United States Court of Appeals,

Eleventh Circuit.

No. 95-2418.

SUZUKI OF ORANGE PARK, INC., as owners of 1993 "Seadoo" Explorer

Serial No. ZZN05228L293, in a cause of action of exoneration from,

or limitation of, liability, Plaintiff-Appellant,

v.

Steven Scott SHUBERT; Sherry Shubert, Defendants-Appellees.

July 1, 1996.

Appeal from the United States District Court for the Middle

District of Florida. (No. 94-1132-Civ-J-16), John H. Moore, II,

Judge.

Before ANDERSON and BLACK, Circuit Judges, and FAY, Senior Circuit

Judge.

ANDERSON, Circuit Judge:

In this admiralty case brought under the Limitation of Vessel

Owner's Liability Act, 46 App. U.S.C. § 181 et seq. (the

"Limitation Act"), appellant Suzuki of Orange Park, Inc. ("Suzuki")

challenges an order of the district court denying by summary

judgment its petition for exoneration from or limitation of

liability. For the reasons set forth herein, we reverse and remand

for further proceedings consistent with this opinion.

I. FACTS

Suzuki is a Florida corporation engaged primarily in the

business of selling recreational watercraft. On September 19,

1993, Suzuki staged a customer relations event near Jacksonville,

Florida, on the waterfront property of a customer. Suzuki invited

numerous other customers, including appellee Steven Shubert, to

attend the event. For the purpose of demonstrating the

recreational watercraft sold by Suzuki, Jerry Blount, the president
of Suzuki, constructed a slalom course on Julington Creek, a

navigable waterway within Florida's territorial waters.

Blount permitted Richard Hall, also a Suzuki customer, to

operate a Seadoo Explorer owned by Suzuki ("the Explorer").

Shubert, along with Billy Joe Mann and Ted Nemic, rode in the

Explorer as passengers. As Hall guided the Explorer through the

slalom course, Shubert fell into the water. It is unknown whether

Mann and Nemic pushed Shubert, whether Hall's driving somehow upset

Shubert's balance, or whether another explanation for Shubert's

fall exists. At the time of Shubert's fall, two other watercraft

followed closely behind the Explorer. The first watercraft was a

"Bombardier GTX," owned and operated by Roy Daniel. The second

watercraft was a "Polaris SL 750," owned by Ronnie Lee Whitaker and

operated by Sean Marr. Daniel's watercraft avoided hitting

Shubert, but Marr's watercraft struck Shubert, causing him to

suffer serious and permanent injuries.

II. PROCEDURAL HISTORY

On June 24, 1994, Shubert and his wife, Sherry, filed a

complaint in Florida state court against Suzuki, Blount, Hall,

Mann, Nemic, Daniel, and Marr. The complaint's allegations against

Suzuki, the vessel owner, are relevant to Suzuki's petition for

limited liability. In summary, the complaint alleges that Suzuki

negligently supervised the demonstration of the Explorer. On

November 22, 1994, Suzuki instituted this limitation action in the

United States District Court for the Middle District of Florida.

Upon approving Suzuki's offer of security and its ad interim

stipulation of $9,000 as the value of the Explorer, the district
 1

46 App. U.S.C. § 183(a) provides:

The liability of the owner of any vessel, whether

American or foreign, for any embezzlement, 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

court enjoined anyone who had claims arising out of the accident

from proceeding against Suzuki in any other forum. See generally

46 App. U.S.C. § 185; Fed.R.Civ.P. Supplemental Rule F. The court

issued a notice to the Shuberts, admonishing them to file claims

against Suzuki in the limitation proceeding, or else be defaulted.

A copy of the notice was published in a newspaper for purposes of

informing other potential claimants. On February 6, 1995, the

Shuberts filed a timely answer and claim for damages in excess of

the stipulated value of the Explorer, with Shubert seeking to

recover for his personal injuries and Shubert's wife seeking to

recover for loss of consortium. Apparently, no one else filed

timely claims in the limitation action.

The Shuberts also moved for summary judgment, contending that

Suzuki was not entitled to limitation for accidents arising from

the direct negligence of its president, Blount. The district court

agreed with the Shuberts and entered final summary judgment,

denying Suzuki limitation of liability on March 3, 1995. This

appeal followed.

