Opinion
No. 7:02-CV-110-F1.
December 17, 2003
ORDER
This Limitation of Liability action came on for hearing before the undersigned on December 5, 2003. The vessel owner was represented at the hearing by Mr. James L. Chapman, IV, of Norfolk, Virginia. The claimant, Jack A. Jarboe ("Jarboe"), was present and was represented at the hearing by Roy C. Bain, of Wilmington, North Carolina. This order assumes familiarity with this case, the legal and factual postures of which the court will not reiterate here.
THEORIES OF LIABILITY SUMMARY JUDGMENT
In his Complaint in civil action No. 7:02-CV-76-F (hereinafter the "-76" case) seeking damages against Norfolk under the Jones Act, for unseaworthiness, and for maintenance and cure, Jarboe alleged numerous theories by which he contends Norfolk's negligence resulted in his injuries. Among those theories is that the negligence of Norfolk employee, Donald Mills, operator of the DERRICK #4 crane at the time of Jarboe's injury, was a contributing factor to that injury. For purposes of this limitation action, Norfolk has admitted its liability for Mills's negligent conduct, but contends that it is entitled to summary judgment because it lacked privity with, or knowledge of, Mills's negligent conduct. The court has carefully considered the parties' respective memoranda concerning that motion for summary judgment, and has concluded, as announced in open court, that summary judgment is ALLOWED in favor of Norfolk as to Donald Mills's admitted negligence only. Therefore, insofar as it is determined that Donald Mills's negligence contributed to Jarboe's injury, Norfolk's liability in damages therefor is limited to the amount of the limitation fund — $107,500.00.
The parties appear to agree that Jarboe's common law maritime claims are subject to a comparative, rather than a contributory, negligence standard.
During the hearing, the undersigned discussed with the attorneys Jarboe's other theories of Norfolk's liability, and ultimately directed Jarboe's counsel to file an amended pleading on or before January 15, 2004, setting forth with particularity the facts that Jarboe contends support both Norfolk's negligence and causation under Jarboe's specified theories of Norfolk's liability, other than Norfolk's admitted liability for the conduct of Donald Mills during his operation of the DERRICK #4 crane on the date of Jarboe's injury. The court directed Norfolk to file its appropriate response thereto within ten (10) days of service (on or before February 4, 2004).
"[T]he `fault' which produces liability must be the proximate cause of the [injury]. To give rise to liability, the culpable act or omission must have been substantial and a material factor in causing the [injury]. American River Trans Co. v. KAVO KALIAKRA S.S., 148 F.3d 446 (5th Cir. 1998). Whether an act is the proximate cause of a collision depends on two factors: 1) the existence of a direct causal nexus between the negligent act or omission; i.e. the harm would not have occurred `but for' the act; and 2) whether the resulting harm was a `natural' and `probable' consequence of the act or omission. See Horn v. B.A.S.S., 92 F.3d 609, 611-12 (8th Cir. 1996). If an intervening act breaks the chain of causation, then it is considered to be a `superceding cause' and cuts off the liability of the first negligent act. See Exxon Co. v. Sofec, 517 U.S. 830, 837, 116 S.Ct. 1813, 135 L.Ed.2d 113 (1996) (finding that superceding cause applies in admiralty when a party's `negligence in fact substantially contributed to the plaintiff's injury, but the injury was actually brought about by a later cause of independent origin that was not foreseeable'); see also Lone Star Industries, supra. Thus, not all intervening acts are considered to be superceding. If an intervening act does not break the causal nexus, a court can hold both actors liable for the resulting injury." In re American Milling Co., 270 F. Supp.2d 1068, 1088 (E.D. Mo. 2003).
Of course, the negligence, if any, of any other person or entity, and contribution of any such negligence to Jarboe's injury, are not issues for this court in the limitation proceeding. Those issues would be resolved in the savings to suitors litigation.
The court further ordered that discovery shall be re-opened for 90 days (until May 10, 2004) following Norfolk's response to Jarboe's amended pleading, and that dispositive motions, if any, must be filed within thirty (30) days following the close of discovery (on or before June 14, 2003). If any matter remains for trial, a pretrial conference will be conducted approximately two weeks prior to the trial date.
