Campbell Transportation Company, Inc. et al
Filing
16
MEMORANDUM OPINION AND ORDER DENYING WITHOUT PREJUDICE CLAIMANTS MOTION TO STAY THIS ACTION AND LIFT INJUNCTION AGAINST STATE COURT PROCEEDING : re 11 Motion to Stay and Lift Injunction against State Court Proceedings are DENIED WITH PREJUDICE to r efiling with stipulations drafted in accordance with this Court's findings. Should the claimants choose to file such amended stipulations, the same must be filed on or before 4/12/13. Signed by Senior Judge Frederick P. Stamp, Jr on 3/27/13. (cc)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
COMPLAINT OF:
CAMPBELL TRANSPORTATION COMPANY, INC.
and C&C MARINE MAINTENANCE COMPANY,
Civil Action No. 5:12CV68
(STAMP)
For Exoneration of Limitation Liability
MEMORANDUM OPINION AND ORDER
DENYING WITHOUT PREJUDICE
CLAIMANTS’ MOTION TO STAY THIS ACTION AND
LIFT INJUNCTION AGAINST STATE COURT PROCEEDING
I.
Background
This action arises from a suit initiated by the claimants,
Harry White, Jr. (“White”) and Roxanne Y. Murphy (“Murphy”), in the
Circuit Court of Hancock County, West Virginia.
allege
in
their
state
court
proceeding
that
The claimants
the
plaintiffs,
Campbell Transportation Company, Inc (“Campbell”) and C&C Marine
Maintenance Company (“C&C”), are the owners of a towboat, the Motor
Vessel Georgetown (“M/V Georgetown”).
The claimants assert that
while White was employed as a deckhand on the M/V Georgetown, a
line being used to assist in the slowing and flattening of the
towboat against a lock wall, while entering a lock chamber in the
Montgomery Locks and Dam, wrapped around White’s lower leg.
As a
result of this incident, the claimants state that White suffered
“crushing and/or traumatic amputation of his right foot, ankle,
and/or lower leg.”
ECF No. 4 *3.
Claimant White asserts a claim
under the Jones Act for negligence on the part of the plaintiffs
and he asserts two claims under general maritime law, one for
unseaworthiness and the second for maintenance and cure.
Further,
claimant Murphy also asserts a claim for loss of consortium,
society, and household services.
In response to the state court suit, the plaintiffs filed
their complaint in this Court pursuant to the Vessel Owners’
Limitation of Liability Act, 46 U.S.C. § 30501, et seq. (“the
Act”), for exoneration or limitation of liability.
The plaintiffs
seek, through their complaint, to be exonerated from liability and
if not so exonerated, for this Court to limit the plaintiffs’
liability to the value of the M/V Georgetown and the freight then
pending after the alleged incident.
The plaintiffs asserted that
the approximate value of the M/V Georgetown was $1,420,000.00.
Further,
the
plaintiffs
sought
to
have
this
Court
issue
an
injunction enjoining the commencement or further prosecution of any
other prosecution resulting from claimant White’s accident.
This
Court then entered an order in which, among other things, it
enjoined and restrained any proceedings related to claimant White’s
accident pending the hearing and determination of this proceeding.
Thereafter, the claimants filed an answer to the plaintiffs’
complaint and the claimants’ claim with this Court.
The claimants
then also filed a motion to stay the proceedings in this Court and
lift the injunction against the prosecution of their state court
action. The claimants included with their motion, a proposed order
granting the stay and lifting the injunction, which also included
2
specific proposed findings.
In the claimants’ motion, they argued
that this Court should grant their motion because: (1) based on the
Supreme Court’s holdings, claimants like White and Murphy are
entitled to proceed with their state court actions against the
vessel owner upon filing stipulations protective of the vessel
owner’s rights under the Act; (2) the claimants need not now
stipulate to plaintiffs’ assessment of the value of the limitation
fund, as this Court can address that issue later, if necessary; (3)
the claimants are not required to stipulate to plaintiffs’ claimed
right to have exoneration issues addressed by this Court, in
addition to limitation issues; and (4) the plaintiffs are not
entitled to an injunction as to claimant White’s maintenance and
cure claim because the claim is outside the scope of the Limitation
of Liability Act. The claimants then filed stipulations in support
of their motion.
The claimants stipulations are as follows:
1.
Claimants stipulate and agree that Campbell
Transportation Company, Inc. (“CTC”) and C&C Marine
Maintenance Company (“C&C”), collectively “Plaintiffs,”
are entitled to litigate all issues relating to
limitation of liability pursuant to the provisions of 46
U.S.C. § 30501, et seq. in this Court, save and except
for all issues concerning White’s claim against CTC and
C&C for maintenance and cure, because Plaintiffs’
maintenance and cure obligation to White is a “personal
contract” of which they are deemed to have privity and
knowledge and thus this contract and the claim which
attends it are not subject to the protections of the Act.
