Court Opinion

ID: 6339613
Source: CourtListenerOpinion
Date Created: 2022-05-11 18:00:39.349441+00
Date Added: 2024-06-11T15:49:12.764013
License: Public Domain

Case: 21-60796    Document: 00516314809        Page: 1     Date Filed: 05/11/2022

          United States Court of Appeals
               for the Fifth Circuit                                 United States Court of Appeals
                                                                              Fifth Circuit

                                                                            FILED
                                                                        May 11, 2022
                                No. 21-60796                           Lyle W. Cayce
                                                                            Clerk

   In re: In the Matter of OHT Hawk AS, Songa
   Shipmanagement LTD., Songa Crewmanagement LTD.
   and OHT Management AS, as owner of the M/V Hawk
   petitioning for Exoneration from or limitation of
   liability

   OHT Hawk AS; OHT Management AS,

                                                         Petitioners—Appellees,

                                    versus

   Offshore Heavy Transport AS; Songa Shipmanagement
   Limited; M/V Hawk, her engines, tackle, apparel,
   furniture, etc. in rem,

                                                     Defendants—Appellees,

                                    versus

   Luis Cruz,

                                                         Claimant—Appellant.

                 Appeal from the United States District Court
                   for the Southern District of Mississippi
                           USDC No. 1:19-CV-236
                           USDC No. 1:19-CV-671
Case: 21-60796       Document: 00516314809           Page: 2    Date Filed: 05/11/2022

                                      No. 21-60796

   Before Higginbotham, Dennis, and Graves, Circuit Judges.
   Per Curiam:*
          On March 29, 2019, the M/V Hawk (the “Hawk”), a semi-
   submersible heavy lift vessel, was transporting a dry dock in the Huntington
   Ingalls Incorporated shipyard in Pascagoula, Mississippi when it allided with
   a barge and a Navy destroyer under construction. The Hawk’s owners filed
   a Complaint in Limitation. See 46 U.S.C. § 30511. Pursuant to Rule F(4) of
   the Federal Rules of Civil Procedure Supplemental Rules for Admiralty or
   Maritime Claims, the district court ordered all persons with claims arising
   from the allision file within thirty days. A number of parties—including the
   shipyard, the United States, and various insurers—did so, and for months
   the district court managed the multiple claims vying for the Hawk’s limited
   fund. On May 6, 2021, roughly seventeen months past the court’s filing
   deadline, Luis Cruz, a pipe insulator who had been aboard the Hawk at the
   time of the allision, sought leave to file a claim. The district court denied
   leave, citing the mature state of the litigation. Cruz appealed.
          Finding no abuse of discretion in denying leave, we AFFIRM the
   district court.
                                           I.
          The Limitation of Liability Act, 46 U.S.C. § 30501 et seq., allows a
   vessel owner to limit his liability for certain civil claims related to an incident
   that occurred during a voyage to the value of the vessel. The Act also allows
   the owner to channel all claims against him into a single federal proceeding
   by prohibiting any other actions related to the voyage outside of the limitation
   proceeding. 46 U.S.C. § 30511(c). Once an owner initiates a limitation
   proceeding, Supplemental Rule F(4) requires that all claims against the

          *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.

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Case: 21-60796        Document: 00516314809        Page: 3      Date Filed: 05/11/2022

   owner be filed within thirty days. The court must provide notice of the
   limitation proceeding, as well as the claim deadline, by publication in a
   newspaper for four weeks prior to the claim deadline. Fed. R. Civ. P.
   Supp. F(4). Additionally, the owner must mail notice to anyone known to
   have asserted a claim against him before he initiated the limitation
   proceeding. Id. Claims must be filed before the date specified in the notice;
   however “[f]or cause shown,” the court can enlarge the time in which a claim
   must be filed. Id.
          The relatively short filing period and the lack of formal process means
   that persons with claims must be both vigilant and diligent. To “ameliorat[e]
   some of the rigors of this result,” our court adopted a liberal stance towards
   filing late claims, embodied in the principle that “‘so long as the limitation
   proceeding is pending and undetermined, and the rights of the parties are not
   adversely affected, the court will freely grant permission to file late claims’
   upon a showing of the reasons therefor.” Texas Gulf Sulphur Co. v. Blue Stack
   Towing Co., 313 F.2d 359, 363; 362 (5th Cir. 1963) (quoting Benedict on
   Admiralty, Vol. 3, § 518 (Knauth ed. 1940)). “Thus a district court ruling
   on a motion to file a late claim, should consider (1) whether the proceeding is
   pending and undetermined, (2) whether granting the motion will adversely
   affect the rights of the parties, and (3) the claimant’s reasons for filing late.”
   Golnoy Barge Co. v. M/T SHINOUSSA, 980 F.2d 349, 351 (5th Cir. 1993).
          We review a district court’s consideration of these factors for abuse of
   discretion. Id. Under this deferential standard of review, “[t]he instances in
   which we can declare that the action is so lacking in reason as to constitute
   an abuse of discretion will be, as they have been, rare indeed.” Texas Gulf,
   313 F.2d at 363.

