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In re Ross Island Sand & Gravel Co.

United States District Court, N.D. California

May 22, 2014

IN THE MATTER OF THE COMPLAINT OF ROSS ISLAND SAND & GRAVEL CO

ORDER DENYING WITHOUT PREJUDICE PLAINTIFF'S MOTION TO INCREASE THE VALUE OF THE LIMITATION FUND

SUSAN ILLSTON, District Judge.

Currently before the Court is claimant Ron Green's motion, pursuant to Supplemental Admiralty Rule F of the Federal Rules of Civil Procedure, to increase the value of the limitation fund established by plaintiff Ross Island Sand & Gravel Co. Docket No. 20. The motion is scheduled for hearing before the Court on May 23, 2014. Pursuant to Local Rule 7-1(b), the Court determines that the matter is appropriate for resolution without oral argument and VACATES the hearing. For the reasons set forth below, the Court DENIES Green's motion without prejudice.

BACKGROUND

This action involves a previously filed lawsuit between Green, the claimant in the present case, and Ross Island Sand & Gravel Co., the plaintiff. On October 21, 2013, Green filed a complaint against Ross Island in Alameda County Superior Court, alleging that on November 17, 2010, he was injured while working for his former employer, Ross Island, onboard a vessel named the Roller Barge. Green brought claims of negligence under the Jones Act, 46 U.S.C. § 30104; unseaworthiness; maintenance, found, and cure; and gross vessel owner negligence.

Ross Island removed that complaint to this Court. Green v. Ross Island Sand & Gravel Co., Case No. 13-cv-5431 SI. Green moved for remand, and on January 23, 2014, the Court remanded the action to Alameda County Superior Court, finding that on the face of the complaint, Green's Jones Act claim was properly pled and therefore not removable.[1] The case is currently pending in Alameda County Superior Court ( Green v. Ross Island Sand & Gravel Co., RS 13699924), but is stayed as described below.

On February 7, 2014, Ross Island filed the complaint in this case, pursuant to the Limitation of Liability Act, 46 U.S.C. §§ 30501, et seq., seeking exoneration from or limitation of liability against all parties, for any and all loss, damages, injury, and other claims of destruction arising out of the injuries claimed by Green on November 17, 2010. Complaint ¶ 14. Ross Island claimed the value of the Roller Barge after the alleged November 17, 2010 incident did not exceed $35, 000.00. Id. ¶ 13.

The case was initially assigned to Magistrate Judge James and subsequently transferred to District Judge Chen. On February 28, 2014, Judge Chen issued Ross Island's proposed order issuing a monition, directing claimants to file and make proof of their claims, and staying any prosecution of suits with respect to any claim arising out of the incident on the Roller Barge on November 17, 2010 until the hearing and termination of this proceeding. Docket No. 14. Thus the Green v. Ross Island Sand & Gravel Co. case pending in Alameda County Superior Court was stayed.

This case was deemed related to the previously filed case between Green and Ross Island, and on March 4, 2014, was reassigned to this Court. Docket No. 17. On March 28, 2014, Green filed this motion to increase the value of the limitation fund, pursuant to Rule F(7). Docket No. 20.

LEGAL STANDARD

The Limitation of Liability Act "allows a vessel owner to limit liability for damage or injury, occasioned without the owner's privity or knowledge, to the value of the vessel or the owner's interest in the vessel." Lewis v. Lewis & Clark Marine, Inc., 531 U.S. 438, 446 (2001); 46 U.S.C. § 30505. The vessel owner first files a complaint in the district court, and then deposits an amount with the court that is the equivalent of its interest in the vessel. Fed.R.Civ.P. Supp. Adm. R. F(1). The district court then notices all potential claimants and requires them to file claims with the court within a specified time, and issues an injunction against any other actions against the owner if they involve related claims. Id. F(3)-(4).

Claimants may, however, bring suit in state or federal court for their damage or injury. Although 28 U.S.C. § 1333(1) grants federal district courts exclusive jurisdiction over "any civil case of admiralty or maritime jurisdiction [including suits brought pursuant to the Limitation Act], " it also specifically "sav[es] to suitors in all cases all other remedies to which they are otherwise entitled." This presents an obvious tension, particularly where a claimant's suit is brought in state court while the Limitation of Liability action is pending in federal court and has produced a stay or injunction against the state court action. "The courts have had to reconcile the functions of the admiralty court in limiting liability under the Limitation Act, which proceeds in equity without a jury, with the claimant's right to a trial by jury for common law and statutory claims." Newton v. Shipman, 718 F.2d 959, 961 (9th Cir. 1983). One way the federal district courts have resolved this conflict is by recognizing the "single claimant exception." In re Ross Island Sand and Gravel, 226 F.3d 1015, 1017 (9th Cir. 2000). Under this exception, "if only one claim has been filed and nothing appears to suggest the possibility of another claim, ' a district court is required to dissolve its injunction to permit the single claimant to pursue a separate action and jury trial." Id. (quoting Newton, 718 F.2d at 962).

A single claimant who seeks dissolution of a federal injunction in order to pursue a claim in state court, must stipulate "to the district court's continuing, exclusive jurisdiction to decide the owner's right to limit his liability." Newton, 718 F.2d at 962. In its most recent opinion discussing the dissolution of an injunction in state court pursuant to the Limitation of Liability Act, the Supreme Court explained that state courts may adjudicate claims "against vessel owners so long as the vessel owner's right to seek limitation of liability is protected." Lewis v. Lewis & Clark Marine, Inc., 531 U.S. at 446. The Ninth Circuit has not yet addressed the Supreme Court's opinion in Lewis v. Lewis & Clark Marine, Inc ., but in an opinion issued eighteen years prior, the Ninth Circuit specified the claimant must: "(1) stipulate that the value of the limitation fund equals the combined value of the vessel and its cargo; (2) waive the right to claim res judicata based on any judgment rendered against the vessel owner outside of the limitation proceedings; and (3) concede the district court's exclusive jurisdiction to determine limitation of liability issues." Id .; see also In re Ross Island, 226 F.3d at 1017.[2]

Pursuant to Rule 7(F), "[a]ny claimant may by motion demand that the funds deposited in court or the security given by the plaintiff be increased on the ground that they are less than the value of the plaintiff's interest in the vessel and pending freight." On a Rule 7(F) motion "any claimant may demand that the deposit or security be increased on the ground that it is insufficient to carry out the provisions of the statutes relating to claims in respect of loss of life or bodily ...


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