, the actions enter shipowner." 316 (5th Cir. in into In state a court stipulation re Port Arthur 1995) . Other courts have recognized the necessity of all claimants entering into protective stipulations. F.3d Third 519, 527-28 Circuit multiple-claim (3d Cir. held that, limitation 1993), the In Gorman v. Court of Appeals although the stipulations action were initially 13 Cerasia, for 2 the filed in a appropriate, once a co-defendant filed a new claim for contribution in both the state and federal actions while the appeal was pending, matter had to be stipulations, including one by the co-claimant, at remanded The 527-28. court to the district emphasized court that Admiralty establish addition, 83 F.3d Seventh Court his cannot claim in grant multiple-claims- to tribunal." (7th 1996), noted Circuit Cir. that shipowner necessitate the Court of "multiple federal court a claimant to at Id. in In re Complaint of McCarty Bros. 821 Id. such dimension that permission another additional were filed. "a inadequate- fund limitation proceeding is of an until the In 525. Co/Clark Bridge, Appeals claims for against adjudication." the the Id. at 832 support of his (emphasis added). Claimant Monroe points to two cases in position that unilateral stipulations are sufficient to protect a limitation plaintiff in a multiple-claimant scenario. Monroe's Reply at 1-3. In In re Dammers & Vanderheide & Scheepvaart Maats Christina B.V., 836 F.3d 750 (2d Cir. 1988), the Court of Appeals for the Second Circuit did hold that the district court was correct to proceedings lift the injunction and stay of after two claimants entered the state court into stipulations, despite the fact that other potential claimants existed. Id. at 756, 760. However, the court did so on the understanding that if the state court co-defendants, who had not filed a claim against 14 the shipowner in either indemnification [district] claims at against or the federal court, limitation were to seek plaintiff, "the court would be obligated to grant a stay of any such unless stipulations Id. state the third preserving the parties executed shipowners' right appropriate to limitation." 758-59. Claimant Monroe primarily relies upon the Court of Appeals for the Eleventh Circuit's decision of In re Beiswenger Enters. Corp., 86 The found that F.3d sufficient 1032 the to proceedings, (11th Cir. stipulations lift the 1996). filed court some and injunction by stay in Beiswenger claimants of state were court despite the fact that potential third party claims for indemnity and contribution were possible. Id. at 1043. The court stated that "the vessel owner can be protected from excess liability parties at the hands themselves Id. In Beiswenger, the stipulation do of third not enter part of that any against the shipowner, parties any even if protective this protection came award of attorneys' in favor of those third stipulations." in the form of and costs would have any party, fees first priority. Id. at 1040. However, stipulating Great Lakes proceeding, in both parties has which were filed it Damme rs and potential an wants actual to be 15 Beiswenger, claimants. claim in adjudicated In this the non- this case, limitation in federal court. Despite Claimant without a Monroe difference," phrasing Monroe's this Reply to be at "distinction this 4, a distinction moves the claimant to a situation that falls squarely within the Supreme Court's prohibition on lifting the of state court proceedings, when multiple claimants cannot agree to sufficient stipulations. See Lewis, Even if the court injunction and stay did have 531 U.S. the at 454. discretion to lift the injunction and stay of state court proceedings at this time, would not Great do Lakes so has in the not interest filed a of judicial cross-claim attorneys' intention of for fees in the state court action, it has no doing so. Thus, economy. loss it Claimant of use or and it has said that if this court were to allow the wrongful death suit to proceed in state court at this time, it Lakes' would claims, wrongful nonetheless which death it suit had If, not have the right been the and stay in the future, to to would be court system and Great Lakes' definite. have limit injunction of adjudicate unable fully to do Claimant until adjudicated in Great after the the state legal fees would be finalized and the court determines that Lyon does its liability, state court the court may lift proceedings, as there will no longer be any need for the claims to be consolidated in a concursus. 4 51 (4th Cir. See Pickle v. Char Lee Seafood, Inc., 174 F.3d 444, 1999); supra note 1 & accompanying text. 16 IV. CONCLUSION Claimant Monroe's unilateral to protect While loss Lyon it appears of use attorneys' fund, of in this stipulations are insufficient multiple-claimant limitation highly unlikely that Great the dredge fees and costs, DODGE ONE Lakes' for action. Claim for $161,000, plus will exceed the $1,200,000 limitation it is not a certainty. Lyon has a right to litigate the limitation of liability action in this federal court, given the multiple claims and the Claimant Monroe's Motion lack of certainty thereon. Thus, to Lift the Injunction and Stay of State Court Proceedings is DENIED. The parties are DIRECTED to contact Calendar seven the Clerk within (7) days of entry of this Memorandum Opinion to set a Scheduling Conference pursuant to Federal Rule of Civil Procedure 16(b). The Clerk is DIRECTED to forward a copy of this Memorandum Opinion to counsel for the parties. IT IS SO ORDERED. /s/ Rebecca Beach Smith TT . Chief United States District Judge _£g£_ REBECCA BEACH SMITH CHIEF UNITED STATES DISTRICT JUDGE °1 ,- March M 2015 17

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