2.
Claimants waive any claim of res judicata relevant
to the issue of limitation of liability pursuant to the
provisions of 46 U.S.C. § 30501, et seq. based on any
3
jury or non-jury trial decision or judgment they may
obtain in state court, except for any such claim based on
White’s above-described maintenance and cure claim.
3.
To clarify the above two stipulations, should
Claimants obtain a judgment against either or both
Plaintiffs in state court in their favor on their Jones
Act negligence, general maritime law unseaworthiness,
and/or general maritime law loss of consortium, society,
and household services claims, Claimants stipulate and
agree that this Court, after lifting its stay of this
federal action, shall then proceed to determine only (a)
whether Plaintiffs had “privity to or knowledge of” (as
these terms have been defined in applicable case law
construing the Act, 46 U.S.C. § 30501, et seq.) the acts,
events, conditions, omissions, etc. upon which their
liability was based in the state court action and, if so,
(b) the value of Plaintiffs’ interest in the M/V
Georgetown, and its pending freight, if any (and any such
other vessels and any such vessels’ pending freight which
this Court may later find pursuant to the provisions of
Rule F(7) should be included in the limitation fund), as
specified under the Act. In other words, nothing
contained in these stipulations should be read or
construed as an agreement or stipulation by Claimants to
allow this federal court to revisit the liability or
damage findings made in the state court action which are
separate and apart from the discrete findings (specified
in (a) and (b), above) which this Court must make as to
limitation of liability under the Act.
Accordingly,
because they are not required to under applicable law,
Claimants do not stipulate or agree to Plaintiffs’
alleged right (as pled in their Complaint) to have this
Court determine issues related to exoneration from
liability, as such would amount to a disregarding of the
liability findings made in the state court action -something Claimants do not agree to.
4.
While not stipulating or agreeing that the value of
the limitation fund in this action is, as alleged by
Plaintiffs, not in excess of $1,420,000.00 (one million
four hundred twenty thousand dollars and no cents), and
specifically reserving their right to file at a later
time a motion under Rule F(7) of the Supplemental Rules
for Admiralty or Maritime Claims and Asset Forfeiture
Actions seeking an appraisement of the value of
Plaintiffs’ interest, if any, in the M/V Georgetown and
its pending freight, together with the value of and
4
pending freight on any other vessels which this Court may
find, under the Flotilla Doctrine, should be included in
the limitation fund, Claimants stipulate and agree that
in the event there is a judgment or recovery on any jury
or non-jury trial decision or judgment in state court in
excess of $1,420,000.00 against Plaintiffs, and to the
extent such state court decision or judgment is not based
on White’s above-described maintenance and cure claim,
Claimants will not seek to enforce such excess judgment
or recovery to the extent same may expose Plaintiffs to
liability in excess of the sum of $1,420,000.00 until
adjudication of Plaintiffs’ Complaint for limitation of
liability in this Court.
5.
Claimants stipulate and agree that this Court has
the exclusive right under the Act to determine the proper
value of the limitation fund under the procedures
outlined in Rule F(7).
6.
Claimants stipulate and agree that White’s claims
for damages will have irrevocable priority over Murphy’s
claims for damages.
ECF No. 13 (emphasis in original).
The plaintiffs responded in opposition to the claimants’
motion and stipulations.
Specifically, the plaintiffs argued: (1)
neither the Supreme Court nor the United States Court of Appeals
for the Fourth Circuit has permitted multiple claimants to proceed
with state court claims when the limitation fund is alleged to be
inadequate; (2) this Court is not required to lift the injunction
because such action is merely within the Court’s discretion; (3)
the claimants cannot be permitted to proceed in state court unless
they stipulate to limit their recovery to the value of the vessel
and its attending freight; and (4) the claimants’ stipulations fail
to adequately protect the plaintiffs’ right to seek limitation of
liability.
Specifically,
the
5
plaintiffs
argue
that
the
stipulations fail to adequately protect the plaintiffs’ right to
seek
limitation
of
liability
by
arguing:
(1)
the
claimants’
clarification regarding the revisiting of liability or damage
findings of the state court, impermissibly restricts this Court’s
exclusive jurisdiction to determine all limitation of liability
issues;
(2)
the
claimants’
clarification
is
especially
inappropriate as to claimant Murphy’s claim for loss of consortium
as such a claim is legally insufficient; (3) the claimants’
proposed order is overbroad and premature with respect to claimant
White’s maintenance and cure claim; and (4) the claimants should be
required to stipulate to this Court’s continuing jurisdiction. The
claimants then filed a reply contesting the plaintiffs’ arguments.
