Mapco Petroleum, Inc. v. Memphis Barge Line, Inc.

• Decision Date: 22 February 1993
• Citation: 1993 A.M.C. 2113,849 S.W.2d 312
• Parties: MAPCO PETROLEUM, INC., Plaintiff-Appellant v. MEMPHIS BARGE LINE, INC., Defendant-Appellant.
• Court: Tennessee Supreme Court

Page 312

849 S.W.2d 312

1993 A.M.C. 2113

MAPCO PETROLEUM, INC., Plaintiff-Appellant v. MEMPHIS BARGE LINE, INC., Defendant-Appellant.

Supreme Court of Tennessee at Jackson.

Feb. 22, 1993.

C. Barry Ward, William R. Bradley, Jr., Glankler, Brown, Gilliland, Chase, Robinson & Raines, Memphis, Robert T. Lemon, II, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, LA, for plaintiff Mapco.

G. Ray Bratton, Eugene Stone Forrester, Jr., Farris, Hancock, Gilman, Branan & Hellen, Memphis, Machale A. Miller, O'Neil, Eichin, Miller & Breckinridge, New Orleans, LA, for defendant Memphis Barge.

OPINION

DROWOTA, Justice.

In this admiralty case, Mapco Petroleum, Inc. ("Mapco"), and Memphis Barge Line, Inc. ("Memphis Barge") have appealed from a judgment of the Court of Appeals finding that the Circuit Court for Shelby County lacked jurisdiction to consider a limitation of liability defense asserted pursuant to 46 U.S.C.App. § 183. The issue presented is one of first impression, whether courts of this state have subject matter jurisdiction to adjudicate an affirmative defense asserted under the Limitation of Vessel Owner's Liability Act, specifically 46 U.S.C.App. § 183. We answer in the affirmative and, accordingly, reverse the courts below.

The Defendant, Memphis Barge, is the owner and operator of the vessel M/V Sebring. The Plaintiff, Mapco, is the owner and operator of petroleum refinery and dock facilities located on the Mississippi River. On December 7, 1986, the M/V Sebring was pushing a 3-barge tow towards one of Mapco's dock facilities for the purpose of mooring at the dock for the night. Instead of mooring as intended, a barge being towed by the M/V Sebring struck and damaged Mapco's dock.

Mapco filed suit against Memphis Barge in the Circuit Court of Shelby County claiming that the damage to its dock was attributable to the negligence of Memphis Barge. In its answer, Memphis Barge asserted an affirmative defense under 46 U.S.C.App. § 183, seeking to limit its liability to $353,515.58, the value of the M/V Sebring and its freight. Mapco moved to strike the affirmative defense, claiming that the court lacked subject matter jurisdiction to consider it. The trial court agreed and ordered the defense stricken. Thereafter, the parties stipulated that Mapco was entitled to recover damages in the amount of $690,000.00 exclusive of pre-judgment interest. The trial court entered judgment in accordance with this stipulation, plus interest, for a total judgment of $905,915.02. Memphis Barge then appealed. The Court of Appeals held that "state courts lack jurisdiction to determine if a vessel owner is entitled to limited liability if the shipowner's right to limit liability is challenged." However, the Court remanded the case for a determination of whether Mapco had a non-frivolous basis for challenging the defense on the merits. Both parties have appealed from the decision of the Court of Appeals.

I.

Our analysis of the jurisdictional question in this case must begin with the recognition that Article III, Section 2, of the United States Constitution vests admiralty and maritime jurisdiction in the federal courts. Congress implemented this constitutional power in 28 U.S.C. § 1333 which provides in part that "[t]he district courts shall have original jurisdiction, exclusive of the courts of the States, of: (1) Any civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled." The so-called "savings to suitors clause" of Section 1333 gives a party injured in an incident occurring on the navigable waters of the United States the option of filing a claim in a state court instead of a federal court whenever the injured party is seeking a common law remedy (i.e., money damages as in the instant case). Roth v. Cox, 210 F.2d 76, 78-79 (5th Cir.1954), aff'd, 348 U.S. 207, 75 S.Ct. 242, 99 L.Ed. 260 (1955); Eastern Steel & Metal Co. v. Hartford Fire Ins. Co., 376 F.Supp. 763, 765 (D.Conn.1974); Pfeiffer v. Weiland, 226 N.W.2d 218, 220 (Iowa 1975); Hebert v. Diamond M. Co., 367 So.2d 1210, 1215 (La.App.1978). Relying on the savings to suitors clause of Section 1333, Mapco, Plaintiff herein, elected to file its lawsuit seeking money damages in the Circuit Court of Shelby County.

As stated above, Memphis Barge asserted in its answer an affirmative defense under 46 U.S.C.App. § 183, which provides in pertinent part:

(a) The liability of the owner of any vessel, whether American or foreign, for any ... 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 ... 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).

