Eleventh Circuit in Admiralty Action Affirms Single Claimant Exception to Limitation of Liability Act, Rejects First-to-File Interpretation of “Saving-to-Suitors” Admiralty Jurisdiction Clause

In Offshore of the Palm Beaches, Inc. v. Lynch, No. 13-11092 (Feb. 3, 2014), the Eleventh Circuit considered in an admiralty action whether a lone claimant could pursue personal injury claims in state court after the defendant had invoked the Limitation of Liability Act (the “Act”), 46 U.S.C. § 30501. The Act allows a “vessel owner to limit its liability to the value of the vessel for any claim arising from a maritime incident that occurred ‘without the privity or knowledge of the owner,’” and grants “the federal courts with ‘exclusive admiralty jurisdiction to determine whether the vessel owner is entitled to limited liability.’”

The Appellant, Offshore of the Palm Beaches, Inc. (“Offshore”), owned and maintained a vessel that was used for Offshore’s boat club, of which the Appellee, Lynch, was a member. While operating the vessel off the coast of Palm Beach County, Florida, Lynch was injured when the vessel struck the wake of another craft. Following the incident, Lynch’s attorney notified Offshore of Lynch’s injuries and requested Offshore’s liability insurance information. Offshore responded by filing in the U.S. District Court for the Southern District of Florida for exoneration and/or limitation of its liability to the value of the vessel pursuant to the Act.

The district court enjoined Lynch from bringing any other cause of action against Offshore or the vessel stemming from the incident. Lynch answered by moving to dismiss, stay, or lift the injunction to allow her to proceed in state court and try a common law negligence claim to a jury, asserting the single claimant exception to exclusive federal admiralty jurisdiction otherwise bestowed upon the district court under the Act. However, Lynch nonetheless stipulated that: (1) Offshore had a right to seek limited liability and an appraisal of the vessel under the Act; (2) the district court had exclusive jurisdiction to resolve these issues; (3) she would not seek any determination of these issues in state court; and (4) she would not seek to enforce any state court judgment that would expose Offshore to liability in excess of the limitation established by the district court. In response, the district court lifted the injunction and stayed the federal proceedings to allow Lynch to litigate the negligence claim in state court. Offshore appealed.

After finding that it possessed appellate jurisdiction to hear interlocutory appeals of admiralty injunctions under 28 U.S.C. § 1291(a)(1), the court affirmed the district court’s decision, holding that the lower court did not abuse its discretion in determining that a single plaintiff may proceed first in state court with her tort claim before the district court adjudicates the vessel owner’s limited liability under the Act. In affirming the single claimant exception, the court relied upon U.S. Supreme Court precedent in Langnes v. Green, 282 U.S. 531 (1931), interpreting the “saving-to-suitors” clause of 28 U.S.C. § 1333, whereby federal district courts are granted original jurisdiction over admiralty cases, “saving to suitors in all cases all other remedies to which they are otherwise entitled.”  In Langnes the Court had eased the tension between the Act’s exclusive federal admiralty jurisdiction and the savings-to-suitors clause by “carving out an exception when a vessel owner faces only a single claimant,” but only where that claimant stipulates that the vessel owner will not be stripped of limited liability under the Act due to competing judgments. In applying Langnes to the case, the Eleventh Circuit rejected Offshore’s first-to-file argument that Offshore should be considered the “suitor” under the saving-to-suitors clause because it initiated the action under the Act, holding instead that the “suitor” is always the owner of the claim at issue—here, Lynch with her personal injury claim. Finding that the lower court had properly applied the law and that Offshore had waived any objection to Lynch’s single-claimant status and/or stipulations, the Eleventh Circuit affirmed.

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