Lexington Ins. Co. v. Langei, C12-946 TSZ

• Decision Date: 18 July 2014
• Docket Number: C12-946 TSZ
• Court: U.S. District Court — Western District of Washington
• Parties: LEXINGTON INSURANCE COMPANY and PORT OF BELLINGHAM, Plaintiffs, v. ROBERT J. LANGEI, as Personal Representative of the Estate of Jim (James) A. Langei, Defendant. LEXINGTON INSURANCE COMPANY and PORT OF BELLINGHAM, Plaintiffs, v. LORA MOREN, as Personal Representative of the Estate of Sterling Taylor, Defendant.

LEXINGTON INSURANCE COMPANYand PORT OF BELLINGHAM, Plaintiffs, v. ROBERT J. LANGEI, as Personal Representative

of the Estate of Jim (James) A. Langei, Defendant.

LEXINGTON INSURANCE COMPANYand PORT OF BELLINGHAM, Plaintiffs, v. LORA MOREN, as Personal Representative

of the Estate of Sterling Taylor, Defendant.

C12-946 TSZ

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE

Dated: July 18, 2014

(consolidated with C12-1036 RSL,

C12-1756 TSZ, and C12-1785 TSZ)

ORDER

THIS MATTER comes before the Court on a motion brought by plaintiff Port of Bellingham (the "Port") for partial summary judgment, docket no. 67. Having reviewed all papers filed in support of and in opposition to the Port's motion, the Court enters the following order.

Background

This consolidated action arises out of a fire that erupted on March 30, 2012, in Squalicum Harbor in Bellingham, Washington, claiming the lives of Jim A. Langei and Sterling Taylor, husband and wife. The fire destroyed the G East Boathouse¹ of the Squalicum Marina and the twelve (12) non-commercial yachts moored there, including the M/Y BREAKWIND, which was owned by Langei and Taylor, all of which sank into the Harbor's navigable waters. The Port of Bellingham and its insurer Lexington Insurance Company ("Lexington") initiated this litigation against Langei's and Taylor's estates (the "Estates"), seeking to recover the amounts expended in salvaging the Boathouse and vessels, in remediating the associated oil and other pollution, and in storing and disposing of the related debris. See Am. Compls. (v. Langei Estate) (docket nos. 15 & 17); Compls. (v. Taylor Estate) (C12-1756, docket no. 1 & C12-1785, docket no. 1).

In response, the Estates asserted a right to exoneration or limitation of liability pursuant to 46 U.S.C. §§ 30501-30512 (the "Limitation Act"). They also pleaded, as an affirmative defense, that the Port's damages were caused by the "negligence of others," and invoked the doctrines of comparative and contributory negligence. Answers (docket nos. 39, 40, 43, & 44). A few months later, the Estates commenced proceedings in Whatcom County Superior Court against the Port, alleging that the Port is liable forLangei's and Taylor's deaths because (i) the fire resulted from the Port's faulty electrical components, and/or (ii) the Port's fire suppression system was inadequate. See Estates' Compl. at ¶¶ 3.1-3.7, Ex. F to Fix Decl. (docket no. 68). In the wrongful death action in Whatcom County Superior Court, the Port moved for a stay, but its motion was denied without prejudice. See Ex. G to Fix. Decl. The Port now seeks relief from this Court in two respects: (i) the Port requests a ruling that certain of its claims against the Estates are not subject to the Limitation Act; and (ii) the Port asks the Court to hold that the Estates' failure to plead the wrongful death claims as compulsory counterclaims in this action bars the Estates from pursuing such claims in state court.

Discussion

A. Exoneration or Limitation of Liability

Under federal law, the liability of a seagoing vessel owner for damage caused by the vessel may be limited, under certain conditions, to the post-accident value of the vessel plus any pending freight. See In re Glacier Bay, 944 F.2d 577, 579 (9th Cir. 1991); see also 46 U.S.C. §§ 30502 & 30505. In this action, the Port and Lexington assert several claims against the Estates, including violation of four (4) federal statutes, namely the Oil Pollution Act of 1990 ("OPA"), the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 ("CERCLA"), the Federal Water Pollution Control Act ("Clean Water Act"), and the Wreck Removal Act ("WRA"),² as well as violation of a state statute, namely Washington's Model Toxics Control Act("MTCA"), RCW Chapter 70.105D.³ See Am. Compls. at 4th, 5th, 6th, 7th, & 8th Causes of Action (docket nos. 15 & 17); Compls. at 4th, 5th, 6th, & 7th Causes of Action (C12-1756, docket no. 1 & C12-1785, docket no. 1). The Port and Lexington also allege that the Estates have indemnification obligations pursuant to a personal contract executed by Langei, namely the Moorage Agreement dated March 2, 2010. See Am. Compls. at 1st & 12th Causes of Action; Compls. at 1st & 11th Causes of Action; see also Ex. A to Fix Decl. With respect to these claims, the Port seeks a ruling that the Estates may not limit their liability to the post-fire value of the M/Y BREAKWIND, which was destroyed and is now worthless.

