Court Opinion

ID: 2995356
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:19:54.148847+00
Date Added: 2024-06-11T11:45:25.051215
License: Public Domain

In the
United States Court of Appeals
For the Seventh Circuit

No. 01-1499

In Re Complaint of Holly Marine Towing, Inc.,
owner of the Barge HMT 7, for exoneration
from or limitation of liability,

Plaintiff-Appellant.

Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 00 C 4750--Matthew F. Kennelly, Judge.

Argued September 24, 2001--Decided October 26, 2001

  Before Posner, Ripple, and Kanne, Circuit
Judges.

  Posner, Circuit Judge. The Limitation of
Shipowners’ Liability Act, 46 U.S.C.
sec.sec. 183-189, limits, with irrelevant
exceptions, the liability of a shipowner
sued in tort to his investment in the
ship and its freight, and establishes a
procedure for obtaining and enforcing the
limitation. 46 U.S.C. sec.sec. 183(a),
185. This limitation of liability, the
purpose of which is to subsidize the U.S.
merchant marine, Grant Gilmore & Charles
L. Black, Jr., The Law of Admiralty, sec.
10-2, pp. 818-19 (1975), is not to be
confused with the more common limited
liability of corporate shareholders,
which would prevent a maritime tort
victim from going against the personal
assets of a corporate shipowner’s
shareholders (though by separately
incorporating each ship the owner could
probably achieve the same protection that
the Limitation Act gives him; cf.
Walkovszky v. Carlton, 223 N.E.2d 6, 9
(N.Y. 1966)).

  Holly Marine owns a barge that it
chartered to a construction company, BH &
H, to perform work on a bridge over the
Chicago Sanitary and Ship Canal, a
navigable waterway of the United States.
Two employees of the construction
company, Gindl and Staal, were operating
a crane that JLG Industries had
manufactured and sold to the construction
company when the crane pitched over the
side of the barge into the canal, killing
Gindl and injuring Staal. Gindl (actually
his estate, but we’ll call it "Gindl" for
the sake of simplicity) and Staal brought
suit against all three companies in a
state court in Illinois. They could do
this, even though the accident occurred
on a navigable waterway and was thus
subject to adjudication in the federal
district court under the admiralty
jurisdiction, because of the "saving to
suitors" clause in the statute that gives
the federal courts exclusive jurisdiction
over admiralty cases. The clause allows
persons who, were it not for that
exclusive federal jurisdiction, would
have rights under "territorial" (federal
or state) law, to enforce those rights
outside the admiralty jurisdiction,
whether in federal or state court. 28
U.S.C. sec. 1333(1); Lewis v. Lewis &
Clark Marine, Inc., 121 S. Ct. 993, 999
(2001); Ghotra v. Bandila Shipping, Inc.,
113 F.3d 1050, 1054 (9th Cir. 1997).
Essentially, any maritime claim can be
sued on either under the federal
admiralty jurisdiction, naming the
offending ship as the defendant (for the
admiralty jurisdiction is in rem), or
under ordinary state or federal law,
naming the owner or another person as the
defendant. See, e.g., American Dredging
Co. v. Miller, 510 U.S. 443, 445 (1994);
Hendricks v. Riverway Harbor Service St.
Louis, Inc., 732 N.E.2d 757, 763 (Ill.
App. 2000); Dungey v. U.S. Steel Corp.,
499 N.E.2d 545, 546 (Ill. App. 1986);
Maxson v. Federal Barge Lines, Inc., 408
N.E.2d 58, 60 (Ill. App. 1980). The
plaintiffs’ state-court suit charges the
defendants with negligence and related
torts under state law.

  As authorized by the Limitation Act,
Holly petitioned the district court for
limitation of liability, depositing with
the court an amount of money ($10,900)
that Holly represented to be its stake in
the barge and so the limit of its
liability. 46 U.S.C. sec. 185. This
section provides that upon compliance
with its requirements, "all claims and
proceedings against the owner with
respect to the matter in question shall
cease." An implementing rule entitles the
shipowner who has satisfied these
requirements to an injunction against the
further prosecution of any action against
the owner with respect to the matter in
question. Fed. R. Civ. P. Supp. R. F(3).
Once the injunction has been entered,
claimants can file claims against the
money that the shipowner has deposited in
the court. Fed. R. Civ. P. Supp. R. F(5).

