Joyce v. Joyce

Decision Date17 September 1992
Docket NumberNo. 91-1310,91-1310
Citation975 F.2d 379
PartiesWilliam JOYCE, Plaintiff-Appellant, v. Mary Ann JOYCE, Defendant-Appellee.
CourtU.S. Court of Appeals — Seventh Circuit

Robert M. Chemers, Scott O. Reed (argued), Richard M. Waris, Matthew J. Egan, Pretzel & Stouffer, Chicago, Ill., for plaintiff-appellant.

David L. Cwik, Karen A. Keefer (argued), Nevoral & Associates, Chicago, Ill., for defendant-appellee.

Before CUMMINGS and RIPPLE, Circuit Judges, and CRABB, District Judge. *

RIPPLE, Circuit Judge.

In a complaint filed in Illinois state court, Mary Ann Joyce (Mary Ann) alleged that William Joyce (William) was negligent in entrusting his pleasure boat to John Ivkovich, who was driving the boat when Mary Ann suffered a back injury. William then filed with the federal district court a complaint for limitation of liability under section 183 of the Limitation of Shipowner's Liability Act. See 46 U.S.C.App. §§ 183, 185. The district court dismissed the suit sua sponte for lack of subject matter jurisdiction because it determined that the Act gave it no power to limit William's liability. William appeals, and we affirm. Mary Ann has filed in this court a motion to dismiss for insufficiency of service of process. Because we affirm the district court's dismissal for lack of subject matter jurisdiction, we deny Mary Ann's motion as moot.

A. Facts

On September 15, 1988, William Joyce, an Illinois citizen, purchased a new pleasure boat--a twenty-two-foot Mako-brand boat, powered by a 225-horsepower outboard engine--for approximately $26,000. William docked the boat in Florida. On April 7, 1989, six people, including Mary Ann Joyce and John Ivkovich but apparently not William, 1 were present on the boat as it was being operated in the intercoastal waterway near St. James City, Pine Island, Florida. William had allegedly authorized or permitted Ivkovich to drive the boat, and Ivkovich was in control of the boat as it approached Mile Marker 31. According to the complaint, Ivkovich drove the boat into the wake of a passing boat and thereby caused the passengers, including Mary Ann, to be tossed about. Mary Ann was jolted so severely that she fractured a vertebrae, requiring surgery.

On July 13, 1990, Mary Ann filed a three-count complaint against William and Ivkovich in Illinois state court, seeking recovery for her injuries. Counts one and two alleged that Ivkovich was negligent in operating the boat. Count three--the only count directly relevant to the present case--alleged that William was negligent in entrusting the boat to Ivkovich. Specifically, count three alleged:

6. That prior to the time John Ivkovich operated defendant William Joyce's 1988 Mako boat on April 7, 1989, the defendant William Joyce never inquired of John Ivkovich concerning his experience, training, knowledge or understanding about the operation of such boats.

7. That prior to the time John Ivkovich operated William Joyce's 1988 Mako boat on April 7, 1989, the defendant William Joyce never observed, participated in, instructed or managed John Ivkovich's operation of said boat.

8. That prior to the time John Ivkovich operated William Joyce's 1988 Mako on April 7, 1989, the defendant William Joyce had no personal knowledge as to John Ivkovich's capability to reasonably and prudently operate such boats while carrying passengers on Florida's Intercoastal Waterways.

9. That, notwithstanding the aforesaid, the defendant William Joyce allowed and permitted the defendant John Ivkovich to operate his Mako boat on April 7, 1989.


12. The defendant William Joyce had the duty to inquire of John Ivkovich concerning his training, knowledge, understanding, capability and experience in operating such boats prior to John Ivkovich's operation of William Joyce's boat on April 7, 1989.

13. That the defendant William Joyce negligently entrusted this Mako boat to John Ivkovich who, at said time and place, was inexperienced and incapable of reasonably and prudently operating said boat along and upon Florida's Intercoastal Waterways.

R.1 Ex.A at 6-7.

B. District Court Proceedings

On January 3, 1991, William filed a complaint against Mary Ann in the United States District Court for the Northern District of Illinois, Eastern Division, pursuant to 46 U.S.C.App. §§ 183(a), 185, the relevant sections of the Limitation of Shipowner's Liability Act, seeking to limit his liability in Mary Ann's suit to the value of his boat ($26,000). 2 Section 183(a) provides:

(a) The liability of the owner of any vessel, whether American or foreign, for any embezzlement, loss, or destruction by any person of any property, goods, or merchandise shipped or put on board of such vessel, or for any loss, damage, or injury by collision, or for any act, matter, or thing, loss, damage, or forfeiture, done, occasioned, or incurred, without the privity or knowledge of such owner or owners, shall not, except in the cases provided for in subsection (b) of this section, exceed the amount or value of the interest of such owner in such vessel, and her freight then pending.