For the reasons set forth below, this Court denies without
prejudice the claimants’ motion to stay proceedings and lift the
injunction against the prosecution of the claimants’ state court
suit.
The
claimants
may
refile
such
motion
with
amended
stipulations in accordance with this opinion for reconsideration by
this Court.
II.
Discussion
Under Article III, § 2 of the United States Constitution, the
federal courts are vested with jurisdiction over all admiralty and
maritime jurisdiction cases.
Lewis v. Lewis & Clark Marine, Inc.,
531 U.S. 438, 443 (2001).
This grant of jurisdiction is now
codified in 28 U.S.C. § 1333, with a limitation “so as to save
6
seamen their remedies.”
205, 208 (4th Cir. 2006).
Norfolk Dredging Co. v. Wiley, 439 F.3d
The statute specifically states:
The district courts shall have original jurisdiction,
exclusive of the courts of the States, of: (1) any 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. § 1331 (emphasis added). This “saving to suitors” clause
“preserves remedies and the concurrent jurisdiction of state courts
over some admiralty and maritime claims.”
Lewis, 531 U.S. at 445.
The saving to suitors clause, however, as recognized by the
Supreme Court, may come in conflict with the Limitation Act
sometimes.
The Limitation Act is a provision of admiralty and
maritime law that “allows a vessel owner to limit liability for
damage
or
injury,
occasioned
without
the
owner’s
privity
or
knowledge, to the value of the vessel or the owner’s interest in
the vessel.”
Id. at 446; see 46 U.S.C. § 30505.
Supplemental
Admiralty and Maritime Claims Rule F sets forth the procedure for
a limitation of liability action.
The Supreme Court briefly
explained the procedure as follows:
The district court secures the value of the vessel or
owner’s interest, marshals claims, and enjoins the
prosecution of other actions with respect to the claims.
In these proceedings, the court, sitting without a jury,
adjudicates the claims. The court determines whether the
vessel owner is liable and whether the owner may limit
liability. The court then determines the validity of the
claims, and if liability is limited, distributes the
limited fund among the claimants.
Id. at 448.
7
The tension between the saving to suitors clause and the
Limitation of Liability Act results because “[o]ne statute gives
suitors the right to a choice of remedies, and the other statute
gives the owners the right to seek limitation of liability in
federal court.”
Id.
The Supreme Court addressed this issue in
Lewis. In Lewis, the claimant sued the vessel owner in state court
for negligence under the Jones Act,1 unseaworthiness of the ship,
and maintenance and cure.
The vessel owner then filed a complaint
in federal court to limit the vessel owner’s liability.
After the
claimant provided certain stipulations to protect the plaintiff’s
limitation rights, the district court dissolved the injunction
placed on the claimant’s state court action.
In regards to the
district court’s decision, the Supreme Court stated that “case law
makes clear that state courts, with all their remedies, may
adjudicate claims like petitioner’s against vessel owners so long
as the vessel owner’s right to seek limitation of liability is
protected.”
Id. at 455.
The Supreme Court further found that,
because the stipulations offered had adequately protected the
vessel owner’s limitation of liability rights, it was “well within”
1
“A Jones Act claim is an in personam action for a seaman who
suffers injury in the course of employment due to negligence of his
employer, the vessel owner, or crew members.” Lewis, 531 U.S. at
441; see 46 U.S.C. § 30104.
8
its discretion to lift the injunction against the state court
proceedings.2
A.
Id. at 454.
Multiple claimants and an inadequate fund
The plaintiffs first argue that neither the Supreme Court nor
the Fourth Circuit has ever permitted multiple claimants to proceed
with state court claims when the limitation fund is alleged to be
inadequate.
The plaintiffs indicate that they are aware that some
Courts of Appeals have permitted multiple claimants to pursue their
claims in state court despite an allegedly inadequate limitation
fund, but they state that the Supreme Court’s failure to discuss
such situation as a valid exception is “conspicuous.”
The claimants respond by stating that the Supreme Court has
acknowledged
the
procedure
of
allowing
multiple
claimants
to
proceed in state court when the limitation fund is alleged to be
inadequate when the Supreme Court in Lewis stated:
If the district court concludes that the vessel owner’s
right to limitation will not be adequately protected -where for example a group of claimants cannot agree on
appropriate stipulations or there is uncertainty
concerning the adequacy of the fund or the number of the
claims -- the court may proceed to adjudicate the merits,
deciding issues of liability and limitation.
