Beiswenger Enterprises Corp. v. Carletta

• Decision Date: 27 June 1996
• Docket Number: No. 95-2272,95-2272
• Citation: 86 F.3d 1032
• Parties: In the Matter of Petition of BEISWENGER ENTERPRISES CORP., Plaintiff-Appellant, v. Kathleen CARLETTA, Pauline Walls, Shante Myers, Yolanda Williams, Julian Myers, Estate of George Myers, George E. Myers, Jr., Claimants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1032

86 F.3d 1032

1996 A.M.C. 2734

In the Matter of Petition of BEISWENGER ENTERPRISES CORP. Plaintiff-Appellant, v. Kathleen CARLETTA, Pauline Walls, Shante Myers, Yolanda Williams, Julian Myers, Estate of George Myers George E. Myers, Jr., Claimants-Appellees.

No. 95-2272.

United States Court of Appeals Eleventh Circuit.

June 27, 1996.

Timothy P. Shusta and Joseph K. Birch, Hayden & Milliken, Tampa, Florida, and James E. Ross, James E. Ross & Associates, Houston, Texas, for appellant.

James B. Tilghman, Jr., Steward Tilghman, Fox & Bianchi, Miami, Florida, for appellees.

Appeal from the United States District Court for the Middle District of Florida.

Before ANDERSON and BLACK, Circuit Judges, and HENDERSON, Senior Circuit Judge.

ANDERSON, Circuit Judge:

Appellant Beiswenger Enterprises Corporation ("BEC"), the owner of the M/V "Skyrider Express," brought this admiralty action under the Limitation of Vessel Owner's Liability Act, 46 App.U.S.C. § 181 et seq. (the "Limitation Act"). This statute, originally enacted by Congress in 1851, limits a vessel owner's liability for any damages arising from a maritime accident to the value of the vessel and its freight, provided that the accident occurred without such owner's "privity or knowledge." 46 App.U.S.C. § 183(a). ¹ When BEC filed its petition seeking limited liability, the district court enjoined the institution or prosecution of other suits against BEC pending the outcome of the limitation proceeding. See Fed.R.Civ.P. Supplemental Rule F(3). The damage claimants, appellees herein, filed a motion in the district court to stay BEC's limitation action and to lift the injunction against their state court tort action. The district court granted the damage claimants' motion, after accepting certain stipulations from the damage claimants designed to protect the vessel owner's rights under the Limitation Act. BEC appeals, contending that the amended stipulations filed by the damage claimants are inadequate. In this opinion, we address two primary issues. First, we address the viability in this Circuit of the procedure which allows the damage claimants in a multiple-claims-inadequate-fund case to proceed against the vessel owner outside the admiralty court upon the filing of appropriate protective stipulations. Second, we address whether the amended stipulations filed by the damage claimants in this case adequately protect BEC's rights under the Limitation Act.

I.

On December 4, 1990, George Edward Myers and his fiancee Kathleen Carletta hired BEC to take them parasailing near Clearwater Beach, Florida. Parasailing is a recreational boating activity in which the riders, secured to the boat by a tow line, are pulled aloft by a parachute. Myers and Carletta boarded BEC's motor vessel, the "Skyrider Express," and they proceeded into the Gulf of Mexico. As the Skyrider Express maneuvered through the water, the parachute canopy filled with wind, lifting Myers and Carletta into the air. At the conclusion of the ride, weather conditions interfered with the boat operator's efforts to retrieve the parasailors from the air. The operator severed the tow line connecting the vessel to the riders, causing them to descend to the water. After Myers and Carletta splashed down, the parachute canopy again filled with a gust of wind and rose into the air. Somehow, the tow line had become entangled around one of Myers' ankles, causing the parachute to pull him, hanging upside down, toward the sky. As the parachute passed over land, Myers slammed into several shoreside objects, and sustained serious injuries from which he died fourteen days later.

Anticipating liability for this event, BEC brought this action on February 6, 1991, seeking exoneration from or limitation of liability with respect to any claims arising out of the parasailing incident. BEC asserted that it was not at fault for the accident, and that the accident occurred without its privity or knowledge. On March 15, 1991, the district court approved BEC's security bond and ad interim stipulation of $40,090.00 as the value of the M/V Skyrider Express and its freight, and enjoined the institution or further prosecution of any suits against BEC or the M/V Skyrider Express in any other forum. See generally 46 App.U.S.C. § 185; Fed.R.Civ.P. Supplemental Rule F. The district court also issued a published notice directing all potential claimants to file their claims in the admiralty court by April 15, 1991.