III. DISCUSSION

 The Limitation Act limits a vessel owner's liability for any

damages arising from a maritime accident to the value of the vessel

and its freight, provided that the accident occurred without such

owner's "privity or knowledge." 46 App. U.S.C. § 183(a). 1 In a
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. 

typical limitation proceeding, the admiralty court determines

whether the vessel owner is entitled to limited liability by

undertaking the following two-step analysis:

First, the court must determine what acts of negligence or

conditions of unseaworthiness caused the accident. Second,

the court must determine whether the shipowner had knowledge

or privity of those same acts of negligence or conditions of

unseaworthiness.

Hercules Carriers, Inc. v. Claimant State of Florida, 768 F.2d

1558, 1563-64 (11th Cir.1985) (quoting Farrell Lines, Inc. v.

Jones, 530 F.2d 7, 10 (5th Cir.1976)). The damage claimants bear

the initial burden of establishing liability (i.e., negligence or

unseaworthiness), and the shipowner then bears the burden of

establishing the lack of privity or knowledge. Id. If limited

liability is granted, the admiralty court oversees the distribution

of the limitation fund among the damage claimants. See generally

In re Dammers & Vanderheide & Scheepvaart Maats Christina B.V., 836

F.2d 750, 755 (2d Cir.1988).

 A vessel owner's claim to limited liability must be

adjudicated exclusively in the admiralty court, which sits without

a jury. See Ex Parte Green, 286 U.S. 437, 439-40, 52 S.Ct. 602,

603, 76 L.Ed. 1212 (1932); Newton v. Shipman, 718 F.2d 959, 962

(9th Cir.1983) (per curiam). However, the same statute that grants

the federal courts exclusive admiralty and maritime jurisdiction

saves to suitors "all other remedies to which they are otherwise

entitled." 28 U.S.C. § 1333(1). The "saving to suitors" clause of
 2

The first exception to exclusive admiralty jurisdiction

arises where the limitation fund exceeds the aggregate amount of

all the possible claims against the vessel owner. See Lake

Tankers Corp. v. Henn, 354 U.S. 147, 152-53, 77 S.Ct. 1269, 1272-

73, 1 L.Ed.2d 1246 (1957). The second exception exists where

there is only one claim to the limitation fund, and the single

claimant enters certain stipulations designed to protect the

vessel owner's rights under the Limitation Act. See In re Mucho

K, Inc., 578 F.2d 1156, 1158 (5th Cir.1978). In In re Beiswenger

Ent. Corp., No. 95-2272, slip. op. at ----, --- F.3d ----, ----

(11th Cir.1996), this Circuit recently held that multiple

claimants may enter appropriate stipulations to create the

functional equivalent of the single claimant exception. 

 3

In Bonner v. City of Prichard, 661 F.2d 1206 (11th

Cir.1981) (en banc), this court adopted as binding precedent all

of the decisions of the former Fifth Circuit handed down prior to

§ 1333(1) embodies a presumption in favor of jury trials and other

common law remedies in the forum of the damage claimant's choice.

See Odeco Oil & Gas, Drilling Div. v. Bonnette, 74 F.3d 671, 674

(5th Cir.1996). To reconcile the tension between the exclusive

admiralty jurisdiction over Limitation Act claims and the

presumption favoring jury trials under the saving to suitors

clause, courts have identified a few circumstances under which the

damage claimants may litigate the issues of liability vel non, as

well as damages, in their chosen fora. See In re Beiswenger Ent.

Corp., No. 95-2272, slip. op. at ----, --- F.3d ----, ---- (11th

Cir.1996).2

 Under these exceptions, if the vessel owner is held

liable in the damage claimant's chosen forum for an amount

exceeding the limitation fund, the parties must return to the

admiralty court to litigate the vessel owner's privity or

knowledge.

 Another method employed to preserve the damage claimants'

saving to suitors clause rights was recognized in Fecht v.

Makowski, 406 F.2d 721 (5th Cir.1969).3 In that case, which
the close of business on September 30, 1981. Id. at 1209. 

involved multiple claims to an inadequate limitation fund, the

former Fifth Circuit held that the damage claimants must be allowed

to litigate the vessel owner's negligence in state court, "where it

is apparent that limitation cannot be granted." Id. at 722. Fecht

involved an accident in which one passenger was killed and another

seriously injured when a pleasure boat struck a submerged object.

The boat's owner, who was operating the boat at the time of the

accident, filed a limitation complaint in federal district court.

The owner conceded that limitation was impossible, because "when an

owner is in control of and operating his pleasure craft he has

privity or knowledge with respect to its operation." Id. at 722;

see also id. at 722 n. 4. Nevertheless, the admiralty court, over

the objections of the damage claimants, conducted a full trial on

the liability issues. Concluding that the boat was seaworthy and

its operator free from fault, the court exonerated the boat owner.