The parties further are DIRECTED to file any motions, including any Daubert motions, concerning the testimony of opinion witnesses at least four (4) weeks prior to trial. Any such motion shall be accompanied by a condensed copy of the subject witness's deposition transcript, along with his or her curriculum vitae, and "expert witness" report.
Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993).
The Clerk of Court shall place the matter on the court's September 7, 2004, term of court.
JARBOE'S RENEWED MOTION TO DISSOLVE INJUNCTION
The court also discussed with counsel Jarboe's Renewed Motion to Dissolve Injunction and Proffered Stipulations (DE #66). Jarboe relies on Lewis v. Lewis Clark Marine, Inc., 531 U.S. 438 (2001), for the proposition that if he stipulates (i) to this court's exclusive jurisdiction over the limitation of liability issue ( except as to his claim based on negligent entrustment); (ii) that he will not seek enforcement of a judgment in excess of the limitation fund until Norfolk's right to limit its liability is determined; and (iii) to waive res judicata effect on any limitation of liability issues ( except as to the issue of negligent entrustment), then this court must stay the instant limitation proceeding and permit him first to try his Jones Act, maintenance and cure, and unseaworthiness claims before a jury in the "-76 case." Jarboe contends the opinion in Joyce v. Joyce, 975 F.2d 379 (7th Cir. 1992), demonstrates that he is entitled, in this court's adjudication of Norfolk's limitation action, to the benefit of the jury's conclusion as to Norfolk's liability under his theory of negligent entrustment.
At the time of the hearing, the undersigned had an incomplete understanding of the holding in the Lewis Clark case. However, subsequent to the hearing, the undersigned has reviewed both the federal district court's and the Supreme Court's opinions in the Lewis Clark case, along with other cases and materials pertinent thereto, as well as the Joyce opinion, and has concluded that Jarboe may, if he so chooses, proceed with his jury trial against Norfolk in the "-76" case, so long as he complies with the stipulation requirements therefor.
The court notes that the Lewis Clark case was factually different in a number of ways from this case. First, claimant Lewis filed, and sought to maintain, his Jones Act, unseaworthiness, and maintenance and cure claims (hereinafter, "savings to suitors claims") in state court. Here, claimant Jarboe filed his claims in this federal district court, based on the diversity of the citizenship of the parties. Second, Lewis did not seek a trial by jury on his savings to suitors claims; Jarboe, on the other hand, has requested a jury trial on his claims in the "-76" case. Third, Lewis "stipulated that the value of his claim was less than the value of the limitation fund." Lewis Clark, 531 U.S. at 442. That stipulation effectively mooted the limitation of liability action in federal court. Here, however, Jarboe seeks damages in excess of seven million dollars, a sum far exceeding the limitation fund of $107,500.00.
The district "court decided to retain jurisdiction over the limitation action to protect the vessel owner's right to limitation in the event that the state proceedings necessitated further proceedings in federal court." Lewis Clark, 531 U.S. at 442.
It is Jarboe's counsel's position that this limitation action should be stayed while he litigates his substantive liability issues in the "-76" case before a jury in this federal district court, after which time the stay in this limitation matter would be lifted in order for this court to adjudicate Norfolk's entitlement to limit its liability, if any, to the value of the composite vessel. Counsel for Jarboe contends that this court would be bound in its limitation inquiry by the jury's determination of Norfolk's liability on his negligent entrustment claim.
The Lewis Clark litigation was concerned with the "tension" between the federal courts' exclusive jurisdiction over the limitation of liability petition, and the claimant's right to pursue his "savings to suitors" clause claims in the forum of his own choosing — there, in state court. The concern was that a claimant "`not be thwarted in [his] attempt to employ [his] common-law remedy in the state court where [he] may obtain trial by jury.'" Lewis Clark, 31 F. Supp.2d 1164, 1169 (E.D. Mo. 1998) (" Lewis Clark I"), (internal citations omitted), rev'd, 196 F.3d 900 (8th Cir. 1999), rev'd and remanded, 531 U.S. 438 (2001) (" Lewis Clark"). Lewis wanted to try his common-law claims in state court without a jury; therefore, a "tension" existed between his choice of forum and the exclusive federal admiralty jurisdiction over the vessel owner's limitation of liability cause of action.
