Opinion ID: 3010396
Heading Depth: 2
Heading Rank: 2

Heading: Background Admiralty Law

Text: The Limitation Act provides that when a maritime accident occurs without the privity or knowledge of [the] owner, the shipowner's liability shall not ... exceed the amount or value of the interest of such owner in such vessel, and her freight then pending. 46 App. U.S.C. § 183(a). A shipowner facing potential liability can file a complaint for limitation of liability in a federal district court which then is authorized to stay all other proceedings against the shipowner and receive all claims. 46 App. U.S.C. § 185; Fed. R. Civ. P. Supp. Rule F(4). Under Rule F of the Supplemental Rules for Certain Admiralty and Maritime Claims, the shipowner may 6 demand exoneration from as well as limitation of liability. See Texaco v. Williams, 47 F.3d 765, 769 n.19 (5th Cir. 1995). Thus, a complaint under the Limitation Act is a twostep process. The district court, sitting in admiralty without a jury, first determines  `whether there was negligence; [second] if there was negligence, whether it was without the privity and knowledge of the owner; and [finally] if limitation is granted, how the [limitation] fund should be distributed.'  In re Complaint of Dammers & Vanderheide & Scheepvaart Maats Christina B.V., 836 F.2d 750, 755 (2d Cir. 1988) (quoting Universal Towing Co. v. Barrale, 595 F.2d 414, 417 (8th Cir. 1979)). The claimant has the initial burden of showing negligence or unseaworthiness, and then, if the claimant is successful, the burden shifts to the shipowner to demonstrate a lack of privity and knowledge in order to obtain the benefit of limitation of liability. Bankers Trust Co. v. Bethlehem Steel Corp., 761 F.2d 943, 948 n.14 (3d Cir. 1985). The exclusive admiralty jurisdiction of the federal courts in Limitation Act actions directly conflicts with the saving to suitors clause of 28 U.S.C. § 1333, which preserves common law rights in certain maritime cases, including the right to a jury trial. See Gorman v. Cerasia, 2 F.3d 519, 524 (3d Cir. 1993). There is a conflict because [t]here is no right to a jury in actions instituted in admiralty, and the claimants are enjoined from pursuing common law actions in other forums. Dammers, 836 F.2d at 755 (citation omitted). The conflict derives from the Seventh Amendment, as the Amendment applies only to cases brought at common law, not those brought in admiralty. Waring v. Clarke, 46 U.S. (5 How.) 441, 458-60 (1847). There are two exceptions to this exclusive admiralty jurisdiction over Limitation Act proceedings. Thefirst arises when the value of the vessel and its freight exceeds that of all claims, that is the fund is adequate to cover all claims filed against the owner. See Lake Tankers Corp. v. Henn, 354 U.S. 147, 152, 77 S.Ct. 1269, 1272 (1957); Gorman,2 F.3d at 524. The second exception arises when there is only one claimant whose claim exceeds the value of the vessel and its freight.3 In this case, because the second exception _________________________________________________________________ 3. If a single claimant's claim is for less than the value of the vessel and its freight, a limitation proceeding is not needed. 7 applied, the district court was obliged to dissolve the stay against other proceedings if Newman stipulated to the district court's exclusive jurisdiction to determine all issues relating to limitation of liability. See, e.g., Ex parte Green, 286 U.S. 437, 438-40, 52 S.Ct. 602, 602-03 (1932); Langnes v. Green, 282 U.S. 531, 540-44, 51 S.Ct. 243, 24648 (1931); Gorman, 2 F.3d at 524. These stipulations must waive any claim of res judicata based on the state court judgment and concede the shipowner's right to litigate all limitation issues in federal court. Id. at 524-25; see also, Grant Gilmore & Charles L. Black, Jr., The Law of Admiralty § 10-19, at 871 (2d ed. 1975). 4