2
This Court recognizes the plaintiffs’ argument regarding the
assertion that it is not mandatory that this Court lift the
injunction against the state court proceedings, but instead it is
within the Court’s discretion to do so. However, as this argument
by the plaintiffs appears to simply seek to make this distinction
for the Court, the same will not be addressed outside of a
recognition that any decision to lift the state court injunction
is, in fact, discretionary on the part of this Court. See Lewis,
531 U.S. at 449.
9
Lewis, 531 U.S. at 454.
The claimants further cite various courts
of appeals cases, wherein the courts have indicated that multiple
claimants can by the use of a priority stipulation effectively
reduce their claims to a single claim.
The claimants state that
these courts have found that after such priority stipulation is
provided,
the
district
court
is
then
entitled
to
lift
its
injunction on the state court action.
The Supreme Court stated in Lewis that “the Courts of Appeals
have generally permitted claimants to proceed with their claims in
state court [when the Limitation of Liability Act may apply] where
there is only a single claimant . . . or where the total claims do
not exceed the value of the limitations fund.”
531 U.S. at 438.
However, the Seventh Circuit found that the statement cited above
by the claimants concerning a situation where a group of claimants
could not agree on appropriate stipulations “supports by negative
implication allowing [multiple] claimants to proceed in state court
so long as the vessel owner’s right to limitation of liability is
adequately protected through appropriate stipulations.”
In re
Illinois Marine Towing, Inc., 498 F.3d 645, 651 (7th Cir. 2007).
In In re Illinois Marine Towing, Inc., the Seventh Circuit
found that “proper stipulations can transform multiple claims into
a single claim for purposes of determining liability in state
court.”
Id. at 652.
The multiple claimants in that case filed
stipulations that included a stipulation that the claimants would
10
only seek their respective pro rata share of any judgment obtained
in the state court from the plaintiffs.
that
such
a
stipulation
The Seventh Circuit found
accomplishes
the
same
thing
as
prioritization and found that the stipulation adequately protected
the plaintiffs’ right to seek limitation of liability in federal
court.
Id. at 652-656.
Other circuits have also approved such stipulations and lifted
the injunctions against claimants’ state court actions.
Texaco,
Inc. v. Williams, 47 F.3d 765, 767-768 (5th Cir. 1995) (recognizing
that
“[m]ultiple
claimants
may
reduce
their
claims
to
the
equivalent of a single claim by stipulating to the priority in
which
their
claims
will
be
paid
from
the
limitation
fund);
Beiswenger Enters. Corp. v. Carleeta, 86 F.3d 1032 (11th Cir. 1996)
(finding that multiple claimants may invoke the single claimant
exception when the stipulations create the functional equivalent of
a single claim situation.); Complaint of Dammers & Vanderhide &
Scheepvaart Maats Christina B.V., 836 F.2d 750, 756 (2d Cir. 1988)
(finding that a priority stipulation granting a claimant’s personal
injury claim irrevocable priority over another claimant’s loss of
consortium claim sufficient to allow the claimants to proceed with
their common law actions in other forums); S & E Shipping Corp. v.
Chesapeake & O. Ry. Co., 678 F.2d 636, 644 (6th Cir. 1982) (finding
that the wife’s loss of consortium claim did not present a separate
claim
because
she
stipulated
that
11
her
husband’s
claims
took
priority over hers).
Circuit
have
allowed
Further, district courts within the Fourth
multiple
claimants
who
submit
priority
stipulations to proceed in a forum other than federal district
court.
In re Ingram Barge Co., 419 F. Supp. 2d 885, 888-891 (S.D.
W. Va. 2006); Complaint of Mohawk Associates and Furlough, Inc.,
897 F. Supp. 906, 911-912 (D. Md. 1995).
Although neither the Supreme Court nor the Fourth Circuit has
directly addressed this particular issue, this Court follows the
decisions of the other circuit courts as well as the other district
courts within the Fourth Circuit in finding that a multiple
claimant case may be effectively transformed into a single claimant
case
through
the
proper
stipulations.
Here,
the
claimants
specifically stipulate that “White’s claims for damages will have
irrevocable priority over Murphy’s claims for damages.”
13.
ECF No.
This Court finds, like other courts found above, that such a
priority stipulation effectively transforms this case into the
functional equivalent of a single claimant case.
It protects the
vessel owner, while also allowing the claimants to pursue their
state court action.
B.
Stipulation limiting recovery of claimants’ claims to the
value of the vessel and its attending freight
The plaintiffs’ third argument is that this Court cannot
permit the claimants to proceed in state court unless they agree to
limit their recovery to the value of the vessel and its attending
12
freight.
The plaintiffs state that “the Supreme Court has only
permitted a claimant to pursue his claims in state court when the
claimant has stipulated, not just that limitation issues will be
tried in the district court, but that the claimant will not contest
the right to limitation.”
