Opinion ID: 2757407
Heading Depth: 1
Heading Rank: 2

Heading: analysis

Text: A party who contends that a limitation action was not timely filed challenges the district court’s subject matter jurisdiction. 5 We review de novo dismissals under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. 6 On issues involving jurisdiction, the district court may consider evidence outside the pleadings and resolve factual disputes. 7 We review purely factual findings for clear error and mixed questions of law and fact de novo. 8 RLB, as the party asserting jurisdiction, has the burden of proof. 9 Both parties relied on evidence outside the pleadings, so the district court converted Butler’s motion to dismiss into a motion for summary judgment under Federal Rule of Civil Procedure 12(d). We review summary and federal rules of civil procedure with notice under the Limitation Act. They cite no case holding that presumptive notice, rather than actual notice, is sufficient under that Act. More importantly, the Butlers did not press this theory before the district court, and therefore may raise it for the first time on appeal. See Kinash v. Callahan, 129 F.3d 736, 739 n.10 (5th Cir. 1997) (“As a general rule, this Court does not review issues that are raised for the first time upon appeal.”). 5 In re Eckstein Marine Serv. L.L.C., 672 F.3d 310, 315 (5th Cir. 2012). 6 See id. at 314. 7 See Freeman v. United States, 556 F.3d 326, 334 (5th Cir. 2009); see also Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981) (“[N]o presumptive truthfulness attaches to plaintiff’s allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims.”). 8 In re Eckstein, 672 F.3d at 314; Complaint of Tom-Mac, Inc., 76 F.3d 678, 682 (5th Cir. 1996). 9 See In re Eckstein, 672 F.3d at 314. 6 Case: 14-40326 Document: 00512856802 Page: 7 Date Filed: 12/03/2014 No. 14-40326 judgment rulings de novo, viewing evidence in the light most favorable to the nonmoving party. 10 Summary judgment is warranted when there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. 11 We have made the general observation that Rule 12(b)(1) and Rule 56 diverge in their treatment of factual disputes. In this case, however, neither the magistrate judge in the R&R, nor the district court in adopting it, made any relevant factual findings. Furthermore, a review of the record reveals no material factual disputes. Thus, the Rule 12(b)(1) and Rule 56 standards converge, and a straightforward de novo review applies.
The Limitation Act “allows a vessel owner to limit liability for damage or injury . . . to the value of the vessel or the owner’s interest in the vessel.” 12 To invoke the protections of the Act, the vessel owner must bring an action in district court “within 6 months after a claimant gives the owner written notice of a claim.” 13 This requirement is jurisdictional. 14 We have said that a communication qualifies as “written notice” if it “reveals a ‘reasonable possibility’ that the claim will exceed the value of the vessel.” 15 This standard evokes two inquiries: (1) whether the writing 10 See Flock v. Scripto-Tokai Corp., 319 F.3d 231, 236 (5th Cir. 2003). 11 Id. 12 Lewis v. Lewis & Clark Marine, Inc., 531 U.S. 438, 446 (2001). A limitation action essentially establishes a limited fund equal to the value of the vessel and consolidates all potential claims before one federal district court. See id. at 448. 13 46 U.S.C. § 30511(a) (2013). This provision was previously codified at 46 U.S.C. app. § 185. 14 In re Eckstein, 672 F.3d at 315. 15 Id. at 317. RLB relies on the multifactor test from Matter of Loyd W. Richardson Const. Co., 850 F. Supp. 555, 557 (S.D. Tex. 1993). However, we have consistently used the “reasonable possibility” test, and continue to do so here. See In re Eckstein, 672 F.3d at 317; Billiot v. Dolphin Servs., Inc., 225 F.3d 515, 518 (5th Cir. 2000); Complaint of Tom-Mac, Inc., 76 F.3d 678, 683 (5th Cir. 1996). 7 Case: 14-40326 Document: 00512856802 Page: 8 Date Filed: 12/03/2014 No. 14-40326 communicates the reasonable possibility of a claim, and (2) whether it communicates the reasonable possibility of damages in excess of the vessel’s value. Answering these questions requires a “fact-intensive inquiry into the circumstances of the case.” 16 The purpose of the “reasonable possibility” standard is to place the burden of investigating potential claims on the vessel owner: The Limitation Act provides generous statutory protection to the vessel owners who reap all of its benefits. When there is uncertainty as to whether a claim will exceed the vessel’s value, the reasonable possibility standard places the risk and the burdens associated with that risk on the owner. In other words, if “doubt exists as to the total amount of the claims or as to whether they will exceed the value of the ship the owner will not be excused from satisfying the statutory time bar since he may institute a limitation proceeding even when the total amount claimed is uncertain.” 17 Assigning the risk of uncertainty to the vessel owner fits the purpose of the six-month limitation, which is “to require the shipowner to act promptly to gain the benefit of the statutory right to limit liability.” 18 Thus, “[o]nce a reasonable possibility has been raised, it becomes the vessel owner’s responsibility to initiate a prompt investigation and determine whether to file a limitation action.” 19 We emphasize that the standard is a reasonable possibility, not a reasonable probability. Although this standard “is not toothless, it is also not particularly stringent.” 20 We have said less about what a communication must contain to qualify as such a written notice under the Act. A state court complaint clearly gives 16 In re Eckstein, 672 F.3d at 317. 17 Id. at 317–18 (quoting Complaint of Morania Barge No. 190, Inc., 690 F.2d 32, 34 (2d Cir. 1982)). 18 Exxon Shipping Co. v. Cailleteau, 869 F.2d 843, 846 (5th Cir. 1989). 19 In re Eckstein, 672 F.3d at 317. 20 Id. 8 Case: 14-40326 Document: 00512856802 Page: 9 Date Filed: 12/03/2014 No. 14-40326 notice of the claim itself. A demand need not express a specific quantum of damages so long as there is a reasonable possibility that a claim’s value will exceed the value of the vessel. 21 This court has not, however, addressed what is required for a written communication that is not a filed complaint to qualify as notice.