46 U.S.C.App. § 183(a) (emphasis supplied). Only four days later, on January 7, 1991--before Mary Ann had filed an appearance or responsive pleading--the district court sua sponte dismissed William's complaint for lack of subject matter jurisdiction. The district court reasoned that, because Mary Ann's cause of action against William was an allegation of William's own direct misconduct in entrusting the boat to Ivkovich (rather than an allegation of vicarious or derivative negligence), either (1) William did entrust the boat to Ivkovich (negligently or not), in which case that entrustment was within William's "privity or knowledge" and the Act does not apply, or else (2) William did not entrust the boat to Ivkovich, in which case Mary Ann's suit will fail and William has no need for the Act to apply. In either case, the court would be powerless to do anything to affect either party.

On January 18, 1991, eleven days after the sua sponte dismissal, Mary Ann's attorney filed a "Special and Limited Appearance" on her behalf with the district court, alleging that the district court lacked personal jurisdiction over her because William never served her with a summons. On January 28, William filed two motions: (1) a motion for leave to file an amended complaint, and (2) a motion to reconsider. William attached an amended complaint that he wished to file, which included the following two new paragraphs:

8. The Plaintiff, WILLIAM JOYCE, was without knowledge that JOHN IVKOVICH was going to operate the boat on the date of the accident or at any other time.

9. The Plaintiff, WILLIAM JOYCE, had no knowledge as to JOHN IVKOVICH'S ability to operate the boat on April 7, 1989, and furthermore, had no reason or duty to determine JOHN IVKOVICH'S ability to operate the boat since the Plaintiff, WILLIAM JOYCE, did not know JOHN IVKOVICH would operate the boat that day or at anytime.

R.8 at 3-4. In response, on February 1, Mary Ann filed her first responsive pleading, a "Motion to Strike and For Costs," in which she reiterated that she had "never been served by the plaintiff with the original Complaint" and argued that William's amendment was "specious" in light of the district court's reasoning in dismissal. On February 4, the district court denied both of William's motions and granted Mary Ann's request for fees with respect to the motions. William then appealed to this court.

On February 6, William filed a Notice of Appeal. On May 1, when Mary Ann filed her appellate brief, she also filed what she termed a Rule 12(b)(5) motion to dismiss for insufficiency of service of process. This court's motions panel ordered the motion to be taken with the case and heard by this panel.


Before this court are both William's appeal of the district court's dismissal for lack of subject matter jurisdiction and Mary Ann's motion to dismiss for insufficiency of service of process. We shall address these in turn.

A. Subject Matter Jurisdiction

William contends that the district court erred in assuming that a shipowner's entrustment--negligent or not--is within the shipowner's "privity or knowledge," as used in the Act. To the contrary, William argues, "entrustment of a vessel to another, without reason to suspect incompetence, is not 'privity or knowledge', absent other facts." Appellant's Br. at 11. William further reasons that the district court's mistaken assumption led it to err when it concluded that it lacked subject matter jurisdiction over the case. We review de novo a dismissal for lack of subject matter jurisdiction. Houck ex rel. United States v. Folding Carton Admin. Comm., 881 F.2d 494, 503 (7th Cir.1989), cert. denied, 494 U.S. 1026, 110 S.Ct. 1471, 108 L.Ed.2d 609 (1990). 3

The Limitation of Shipowner's Liability Act allows district courts, under their admiralty jurisdiction conferred by 28 U.S.C. § 1333(1), to determine whether a shipowner's liability should be limited when that liability may be predicated on an act that was not within the shipowner's "privity or knowledge." The phrase "privity or knowledge" is not defined in the Act, but the history and purpose of the Act shed substantial light on its meaning.

The Act is principally rooted in an English limitation of liability statute (7 Geo. 2, ch. 15) passed by Parliament in 1734, after English shipowners, envious of the limited liability of European shipowners, persuaded Parliament to level the playing field. In 1848, American shipowners were moved by a similar sense of competitive disadvantage after several incidents in which shipowners were held liable for significant damage amounts under the common law rule of common carrier liability, which did not require proof that the owner was negligent or at fault. See New Jersey Steam Navigation Co. v. Merchant's Bank, 47 U.S. (6 How.) 344, 12 L.Ed. 465...

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