ECF No. 14 *6 (emphasis in original).
They argue that by the refusal of the claimants to limit their
claims to the value of the vessel and its attending freight, and by
challenging the plaintiffs’ right to limit their liability, the
claimants’ claims diverge from those claims found in Lewis, Ex
parte Green, 286 U.S. 437 (1932), and Lake Tankers Corp. V. Henn,
354 U.S. 147 (1957).
Therefore, the plaintiffs argue that the
claimants should not be permitted to pursue their claims in state
court.
The plaintiffs recognize that the Fourth Circuit and other
lower courts have permitted claimants to pursue their claims in
state court upon stipulating that the district court will have
exclusive jurisdiction to determine all issues relating to the
vessel owner’s right to limitation of liability.
However, the
plaintiffs argue that because the Supreme Court has not approved
this procedure, and because it differs from the procedure outlined
in Ex parte Green, it is invalid.
Further, the plaintiffs also
seem to argue that the claimants must also “concede the sufficiency
in
the
amount
of
the
stipulation[,]”
$1,420,000.00, before proceeding as well.
13
which
is
currently
ECF No. 14 *6.
The claimants respond by stating that they are not required to
stipulate
now
to
limit
their
recovery
to
the
value
of
the
plaintiffs’ vessel and pending freight before they may continue
their state court action.
First, the claimants argue that the
plaintiffs misinterpret Ex parte Green.
The claimants state that
the Supreme Court in Ex parte Green only held that if the claimant
attempted
to
obtain
judicial
findings
on
issues
that
are
exclusively within the purview of the federal court during his
state court proceedings, then the federal court can intervene and
enjoin the state court action.
The claimants next argue that the
plaintiffs misinterpret Lake Tankers Corp. as well, because nowhere
in that case does the Supreme Court require a stipulation to both
the value of the claimants’ claims and the value of the limitation
fund.
Instead, the claimants state that such stipulations were
voluntary.
The claimants argue that they are not required to
stipulate to the right of the plaintiffs to limitation in order to
proceed with their state court action, as all that is required by
Supreme Court and Fourth Circuit precedent is that a claimant
recognize a plaintiff’s right to litigate the limitation issue in
federal court. Finally, the claimants argue that they are also not
required to stipulate to the value of the limitation fund based on
case law from the Fourth Circuit and many other circuits.
According to the Supreme Court in Ex parte Green, a “state
court has no jurisdiction to determine the question of the owner’s
14
right to limited liability, and that, if the value of the vessel be
not accepted as to the limit of the owner’s liability, the federal
court is authorized to resume jurisdiction and dispose of the whole
case.”
286 U.S. at 440-441.
The Supreme Court never stated in Ex
parte Green or any other case that a claimant must enter a
stipulation in the district court wherein the claimant agrees to
limit his claim to the value of the vessel and its attending
freight in order to litigate his claim in state court. Rather, the
Court stated that the claimant may not litigate the issue of
limitation in state court, and if the claimant chose to, the
district court may resume jurisdiction at that point.
Id. at 440.
Also, as the claimants indicated, the Supreme Court in Lake Tankers
Corp. and Lewis did not state specifically that a stipulation by
the claimant limiting his claim to the value of the vessel and
attending freight was required, but it only noted that the claimant
did make such a stipulation in those cases.
See Lake Tankers
Corp., 354 U.S. at 149; and Lewis, 531 U.S. at 442.
Simply because
the claimants in those cases voluntarily chose to make such
stipulations, does not stand for the proposition that such a
stipulation is mandatory.
Further, as the plaintiffs indicate, the Fourth Circuit in
Norfolk Dredging Co. expressly found that a claimant’s stipulations
which simply agreed that “claimant will not seek to enforce any
judgment received from a jury in excess of the Limitation Fund
15
until the vessel owner’s right to limitation has been determined in
admiralty,” Norfolk Dredging Co. v. Wiley, 357 F. Supp. 2d 944, 950
(E. D. Va. 2005)(emphasis added), but which did not agree to limit
the claimant’s damages to the value of the relevant vessel, were
adequate to allow the claimant to return to state court. Norfolk
Dredging Co., 439 F.3d at 207-11. Norfolk Dredging Co., which is
binding precedent upon this Court, allowed the claimant to proceed
in state court upon stipulating “that the district court had
exclusive
jurisdiction
issues[.]”
to
decide
439 F.3d at 207-11.
plaintiffs’
contention
that
all
Limitation
of
Liability
This Court does not agree with the
this
procedure allowed in Ex parte Green.
procedure
differs
from
the
As this Court reads it, Ex
parte Green did not require a stipulation that the claimant limit
his damages to the value of the vessel and its attending freight.