  Holly followed this procedure and
obtained the injunction, which was
followed by the submission of claims by
Gindl, Staal, and JLG but, for
unexplained reasons, not by BH & H. JLG’s
claim was for contribution from Holly as
a joint tortfeasor should Gindl and Staal
obtain a judgment against JLG for its
role in the accident. Joint Tortfeasor
Contribution Act, 740 ILCS 100/2;
Truszewski v. Outboard Motor Marine
Corp., 685 N.E.2d 992, 994 (Ill. App.
1997); Alper v. Altheimer & Gray, 257
F.3d 680, 684-87 (7th Cir. 2001). Later,
however, the district court partially
dissolved the injunction, precipitating
this appeal.

  Orders modifying or dissolving
injunctions are appealable without regard
to finality. 28 U.S.C. sec. 1292(a)(1);
Hispanics United v. Village of Addison,
248 F.3d 617, 620 (7th Cir. 2001); Lorain
NAACP v. Lorain Board of Education, 979
F.2d 1141, 1147 (6th Cir. 1992). We
needn’t worry whether partial dissolution
is dissolution within the meaning of the
statute, since an order that dissolves a
part of a decree modifies the decree. For
cases holding orders under the Limitation
Act that are similar to the order
appealed from in this case immediately
appealable, see, e.g., Pershing Auto
Rentals, Inc. v. Gaffney, 279 F.2d 546,
548 (5th Cir. 1960); A. C. Dodge, Inc. v.
J. M. Carras, Inc., 218 F.2d 911, 913 (2d
Cir. 1955).

  The basis of the partial dissolution,
which allows the plaintiffs to press
their suit in state court but not to
enforce any judgment they obtain there
until Holly’s right to limitation is
determined, was a stipulation they
submitted to the district court in
support of their motion to dissolve the
injunction. (The term "stipulation,"
though customary in Limitation Act
proceedings, is a bit of a misnomer,
since these stipulations are unilateral
promises rather than agreements.) They
stipulated that they would neither ask
the state court to resolve any issue
concerning the limitation of Holly’s
liability nor seek to enforce any
judgment they obtain in state court
against JLG to the extent that such
enforcement would expose Holly to
liability in excess of its stake in the
barge by reason of JLG’s seeking
contribution from Holly. By granting the
motion to dissolve, on the basis of this
stipulation, so much of the injunction as
barred Gindl and Staal from proceeding in
state court until Holly’s right to
limitation is determined, the district
judge thought he was protecting Holly at
the same time that he was allowing Gindl
and Staal to proceed with their tort
claims, as they wanted to do, in state
court in accordance with the savings to
suitors clause.

  Holly argues that the stipulation has a
huge loophole. Since it was not signed by
JLG, the possibility exists that if Gindl
and Staal obtain a judgment, which might
be quite large, in state court, JLG will
seek contribution from Holly in an amount
greatly in excess of Holly’s stake in the
barge. Gindl and Staal emphasize the
district court’s ruling that the
injunction that Holly originally obtained
"remains in effect . . . as a stay
against entry and enforcement of Staal’s
and Gindl’s state court cases pending
determination by this Court of Holly’s
complaint for limitation of liability."
In other words, if Gindl and Staal do
obtain a large judgment against JLG,
collection of it will be stayed while the
parties repair to the federal district
court to limit Holly’s liability; the
result will presumably be an injunction
against JLG’s seeking contribution from
Holly, assuming Holly’s stake is indeed
small. The fact that JLG is not a party
to the stipulation is troublesome,
however, for it means that the
stipulation does not protect Holly from
being held liable, in a suit for
contribution by JLG, in an amount greater
than its stake in the suit. Not only is
JLG not a signer of the stipulation; it
has not even bothered to file a brief in
this appeal. Its plans and intentions are
unknown.

  Granted, the danger of JLG’s seeking
contribution may well be small if Holly’s
stake is indeed only $10,900, since the
district court has retained jurisdiction
to limit Holly’s liability, and, as all
the courts to have addressed the question
hold (ours has not till today, Great
Lakes Dredge & Dock Co. v. City of
Chicago, 3 F.3d 225, 232 n. 11 (7th Cir.
1993)), such a limitation is good against
a claim by a joint tortfeasor as well as
against a claim by a tort victim. See,
e.g., In re ADM/Growmark River System,
Inc., 234 F.3d 881, 886 (5th Cir. 2000);
Gorman v. Cerasia, 2 F.3d 519, 526-28 (3d
Cir. 1993); In re Dammers & Vanderheide &
Scheepvaart Maats Christina B.V., 836
F.2d 750, 755-57 (2d Cir. 1988). For a
good statement of the many reasons
supporting this conclusion, see In re
Garvey Marine, Inc., 909 F. Supp. 560,
565 (N.D. Ill. 1995). The obvious reason
is that without it the objective of the
Limitation Act would be defeated by the
happenstance of the shipowner’s not being
the only tortfeasor. What sense would
that make?

