Court Opinion

ID: 6331440
Source: CourtListenerOpinion
Date Created: 2022-04-14 14:00:31.407677+00
Date Added: 2024-06-11T09:23:11.215725
License: Public Domain

USCA11 Case: 21-11084     Date Filed: 04/14/2022    Page: 1 of 18

                                            [DO NOT PUBLISH]
                            In the
         United States Court of Appeals
                 For the Eleventh Circuit

                   ____________________

                         No. 21-11084
                   ____________________

MICHAEL MARTINEZ,
as Owner of and for a 2019 22’ Cape Horn,
hull identification number FAB22078E919,
her engines, tackle and appurtenances,

                                              Plaintiff-Appellant,
versus
ERIC REYNOLDS,

                                            Defendant-Appellee.
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2                        Opinion of the Court                   21-11084

                      ____________________

           Appeal from the United States District Court
               for the Southern District of Florida
              D.C. Docket No. 4:20-cv-10129-JLK
                    ____________________

Before NEWSOM and MARCUS, Circuit Judges, and STORY,* DISTRICT
JUDGE.
STORY, District Judge:
       Following a boating accident between Michael Martinez and
Eric Reynolds, Reynolds filed a Petition for Exoneration From or
Limitation of Liability in order to limit the liability he could
personally incur from the accident. Martinez filed a claim for his
alleged damages within that proceeding, and the parties voluntarily
settled his claim and executed a Settlement Agreement and Release
of Claims (“Settlement and Release”).
       After the settlement, Martinez filed his own Petition to
similarly limit his own liability from the accident. The district
court dismissed his Petition, finding that the Settlement and
Release precluded its filing. Martinez appeals that dismissal,
arguing that the Settlement and Release only released his own
personal injury and property damage claims against Reynolds, not
his right to bring the Petition. After careful review, we reverse the

Honorable Richard W. Story, United States District Judge for the Northern
*

District of Georgia, sitting by designation.
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21-11084               Opinion of the Court                       3

district court’s judgment and remand for proceedings consistent
with this opinion.
                                 I
       Martinez owned a 22-foot boat that he kept docked at the
Anchorage Resort in Key Largo, Florida. On December 30, 2019,
Martinez left the dock in his boat with several passengers on board.
After an afternoon of fishing, around sunset, Martinez began
driving his boat back to shore at approximately 30 miles per hour.
A 32-foot boat operated by Eric Reynolds collided with Martinez’s
boat. Reynolds was driving approximately 55 miles per hour at the
time of the collision, which caused damage to Martinez’s boat and
serious injuries to Martinez and his passengers. The Florida Fish
and Wildlife Conservation Commission charged Reynolds
criminally for the collision and found that Martinez was not at
fault.
       As a result of the accident, on January 24, 2019, Reynolds
filed a Petition for Exoneration From or Limitation of Liability
pursuant to the Shipowner’s Limitation of Liability Act, 46 U.S.C.
§ 30501, and Federal Rule of Civil Procedure, Supplemental Rule
F. Martinez asserted claims against Reynolds in this proceeding to
account for his personal injuries and the damage to his boat.
Reynolds asserted a compulsory counterclaim against Martinez in
the Limitation proceeding for his own alleged injuries and
damages. Martinez and Reynolds ultimately settled Martinez’s
claim, after which they executed a Settlement and Release dated
September 21, 2020.
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4                     Opinion of the Court                    21-11084

       The Settlement and Release noted that both Martinez and
Reynolds mutually participated in its drafting, and therefore its
language would “not be presumptively construed either in favor of
or against either of the Parties.” The “Release of Claims” section
stated, in pertinent part:
             Martinez does hereby release . . .
             Reynolds . . . of and from all manner of
             action and actions, cause and causes of
             action, claims the Party hereto made,
             could or should have made including,
             but not limited to any and all claims for
             negligence; intentional tort; and for all
             damages allowable, . . . ; common law,
             statutory, and bad faith actions, actions
             for subrogation, contribution and/or
             indemnity . . . and any sums or expenses
             whatsoever, including any claim or
             demand for arbitration, known or
             unknown, in admiralty, law or equity,
             presently existing or which might arise
             or be discovered in the future arising
             out of or resulting from any property
             damage, or injury(s) sustained by
             Martinez, on the Vessel including the
             boating incident involving Reynolds
             and Martinez on or about December 30,
             2019 . . . and arising out of or resulting
             from the Incident and/or Limitation
             Action.
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21-11084                Opinion of the Court                         5