As a threshold matter, to the extent that we have never explicitly held that a written communication may serve as notice under the Act in lieu of a filed complaint, we do so today. 22 In this case, that presents three issues: (1) whether a series of letters, none of which constitutes notice on its own, may be considered together to find notice in the aggregate, (2) whether Daniel’s letters convey a “reasonable possibility” of a potential claim, and (3) whether those letters establish a “reasonable possibility” that the amount of the claim might exceed the value of the Vessel.
The Butlers urge us to consider counsel Daniel’s letters “bundled together” and to evaluate the entire body of correspondence under the Act’s “written notice” requirement. The statutory text does not foreclose the 21 See id. at 317–19 (“[A] claimant need not prove or even specifically allege that his damages will exceed the value of the vessel in order to trigger the six month deadline. So long as the reasonable possibility standard has been met by the claimant’s allegations, the vessel owner bears the risk even if the total value of the claim is uncertain.” Id. at 319.). Thus, although a claimant who affirmatively demands a lower amount does not trigger the six-month period until he later amends his complaint to demand a higher figure, a vessel owner who has reason to know of “other claims . . . arising out of the same occurrence [that] may exceed the value of his ship” is still on notice from the start. Id. at 319 (emphasis added) (quoting Exxon Shipping, 869 F.2d at 846); see also, e.g., Complaint of Morania Barge, 690 F.2d at 34–35. 22 See In re Marquette Transp. Co., L.L.C., 524 F. App’x 989, 992–93 (5th Cir. 2013) (per curiam) (unpublished); see also Complaint of Beesley’s Point Sea-Doo, Inc., 956 F. Supp. 538, 540 (D.N.J. 1997)) (“It is well settled that letters sent by claimants to vessel owners may, in some circumstances, constitute notice sufficient to trigger the six-month rule under the Act.”). 9 Case: 14-40326 Document: 00512856802 Page: 10 Date Filed: 12/03/2014 No. 14-40326 possibility of aggregate notice; it only requires the claimant to give “the owner written notice,” not a written notice. 23 In fact, some district courts, including one in this circuit, have considered a body of correspondence rather than each of its individual constituent parts in a vacuum. 24 Moreover, from a practical standpoint, it makes sense to do so. In situations like this one, in which the vessel owner and the putative claimant corresponded over time, it is natural for individual letters to focus narrowly on specific subjects and for later letters to assume knowledge of the contents of previous letters. Considering the correspondence as a whole better approximates what the vessel owner, as the recipient of all of the writings, should have thought was a “reasonable possibility” of a potential claim and its value. Furthermore, it would be an artificial exercise to require a claimant who did engage in a lengthy correspondence to designate the single most favorable writing from the series as the written notice. Far better for the record to reflect what actually occurred and for the district court to make its ruling accordingly. Thus, we shall consider whether the entire series of letters satisfies the “reasonable possibility” requirement.
