American River Transp. Co. v. Ryan
| Decision Date | 27 August 2009 |
| Docket Number | No. 08-1545.,08-1545. |
| Citation | 579 F.3d 820 |
| Parties | AMERICAN RIVER TRANSPORTATION COMPANY, Plaintiff-Appellee, v. Antoinette RYAN, Defendant. Appeal of Kerrie L. Vesolowski, Claimant-Appellant. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Richard F. Johnson, Attorney, Hughes Socol Piers Resnick & Dym, Ltd., Chicago, IL, Gary T. Sacks (argued), Neal W. Settergren, Attorney Goldstein & Price St. Louis, MO, for Plaintiff-Appellee.
Cary E. Donham (argued), J. Timothy Eaton, Attorney, Shefsky & Froelich, Sean P. Driscoll, Chicago, IL, for Claimant-Appellant.
Jeffrey J. Kroll, Attorney, Chicago, IL, for Defendant.
Before BAUER, RIPPLE and WOOD, Circuit Judges.
When a barge pushed by a towboat owned and operated by American River Transportation Company ("Artco") collided with a motor boat, passenger Kerrie Vesolowski was injured. After Vesolowski sued Artco for negligence in the Circuit Court of Cook County, Artco filed a complaint in federal court under the Shipowner's Limitation of Liability Act ("Limitation Act"), 46 U.S.C. §§ 30501 et seq., seeking exoneration from, or limitation of, liability. This appeal considers whether the district court had the authority to stay Vesolowski's state suit while it decides if Artco is entitled to limitation or exoneration. After initially permitting such a stay, the district court changed its mind, ordered Vesolowski to dismiss the suit, and found her in contempt for maintaining it. Because we find that the law permits Vesolowski to maintain her suit under stay, we reverse the judgment of dismissal and remand for further proceedings consistent with this opinion.
On September 14, 2006, a motor boat driven by Jason Aardema collided with a barge pushed by the Donna Jean, a towboat owned and operated by Artco. Three passengers on the motor boat — Vesolowski, Antoinette Ryan, and Mark Bigos — were injured in the collision. After Vesolowski followed up with her state-court negligence action against Artco, Artco turned to the federal court for relief. Under the Limitation Act, a shipowner's liability is limited to the value of the ship, so long as the owner proves that the acts and losses were "done, occasioned, or incurred, without the privity or knowledge of the owner." 46 U.S.C. § 30505(b). But determining whether a shipowner qualifies for limited liability takes time. To protect the potentially qualified shipowner during that time, the Limitation Act requires that "[w]hen an action has been brought under this section ... all claims and proceedings against the owner related to the matter in question shall cease." § 30511(c). Artco accordingly coupled with its complaint a request for an injunction under § 30511(c). The district court responded with the following order, issued under the authority of Supplemental Rule F of the Federal Rules of Civil Procedure on January 24, 2007:
FURTHER ORDERED that the institution and prosecution of any suits, actions or legal proceedings of any nature or description whatsoever in any court whatsoever, against the Petitioner or the M/V DONNA JEAN in respect of any claim arising out of or connected with the said voyage and incident, exception in this proceeding, be hereby stayed and restrained until the hearing and determination of this proceeding....
In compliance with this order, Vesolowski stayed her state suit against Artco.
The state-court suit remained stayed for a year, until January 2008, when Artco filed a motion asking the district court to find Vesolowski, Ryan, and Edward Bigos (the administrator of Mark Bigos's estate) in contempt and to impose sanctions against them. Unlike Vesolowski, Ryan, and Bigos had filed state-court actions against Artco after the January 24 injunction, and the bulk of Artco's motion addresses them. Only four sentences describe why Vesolowski — as opposed to Ryan and Bigos — should be punished. Those sentences allege that Vesolowski filed a "Third Amended Complaint naming Artco as a defendant" and that the district court's orders "prohibit Artco from being sued at all." We pause to note that the first assertion mischaracterizes the facts. Vesolowski did file a Third Amended Complaint in December 2007 adding new defendants, but those new defendants did not include Artco. Artco had been named as a defendant since Vesolowski's first complaint, which was filed before the January 24 injunction. Artco's motion also discusses a November 29, 2007, order of the district court that denied Aardema's request to modify the injunction. But Aardema, unlike Vesolowski, initiated his state claim against Artco after the January 24 injunction.