        The Settlement and Release further reiterated that it was
intended to fully settle, resolve, and release all of Martinez’s claims
against Reynolds for damages arising out of the accident. Finally,
it acknowledged that Reynolds had filed a still-pending claim
against Martinez for his own alleged personal injuries and property
damage stemming from the accident. As such, it clarified that the
Release was “specifically intended to release Reynolds from any
further liability to Martinez for injuries and damages sustained by
Martinez in the afore described incident” and “preclude[d] any
further and future claims or counterclaims by Martinez against
Reynolds arising out of the boating accident in question.” The
Release explicitly did not preclude Reynolds from proceeding with
his own counterclaim for damages against Martinez arising from
the boat collision nor did it waive any defenses that Martinez could
raise in Reynolds’ counterclaim against him.
       Following the parties’ settlement, on November 5, 2020,
Martinez filed his own Petition for Exoneration From or Limitation
of Liability in the United States District Court for the Southern
District of Florida, seeking to limit his own liability stemming from
the accident. Reynolds moved to dismiss the Petition, arguing that
it was barred by the parties’ Settlement and Release. Martinez
argued that the Settlement and Release governed his own personal
injury and property damage claims against Reynolds, not the other
way around, and therefore did not bar his Petition.
      The district court agreed with Reynolds, concluding that
Martinez’s Petition was a cause of action and that the Settlement
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6                          Opinion of the Court                        21-11084

and Release “released Reynolds from ‘all manner of action and
actions, cause and causes of action’ that could have been brought
by Martinez in connection with the subject boating collision.” In
reaching this conclusion, the district court focused almost
exclusively on isolated phrases in the parties’ Settlement and
Release and the Limitation of Liability Act. And, as a result, the
district court held that Martinez’s Petition was barred by the
Settlement and Release and dismissed Martinez’s Petition.
        Martinez timely appealed to this Court. He argues that the
district court erred in dismissing his Petition for two primary and
related reasons: (1) when read as a whole, such that every provision
has meaning, the Settlement and Release does not prohibit
Martinez’s Petition; and (2) a Petition is defensive in nature and not
the type of “cause of action” contemplated by the Settlement and
Release. 1 Reynolds disagrees and believes that the district court
accurately construed the Settlement and Release and therefore
properly dismissed Martinez’s Petition.
                                        II
                                       A

1 We review de novo the grant of a motion to dismiss, accepting the allega-
tions in the complaint as true and drawing all reasonable inferences in the
plaintiff’s favor. Paez v. Mulvey, 915 F.3d 1276, 1284 (11th Cir. 2019) (citations
omitted). We also review do novo the interpretation of a contract, including
whether it is ambiguous. Reynolds v. Roberts, 202 F.3d 1303, 1313 (11th Cir.
2000) (citation omitted).
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21-11084               Opinion of the Court                        7