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                                                II.
           The district court denied Cruz’s motion for leave to file his claim,
   finding: (1) that the limitation proceeding was “partially determined”
   because a claim against the Hawk had been settled; (2) that allowing Cruz’s
   late claim would prejudice the parties by causing delay, increasing litigation
   expenses, and threatening the adequacy of the limited fund; and (3) that
   Cruz’s reason for missing the deadline—that he resided in New Orleans, but
   notice was published in a Mississippi newspaper—was not good cause to
   excuse his untimeliness. Under our precedent, we cannot say that any of
   these conclusions amounts to an abuse of discretion.
           First, the district court did not abuse its discretion in determining that
   the limitation proceeding was partially determined when Cruz filed his
   motion. Although we have not defined the term, we have held, at least in an
   unpublished decision, that a proceeding is partially determined when the
   petitioner has settled a claim and is in settlement negotiations over the others.
   In re Trace Marine Inc., 114 F. App’x 124, 127 (5th Cir. 2004). 1 Additionally,
   district courts within our circuit consider factors like the nearness of a trial

           1
               As Trace Marine discusses, settling a single claim or a single category of claims
   can be said to “partially determine” a limitation proceeding because the limitation
   petitioner relies on the strength and number of pending claims against him when
   formulating his settlement price. See 114 F. App’x at 127. When the parties thus settle a
   personal injury claim, or all personal injury claims, they do so with the understanding that
   the settlement will achieve a certain degree of resolution of the entire proceeding.
   Accordingly, a limitation petitioner may be willing to settle a certain claim at a higher price
   if it will buy him immediate resolution and thus reduce his overall litigation costs. On the
   other hand, if he is facing a number of similar claims—say, personal injury claims from the
   entire crew—then he may be disinclined to settle at a high price without first seeking a
   judicial determination on liability. To borrow a phrase, settlements are negotiated “in the
   shadow of the law,” more specifically here, in the shadow of the claims pending against the
   petitioner and the limited fund from which the claimants could recover. Thus settling a
   single claim can have consequences for, “partially determine,” the broader proceeding.

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   date, the amount of discovery completed, and the passage of other material
   pretrial deadlines in assessing whether a limitation proceeding is partially
   determined. See Plaquemine Point Shipyard, LLC v. Kirby Inland Marine, LP,
   472 F. Supp. 3d 313, 315–16 (E.D. La. 2020) (collecting cases). Cruz filed his
   motion for leave on May 6, 2021, seventeen months after the filing deadline
   of November 20, 2019 mandated by Supplemental Rule F(4). In those
   months, the parties to the limitation proceeding stipulated to liability, as well
   as to the value of the fund from which all claimants could recover. The only
   other personal injury claim in the proceeding settled. The parties exchanged
   expert disclosures and other discovery. In fact, when Cruz filed his motion,
   discovery was less than a month from closing. Given the advanced stage of
   the litigation, we find no abuse of discretion in the district court’s conclusion
   that the proceedings were partially determined. Indeed, only a few months
   after Cruz filed his motion, all claims against the Hawk settled and the case
   resolved.
          For many of the same reasons, we find no abuse of discretion in the
   district court’s conclusion that granting Cruz leave to file belatedly would
   prejudice the parties to the limitation proceeding, that is, both the Hawk and
   the claimants. The court found that adding Cruz’s claims would adversely
   affect the parties because the proceeding was near completion. Though the
   district court did not say so specifically in its order, “we can safely presume
   that the trial judge knew” that the discovery deadline was less than a month
   away when Cruz filed and would likely need to be continued if Cruz’s claim
   were permitted. Trace Marine, 114 F. App’x at 127. Thus, Cruz’s late filing
   would have likely added delay and increased the litigation costs for all parties
   to the proceeding. This conclusion was within the district court’s discretion
   to make.
          Finally, we do not find any abuse of discretion in the district court’s
   determination that Cruz failed to demonstrate good cause for his failure to

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   timely file his claim. Cruz’s reason for missing the deadline is that he did not
   receive actual notice of the limitation proceeding because he lived in New
   Orleans and the notice was published in the Sun Herald, a local newspaper in
   Harrison County, Mississippi, where the allision occurred. Other circuits
   have found that when a late claimant did not receive actual notice of a
   limitation proceeding because notice was published in “a place remote from
   the residence of potential claimants,” that is a sufficient ground to excuse the
   late filing of claims. See Sagastume v. Lampsis Nav. Ltd., Drosia, 579 F.2d 222,
   224 (2d Cir. 1978) (claimants lived in a small village in Honduras and notice
   was published in a New York newspaper); Jappinen v. Canada S.S. Lines,
   Ltd., 417 F.2d 189, 190 (6th Cir. 1969) (claimants lived in a small town in
   Minnesota and notice was published in Cleveland and Port Huron,
   Michigan). In those cases, notice was published in a different country, or
   several states away from where the late claimants lived. Here, notice was
   published in a newspaper serving a county just over seventy miles from New
   Orleans where Cruz lived. These facts are closer to those in Lloyd’s Leasing
   Ltd. v. Bates, 902 F.2d 368, 369 (5th Cir. 1990), where we found no abuse of
   discretion when notice was published in the Galveston Daily News and the late
   claimants lived in Port Arthur and around Sabine Pass. There, like here, the
   distance between the late-claimant and the coverage area of the publication
   was less than one-hundred miles and—more relevant to the question of
   “remoteness”—the two were in adjacent metropolitan regions. We see no
   abuse of discretion in the district court’s analysis of this factor.
                                    *      *       *
          For the foregoing reasons, the district court order denying Cruz leave
   to file a late claim is AFFIRMED.

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