Further, the Fourth Circuit directly cites to Ex parte Green in the
Norfolk Dredging Co. opinion. As such, this Court must assume that
the Fourth Circuit was aware of the opinion and considered it,
finding that its decision was in line with Supreme Court precedent.
Therefore, based on binding precedent, this Court finds that the
claimant is not required to agree to limit his damages to the value
of the vessel and its attending freight in order to proceed in
state court.
As to the issue of whether the claimants must stipulate to the
precise amount of the limitation or rather the precise amount of
16
the plaintiffs’ interest in the vessel and freight, the Fourth
Circuit
stated
determination
in
of
Norfolk
the
Dredging
precise
Co.
amount
that
of
the
postponing
limitation
the
is
“consistent with the broad power of the district court to manage
its cases and to reserve the determination of any important, yet
potentially irrelevant, issue until later in the proceedings.” Id.
Other
circuit
courts
of
appeal
have
also
held
that
it
is
unnecessary to stipulate to the precise value of the limitation
prior to the injunction being lifted against a claimant’s state
court action.
Two “R” Drilling Co. v. Rogers, 943 F.2d 576, 578
(5th Cir. 1991); Anderson v. Nadon, 360 F.2d 53, 58 n.8 (9th Cir.
1966).
Accordingly, this Court finds that the claimants, like
those in the above cited cases, are not required to stipulate to
the precise value of the limitation.
with
the
plaintiffs
insomuch
as
Therefore, this Court agrees
it
does
not
find
that
the
plaintiffs must stipulate to either the value of the limitation nor
the plaintiffs’ right to limitation before the injunction is
lifted.
C.
Clarification of Stipulation No. 3 limiting claimants’ waiver
of their res judicata rights
The plaintiffs next take issue with the claimants’ Stipulation
No. 3.
In this stipulation, the claimants attempt to clarify
Stipulation Nos. 1 and 2.
Specifically, the plaintiffs take issue
with the part of the stipulations that limits the issues that this
17
Court may take up after the state court proceeding is completed.
This part reads:
[T]his Court . . . shall then proceed to determine only
(a) whether Plaintiffs had ‘privity to or knowledge of’
. . . the acts, events, conditions, omissions, etc. upon
which their liability was based in the state court action
and, if so, (b) the value of the Plaintiffs’ interest in
the M/V Georgetown, and its pending freight if any (and
any such other vessels and any such vessels’ pending
freight which this Court may later find pursuant to the
provisions of Rule F(7) should be included in the
limitation fund) as specified under the Act.
ECF No. 13 *2.
The plaintiffs argue that this clarification added
to the stipulations makes it so the claimants’ stipulations in
total do not adequately protect the plaintiffs’ rights.
Further,
they state that the clarification also deprives this Court of
exclusive
jurisdiction
to
determine
all
issues
relating
to
limitation of liability.
The claimants argue in opposition that their clarification in
the
stipulation
is
informed
by
case
law
and
is
proper,
understandable, and prudent. The claimants state that through this
clarification they are trying to avoid the situation that befell
the claimant in Complaint of Consolidation Coal Co., 123 F.3d 126
(3d
Cir.
1997).
Further,
the
claimants
argue
that
their
stipulations comply with the applicable law in the Fourth Circuit,
as they substantially mirror those approved in Norfolk Dredging Co.
In Complaint of Consolidation Coal Co., the Third Circuit
addressed a situation where the district court had insisted that
the claimant waive the res judicata effect as to both exoneration
18
and limitation of liability prior to dissolving the injunction
against the state court proceeding.
123 F.3d at 133.
The Third
Circuit stated that because the claimant agreed to enter into such
a stipulation and did not object nor appeal the requirement, the
claimant was bound by the stipulation as he did not preserve the
issue for appeal.
Id.
As to whether it was necessary for a party
to waive the res judicata effect as to the exoneration issue, the
Third Circuit stated that while it was not deciding this issue, it
had “serious doubts that the claimant must do so.”
Id.
While it may not be necessary for a party to waive the res
judicata effect of a state court’s findings as to exoneration, it
is clear based on Supreme Court case law that the district court
must find that the “vessel owner’s right to seek limitation of
liability is protected” prior to lifting the injunction on the
state court proceeding.”
Circuit,
in
Norfolk
concerning
the
concerning
waiver
the
Lewis, 531 U.S. at 455.
Dredging
of
limitation
Co.,
the
found
claimant’s
of
liability,
The Fourth
that
res
stipulations
judicata
along
with
rights
other
stipulations concerning the value of the fund, and the retention of
jurisdiction, were sufficient to protect such rights.