In an attempt to reconcile the "recurring and inherent conflict" between these two statutory mandates, . . . courts have created two exceptions to the admiralty court's exclusive jurisdiction over limitation proceedings in which a claimant must be allowed to pursue a claim in the forum of his choice. Under either exception, "[t]he court's primary concern is to protect the shipowner's absolute right to claim the [Limitation] Act's liability cap, and to reserve the adjudication of that right in the federal forum. . . ."
The first exception occurs if the value of the limitation fund . . . exceeds the total value of all claims asserted against the vessel owner. . . . In such a case, the vessel owner is not exposed to liability in excess of the limitation fund and, thus, the vessel owner's rights under the Limitation Act are not implicated. . . .
The second exception occurs when a single claimant brings an action against the shipowner seeking damages in excess of the value of the vessel. Because a major purpose of the concurses proceeding is to resolve competing claims . . . the single claimant may try liability and damages issues in the forum of his choice by filing stipulations that protect the shipowner's right to have the admiralty court ultimately adjudicate its claim to limited liability.Lewis Clark I, 33 F. Supp.2d at 1168 (internal citations omitted).
If a vessel owner if found to be liable, but succeeds in having its liability limited, the admiralty court distributes the limitation fund among the claimants in an equitable proceeding called a "concurses." Lewis Clark I, 31 F. Supp.2d at 1167.
Upon a finding that one of the two "exceptions" exists, and after the claimant's entry of the proper stipulations, the federal district court must dissolve the injunction in the limitation action, thereby permitting the claimant to litigate his savings to suitors clause claims in the forum of his choice — either in state court or, as here, on the "law side" of the federal district court upon diversity of the parties. If the result of that litigation is a finding of liability on the part of the vessel owner and an assessment of damages beyond the amount of the limitation fund, then the federal limitation action stay will be lifted, and all issues concerning the vessel owner's petition for limitation of liability will be determined by the federal district court "in admiralty." See id. 1169, n. 2; Beiswenger Enterprises Corp. v. Carletta, 86 F.3d 1032, 1037 (11th Cir. 1996) (If the state court (or a federal court sitting in law rather than admiralty) finds a shipowner liable for damages in excess of the limitation fund, the claimant and shipowner must return to the admiralty court for a determination of the shipowner's privity or knowledge).
This case does not involve exactly the same "tension" present in Lewis Clark. Here, Jarboe's chosen forum is federal district court but, unlike Lewis, he wishes to try his savings to suitors claims to a jury. The "tension" exists here between Jarboe's savings to suitors claims pending in the "law" side of this court, and Norfolk's limitation of liability claim pending in the "admiralty" side. If Jarboe enters the appropriate stipulations, as set forth in Lewis Clark I, then this court will lift the injunction, and Jarboe may proceed with his savings to suitors claims in the "-76" case, during which time this limitation action will be stayed. See id. at 1169, n. 3 ("`[G]iven adequate protection of the shipowner's right, a claimant is entitled to proceed in the forum of his or her choice, regardless of the judicial inefficiency this decision may cause.'") (quoting In re Antill, 1997 WL 399603 (E.D. La. 1997)) (emphasis in original).
Lewis Clark I lists the three stipulations required of a single claimant who wishes to adjudicate his savings to suitors claims prior to a determination by the federal district court of the vessel owner's limitation of liability action. These stipulations are: (1) that the "value of the [limitation] fund is the value of the vessel and its freight;" (2) that he waives "any right to a claim of res judicata based on another court's judgment; and (3) that the federal district court has exclusive jurisdiction to rule on all questions pertaining to limitation of liability." Lewis Clark I, 31 F. Supp.2d at 1168 (citations omitted).
