Offshore of the Palm Beaches, Inc. v. Lynch

• Decision Date: 03 February 2014
• Docket Number: No. 13–11092.,13–11092.
• Citation: 741 F.3d 1251
• Parties: OFFSHORE OF THE PALM BEACHES, INC., a Florida Corporation, d.b.a. Freedom Boat Club, Petitioner–Appellant, v. Lisa LYNCH, Claimant–Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

741 F.3d 1251

OFFSHORE OF THE PALM BEACHES, INC., a Florida Corporation, d.b.a. Freedom Boat Club, Petitioner–Appellant,

v.Lisa LYNCH, Claimant–Appellee.

No. 13–11092.

United States Court of Appeals,

Eleventh Circuit.

Feb. 3, 2014.

Ryan Charles Meade, William E. Crabill, Alejandro J. Gonzalez, Quintairos Prieto Wood & Boyer, PA, Miami, FL, for Petitioner–Appellant.

Michael William McLeod, Rumrell Bate McLeod & Brock, PA, St. Augustine, FL, George M. Bakalar, Darryl B. Kogan, Kogan & Disalvo, PA, Boynton Beach, FL, for Claimant–Appellee.

Appeal from the United States District Court for the Southern District of Florida. D.C. Docket No. 9:12–cv–80829–DMM.

Before MARCUS, FAY, and WALKER,^* Circuit Judges.

MARCUS, Circuit Judge:

In this admiralty action, a boat owner, Offshore of the Palm Beaches, Inc. (“Offshore”), appeals from a district court order that permitted a lone claimant, Lisa Lynch, to pursue personal injury claims in state court after Offshore had invoked the Limitation of Liability Act (“Limitation Act”), 46 U.S.C. § 30501 (2006). Offshore argues that its forum selection should control because Lynch lost the race to the courthouse. Our case precedent instructs us that we have jurisdiction to review the district court's order as one dissolving or modifying an injunction pursuant to 28 U.S.C. § 1292(a)(1). On the merits, we affirm. The district court did not abuse its considerable discretion in determining that Lynch may proceed first in state court with her tort claim before the district court adjudicates the boat owner's efforts to limit its liability to the value of the vessel.

I.

On October 13, 2011, Offshore owned and maintained a 2008 Everglades 27CC, a twenty-six foot vessel used as part of Offshore's Freedom Boat Club. Lynch and her husband, Michael, were members of the Club. That day the couple took the boat to sea off Palm Beach County, Florida, where, five-hundred yards from shore, they struck the wake of another craft. The concussion threw Lynch from the bow bench into the air. Gravity brought her back to the boat, with an impact she claims caused catastrophic physical injury. Specifically, Lynch alleges that Offshore's negligence was to blame for damages well in excess of the vessel's $95,000 value.

A few months after the incident, on February 6, 2012, attorney Darryl Kogan wrote Offshore a letter noting his representation of Lynch and requesting the company's liability insurance information. Six months later, on August 6, 2012, Offshore sued in the United States District Court for the Southern District of Florida seeking exoneration or limitation of its liability to the value of the vessel pursuant to the Limitation Act. Soon thereafter, the district court enjoined any other cause of action against Offshore or the vessel relating to the incident.

In her answer, Lynch asserted a claim for her extensive injuries based on Offshore's failure to exercise reasonable care. On October 22, she moved to dismiss, stay, or lift the injunction to allow her to proceed in state court and try her common law tort claim to a jury, invoking the single claimant exception to exclusive federal admiralty jurisdiction otherwise reposed in the district court under the Limitation Act. Following unambiguous case precedent, she included in her motion a set of detailed stipulations designed to protect Offshore's right to litigate any limitation of liability in federal district court:

Stipulations of Claimant in Support of Claimant's Motion to Dismiss, Stay And/or Lift the Injunction in this Matter and Permit the Claimant to Proceed in State Court

Provided the Court lifts its Monition and Injunction of August 10, 2012 (D.E.6) and stays this action to permit the single Claimant to proceed against the Petitioner in a state court action for personal injury, the single Claimant, LISA LYNCH, stipulates and agrees as follows:

1. That the Petitioner, OFFSHORE, 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. § [30501] 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 and the Petitioner's interest in the vessel Model year 2008, Everglades 27CC, Bearing Hull Identification No.: PJDB1043B708 and any other vessel determined by this Court to be a proper part of the limitation fund, such value and interest to be the value and interest in the vessel(s) as provided by the applicable federal law immediately following the incident at issue, and this Court has exclusive jurisdiction to determine that issue.