Although it did not mention these points earlier, Artco now suggests that there were two additional justifications for its motion seeking a contempt order and sanctions against Vesolowski. First, Vesolowski had filed a Second Amended Complaint in October 2007 changing the allegations against Artco; she added two new theories of negligence — failure to sound proper whistles and failure to exhibit proper lights — and she supplied rule numbers for her original allegations. Second, Artco complains, Vesolowski asked the state court to remove her case from the bankruptcy calendar, where it had been placed in error. The suit remained stayed at all times and, while Artco attended the state hearings, Artco never had to respond to Vesolowski's actions or answer the complaint.
Artco's motion for contempt and sanctions was originally noticed for presentment on January 30, but the district court cancelled the hearing after Vesolowski filed her response. The court granted Artco's motion for contempt and sanctions on February 5 with the following explanation:
Artco's motion for contempt and sanctions for repeated violations of the court's orders of January 24, 2007 and November 29, 2007 against Antoinette Ryan, Kerrie Vesolowski and Edward Bigos is granted.... As I have said before, there is no exception to the statute barring the state court action against Artco that is applicable here, nor have respondents argued that they fall within one of the eliminated exceptions under which courts have allowed the filing of state actions. Therefore, under the law they may not continue any action against Artco in state court, even if the action is stayed. They are protected by the fact that they can file an action for contribution in this court, as I have previously stated. The state court actions against Artco shall be dismissed within one week. Respondents shall pay Artco's costs in bringing this motion.
(emphasis added). Vesolowski obeyed the order and dismissed her state-court action, but she filed a motion for reconsideration. After the district court denied that motion, she filed this appeal. This order matters to Vesolowski because if it stands, she loses the ability to sue Artco in state court (and thus to have a jury decide her negligence claims), because Illinois's two-year statute of limitations for personal injury claims, see 735 ILCS 5/13-202, will have run by that time, and the parties have not directed our attention to any tolling rule that would permit a late filing.
Our assessment of the district court's order is complicated by Artco's shifting explanation for it. Artco's argument to the district court, abbreviated as it was, seems to have been that the Limitation Act and the January 24 injunction prevent Vesolowski from maintaining her state suit, even if that suit is stayed. The district court appears to have agreed, though the order fails to distinguish Vesolowski from Bigos and Ryan and does not explain why a stay is not a satisfactory way of meeting the requirement of § 30511(c) that "all claims and proceedings against the owner related to the matter in question shall cease."
On appeal, Artco adopts yet another argument: the order to dismiss the suit, it urges, is a sanction for Vesolowski's prosecution of the state suit. Artco now concedes that Vesolowski could have maintained her suit under stay so long as she refrained from "prosecuting" it. We therefore have two possible explanations for the district court's order: (1) Vesolowski cannot maintain her suit under stay (or, in other words, nothing less than dismissal will do once § 30511(c) is invoked) and (2) Vesolowski violated the injunction by prosecuting the suit and the order to dismiss the suit is a sanction. We need not guess which of these lay behind the district court's order because, as we discuss below, neither reason justifies requiring Vesolowski to dismiss her suit.
But Artco's federal complaint is still pending, and so the first thing we must address is our jurisdiction over Vesolowski's appeal. Under 28 U.S.C. § 1292(a)(1), this court has jurisdiction over modifications of injunctions. We do not, however, have jurisdiction over orders interpreting injunctions. See ACORN v. Illinois State Bd. of Elections, 75 F.3d 304, 306 (7th Cir.1996). Artco, which has a vested interest in avoiding immediate review of the February 5 order, insists that it merely interprets the January 24 injunction. Vesolowski defends appellate jurisdiction with the arguments that the February 5 order altered the legal relationship between the parties and that it is sufficiently distinct from the underlying merits of Artco's suit to fall within the collateral order doctrine. We take these points in turn.
To determine the consequences of a contempt order, we must "look beyond the characterization given the contempt order by the parties and the district court to the actual effect of that order." Motorola, Inc. v. Computer Displays Int'l, Inc., 739 F.2d 1149, 1155 (7th Cir.1984). As Vesolowski notes, the key question is whether the order "alters the legal relationship between the parties," id., or "raises new substantive issues or material," Buckhanon v. Percy, 708 F.2d 1209, 1213 (7th Cir.1983).
The January 24 injunction ordered that the "institution and prosecution" of suits be ...
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