See id. On appeal, the damage claimants argued that the admiralty

court should have allowed them to litigate the boat owner's

negligence in state court, while the boat owner argued that he was

entitled to litigate his right to exoneration from liability in the

admiralty court. The Fifth Circuit agreed with the damage

claimants, and reversed the lower court's grant of exoneration:

[W]here no limitation is possible the damage claimants are

entitled to have the injunction against other actions

dissolved, so that they may, if they wish, proceed in a common

law forum as they are entitled to do under the saving to

suitors clause. 28 U.S.C. § 1333.... The reason for

enjoining state court suits is to distribute effectively a

limited fund in a single proceeding, not to "transform the

[Limitations] Act from a protective instrument to an offensive

weapon by which the shipowner could deprive suitors of their
common law rights." Lake Tankers Corp. v. Henn, 354 U.S. 147,

152, 77 S.Ct. 1269, 1272, 1 L.Ed.2d 1246, 1251 (1957). Where

no grant of limitation is possible, the basis for granting

exoneration vanishes.

Id. at 722-23. Thus, Fecht establishes that the admiralty court

may decide the privity or knowledge issue without first deciding

the liability issue—at least where the boat owner concedes privity

or knowledge, or where it is otherwise impossible under any set of

circumstances for the vessel owner to demonstrate the absence of

privity or knowledge. See also Joyce v. Joyce, 975 F.2d 379, 385

(7th Cir.1992) (where sole allegation against boat owner is

negligently entrusting the boat to its operator, the boat owner is

necessarily ineligible for limited liability because privity or

knowledge is an element of the tort of negligent entrustment).

With the principle of Fecht in mind, we turn to the privity or

knowledge issue in this case. If it is truly impossible under any

set of circumstances for Suzuki to establish its lack of privity or

knowledge, then the limitation action should be dismissed, and the

Shuberts should be allowed to try liability and damages issues in

state court.

 The statutory concept of "privity or knowledge" is somewhat

elusive, although the purpose of the Limitation Act provides some

guidance as to its proper application. See Gibboney v. Wright, 517

F.2d 1054, 1057 (5th Cir.1975) ("What is meant by privity or

knowledge is not easy to pin down."); Fecht, 406 F.2d at 722

(citing cases for the proposition that "the meaning of "privity or

knowledge' has been the subject of considerable speculation"). The

Limitation Act was designed to encourage investment in the shipping

industry by limiting the physically remote shipowner's vicarious
liability for the negligence of his or her water-borne servants.

See Tittle v. Aldacosta, 544 F.2d 752, 756 (5th Cir.1977). Thus,

consistent with the statutory purpose to protect innocent

investors, "privity or knowledge" generally refers to the vessel

owner's personal participation in, or actual knowledge of, the

specific acts of negligence or conditions of unseaworthiness which

caused or contributed to the accident. See Coryell v. Phipps, 317

U.S. 406, 411, 63 S.Ct. 291, 293, 87 L.Ed. 363 (1943); American

Car & Foundry Co. v. Brassert, 289 U.S. 261, 264, 53 S.Ct. 618,

619, 77 L.Ed. 1162 (1933) (because the Limitation Act was designed

to protect the innocent investor, the vessel owner remains liable

"[f]or his own fault, neglect and contracts"). Over the years,

however, the courts have broadened privity or knowledge to include

constructive knowledge—what the vessel owner could have discovered

through reasonable inquiry. See, e.g., In re Oil Spill by the

AMOCO CADIZ, 954 F.2d 1279, 1303 (7th Cir.1992) ("The recent

judicial trend has been to enlarge the scope of activities within

the "privity or knowledge' of the shipowner, including ...

requiring shipowners to exercise an ever-increasing degree of

supervision and inspection."); Hercules Carriers, Inc. v. Claimant

State of Florida, 768 F.2d 1558, 1564, 1576 (11th Cir.1985)

("[P]rivity or knowledge is established where the means of

obtaining knowledge exist, or where reasonable inspection would

have led to the requisite knowledge."); McNeil v. Lehigh Valley

R.R., 387 F.2d 623, 624 (2d Cir.1967) ("Negligent failure to

discover constitutes privity and knowledge within the meaning of

the statute."), cert. denied sub nom. Lehigh Valley R. Co. v. Wm.
Spencer & Son Corp., 390 U.S. 1040, 88 S.Ct. 1638, 20 L.Ed.2d 302

(1968).