        Martinez’s primary argument is that the Settlement and
Release must be read as a whole and put into context, so that every
provision has meaning. And when that is done, he argues that two
conclusions are inescapable: “the release only discharged
Martinez’s personal injury and property damage claims against
Reynolds,” and it “did not discharge or affect Reynolds’ injury
claims against Martinez” or “Martinez’s right to defend those
claims being made by Reynolds against him and to limit his
liability.”
       “[A] settlement agreement is essentially a contract and is
subject to the traditional rules of contract interpretation.” Norfolk
S. Corp. v. Chevron, U.S.A., Inc., 371 F.3d 1285, 1290 (11th Cir.
2004) (citation omitted).
       The parties agree that Florida law applies to construe the
Settlement and Release. “The polestar guiding the court in the
construction of a written contract is the intent of the parties.”
Circuitronix, LLC v. Kapoor, 440 F. Supp. 3d 1345, 1358 (S.D. Fla.
2020) (citation and quotations omitted). “To determine the intent
of the parties, a court should consider the language in the contract,
the subject matter of the contract, and the object and purpose of
the contract.” Id. (citation and quotations omitted). “[T]he
contract language is the best evidence of the parties’ intent at the
time of the execution of the contract.” Taylor v. Taylor, 1 So. 3d
348, 350 (Fla. Dist. Ct. App. 2009) (per curiam) (citation omitted).
In addition, “courts must read provisions of a contract
harmoniously in order to give effect to all portions thereof.”
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8                       Opinion of the Court                 21-11084

S&B/BIBB Hines PB 3 Joint Venture v. Progress Energy Fla., 365
F. App’x. 202, 204 (11th Cir. 2010) (citations omitted); see also
Lalow v. Codomo, 101 So. 2d 390, 393 (Fla. 1958) (“The intention
of the parties must be determined from an examination of the
whole contract and not from the separate phrases or paragraphs.”)
(citation omitted). Courts “may draw reasonable inferences from
unambiguous contract language to determine what the parties
intended.” GE Med. Sys. S.C.S. v. SYMX Healthcare Corp., 2021
WL 821433, at *12 (S.D. Fla. Mar. 4, 2021) (citation and quotations
omitted).
        A contract is ambiguous if it “is susceptible to two different
interpretations, each one of which is reasonably inferred from the
terms of the contract.” Frulla v. CRA Holdings, Inc., 543 F.3d 1247,
1252 (11th Cir. 2008) (citations and quotations omitted). However,
“a party’s interpretation of the contract that is unreasonable in light
of the contract’s plain language does not make the contract
ambiguous.” Caracol Television S.A. v. Telemundo Television
Studios, LLC, 2022 WL 202546, at *3 (11th Cir. Jan. 24, 2022)
(citation omitted). In addition, “it is the duty of the court, as near
as may be, to place itself in the situation of the parties, and from a
consideration of the surrounding circumstances, the occasion, and
apparent object of the parties, to determine the meaning and intent
of the language employed.” Circuitronix, LLC, 440 F. Supp. 3d at
1359 (citation and quotations omitted).
       In construing and interpreting the Settlement and Release
here, the district court focused on two isolated provisions. First, it
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21-11084               Opinion of the Court                         9

observed that the Settlement and Release releases Reynolds “[o]f
and from all manner of action and actions, cause and causes of
action, claims the party hereto made, could or should have made .
. . known or unknown, in admiralty, law or equity, presently
existing or which might arise or be discovered in the future . . .
arising out of or resulting from the Incident and/or Limitation
Action.” And, second, the district court noted that the Settlement
and Release preserved Martinez’s defenses to Reynolds’ still-
pending negligence claim.
       If we looked at only those two provisions, we might reach
the same conclusion as the district court. But that is not how we
read and interpret contracts. Indeed, long-standing Florida law
instructs us to determine the parties’ intent through “an
examination of the whole contract and not from the separate
phrases or paragraphs.” Lalow, 101 So. 2d at 393 (citation omitted).
Doing so here leads to a different conclusion than the district court
reached.
       First, we look at the title of the document itself: “Settlement
Agreement and Specific Release of Claims by Michael Martinez.”
The inclusion of the phrase “by Michael Martinez” at the end of the
title suggests that the parties intended for the Settlement and
Release to apply solely to Martinez’s affirmative claims against
Reynolds. Were that not the case, and the parties intended for the
document to also apply to (and restrict) Martinez’s right to file his
own Petition, the parties could have used a different title. For
example, they could have titled their document “Settlement
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10                    Opinion of the Court                21-11084