211;
see
Lewis,
531
U.S.
at
451-452
(finding
439 F.3d at
that
similar
stipulations, including a claimant’s waiver of res judicata rights
with respect to limitation of liability, adequately protected the
plaintiff’s right to seek limitation of liability).
19
Although the
claimants argue that their stipulations mirror those in Norfolk
Dredging Co., this Court is unaware of any case, including Norfolk
Dredging Co., where a court found that a stipulation concerning the
waiver of a claimant’s res judicata rights that also included a
clarification
limiting
such
rights,
adequately
plaintiff’s right to seek limitation of liability.
protected
a
As this Court
is uncertain whether the claimants’ stipulation that clarifies or
limits
the
plaintiffs’
rights
will
adequately
protect
the
plaintiffs’ limitation rights, it finds that the clarification is
improper. Therefore, this Court must deny the claimants’ motion to
stay this action and lift the injunction against their state court
proceedings due to this possible inadequacy.3
Moreover,
this
Court
notes
that
the
claimants’
concerns
regarding the waiver of their res judicata rights concerning
exoneration are unfounded. In Complaint of Consolidation Coal Co.,
the Third Circuit found that the claimant had waived his res
judicata rights concerning exoneration after the claimant actually
entered into a stipulation that specifically waived such rights.
3
In addition to the plaintiffs arguing that Stipulation No. 3
was generally inappropriate, they also argue that Stipulation No.
3 is particularly inappropriate because claimant Murphy’s claim for
loss of consortium is legally insufficient and the clarification
would prohibit this Court from determining whether such a claim may
be asserted.
As this Court has now determined that the
clarification limiting the waiver of the claimants’ res judicata
rights as to limitation of liability is inappropriate and a
complete waiver without such clarification is required, this Court
need not address the plaintiffs’ particular concerns regarding the
loss of consortium claim at this time.
20
123 F.3d at 133.
This Court is not requiring that the claimants
provide a stipulation waiving their res judicata rights with
respect to exoneration.
the
plaintiffs’
Rather, this Court is only requiring that
rights
to
seek
limitation
to
liability
are
protected by the complete waiver of the claimants’ res judicata
rights concerning limitation of liability.
D.
Maintenance and cure claim
The plaintiffs’ next argument in opposition to the claimants’
motion to stay and lift the injunction against their state court
proceedings, is that the claimants’ proposed order is overbroad and
premature with respect to White’s maintenance and cure claims.
Specifically, the plaintiffs take issue with the following part of
the claimants’ proposed order:
Since Claimant White’s maintenance and cure claim against
Plaintiffs is based on a personal contract that is deemed
to be within Plaintiffs’ privity and knowledge and thus
outside the purview of the Act, Claimants need not return
to this Court for any proceedings, including judgment
collection, in furtherance of that claim, as such claim
is outside the protections of the Act.
ECF No. 11 Ex. 1 *3.
never
been
addressed
The plaintiffs assert that this issue has
by
the
Fourth
Circuit.
Further,
the
plaintiffs state that even if the maintenance and cure claim falls
outside of the protections of the Limitation Act, this Court must
be permitted to determine what portion, if any, of the potential
jury award against the plaintiffs “probably included amounts which
are the substantial equivalent of cure.”
21
Brister v. A.W.I. Inc.,
946 F.2d 350, 361 (5th Cir. 1991). Otherwise, the plaintiffs state
that they would be exposed to the risk of paying twice for the same
element of damages.
In response, the claimants assert that maintenance and cure is
a personal contract of the vessel owner that the vessel owner has
privity and knowledge of.
plaintiffs
are
not
Therefore, the claimants argue that the
entitled
to
any
protections
Limitations Act with regard to such claim.
under
the
Further, as to the
plaintiffs’ argument concerning the issue of this Court determining
what
portion
of
the
jury
award
included
amounts
that
are
substantial equivalent of cure, the claimants argue that such an
issue can be resolved by using detailed jury verdict forms.
Specifically, the claimants state that the parties can ensure there
is no overlap by agreeing to submit to the jury a verdict form that
breaks the damages into categories.
The claimants state that this
will enable this Court to afford the plaintiffs a credit for any
sums they have already paid out for the maintenance in cure claim.
First, this Court notes that rather than adopting the proposed
order, which the claimants submitted along with their motion to
stay and lift the injunction, this Court instead is making its
findings by way of this memorandum opinion and order.
Therefore,
it is unnecessary to address the plaintiffs’ specific objection to
the claimants’ proposed order.
The claimants’ stipulations, Nos.
1, 2, 3, and 4, however, do discuss the maintenance and cure claim
22
and
its
relationship
to
the
litigation
of
the
plaintiffs’
limitation rights. In these stipulations, the claimants relinquish
certain rights such as their res judicata rights relevant to the
issue of limitation of liability, and their right to enforce any
state court judgment in excess of $1,420,000.00.4
ECF No. 13.