 The shipowner's privity or knowledge is not measured against

every fact or act regarding the accident; rather, privity or

knowledge is measured against the specific negligent acts or

unseaworthy conditions that actually caused or contributed to the

accident. Farrell Lines, Inc. v. Jones, 530 F.2d 7, 10 (5th

Cir.1976) (after determining what acts of negligence or conditions

of unseaworthiness caused the accident, "the court must determine

whether the shipowner had knowledge or privity of those same acts

of negligence or conditions of unseaworthiness"); Avera v. Florida

Towing Corp., 322 F.2d 155, 158 (5th Cir.1963) ("For the problem

always exists ... of determining just what specific acts of

negligence were committed against which the admiralty court

subsequently applies the privity-knowledge yardstick."); see also

Deslions v. La Compagnie Generale Transatlantique, 210 U.S. 95,

122, 28 S.Ct. 664, 673, 52 L.Ed. 973 (1908) ("[M]ere negligence,

pure and simple, in and of itself does not necessarily establish

the existence on the part of the owner of a vessel of privity and

knowledge within the meaning of the statute.").

 In the context of a corporate shipowner, the privity and

knowledge of "corporate managers vested with discretionary

authority" is attributed to the corporation. Great Lakes Dredge &

Dock Co. v. City of Chicago, 3 F.3d 225, 231 (7th Cir.1993)

(distinguishing "managerial" employees from "purely ministerial"

employees for purposes of attributing privity or knowledge to the

corporation), aff'd sub nom. Jerome B. Grubart, Inc. v. Great Lakes
Dredge & Dock Co., --- U.S. ----, 115 S.Ct. 1043, 130 L.Ed.2d 1024

(1995); see also Coryell v. Phipps, 317 U.S. 406, 410-11, 63 S.Ct.

291, 293, 87 L.Ed. 363 (1943) (explaining that a corporate

shipowner may not limit its liability where "the negligence is that

of an executive officer, manager or superintendent whose scope of

authority includes supervision over the phase of the business out

of which the loss or injury occurred"); Craig v. Continental Ins.

Co., 141 U.S. 638, 646, 12 S.Ct. 97, 99, 35 L.Ed. 886 (1891) ("When

the owner is a corporation, the privity or knowledge must be that

of the managing officers of the corporation."); Hercules Carriers,

Inc. v. Claimant State of Florida, 768 F.2d 1558, 1574 (11th

Cir.1985) (privity and knowledge of a managing agent, officer or

supervising employee, including supervisory shoreside personnel, is

attributable to the corporation); Continental Oil Co. v. Bonanza

Corp., 706 F.2d 1365, 1376 (5th Cir.1983) (en banc) (explaining

that the attribution of a managing agent's privity or knowledge to

the corporation depends upon the scope of such managing agent's

authority). In the instant case, therefore, the privity and

knowledge of Blount, Suzuki's president, clearly constitutes the

privity and knowledge of Suzuki.

 In the case at bar, the district court applied Fecht and held

that limitation is impossible. The court expressly refrained from

deciding what acts of negligence or conditions of unseaworthiness

caused the accident, leaving those issues open for determination by

the state court jury. According to the district court, if the

state court holds Suzuki liable for the accident, Suzuki's

liability would derive solely from Blount's actions. Because
 4

In granting summary judgment against Suzuki, the district

court considered only the pleadings filed in the limitation

proceeding, the Shuberts' state court complaint, and a deposition

of Blount. 

Blount necessarily has privity and knowledge of his own actions,

and because Blount's privity and knowledge is the same as Suzuki's,

the district court denied Suzuki's limitation petition.

We do not believe that the district court's disposition of

this case adequately protects Suzuki's rights under the Limitation

Act. It is true that Suzuki necessarily possesses privity and

knowledge with respect to all of the acts of Blount. If Suzuki

could be held vicariously liable only through Blount, then no doubt

limited liability would be impossible. At this stage of the

proceedings, however, we are reluctant to assume that Suzuki can be

held vicariously liable only through Blount.4

 Our reluctance finds

support in this court's decision in In re M/V SUNSHINE, II, 808

F.2d 762, 765 (11th Cir.1987). In that case, a pleasure boat

owner, who was operating his boat when it collided with another

boat, filed a petition for limited liability. See id. at 763.