Agreement and Release of Claims by Michael Martinez and Eric
Reynolds” or left out the parties’ names altogether.
       Next, the Recitals section states that “Martinez and
Reynolds . . . desire to resolve the claim by Michael Martinez
arising out of the Incident and Limitation Action.” This language
refers only to Martinez’s claim against Reynolds, and
unambiguously conveys the intent of the Settlement and Release—
to voluntarily settle Martinez’s affirmative claim for damages
against Reynolds.
        The “Release of Claims” section has a lot to unpack. The
district court is correct that this section purports to release
Reynolds “of and from all manner of action and actions, cause and
causes of action, claims the Party hereto made, could or should
have made . . . known or unknown, in admiralty, law or equity,
presently existing or which might arise or be discovered in the
future . . . arising out of or resulting from the Incident and/or
Limitation Action.” But focusing on that line ignores other
language and key context in the section. For example, between
that excerpted release language, the Settlement and Release details
a number of types of claims that Martinez releases his right to
bring, including negligence, intentional tort, and all sorts of
monetary damages. Importantly, these are all affirmative claims
that Martinez could have raised against Reynolds as a result of
Reynolds’ alleged liability to him. They have nothing to do with
Martinez’s own liability to Reynolds. Moreover, this section later
states that it releases Reynolds from any claims “arising out of or
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21-11084               Opinion of the Court                       11

resulting from any property damage, or injury(s) sustained by
Martinez, on the Vessel including the boating accident. . . .” Again,
this language clearly contemplates the release of Martinez’s
affirmative claims against Reynolds for the injuries that he
allegedly sustained and property damage he allegedly incurred in
their accident. It says nothing about Martinez’s own liability or his
right to seek to limit that liability.
       Several other provisions follow this same interpretive
trajectory. The “Consideration and Payment to Martinez” section
notes that Reynolds’ settlement payment is made in release “of any
and all claims by Martinez against Reynolds for damages arising
out of the Limitation Action and/or Incident.” The “Agreement
to Hold Harmless and Indemnify” section discusses Reynolds’
negligence, Martinez’s injuries, and the potential of future claims
or actions filed against Reynolds. And the “Not an Admission”
section clarifies that the Settlement and Release “resolves disputed
claims by Martinez against Reynolds.”
        Finally, lest there be any remaining doubt, the final
paragraphs of the Settlement and Release “acknowledge[] that
Reynolds has filed, and there is pending in this action, a claim by
Reynolds against Martinez for personal injuries allegedly sustained
by Reynolds in the afore described incident.” Moreover, it states
as follows:
             This release is specifically intended to
             release Reynolds from any further
             liability to Martinez for injuries and
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12                     Opinion of the Court                21-11084

             damages sustained by Martinez in the
             afore described incident. This release
             precludes any further and future claims
             or counterclaims by Martinez against
             Reynolds arising out of the boating
             accident in question. Nothing in this
             release will prevent or preclude in any
             way Reynolds’ ability to proceed with
             his own claim for damages against
             Martinez arising from the subject boat
             collision. This release is not intended
             and does not waive any defenses which
             Martinez is entitled to raise in the claim
             by Reynolds against Martinez. These
             defenses include, but are not limited to,
             comparative fault by Reynolds.
This section again repeats what the rest of the Settlement and
Release conveys—it specifically applies only to Martinez’s
affirmative claims against Reynolds for his own alleged injuries and
property damages.
       The parties strenuously dispute the import of the last two
sentences of this section, which explicitly preserve Martinez’s right
to assert defenses to any claims by Reynolds. Reynolds believes
these sentences contemplate only his existing counterclaim against
Martinez and Martinez’s right to raise defenses to that
counterclaim, in part because “Martinez’[s] independent action for
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21-11084               Opinion of the Court                        13

