Gorman v. Cerasia
| Decision Date | 08 September 1993 |
| Docket Number | No. 92-5601,No. 0364FO,0364FO,92-5601 |
| Citation | 2 F.3d 519 |
| Parties | Brad J. GORMAN, As Owner of a 1990 Wellcraft Scarab-Viper, New Jersey Registrationfor Exoneration from or Limitation of Liability, in a Cause of Action Civil and Maritime, Appellant, v. Robert L. CERASIA, Individually and as General Administrator and Administrator Ad Prosequendum of the Estates of Robert J. Cerasia and Michael C. Cerasia, Deceased; Carole Cerasia, Individually; Anthony Dinallo, Individually and as General Administrator of the Estate of Robert J. Dinallo, Deceased. |
| Court | U.S. Court of Appeals — Third Circuit |
George A. Smith (argued), James S. McMahon, Bigham, Englar, Jones & Houston, Newark, NJ, for appellant.
Steven P. Benenson (argued), Riker, Danzig, Scherer, Hyland & Perretti, Morristown, NJ, for appellees.
Before: SLOVITER, Chief Judge, NYGAARD and WEIS, Circuit Judges.
In this interlocutory appeal in an admiralty case, Brad J. Gorman appeals from the order of the district court vacating portions of its earlier stay and permitting appellees Robert L. Cerasia and Carole Cerasia to proceed with their state court tort action against him. The action was instituted by the Cerasias after their two teenaged sons were killed when the boat in which they were passengers collided with a boat owned and operated by Gorman. Gorman then filed a complaint in the United States District Court for the District of New Jersey for exoneration from or limitation of liability pursuant to the Limited Liability Act, 46 U.S.C. app. Secs. 181-196 (1988). In accordance with the provisions of the Act, the district court enjoined the state court action pending resolution of the underlying admiralty proceeding, but after the state plaintiffs filed stipulations recognizing Gorman's right to litigate the issue of limited liability in the admiralty proceeding, the court partially lifted the stay. It is from this modification of the stay that Gorman appeals.
On the evening of August 10, 1991, Gorman was operating a 1990 Wellcraft Scarab-Viper power vessel in Barnegat Bay off the coast of New Jersey. At approximately 10:00 P.M. the Wellcraft passed a northbound vessel owned by Steven Pyskaty. Immediately thereafter, the Wellcraft and a sixteen-foot 1985 Boston Whaler Montauk, owned by appellee Anthony Dinallo and operated by his son Robert, collided. Also on board the Dinallo boat were two teenaged brothers, Michael and Robert J. Cerasia. All three individuals drowned as a result of the collision.
On February 7, 1992, Robert L. and Carole Cerasia, the parents of the decedents, filed a tort action against Gorman, Anthony Dinallo, and Pyskaty in the Superior Court of Essex County, New Jersey, asserting that the defendants acted negligently and were jointly and severally liable for the accident. Robert Cerasia brought suit in his individual capacity and as administrator of the decedents' estates, seeking damages under the New Jersey Wrongful Death Act, N.J.Stat.Ann. Sec. 2A:31-1 to 2A:31-6 (West 1987), for pecuniary loss resulting from the death of the two boys. He also asserted a claim under the New Jersey Survival Statute, N.J.Stat.Ann. Sec. 2A:15-3 (West 1987), for the personal injuries and pain suffered by his sons before their death. Carole Cerasia sued in her individual capacity, asserting a per quod claim for the loss of her children's company and services. 1
Shortly after the Cerasias filed their complaint, Dinallo cross-claimed in the state action against Gorman for contribution under the New Jersey Tortfeasors Contribution Law, N.J.Stat.Ann. Sec. 2A:53A-1 (West 1987). During the pendency of this appeal, Pyskaty also filed a claim for contribution against Gorman in the state action.
After being served with the Cerasias' summons and complaint in the state proceeding, Gorman filed a timely complaint in the district court seeking exoneration from or limitation of his liability pursuant to the Limited Liability Act, 46 U.S.C. app. Secs. 181-196 (1988). The Act provides that the liability of a shipowner for any damage arising from a maritime accident which occurs "without the privity or knowledge of such owner" shall not exceed the value of the vessel and its freight. Id. Sec. 183(a). Gorman denied that the collision was due to any fault on his part and asserted that he had no privity or knowledge of the events surrounding the accident. App. at 68. He also filed an ad interim stipulation for value in the amount of $70,000 which reflected the total value of the Wellcraft and its cargo.