Following Fecht and explaining that an owner-operator may not ever

limit his liability, the district court dismissed the limitation

petition on a motion to dismiss. This court reversed, holding that

the district court should not have resolved the privity or

knowledge issue without further factual development. We stated:

[I]n most circumstances negligence in operation will be

sufficiently connected to the owner on board his own small

vessel and operating it that he will be found to have privity

or knowledge, but this common sense recognition of how the

facts will usually work out is not an ineluctable doctrine to

be applied at the pleading stage, on conclusory and disputed

allegations, as a substitute for the knowledge necessary to

lead a court to rational decision.
 5

Although it appears that Hall is not an employee of Suzuki,

it would be premature to say that Hall was not acting on Suzuki's

behalf on the day of the accident. 

 6If Hall is not a managerial employee of Suzuki, Hall's

privity or knowledge would not automatically be attributed to

Suzuki. This is not to say, however, that if Hall caused the

accident, Suzuki could always demonstrate a lack of privity or

knowledge. For example, in Tittle v. Aldacosta, 544 F.2d 752,

756-57 (5th Cir.1977), the court attributed the privity or

knowledge of a ship's mate to the shipowner, where the shipowner

was on board the ship at the time of the accident, and exercised

"direct command" over the negligent mate. "Unlike owners who are

remote physically and operationally, [the owner present at the

accident] cannot rightfully claim that his investment in a

seagoing enterprise is imperiled by actions of those over whom he

can exercise no immediate control." Id. Accordingly, "where the

operational command of the whole enterprise is in the hands of

the owner then present, he is charged with privity and knowledge

on usual principles for the negligent acts of those under his

effective command." Id. 

Id. at 765.

In the instant case, we can envision a set of circumstances

under which Suzuki could be exposed to liability based on the

actions of someone other than Blount. For example, suppose that

the state court finds that Hall and Marr both caused the accident

by operating their watercraft negligently, and that Blount and

Shubert are free from contributory fault. If Hall was acting as

Suzuki's agent at the time of the accident, the court could hold

Suzuki vicariously liable under principles of respondeat superior.5

Despite this imputation of Hall's negligence to Suzuki, Suzuki may

lack privity or knowledge with respect to Hall's negligence.6 This

scenario illustrates why Suzuki's rights under the Limitation Act

may be in jeopardy. It remains possible that Suzuki will have to

pay damages exceeding the limitation fund for acts occurring

without its privity or knowledge. Accordingly, we hold that the

possibility of vicarious liability through parties other than
Blount precludes summary judgment. A genuine issue of material

fact as to Suzuki's lack of privity or knowledge still exists.

Although the Shuberts emphasize that their state court

complaint does not allege that Suzuki is vicariously liable for

Hall's conduct, or for anyone's conduct other than Blount's, the

Shuberts cannot ensure that Suzuki will be held vicariously liable

only through Blount. First, the Shuberts have not executed any

stipulation in the admiralty court binding them to hold Suzuki

vicariously liable for Blount's actions only. Without such a

stipulation, the Shuberts presumably could amend their state court

pleadings to allege that Suzuki is vicariously liable through

someone other than Blount. Second, even if the Shuberts agree not

to pursue vicarious liability through anyone but Blount, the

Shuberts' amended state court complaint names Blount, Hall, Mann,

Nemic, Daniel, and Marr as defendants (along with Suzuki). If

deemed negligent, these parties could file cross-claims against

Suzuki for indemnification or contribution, alleging that Suzuki is

vicariously liable through someone other than Blount (such as

Hall). Cf. In re Beiswenger Ent. Corp., No. 95-2272, slip. op. at

----, --- F.3d ----, ---- (11th Cir.1996) (holding that, for

purposes of determining whether a multiple-claims-inadequate-fund

situation exists, potential claims for indemnity or contribution

from the vessel owner's co-defendants must be considered separately

from the damage claimant's primary claim against the vessel owner).

If Suzuki lacks privity or knowledge with respect to Hall's

actions, see supra, then Suzuki's rights under the Limitation Act

will have been frustrated.
Our decision, reversing summary judgment on the privity or

knowledge issue, is not necessarily fatal to the Shuberts' ability

to try liability and damages issues against Suzuki in state court.

See, e.g., Beiswenger, slip. op. at ----, --- F.3d at ----

(allowing damage claimants in a multiple-claims-inadequate-fund

case to proceed in state court upon filing of appropriate

stipulations). We leave to the parties and the district court on

remand the matter of the feasibility of appropriate protective

stipulations, and the fashioning thereof.

IV. CONCLUSION

We REVERSE the district court's order granting summary

judgment against the appellant, and REMAND this action to the

district court for proceedings consistent with this opinion.