Jarboe's proposed stipulations purport to exclude from the purview of the court, sitting in admiralty in the limitation action, the issue whether Norfolk negligently entrusted the dredging operation to named Norfolk employees. He contends the court would be bound during its limitation inquiry by the jury's determination as to his savings to suitors negligent entrustment claim. While the court understands the reason for Jarboe's contention, it cannot accede thereto. First, the court perceives "negligent entrustment" to be among those common law theories of negligence that have been incorporated into federal maritime law. See In re Bay Runner Rentals, Inc., 113 F. Supp.2d 795, 803 (D. Md. 2000) (failure-to-warn of a dangerous condition is a common-law negligence theory absorbed into federal maritime law) (citing 8 BENEDICT ON ADMIRALTY § 4.03; Gautreaux v. Scurlock Marine, Inc., 107 F.3d 331, 334 (5th Cir. 1997) ( en banc) (Jones Act claim that employer negligently failed to properly train plaintiff in operation of ship's winch)). Jarboe has not explained why a negligent entrustment theory should be treated differently from any other theory of Norfolk's negligence. See Great Lakes Dredge Dock Co., 3 F.3d at 232.
Relying on Joyce v. Joyce, 975 F.2d 379 (7th Cir. 1992), Jarboe contends that if a vessel owner negligently entrusted the vessel, he not only committed the tort of negligent entrustment, but he also possessed the requisite privity or knowledge to prevent him from limiting his liability. See id. at 385. However, as Norfolk points out, the Seventh Circuit Court of Appeals distinguished Joyce in an action involving a corporate vessel owner. "Because the shipowner in Joyce was an individual, i.e., a natural person, our holding in that case is not appropriate to guide our decision here. The present case, which involves a corporate shipowner, lacks the same confluence of negligence and knowledge as existed in Joyce. [The corporate vessel owner here] is liable for the negligence of all of its employees. But it will be charged, for purposes of the Limitation Act, with the privity and knowledge only of certain managerial employees." Great Lakes Dredge Dock Co. v. City of Chicago, 3 F.3d 225, 232 (7th Cir. 1993), aff'd, 513 U.S. 527 (1995). Because Norfolk, the vessel owner here, is a corporation, the court deems Joyce to be inapposite.
Second, as pointed out above, see supra note 6, the case upon which Jarboe relies for advancing his argument simply does not apply here, where the vessel owner is a corporate entity, rather than an individual. See Great Lakes Dredge Dock Co., 3 F.3d at 232.
Third, the cases do not provide for exclusions from or exceptions to the three required stipulations. Absent some citation to apposite, controlling authority, the court will not accept a stipulation that purports to withhold from the district court's determination any issue concerning Norfolk's claim for limitation of liability.
Finally, the court takes the Supreme Court at its word that, while the common law "savings to suitors" tort claims may be litigated either in state or federal court, a vessel owner is entitled to have a federal court, sitting in admiralty, determine its ability to limit its liability under 46 U.S.C. App. §§ 181- 196. Cf. Lewis Clark III, 531 U.S. at 453 ("scope of exclusive federal jurisdiction is proportional to the federal interest in protecting the vessel's owner's right to seek limitation of liability"). Jarboe's proffered stipulations are inadequate to preserve Norfolk's "absolute right to claim the [Limitation of Liability] Act's liability cap, and to reserve the adjudication of that right in the federal forum." In re Port Arthur Towing Co., 42 F.3d 312, 316 (5th Cir.), cert. denied, 516 U.S. 823 (1995) (internal citation omitted); see also B. Matthew Struble, Of Saving to Suitors, Limitation of Shipowners' Liability, and the Inherent Conflict Between, 67 MO. L.REV. 963, 981-82 n. 173 (2002).
If he so desires, Jarboe may enter the appropriate stipulations on or before December 22, 2003. If he does not, his amended pleading in this action must be filed as ordered above, and this limitation action will proceed.
Norfolk's Motion for Summary Judgment (DE #47) is ALLOWED insofar as it seeks to limit its liability for Donald Mills's admitted negligence in operating the DERRICK #4 crane that resulted in injury to Jarboe. Jarboe's Motion for Summary Judgment (DE #50) is DENIED. Jarboe's Renewed Motion to Dissolve Injunction (DE # 66) is DENIED without prejudice to renew it should he wish to file the appropriate stipulations.
SO ORDERED.