In response, the Estates do not dispute that each federal statute at issue contains, with respect to any claims brought under such statute, an express or implied "repeal" of the Limitation Act.⁴ Likewise, the Estates do not quarrel with the proposition that theLimitation Act would not relieve them from any liability under the MTCA⁵ or pursuant to the Moorage Agreement.⁶ Rather, the Estates contend only that (i) they are not liable because the fire did not result from the acts of the decedents or because the decedents are entitled to the benefit of exculpatory provisions of the statutes at issue; (ii) the Port is not a proper plaintiff under the Clean Water Act or the WRA;⁷ and (iii) the Estates are not proper defendants under the MTCA.⁸ The Estates, however, have not themselves moved for any relief, and the Court DECLINES to further address these contentions at this time.

With respect to the issue of whether the federal and state statutory claims and the contract claims fall outside the scope of the Limitation Act, the Court GRANTS the Port's motion for partial summary judgment as follows. See Fed. R. Civ. P. 56(a). Any damages that might be awarded to the Port in connection with its claims under the OPA,CERCLA, the Clean Water Act, the WRA, the MTCA, or the Moorage Agreement will not be limited to the salvage value of the M/Y BREAKWIND, notwithstanding 46 U.S.C. §§ 30501-30512. The Court, however, makes no ruling concerning the cognizability of, or any liability of the Estates relating to, such claims.

B. Compulsory Counterclaim for Wrongful Death

In a federal action, a responsive pleading must include any mature compulsory counterclaim. Fed. R. Civ. P. 13(a). A counterclaim is compulsory if it arises out of the same transaction or occurrence as the opposing party's claim, is not the subject of another pending action, and does not require the joinder of a party over which the Court cannot acquire jurisdiction. Id. A counterclaim is mature when the conditions precedent to its assertion have been satisfied. See Stone v. Dep't of Aviation, 453 F.3d 1271, 1276-77 (10th Cir. 2006); Keller Transp., Inc. v. Wagner Enters., LLC, 873 F. Supp. 2d 1342, 1354-55 (D. Mont. 2012). The Port asserts that the Estates were required to plead their wrongful death claims as counterclaims in this matter and that, because they failed to do so, they are now precluded from proceeding on the wrongful death claims in state court.

In response to the Port's motion, the Estates do not dispute that their wrongful death claims against the Port arise out of the same "occurrence" as the Port's claims against the Estates,⁹ and they do not suggest that the wrongful death claims would require the addition of another party over whom the Court cannot acquire jurisdiction. See Fed.R. Civ. P. 13(a)(1). The Estates contend solely that, because they had not yet presented their wrongful death claims to the Port as required by RCW 4.96.020, the claims were not mature at the time the Estates filed their answers and therefore were not compulsory counterclaims. Although the Estates' position finds support in Stone and Keller Transp., those cases are distinguishable, involving right-to-sue letters and the prerequisites for private claims under the OPA, respectively.

The issue in this case, whether the presentment requirements of RCW 4.96.020 are waived with respect to any compulsory counterclaims when a municipal corporation itself initiates suit, appears to be an issue of first impression. Courts have previously held, however, that sovereign immunity is waived as to compulsory counterclaims when a state or municipality invokes the jurisdiction of the federal courts. Competitive Techns. v. Fujitsu Ltd., 286 F. Supp. 2d 1118, 1129 (N.D. Cal. 2003) (citing In re Lazar, 237 F.3d 967, 978 (9th Cir. 2001)); City of Newark v. United States, 254 F.2d 93 (3d Cir. 1958). Such waiver of sovereign immunity might extend to the notice-of-claim condition precedent to commencing an action against the sovereign, and if so, would undermine the Estates' assertion that their wrongful death claims were not mature at the time they filed their answers. The Court, however, DECLINES to rule on this issue because the Port would not be entitled to the relief it seeks even if the Estates' wrongful death claims constituted mature compulsory counterclaims.

The Port's position that the wrongful death claims are barred by the failure to plead them as counterclaims is premised on a misunderstanding concerning Rule 13. Although the failure to plead a compulsory counterclaim in a prior action might bar asubsequent suit, the legal theory leading to such result is the doctrine of res judicata, which operates only after the first case, in which the compulsory counterclaim was omitted, has reached final judgment. See Pochiro v. Prudential Ins. Co. of Am., 827 F.2d 1246, 1253-54 (9th Cir. 1987); see also Mitchell v. CB Richard Ellis Long Term Disability Plan, 611 F.3d 1192, 1201 (9th Cir. 2010) ("where a party has failed to plead a compulsory counterclaim, the claim is waived and the party is precluded by principles of res judicata from raising it again"). Rule 13 does not itself prevent the filing of a separate lawsuit instead of a compulsory counterclaim. See William W. Schwarzer, A. Wallace Tashima, & James M. Wagstaffe, FEDERAL CIVIL PROCEDURE BEFORE TRIAL at ¶ 8:1177 (2014).

Moreover, while the federal action in which the counterclaim should have been interposed remains pending, leave of the...