Section 183 is the substantive provision of the Limitation of Vessel Owner's Liability Act, 46 U.S.C.App. § 181 et seq. ¹ It provides that the owner of a vessel can limit liability for losses occurring on the navigable waters of the United States to the value of the vessel and its freight, provided the loss occurred without the privity and knowledge of the owner or owners. ²

Aside from Section 183, Section 185 of the Act provides for a procedure known as a "concursus," whereby the vessel owner can file a petition in federal court evoking the limitation of liability provision of Section 183. ³ The purpose behind a Section 185 proceeding in federal court is to permit all actions against the vessel owner to be consolidated in a single case which will then dispose of all claims simultaneously. Complaint of Caldas, 350 F.Supp. 566, 575 (E.D.Pa.1972), aff'd, 485 F.2d 678, 679 (3rd Cir.1973). Congress established the Section 185 concursus procedure because maritime casualties often involve interstate commerce with injuries to multiple parties with diverse domiciles. As a result, a ship owner can be subject to multiple suits by multiple parties in multiples forums. For whatever reason, perhaps because of the lack of the threat of multiple suits, Memphis Barge did not file a Section 185 limitation of liability proceeding in federal court.

Although the Act specifically provides a procedure for limiting liability through the filing of a Section 185 petition in federal court, the U.S. Supreme Court has long recognized that this is not the exclusive means by which a vessel owner may assert the limitation defense under Section 183. The benefits of Section 183 can also be obtained by raising the limitation by way of answer to a suit commenced in state court against the vessel or its owner. Ex Parte Green, 286 U.S. 437, 52 S.Ct. 602, 76 L.Ed. 1212 (1932); Langnes v. Green, 282 U.S. 531, 51 S.Ct. 243, 75 L.Ed. 520 (1931); Carlisle Packing Co. v. Sandanger, 259 U.S. 255, 42 S.Ct. 475, 66 L.Ed. 927 (1922); The Scotland, 105 U.S. 24, 26 L.Ed. 1001 (1881). Thus, the rule is that the vessel owner may raise the Section 183 limitation defense in its answer in state court brought by the injured party under the savings to suitors clause of Section 1333, as well as in a concursus proceeding brought in federal court by the vessel owner under Section 185. Langnes, 282 U.S. at 540-41, 51 S.Ct. at 246-47; Signal Oil & Gas Co. v. Barge W-701, 654 F.2d 1164, 1173 (5th Cir.1981) ⁴; The Chickie, 141 F.2d 80, 84 (3rd Cir.1944). Accordingly, state courts have adjudicated the right of vessel owners to limit their liability under Section 183. See, e.g., Fishboats, Inc. v. Welzbacher, 413 So.2d 710, 717-19 (Miss.1982); The Golden Touch, 1967 A.M.C. 353 (R.I.Super.Ct.1966), cert. denied, 226 A.2d 505 (R.I.1967); De Pinto v. O'Donnell Transp. Co., 180 Misc. 649, 40 N.Y.S.2d 218 (N.Y.Sup.1943); Loughin v. McCaulley, 186 Pa. 517, 40 A. 1020, 1021-22 (1898).

II.

Relying upon Vatican Shrimp Co., Inc. v. Solis, 820 F.2d 674 (5th Cir.1987), and Cincinnati Gas & Elec. Co. v. Abel, 533 F.2d 1001 (6th Cir.1976), Plaintiff Mapco contends that the Section 183 limitation defense can be asserted as an affirmative defense in a state court action, but the state court loses subject matter jurisdiction to consider the defense if the plaintiff contests the vessel owner's right to limit liability. Memphis Barge argues that Vatican Shrimp and Cincinnati Gas are inapplicable and, in any event, misconstrue the U.S. Supreme Court decisions in Langnes v. Green, 282 U.S. 531, 51 S.Ct. 243, 75 L.Ed. 520 (1931), and Ex Parte Green, 286 U.S. 437, 52 S.Ct. 602, 76 L.Ed. 1212 (1932). Memphis Barge maintains that a state court does have subject matter jurisdiction to adjudicate a Section 183 defense when there is no companion Section 185 action pending in federal court to divest the state court of jurisdiction.

A. Langnes

and Ex Parte Green

In Langnes, the injured party elected to commence suit seeking damages in state court instead of federal court under the savings to suitors clause of Section 1333. Two days before the trial, the vessel owner commenced its own Section 185 petition in federal court which, in turn, issued an order restraining further prosecution of the state court action. Langnes, 282 U.S. at 532-34, 51 S.Ct. at 244.

The U.S. Supreme Court first observed that under the savings to suitors clause, the injured party had a right to proceed in state court because he was seeking a common law remedy, money damages. Id. at 538-40, 51 S.Ct. at 246. At the same time though, Section 185 gave the vessel owner the right to seek limitation of liability in federal court. Id. ⁵ Given these competing legal interests, the Court cast the case in the following terms:

Upon the face of the record, the state court, whose jurisdiction already had attached, was competent to afford relief to the petitioner. The difference in the effect of adopting one or the...