  The Eighth Circuit reached the same
conclusion, though by a different route
(but one that has implications for the
proper disposition of this case, as we’ll
see shortly) and in an obscurely worded
opinion, Universal Towing Co. v. Barrale,
595 F.2d 414, 419 (8th Cir. 1979), that
is often, though we think incorrectly,
read as rejecting the majority rule
because it describes the joint
tortfeasor’s claim as "derivative" from
the tort victim’s rather than as a
separate claim. The court made clear,
however, that the total recovery against
the shipowner could not exceed the
statutory limitation. And likewise the
Sixth Circuit, which adopted the Eighth
Circuit’s reasoning in S & E Shipping
Corp. v. Chesapeake & Ohio Ry., 678 F.2d
636, 645 (6th Cir. 1982).

  But the fact that a contribution claim
is a claim subject to limitation is not
in itself enough to protect Holly’s
statutory right to limitation fully. For
in a suit for contribution JLG might try
to show that Holly’s stake exceeded
$10,900 and if it obtained a ruling to
that effect it might try to plead that
ruling as res judicata in the postponed
limitation proceeding. Gindl and Staal go
further, acknowledging in their brief
that Holly may well end up paying more
than its limitation: "If Gindl or Staal
prevail against JLG, Holly may be at risk
only to the extent that its proportional
share of any judgment exceeds the value
of the barge and its contents." "Only"?
But suppose Gindl and Staal obtained a
judgment against JLG for $2 million and
Holly’s proportionate share was adjudged
in a suit for contribution by JLG to be
50 percent. Then Holly would be $1
million in the hole even if the value of
its investment in the barge was, as it
claims, only one one-hundredth of that
amount. That result would be contrary to
the Limitation Act, but the fact that
Gindl and Staal think it’s possible
augurs a long litigation road ahead for
Holly.

  Apart from these obscure and perhaps
chimerical dangers to Holly posed by the
partial dissolution of the injunction,
the Limitation Act entitles the shipowner
to obtain limitation upon the filing of
his petition for limitation in federal
district court and his satisfying the
requirements of the Act, not, possibly
much later, upon the completion of state-
court proceedings. That is where we part
company with the Sixth and Eighth Circuit
decisions (Universal Towing and S & E
Shipping), which don’t treat the
possibility of a future suit for
contribution as creating a situation in
which the shipowner confronts, and is
entitled to relief from, a risk of
multiple claims. It is true that if the
amount paid into court by the shipowner
exceeds the tort claims against him, or
if all the claimants stipulate that their
claims will not subject him to liability
beyond that amount, then he is fully
protected, and, even if there are
multiple claimants, the suits can
continue in state court without
endangering any interest that the Act
protects. See Lewis v. Lewis & Clarke
Marine, Inc., supra, 121 S. Ct. at 1002-
04; In re Complaint of McCarthy Bros.
Co./Clark Bridge, 83 F.3d 821, 832 (7th
Cir. 1996); Odeco Oil & Gas Co. v.
Bonnette, 74 F.3d 671, 675 (5th Cir.
1996); Gorman v. Cerasia, supra, 2 F.3d
at 525-26; In re Dammers & Vanderheide &
Scheepvaart Maats Christina B.V., supra,
836 F.2d 750, 757-60. It is otherwise if,
because neither condition is satisfied,
the shipowner must await the outcome of
state-court litigation to obtain his
protection. Because of the absence of a
stipulation from JLG, Holly cannot be
certain what the outcome of the postponed
limitation hearing will be, and so it
will be obliged to defend itself in state
court against Gindl and Staal (should
they press their suit against Holly,
which they presumably will do if they
doubt that its stake is as small as it
claims) in an effort to minimize any
potential liability.

  In these circumstances, the partial
dissolution of the injunction deprived
Holly of its statutory rights and was
therefore unreasonable, or equivalently,
Marsh v. Oregon Natural Resources
Council, 490 U.S. 360, 377-78 n. 23
(1989), as the cases say, an "abuse of
discretion." Gorman v. Cerasia, supra, 2
F.3d at 523; In re Complaint of Port
Arthur Towing Co., 42 F.3d 312, 317 (5th
Cir. 1995) (per curiam). The judgment of
the district court is therefore reversed
and the case is remanded for further
proceedings consistent with this opinion.
Reversed and Remanded.