Opinion ID: 453252
Heading Depth: 1
Heading Rank: 2

Heading: the applicable supreme court decision

Text: The conflict between the Limitation of Liability Act, 46 U.S.C. Sec. 183, and the saving to suitors clause, 28 U.S.C. Sec. 1333, has been troublesome for the courts. When the aggregate of all multiple claims will not exhaust the available limitation fund, the district court will not enjoin the prosecution of claims in other courts. If multiple claims exceed the amount of the fund, then other proceedings will be enjoined. What if the amount of the claims exceed the fund but the parties stipulate that they will not enter judgment in any court for more than the amount of the Limitation Fund? In Lake Tankers Corporation v. Henn, 354 U.S. 147, 77 S.Ct. 1269, 1 L.Ed.2d 1246 (1957) the Supreme Court held that such a stipulation must be accepted and the injunction dissolved since the respondent must not be thwarted in her attempt to employ her common law remedy in the state court where she may obtain trial by jury. Id. at 153, 77 S.Ct. at 1273. Justice Clark, writing for the majority reasoned as follows: 1 The state proceeding could have no possible effect on the petitioner's claim for limited liability in the admiralty court and the provisions of the Act, therefore, do not control. Langnes v. Green, 282 U.S. 531, 539-540 [51 S.Ct. 243, 246-247, 75 L.Ed. 520] (1931). It follows that there can be no reason why a shipowner, under such conditions, should be treated any more favorably than an airline, bus, or railroad company. None of them can force a damage claimant to trial without a jury. They, too, must suffer a multiplicity of suits. Likewise, the shipowner, so long as his claim of limited liability is not jeopardized, is subject to all common-law remedies available against other parties in damage actions. 2 354 U.S. at 153, 77 S.Ct. at 1273. 3 Langnes v. Green, 282 U.S. 531, 51 S.Ct. 243, 75 L.Ed. 520 (1931), cited by Justice Clark in the above quotation, involved a single claimant in contrast to multiple claimants. However, the Supreme Court had previously held that the Limitation Act applied in this situation, as well as in one involving multiple claims. White v. Island Transportation Co., 233 U.S. 346, 34 S.Ct. 589, 58 L.Ed. 993 (1914). The value of the vessel in Langnes v. Green, supra, was $5,000, and Green's claim was for $25,000. The district court enjoined the state court proceeding and proceeded to try Green's claim. The Supreme Court, overruling White v. Island Transportation Co., supra, held that the district court should have allowed the state court action to proceed, retaining as a matter of precaution, the petition for a limitation of liability to be dealt with in the possible but ... unlikely event that the right of petitioner to limited liability might be brought into question in the state court. 282 U.S. at 541, 51 S.Ct. at 247. Only in this way, said the Court, can the rights of both parties [i.e., under the Limitation Act and under the saving to suitors clause] be preserved. 4 The procedure that has been worked out for a single-claim plaintiff as a result of the decision in Langnes v. Green, supra, and a subsequent decision interpreting the mandate in Ex parte Green, 286 U.S. 437, 52 S.Ct. 602, 76 L.Ed. 1212 (1932) has been summarized in a leading admiralty text. 1 The state court plaintiff must comply with the following requirements: 5 a) file his claim in the limitation proceeding; 6 b) where a stipulation for value has been filed in lieu of the transfer of the ship to a trustee, concede the sufficiency in amount of the stipulation; 7 c) consent to waive any claim of res judicata relevant to the issue of limited liability based on any judgment obtained in the state court; 8 d) concede petitioner shipowner's right to litigate all issues relating to limitation in the limitation proceeding. 9 In their motion to dissolve the injunction, appellants stipulated as follows: 10 1. That if the District Court saw fit to dissolve its Order of Injunction, dated March 29, 1984, which prohibited Appellants from maintaining a direct action against Appellees in state court, Appellants would proceed as party-plaintiffs in the Circuit Court of St. Louis County, Missouri in Cause No. 897969 which had been filed prior to the issuance of the District Court's Order of Injunction. 11 2. That upon the dissolution of the Order of Injunction, the District Court sitting in admiralty would retain its exclusive jurisdiction over the issues of (1) Appellees' right to limit liability, (2) the proper value of the Limitation Fund, and (3) all matters affecting the right of Appellees to limit liability herein, and that any decision in the above described state court action would not be res judicata as to those issues should they in any manner be embraced by any such decision in state court. 12 3. That if Appellants obtained in the aggregate a verdict or judgment against Appellees, or any of them, in the Circuit Court of St. Louis County in excess of the difference of the amount of the Limitation Fund as was previously stipulated by Appellees less the amount agreed to be paid by Appellees to Harold Byington, Sr. as and for his claim, Appellants would consent to a remittitur so that judgment would be entered in the aggregate equal to the difference between the amount of the Limitation Fund as originally stipulated by Appellees less the amount agreed to be paid by Appellees to Harold Byington, Sr.--each of the Appellants remitting in proportion to his or her respective loss--and that an injunction would issue restraining Appellants from exeucting thereon to the extent that any such judgment exceeded the amount remaining in the Limitation Fund. 13 The stipulation in our opinion met the requirements of Lake Tankers Corporation v. Henn, supra, and Langnes v. Green, supra. The effect of these cases and a stipulation such as entered here was thoroughly discussed in Universal Towing Co. v. Barrale, 595 F.2d 414 (8th Cir.1979). In the case of either a single claim or of multiple claims that do not exceed, the limitation fund, however, the court's discretion is narrowly circumscribed. The District Court must dissolve the injunction unless the owner can demonstrate that his right to limit liability would be prejudiced. Id. at 420 (emphasis added). Here the owner has not made the required demonstration. His reliance on Helena Marine Service, Inc. v. Sioux City and New Orleans Barge Lines, Inc., 564 F.2d 15 (8th Cir.1977) is misplaced. The facts of that case bear little relationship to those of the case at bar. It involved not a phantom claimant but one readily identified and poised in a position to assert at any time a claim that would exceed the limitation fund. Lake Tankers Corp. v. Henn, supra, is factually and legally akin to the case under consideration.