On April 12, 1991, Carletta filed a claim for damages for her personal injuries, and, in an answer to BEC's limitation complaint, disputed BEC's allegations on the central issues of fault and privity or knowledge. The estate of Myers and two of Myers' surviving minor children, Shante Denise Myers and Julian Caesar Myers, also answered BEC's complaint and filed a damages claim. ²

More than a year later, in July 1992, Carletta and Myers' estate filed an action for personal injury and wrongful death in Florida state court against the following parties: Parasailing Enterprises, Inc. and Controlled Parasailing Corporation of America, the manufacturer and seller of the parasailing equipment; Mark McCulloh, an employee of Parasailing Enterprises and/or Controlled Parasailing; Roy F. Beiswenger, the operator of the Skyrider Express at the time of the accident; and William J. Beiswenger, the parasailing instructor and trainer. Because this state court complaint did not name BEC as a party, the district court refused to enjoin its prosecution. ³

At some point, appellees decided that they wanted to add BEC as a party to the pending state court action. On September 14, 1994, they filed a motion to stay the limitation of liability proceeding and to lift the injunction against suing BEC in state court. Appellees attached to this motion a series of stipulations designed to protect BEC's rights under the Limitation Act. The magistrate judge identified several perceived deficiencies in these stipulations, and recommended that the motion to lift the injunction be denied without prejudice. In response to the magistrate judge's concerns, appellees filed the following amended stipulations on October 6, 1994:

AMENDED STIPULATIONS OF THE RESPONDENT/CLAIMANTS IN SUPPORT OF MOTION TO STAY LIMITATION OF LIABILITY ACTION AND TO LIFT INJUNCTION RESTRAINING ACTIONS AGAINST PETITIONERS

Provided the Court lifts its Injunction of March 15, 1991 and stays this action to permit the Claimants to proceed against the Petitioner in a state court action for personal injury and wrongful death, the Respondent/Claimants, KATHLEEN CARLETTA and ELNORA MYERS, as Personal Representative of the Estate of George Edward Myers, stipulate and agree as follows:

1. That the Petitioner, BEISWENGER ENTERPRISES CORP., has the right to litigate the issue of whether it is entitled to limit its liability under the provisions of the Limitation of Liability Act, 46 U.S.C. § 181 et seq., in this Court, and this Court has exclusive jurisdiction to determine that issue.

2. That the Petitioner has the right to have this Court determine the value of the M/V Skyrider Express immediately following the incident at issue, and this Court has exclusive jurisdiction to determine that issue.

3. That the Respondent/Claimants will not seek a determination of the issues set forth in paragraphs (1) and (2) above in any state court, and consent to waive any res judicata effect the decisions, rulings or judgments of any state court might have on those issues.

4. That the Respondent/Claimants will not seek to enforce any judgment rendered in any state court, whether against the Petitioner or another person or entity that would be entitled to seek indemnity or contribution from the Petitioner, by way of cross-claim or otherwise, that would expose the Petition [sic] to liability in excess of $40,090.00, until such time as this Court has adjudicated the Petitioner's right to limit that liability.

5. That, in the event this Court determines that the Petitioner is entitled to limit its liability, the Respondent/Claimants agree that any claim based upon fees and/or costs awarded against Petitioner and in favor of any party in any state court proceeding will have first priority against the available fund.

6. That, in the event this Court determines that the Petitioner is entitled to limit its liability, the Respondents/Claimants agree that, following payment of the claims, if any, described in paragraph 5 above, the claim of ELNORA MYERS, as Personal Representative of the Estate of George Edward Myers, Deceased, shall have second priority against the limitation fund and priority over the claim of KATHLEEN CARLETTA.

R-2-81.

After reviewing these amended stipulations, the district court stayed the federal limitation proceeding and lifted the injunction, thus allowing appellees to proceed against BEC in state court. This appeal followed.

II.

In the mid-nineteenth century, Congress passed the Limitation Act ⁴ "to encourage ship building and to induce capitalists to invest money in this branch of industry." Norwich & N.Y. Transp. Co. v. Wright, 80 U.S. (13 Wall.) 104, 121, 20 L.Ed. 585, 591 (1871). The Act achieves this purpose by "exempting innocent shipowners from liability, beyond the amount of their interest." Id. When faced with liability for a maritime accident, a vessel owner may file a petition in federal court seeking protection under the Limitation Act. Provided that the accident in question occurred without the vessel owner's "privity or knowledge," the Act limits the owner's liability to the value of his or her interest in the vessel and its pending freight. 46 App.U.S.C. § 183(a). After the vessel owner deposits with the court an amount representing the value of the vessel and its freight (the "limitation fund"), the district court stays all related claims against the vessel owner pending in any other forum, and directs all potential claimants to file their claims against the...