On May 22, 1992, the district court, as authorized by 46 U.S.C. app. Sec. 185 and Fed.R.Civ.P. Supplemental Rule F(3), enjoined "the commencement or continuation of prosecution of any and all suits, actions, or proceedings" against Gorman arising out of the 1991 boating accident and directed all those asserting claims against him to file them with the court by July 1, 1992. App. at 64. Thereafter, the Cerasias filed a claim in the district court for damages caused by the death of their two sons. Dinallo filed a claim against Gorman for contribution, and also requested attorneys' fees and costs.
On June 30, 1992, the Cerasias moved the district court to vacate its original stay order and to permit their claims against Gorman to proceed in state court on the condition that they file protective stipulations acknowledging Gorman's right to litigate all issues relating to limitation of liability in the admiralty proceeding. Gorman objected on the ground that the district court had exclusive jurisdiction over all issues arising from the boating mishap.
In a letter opinion filed on September 30, 1992, the district court granted the motion to lift the stay. The court stated that App. at 140. 2 The court concluded that the following protective stipulations proffered by the Cerasias and agreed to by Dinallo adequately preserved Gorman's rights under the Act:
(1) Plaintiff Gorman has the right to litigate in this Court all issues relating to limitation of liability under the federal Limitation of Liability Act;
(2) The parties will not seek in any state court action any ruling on Gorman's right to limitation of liability;
(3) In the event that a judgment is recovered in any state court action against Gorman that exceeds the fund representing the value of plaintiff's vessel, neither party will seek to enforce the judgment against Gorman pending adjudication of the Limitation of Liability action in this Court; and
(4) The parties stipulate that the appraisal submitted by Gorman [$70,000] accurately reflects the fair market value of his vessel.
App. at 143-44. The district court also directed a United States Magistrate Judge to "provid[e] for coordination and joint use of discovery in both [the state and federal] actions in order to minimize the time and expenses of pretrial preparation." App. at 142.
Gorman appeals from the district court's order permitting the state action to proceed subject to these four stipulations. On March 26, 1993, while this appeal was pending, Pyskaty also filed a claim for contribution, attorneys' fees, and costs in the limitation proceeding, and in addition Pyskaty claimed the benefit of the federal statute limiting his liability. The district court, with Gorman's consent, permitted Pyskaty to file his claim out of time.
The Cerasias have moved to dismiss Gorman's appeal for lack of jurisdiction. However, as numerous courts have held, "[t]he denial, modification, or dissolution of an injunction in a limitation proceeding is appealable as a matter of right under 28 U.S.C. Sec. 1292(a)(1)." In re Bowoon Sangsa Co., 720 F.2d 595, 597 (9th Cir.1983); see S & E Shipping Corp. v. Chesapeake & Ohio Ry. Co., 678 F.2d 636, 641-42 n. 10 (6th Cir.1982) (); Pershing Auto Rentals, Inc. v. Gaffney, 279 F.2d 546, 547-48 (5th Cir.1960) (same). It follows that we have jurisdiction to hear Gorman's appeal.
The district court has discretion to vacate a previously-issued stay in a limitation proceeding. See Langnes v. Green, 282 U.S. 531, 541, 51 S.Ct. 243, 247, 75 L.Ed. 520 (1931); Newton v. Shipman, 718 F.2d 959, 961 (9th Cir.1983). However, where a shipowner demonstrates that his or her right to limit liability would be prejudiced, the court's lifting of the stay constitutes an abuse of discretion. See Universal Towing Co. v. Barrale, 595 F.2d 414, 420 (8th Cir.1979); S & E Shipping, 678 F.2d at 647 (Cornelia G. Kennedy, J., concurring).
The Limited Liability Act provides that the liability of a shipowner incurred as a result of a maritime accident "without the privity or knowledge of such owner ... shall not ... exceed the amount or value of the interest of such owner in such vessel, and her freight then pending." 46 U.S.C. app. Sec. 183(a). 3 As the Fifth Circuit has explained, "[i]n the typical situation of a corporate owned ocean vessel the privity and knowledge scrutiny focuses in on whether the shore-based high-leveled management is aware (or should have been) of the likelihood of the occurrence happening after the ship is underweigh [sic]." Tittle v. Aldacosta, 544 F.2d 752, 756 (5th Cir.1977) (citations omitted).
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