However, the claimants do not relinquish such rights insomuch as
they pertain to claimant White’s maintenance and cure claim.
No. 13.
ECF
Therefore, because claimants limit their stipulations in
such a way, this Court will address plaintiffs’ concerns as to
whether any amount awarded for the maintenance and cure claim falls
outside of the protections of the Limitations Act.
According to the Fourth Circuit, maintenance and cure “does
not rest upon negligence.”
Evans v. Blidberg Rothchild Co., 382
F.2d 637, 639 (4th Cir. 1967); see Aguilar v. Standard Oil Co. of
N.J., 318 U.S. 724, 730 (1943) (stating that maintenance and cure
is not predicated on the fault or negligence of the shipowner).
Instead, it is “a contractual form of compensation given by general
maritime law to a seaman who falls ill while in the service of his
vessel.”
Id.
The First and Fifth Circuits have both found that
maintenance and cure claims are “exempt from the limitation of
liability rules in admiralty.”
In re RJF Intern. Corp. for
Exoneration from or Limitation of Liability, 354 F.3d 104, 107 (1st
4
This is the plaintiffs’ asserted value of the M/V Georgetown
as indicated in the verification of value attached to the
plaintiffs’ complaint in this action. ECF No. 4 Ex. 1.
23
Cir. 2004) (citing Brister, 946 F.2d at 361). This Court, however,
is unaware of a case from the Supreme Court or the Fourth Circuit
addressing this issue.
This Court does not feel that it is appropriate at this time,
without
any
binding
precedent,
to
determine
whether
claimant
White’s maintenance and cure claim is in fact exempt from the
limitation of liability rules in admiralty.
that
such
claims
are
exempt
from
the
Making a finding now,
limitation
rules,
may
prejudice the plaintiffs as they could no longer contest such issue
upon the reconvening of these proceedings, while deferring such a
decision will not result in such prejudice.
Therefore, this Court
finds that such a determination is better left to the time, if any,
when this Court undertakes the limitation inquiry in this case.5
As such, this Court must also deny the claimants’ motion to stay
this action and lift the injunction against the state court
proceedings on the basis that the stipulation specifically excludes
from this Court’s jurisdiction regarding limitation of liability
any state court judgment stemming from the claimant’s maintenance
and cure claim.
5
This situation is similar to that of the district court in
Norfolk Dredging Co., wherein it deferred a decision relating to
the vessel owner’s right to limit its liability. 439 F.3d at 210.
The Fourth Circuit found that this action did not prejudice
plaintiff’s limitation rights. Id.
24
E.
Stipulation of continuing jurisdiction
The plaintiffs lastly argue that the claimants’ stipulations
are inadequate as they do not include a stipulation agreeing to the
district court’s retention of jurisdiction until the claimants’
state court proceeding is completed.
The plaintiffs state that in
both Lewis and Norfolk Dredging Co., the claimants agreed to such
a stipulation.
The claimants respond by stating that they agree
with this Court retaining jurisdiction. Given the wording of their
proposed order (ECF No. 11 Ex. 1), the claimants stated that they
assumed that this Court would retain jurisdiction over the action.
Further, they state that if this Court finds the wording of the
proposed order insufficient in this respect, the claimants would be
willing
to
stipulations
submit
stating
an
amended
that
this
proposed
Court
will
order
and
retain
amended
continuing
jurisdiction while this case is stayed pending the outcome of the
state court action.
In Norfolk Dredging Co., the claimant agreed that the district
court would retain jurisdiction until the claimant’s state court
claims were determined. 439 F.3d at 211. The Fourth Circuit found
that based on this stipulation if the claimant’s “stipulations
provide inadequate protection in some unforeseen way, the district
court has continuing jurisdiction to correct any deficiencies.”
Id. (citing Lewis, 531 U.S. at 453-54).
This Court agrees that
such a stipulation would assist in ensuring that the plaintiffs’
25
limitation rights are adequately protected. Further, the claimants
do not object to including such a stipulation in possible future
amended stipulations.
Therefore, this Court directs the claimants
to include such a stipulation indicating their agreement with this
Court’s retention of jurisdiction if the claimants choose to file
amended stipulations.
III.
Conclusion
For the reasons stated above, the claimants’ motion to stay
this
action
and
lift
the
injunction
on
their
state
court
proceedings (ECF No. 11) is DENIED WITHOUT PREJUDICE to refiling
with stipulations drafted in accordance with this Court’s findings.
Should the claimants choose to file such amended stipulations, the
same must be filed on or before April 12, 2013.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein.
DATED:
March 27, 2013
/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE
26
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