We have not previously addressed the issue of what a writing must contain to give a vessel owner notice of a potential claim. Both RLB and the Butlers analogized to district court cases (primarily from courts outside this circuit) and emerge with two different methodologies for analyzing the facts at hand. RLB starts with an idea of what proper notice of a claim would look like and searches through Daniel’s emails for statements matching that standard. 46 U.S.C. § 30511(a) (2013). 23 See Complaint of Beesley’s, 956 F. Supp. at 541; Matter of Oceanic Fleet, Inc., 807 F. 24 Supp. 1261, 1263 (E.D. La. 1992). 10 Case: 14-40326 Document: 00512856802 Page: 11 Date Filed: 12/03/2014 No. 14-40326 RLB states that notice must “refer to the cause of [claimants’] injuries or the types of injuries sustained . . . and clearly assert blame on the petitioner.” RLB also tries to disqualify Daniel’s emails for “provid[ing] no details regarding the claims, injuries, or causes of injuries” and for not mentioning any “demand of a right, specific blame for damage, or call upon something due.” RLB asserts that, even though Daniel’s emails might have obliquely referred to a potential lawsuit, absent the magic words it sought, RLB “was never put on notice that [the Butlers] would be seeking a claim based on RLB’s alleged negligence in connection with the vessel.” RLB also claims that it had serious doubts as to the viability of the potential claim because of Butler’s alleged contributory negligence. The Butlers point out that RLB cannot simultaneously disclaim knowledge of a pending claim and assert knowledge of a potential defense to that claim. Furthermore, the issue here is the “reasonable possibility” that a claim exists, not probability of success on the merits. 25 In contrast, the Butlers’ approach is to start with the letters themselves, then consider whether together those letters reveal the reasonable possibility of a pending claim. Daniel’s first letter instructed RLB “to preserve evidence as if a suit had been initiated”; his email of August 19, 2011, mentioned the evidence he had already gathered and requested mediation “before any lawsuit”; his email on May 30 of the following year discussed state and federal venues for the suit and again requested mediation; finally, his emails of June 8 and 14, 2012, explicitly bring up filing the lawsuit and service of process. According to the Butlers, these statements, when taken together, paint a picture of a pending claim. 25Cf. In re Hawaiian Watersports, LLC, No. 07-00617, 2008 WL 3065381, at  (D. Haw. Feb. 29, 2008) (“Plaintiff would not be excused from being on notice if it believed it had some other compelling defense to the claim, such as no negligence on its part.” (citations omitted)). 11 Case: 14-40326 Document: 00512856802 Page: 12 Date Filed: 12/03/2014 No. 14-40326 The Butlers’ approach is more compatible with the reasonable-possibility test’s fact-intensive nature, as it starts with the actual facts rather than a predefined factual pattern. This finds support from the Second Circuit, which does not require “exacting specificity in a notice of claim to a vessel owner.” 26 Rather, that court uses “a broad and flexible standard of review—reading letters of notice in their entirety and considering their ‘whole tenor’—when determining if sufficient notice was given.” 27 In its favor, RLB’s position does invoke the benefits of a bright-line rule: A clear list of required statements and demands would provide guidance to future claimants and vessel owners alike. In addition to being less factfocused, however, there are two additional problems with this approach. First, regarding damages, we have held that the risk of uncertainty lies with the vessel owner. It would be inconsistent to reverse that risk when it comes to notice of a potential claim. Second, mandating that written notice contain “magic words” or specific elements might well impose a requirement not found in the statutory text. As the Butlers’ analytical approach appears to be more compatible with our precedent, and as it is factually inconceivable that RLB had no notice of a claim after almost a year of emails discussing the case—culminating in the June 14 missive informing RLB that Butler had actually filed suit—we hold that by June 14, 2012, at the latest, RLB had notice of the Butlers’ claim. This is obviously more than six months prior to the December 28, 2012, filing date of RLB’s limitation action. 26 Doxsee Sea Clam Co. v. Brown, 13 F.3d 550, 554 (2d Cir. 1994). 27 Id. 12 Case: 14-40326 Document: 00512856802 Page: 13 Date Filed: 12/03/2014 No. 14-40326 3. “Reasonable Possibility” of Damages in Excess of Vessel’s Value To the same extent that RLB had notice of the Butlers’ potential wrongful death suit, it had notice that there was a reasonable possibility of damages in excess of $750,000, even though Daniel’s emails never gave a specific number. Our recent decision in In re Eckstein Marine Service L.L.C. addressed almost precisely this same issue. 28 In that case, the state court plaintiff alleged permanent and disabling injuries, but did not provide a specific damages figure. We rejected the vessel owner’s contention that, without a dollar amount or certainty as to the extent and permanence of the plaintiff’s injuries, the period for filing a limitation action could not start. 29 We concluded that, in light of the severity of the injuries, a vessel owner should have realized the potential for damages in excess of its vessel’s value (coincidentally, also $750,000), and that any uncertainty was the owner’s burden to resolve. 30 That is the reason for a six-month grace period. The analogy to this case is clear. 31 The $3 million figure and dispute surrounding it are red herrings. RLB attacks the district court’s conclusion that RLB “certainly knew” of the $3 million value of the claim, and seeks to rely on the fact that this settlement offer never appeared in Daniel’s letters, only in Schulz’s rejection. However, RLB has no reply to the district court’s primary reasoning: RLB should have 28 672 F.3d 310 (5th Cir. 2012). 29 Id. at 317. 30 Id. at 317–18; see also Paradise Divers, Inc. v. Upmal, 402 F.3d 1087, 1091 (11th Cir. 2005); Doxsee, 13 F.3d at 554–55. 31 We note further that in In re Eckstein, the vessel owner had actually done some legal research to find that juries typically awarded about $335,000 for injuries similar to those suffered by the state court plaintiff, demonstrably less than the boat’s value of $750,000. We still did not excuse the untimely filing of the limitation action, however, stating that “[w]hile this finding might have made it less probable that [the state court plaintiff’s] claim would exceed $750,000, in light of the other evidence available to [the vessel owner] it did not make the possibility of such an award unreasonable.” In re Eckstein, 672 F.3d at 318 (emphases added). 13 Case: 14-40326 Document: 00512856802 Page: 14 Date Filed: 12/03/2014 No. 14-40326 realized that an action involving the death of a child would easily exceed $750,000 in potential damages. We are satisfied that more than six months prior to filing its limitation action, RLB had notice of a potential claim the value of which had the reasonable possibility of exceeding the value of its vessel.