exoneration and limitation of liability is not a defense ‘in the claim
by Reynolds against Martinez.’” We disagree. As we will next
discuss, a Limitation proceeding is an inherently defensive action.
As such, the text of the Settlement and Release preserved
Martinez’s right to assert defenses in one of two ways—directly in
response to Reynolds’ counterclaim, or through a Limitation
proceeding. It does not bar Martinez’s Petition.
       Again, the court’s role in construing a contract is to
determine the intent of the parties by considering the contract’s
subject matter, its object and purpose, and, most importantly, its
language. To do so, we must read all of the contract provisions
together to give each of them meaning. Here, however inartfully
the Settlement and Release was written and prepared, it is not
ambiguous. To the contrary, when we review and interpret all of
its provisions together, it is clear that the Settlement and Release
was intended to resolve only Martinez’s affirmative claims against
Reynolds for his own damages that he allegedly incurred, and
nothing more. It was not intended to preclude Martinez from filing
his own Petition to limit his own liability stemming from the
accident. If that is what the parties, and particularly Reynolds,
meant for the Settlement and Release to say, then they could have
written it to apply to and bar Martinez’s Limitation proceeding.
But they did not, and we will not read the Settlement and Release
to apply more broadly than its terms clearly state.
      Here, the district court focused on isolated phrases in the
Settlement and Release rather than interpreting it as a whole,
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14                      Opinion of the Court                 21-11084

erroneously concluding that the Settlement and Release barred
Martinez’s Petition.
                                  B
       Even if we agreed with the district court’s interpretation of
the Settlement and Release, Martinez also argues that the district
court erred in dismissing his Petition because such a Petition is de-
fensive in nature and not the type of “cause of action” that is con-
templated—and therefore barred—by the Settlement and Release.
We agree.
        Under the Shipowner’s Limitation of Liability Act, 46 U.S.C.
§§ 30501, et seq., “a shipowner can limit its liability for certain
claims involving its vessel to the value of the vessel.” In re Bertsch,
540 F. Supp. 3d 1188, 1190 (S.D. Fla. 2021); see also Orion Marine
Constr., Inc. v. Carroll, 918 F.3d 1323, 1325 (11th Cir. 2019) (“The
Act establishes a procedure by which a shipowner can limit its lia-
bility for certain claims involving one of its vessels to the value of
the vessel plus its then-pending freight.”) (citing 46 U.S.C. §
30505(a)). In other words, this Act allows a shipowner to seek to
limit his or her liability following a maritime accident where there
is a potential for multiple claimants against him or her.
      “A shipowner can assert its right to limitation of liability in
one of two ways. First, the shipowner can claim limitation by
pleading it as a defense in an answer to a claim in any court.
Alternatively, the shipowner can file a limitation of liability
proceeding in federal district court.” El Paso Prod. GOM, Inc. v.
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21-11084                Opinion of the Court                         15

Smith, 406 F. Supp. 2d 671, 675 (E.D. La. 2005) (citations omitted).
Federal Rule of Civil Procedure Supplemental Rule F, Limitation
of Liability, sets forth the applicable procedures that shipowners
must follow to protect their right to limit liability. In evaluating a
shipowner’s right to limit his or her liability, the court first
“determine[s] what acts of negligence or conditions of
unseaworthiness caused the accident,” and then “determine[s]
whether the shipowner had knowledge or privity of those same
acts of negligence or conditions of unseaworthiness.” Tug Allie-B,
Inc. v. United States, 273 F.3d 936, 944 (11th Cir. 2001) (citation and
quotations omitted).
        The district court concluded that a Petition for Exoneration
From or Limitation of Liability was a “cause of action” as
contemplated by the parties’ Settlement and Release. As such, it
held that Martinez’s Petition must be barred because “Martinez
cannot circumvent the purpose and effect of the settlement
agreement and release, which was to ensure that Reynolds would
have no further legal action instigated against him in any way in
connection with the accident.” In reaching this conclusion, the
district court focused on isolated phrases in the Limitation of
Liability Act. In particular, it noted that the statute permits a vessel
owner to “bring a civil action” and “file a complaint” in federal
district court. True enough. And it is also true that federal courts
routinely refer to such Petitions as “causes of actions.” See, e.g., In
re Brown, 766 F. App’x. 30, 32-33 (5th Cir. 2019) (discussing the
shipowner’s cause of action under the Limitation of Liability Act);
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16                      Opinion of the Court                 21-11084

