196 F.3d 900 (8th Cir. 1999), 99-1346, Lewis & Clark Marine Inc. v Lewis

Docket Nº:99-1346
Citation:196 F.3d 900
Party Name:IN THE MATTER OF THE COMPLAINT OF LEWIS & CLARK MARINE, INC., AS OWNER OR OWNER PRO HAC VICE OF THE M/V KAREN MICHELLE FOR EXONERATION FROM OR LIMITATION OF LIABILITY, APPELLANT, v. JAMES F. LEWIS, APPELLEE.
Case Date:November 05, 1999
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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196 F.3d 900 (8th Cir. 1999)

IN THE MATTER OF THE COMPLAINT OF LEWIS & CLARK MARINE, INC., AS OWNER OR OWNER PRO HAC VICE OF THE M/V KAREN MICHELLE FOR EXONERATION FROM OR LIMITATION OF LIABILITY, APPELLANT,

v.

JAMES F. LEWIS, APPELLEE.

No. 99-1346

United States Court of Appeals, Eighth Circuit

November 5, 1999

Submitted: September 16, 1999

Rehearing and Rehearing En Banc

Denied Dec. 8, 1999

Appeal from the United States District Court for the Eastern District of Missouri

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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Before McMILLIAN and Murphy, Circuit Judges, and Tunheim,1 District Judge.

McMILLIAN, Circuit Judge.

This is a federal admiralty case involving an underlying Jones Act personal injury action brought in Illinois state court by James F. Lewis (Claimant) against Lewis & Clark Marine, Inc. (Lewis & Clark). Lewis & Clark presently appeals from an interlocutory order entered in the United States District Court for the Eastern District of Missouri dissolving a restraining order that the district court had previously entered to enjoin Claimant's state court action from further proceedings; upon dissolution of its restraining order, the district court also stayed the present federal action brought by Lewis & Clark seeking its exoneration from or limitation of liability. See In re Complaint of Lewis & Clark Marine, Inc., Case No. 4:98CV0503 (MLM), (E.D. Mo. Dec. 22, 1998) (hereinafter "Memorandum and Order"). For reversal, Lewis & Clark argues that the district court abused its discretion in dissolving its restraining order and staying the federal admiralty action because (1) the federal district court has exclusive jurisdiction to adjudicate Lewis & Clark's right to exoneration from or limitation of liability and (2) Claimant's Illinois state court action was properly enjoined under the circumstances of the present case. For the reasons discussed below, we reverse the order of the district court and remand the case to the district court for further proceedings consistent with this opinion.

Jurisdiction

Jurisdiction in the district court was proper based upon 28 U.S.C. § 1333; 46 U.S.C. app. §§ 181-196. Jurisdiction in the court of appeals is proper based upon 28 U.S.C. § 1292(a)(1). The notice of appeal was timely filed pursuant to Fed. R. App. P. 4(a).

Background

Lewis & Clark is a Missouri corporation with its principal place of business in

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Granite City, Illinois. At all times relevant hereto, Lewis & Clark was the owner or, alternatively, owner pro hac vice of the M/V KAREN MICHELLE. On March 17, 1998, Claimant was purportedly injured while working for Lewis & Clark as a deckhand aboard the M/V KAREN MICHELLE. See Memorandum and Order at 1. One week later, on March 24, 1998, Lewis & Clark filed a "Complaint for Exoneration from or Limitation of Liability" (hereinafter "Complaint") in the United States District Court for the Eastern District of Missouri pursuant to the Limitation of Liability Act, codified as amended at 46 U.S.C. app. §§ 181-196. See Joint Appendix at A1-A5 (hereinafter "App.").

On April 2, 1998, Claimant sued Lewis & Clark in state court in Madison County, Illinois, seeking damages for personal injuries allegedly sustained in the March 17, 1998, incident. See James F. Lewis v. Lewis & Clark Marine, Inc., No. 98-L-233 (Apr. 2, 1998) (hereinafter "the state court action") (located in App. at A30-A37). Claimant asserted three counts: (1) negligence under the Jones Act, 46 U.S.C. app. § 688; (2) unseaworthiness; and (3) maintenance and cure. See id. Claimant did not demand a jury trial in the state court action and does not dispute that it would not be tried to a jury. See Memorandum and Order at 2.

On May 8, 1998, the federal district court entered an "Order Approving Stipulation for Costs and Security for Value and Directing the Issuance of Notice, and Restraining Suits." See App. at A19-A21. In this order, the district court approved the surety bond in the amount of $450,000 as security for Lewis & Clark's interest in the M/V KAREN MICHELLE. See id. at A20. The district court further directed that any person with a claim related to the March 17, 1998, incident file said claim with the court on or before June 12, 1998. See id. at A20-A21. Finally, the district court enjoined the institution or prosecution of any other suits against Lewis & Clark relating to the incident involving the M/V KAREN MICHELLE on March 17, 1998. See id. at A21.

On June 9, 1998, Claimant filed his Answer to Lewis & Clark's Complaint, as well as a Claim for Damages for Injury and a Motion to Dissolve Restraining Order (hereinafter "Motion"). See id. at A45-A53. Claimant initially contested Lewis & Clark's right to exoneration from or limitation of liability, see id. at A45, and claimed an amount in excess of the limitation fund. See id. at A49. In his Motion, Claimant sought to dissolve the May 8, 1998, injunction so that he might pursue his state court action. To this end, Claimant asserted that he was the sole claimant seeking damages with respect to the March 17, 1998, incident. See id. at A52. He also stated that he "waive[d] any claim of res judicata relevant to the issue of limited liability based on any judgment obtained in state court" and "stipulate[d] to [Lewis & Clark's] right to litigate issues relating to the limitation in this limitation proceeding." Id. On July 24, 1998, Claimant filed a Second Stipulation in the district court, stating that the value of his claim in the federal action was less than $400,000 and thus less than the value of the limitation fund deposited with the district court by Lewis & Clark. See id. at A79.

On December 22, 1998, the district court granted Claimant's Motion and entered an order both dissolving the prior restraining order enjoining related litigation and staying the federal court action pending final resolution of Claimant's Illinois state court action. See Memorandum and Order at 11-12. This appeal followed.

Discussion

Statutory Background

The Limitation of Liability Act (hereinafter "Limitation Act"), was "adopted primarily to encourage the development of American merchant shipping." Lake Tankers Corp. v. Henn, 354 U.S. 147, 150 (1957)

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(Lake Tankers). To this end, the Limitation Act "exempt[s] innocent shipowners from liability, beyond the amount of their interest." Norwich & N.Y. Transp. Co. v. Wright, 80 U.S. (13 Wall.) 104, 121 (1871). Specifically, the Limitation Act permits a shipowner to limit its liability to damage claimants to the value of its interest in the vessel and the vessel's pending freight, so long as the loss is incurred without the shipowner's "privity or knowledge." 46 U.S.C. app. § 183. See also In re Complaint of Universal Towing Co. v. Barrale, 595 F.2d 414, 417 (8th Cir. 1979) (Universal Towing).

Thus, when faced with potential liability for a maritime accident, a shipowner may demand a federal district court judgment for exoneration from or limitation of liability. See Fed. R. Civ. P. Supplemental Admiralty & Maritime Claims Rule F(2) (hereinafter "Supp. AMC Rule"). In addition to filing a complaint, the shipowner must deposit with the court an amount representing the value of the vessel and its freight, to serve as the "limitation fund" from which damage claims are satisfied...

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