3. That the Claimant will not seek a determination of the issues set forth in paragraphs (1) and (2) above in any state court, or any other forum outside of this limitation proceeding, and consents to waive any res judicata or issue preclusion effect the decisions, rulings or judgments of any state court, or any other forum outside of this limitation proceeding, might have on those issues.

4. That the Claimant will not seek to enforce any judgment rendered in any state court, or any other forum outside of this limitation proceeding, against the Petitioner that would expose the Petitioner to liability in excess of the limitation fund to be determined by this Court, until such time as this Court has adjudicated the Petitioner's right to limit that liability. In the event this Court determines that the Petitioner is entitled to limit its liability, the Claimant agrees that it will not seek to enforce any judgment that would require the Petitioner to pay damages in excess of the limitation fund to be determined by this Court.

On February 12, 2013, the district court entered a final default as to all persons who did not file a timely claim or answer against the vessel. In fact, Lynch was the only claimant who had filed a claim with the court. On February 20, the district court entered an order (the one at issue today) that lifted the injunction and stayed the federal proceeding in order to allow Lynch to litigate Offshore's liability in a Florida forum. The court directed the clerk to close the case for administrative purposes. Offshore filed a timely notice of appeal. The district court denied Offshore's motion to stay its order pending appeal.

II.

Offshore asserts that we have appellate jurisdiction to review the court's action as a final order pursuant to 28 U.S.C. § 1291,¹ or as a non-final order determining “the rights and liabilities of the parties to admiralty cases” under § 1292(a)(3).² Lynch disagrees. Our case precedent instead compels the conclusion that we have jurisdiction under § 1292(a)(1) to review the trial court's order modifying or dissolving an injunction.³

Early Fifth Circuit case-law held that parties could not appeal admiralty orders that modified injunctions in limitation actions under the precursors to any of the three provisions— §§ 1291, 1292(a)(1), or 1292(a)(3). ⁴SeePostal S.S. Co. v. Int'l Freighting Corp., 133 F.2d 10, 11 (5th Cir.1943); Stark v. Tex. Co., 88 F.2d 182, 183 (5th Cir.1937). Applying a dated distinction between the law, equity, and admiralty sides of a federal district court's jurisdiction, these cases concluded that interlocutory admiralty appeals fall within the explicit admiralty provision of § 1292(a)(3).⁵See Stark, 88 F.2d at 183 (“Appeals from interlocutory decrees in admiralty ... are allowed only when the interlocutory decree determines rights and liabilities of the parties.”). In reaching this result, the early cases relied on Schoenamsgruber v. Hamburg American Line, 294 U.S. 454, 457–58, 55 S.Ct. 475, 79 L.Ed. 989 (1935), which held that federal jurisdiction to review orders affecting injunctions ( § 1292(a)(1)) “extends only to suits in equity” because the inclusion of the specific admiralty provision of § 1292(a)(3) “indicates that Congress did not intend to make appealable any other interlocutory decrees in admiralty.” In other words, the specific admiralty grant in § 1292(a)(3) governed to the exclusion of the general injunction provision in § 1292(a)(1). Moreover, because a stay in a limitation action did not determine “the rights and liabilities of the parties,” the specific admiralty provision in § 1292(a)(3) did not provide jurisdiction. See Postal S.S., 133 F.2d at 11. Therefore, an appellate court could not review a district court order modifying an injunction in a limitation action.

In 1960, however, a panel of the Fifth Circuit in binding precedent held that the Supreme Court had abrogated the Circuit's earlier cases, Postal S.S. and Stark. See Pershing Auto Rentals, Inc. v. Gaffney, 279 F.2d 546, 547–48 (5th Cir.1960). Pershing concluded that, in light of the Supreme Court's decision in Lake Tankers Corp. v. Henn, 354 U.S. 147, 77 S.Ct. 1269, 1 L.Ed.2d 1246 (1957), appellate jurisdiction existed under § 1292(a)(1) to review a modification to a Limitation Act injunction. 279 F.2d at 547–48. (“For accepting our prior decisions, Stark [and] Postal S.S., as holding to the contrary, we think that Lake Tankers, in this context at least, requires that we no longer adhere to them.” (citations omitted)).

After Pershing, a series of Circuit cases permitted § 1292(a)(1) interlocutory review of admiralty injunctions. Thus, for example, when a trial court enjoined salvage operations at a wreck site, the former Fifth Circuit cited Pershing in hearing an appeal that challenged the injunction:

We do not ... believe that § 1292(a)(3) provides the exclusive authorization for interlocutory appeals in admiralty. In admiralty cases where injunctive orders are entered which would be appealable under § 1292(a)(1) if entered in the course of an ordinary civil proceeding, interlocutory appeals will properly lie under that statutory provision. Prior to the unification of the admiralty rules with the federal civil rules it was generally presumed that the admiralty...