In re Wellborn, 2013 WL 2243088, at *1 (N.D. Fla. May 21, 2013)
(“The Limitation of Liability Act [] provides a cause of action
whereby a vessel owner facing liability for a maritime accident may
file a petition in federal court seeking protection . . . .”) (citation
omitted).
        However, those facts ignore the nature of a Limitation
proceeding and overlook how other federal courts have treated
them. Most obviously, a Limitation proceeding is not a typical
adversarial proceeding, because a ship owner filing a Petition does
not name defendants or assert affirmative claims against any
defendants. Accordingly, the petitioner need not effectuate formal
service of process on any potential claimants. To the contrary,
after the ship owner files his or her Petition and clears the required
procedural hurdles, the district court itself issues a notice to all
potential claimants about the Limitation proceeding, instructing
them to promptly file any claims that they may have against the
petitioner. Any claimants are then responsible for entering the
Limitation proceeding themselves by filing claims against the
petitioner within the Limitation proceeding. That decision is
wholly voluntary, though—a ship owner’s filing of a Petition
imposes no obligations on any potential claimants. Here, then,
Martinez did not “instigate[]” any legal action “against” Reynolds,
as the district court suggested, and Reynolds now argues.
      In addition, Limitation proceedings are inherently
defensive. See, e.g., Corso v. DeWitt, 180 B.R. 589, 592 (C.D. Cal.
1994) (“Appellant’s limitation action is defensive rather than
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21-11084                Opinion of the Court                          17

offensive in nature.”) (citation omitted); Application of Sand Bar I,
Inc., 1992 WL 84277, at *3 (E.D. La. Apr. 23, 1992) (“A limitation
of liability action is so thoroughly defensive in nature . . . .”); In re
Indep. Towing Co., 242 F. Supp. 950, 953-54 (E.D. La. 1965) (“A
petition for exoneration from or limitation of liability has always
been construed as a defensive action and the proceeding apparently
one in personam. . . . Therefore, as a defensive action, in personam,
a petition for exoneration from or limitation of liability is the
assertion of a personal defense.”) (citations omitted).
       Courts have long referred to them as such, and that makes
sense—a party instituting a Limitation proceeding is not seeking to
(and, indeed, cannot) recover any monetary damages from any
potential claimants. See Application of Sand Bar I, Inc., 1992 WL
84277, at *3 (“the vessel owner . . . never can recover money
pursuant to that statute”) (citation omitted). Just the opposite.
Such a proceeding simply allows boat owners to protect
themselves and limit their own liability. Id. (“A petition for
limitation of liability is nothing more than a statutory procedure to
secure a vessel owner’s rights in defending a prospective suit for
damages. It is not a suit itself, as contemplated by the Eleventh
Amendment . . . .”); see also In re Orion Marine Constr., Inc. v. All
Potential Claimants, 2021 WL 2779115, at *2 (S.D. Tex. July 2,
2021) (“And it is well-established that the Limitation of Liability Act
is designed only to protect owners and to determine claims made
against them.”) (citations omitted).
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18                     Opinion of the Court                21-11084

       Simply put, Martinez’s Petition for Exoneration From or
Limitation of Liability is not the type of “cause of action” that is
contemplated by the parties’ Settlement and Release here. Mar-
tinez did not file it against Reynolds or seek damages from him.
Rather, he sought to limit his own liability for all potential claims
stemming from the accident, including those by Reynolds, against
him. Accordingly, even if we agreed with the district court’s con-
struction of the parties’ Settlement and Release, which we do not,
we nevertheless find that Martinez’s Limitation proceeding is not
barred by the Settlement and Release. The district court erred by
holding otherwise.
                                 III
       For the foregoing reasons, we reverse the district court’s
judgment granting Reynolds’ motion to dismiss Martinez’s Peti-
tion for Exoneration From or Limitation of Liability, and remand
to allow Martinez to proceed with his Petition.
      REVERSED and REMANDED.