Court Opinion

ID: 7801388
Source: CourtListenerOpinion
Date Created: 2022-08-17 17:01:10.443788+00
Date Added: 2024-06-11T16:29:16.744584
License: Public Domain

USCA11 Case: 21-13465    Date Filed: 08/17/2022   Page: 1 of 9

                                        [DO NOT PUBLISH]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

                ____________________

                        No. 21-13465
                Non-Argument Calendar
                ____________________

In Re:
MAD TOYZ, III, LLC
as titled owner of and for one 2018 38'
Statement 380 Open Motorboat bearing hull
identification number STTEB112L718, her
engines, tackle, and appurtenances,
___________________________________________________
JEFFRY KNIGHT,
as owner pro hac vice of and for one 2018
38' Statement 380 Open Motorboat bearing
hull identification number STTEB112L718,
her engines, tackle, and appurtenances,
for Exoneration from or Limitation of Liability,
USCA11 Case: 21-13465        Date Filed: 08/17/2022     Page: 2 of 9

2                      Opinion of the Court                21-13465

                                                Petitioner-Appellee,
versus
JOHN DOE,
et al.,

                                                      Respondents,

NADINE SARAH RUSLI,
ERWIN P. RUSLI,

                               Respondents-Claimants-Appellants.

                     ____________________

           Appeal from the United States District Court
                for the Middle District of Florida
            D.C. Docket No. 8:20-cv-00911-MSS-AAS
                    ____________________

Before ROSENBAUM, NEWSOM, and GRANT, Circuit Judges.
PER CURIAM:
       Following a boating accident, Mad Toyz, III, LLC and Jeffry
Knight filed the instant action, seeking the protections of the Limi-
tation of Liability Act, 46 U.S.C. § 30501, et seq. The respondents-
appellants, Erwin and Nadine Rusli, moved to dismiss. A
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21-13465                Opinion of the Court                          3

magistrate judge recommended denying the Ruslis’ motion. Disa-
greeing, the district court held that the complaint was untimely and
dismissed it. Even so, the district court denied the Ruslis’ motion
for Rule 11 sanctions against Knight. After careful review, we hold
that the district court did not abuse its discretion in declining to
issue sanctions.
                                   I
        “Rule 11 authorizes the district court to sanction a party who
files a pleading containing a false factual representation if that party
knew of, or did not reasonably inquire into, the falsehood.” Mitch-
ell v. Nobles, 873 F.3d 869, 875 (11th Cir. 2017) (citing Fed. R. Civ.
P. 11(b), (c)(1)). The rule also permits sanctions if the offending
pleading is “presented for any improper purpose,” or if it is legally
frivolous. See Fed. R. Civ. P. 11(b)(1)–(2), (c)(1).
        Significantly here, we review a district court’s denial of a
motion for Rule 11 sanctions only for abuse of discretion. Fuentes
v. Classica Cruise Operator Ltd., 32 F.4th 1311, 1321 (11th Cir.
2022). “This scope of review will lead to reversal only if the district
court applies an incorrect legal standard, or applies improper pro-
cedures, or relies on clearly erroneous factfinding, or if it reaches a
conclusion that is clearly unreasonable or incorrect.” Schiavo ex
rel. Schindler v. Schiavo, 403 F.3d 1223, 1226 (11th Cir. 2005) (per
curiam). “Short of that, an abuse of discretion standard recognizes
there is a range of choice within which we will not reverse the dis-
trict court even if we might have reached a different decision.” Id.
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4                       Opinion of the Court                  21-13465

                                   II
                                   A
       Before turning to the issue of sanctions, we provide a brief
overview of the relevant substantive law. And we note that neither
party disputes the district court’s assessment of that law.
       As all agree, the Limitation of Liability Act allows shipown-
ers to limit their liability to “the value of the vessel and pending
freight” for tort claims “arising from . . . any loss, damage, or injury
by collision, or any act, matter, or thing, loss, damage, or forfeiture,
done, occasioned, or incurred, without the privity or knowledge of
the owner.” 46 U.S.C. § 30505(a)–(b). This Court has explained
that “[t]he shipowner’s privity or knowledge is not measured
against every fact or act regarding the accident; rather, privity or
knowledge is measured against the specific negligent acts or unsea-
worthy conditions that actually caused or contributed to the acci-
dent.” Suzuki of Orange Park, Inc. v. Shubert, 86 F.3d 1060, 1064
(11th Cir. 1996). Normally, when a shipowner “is in control of and
operating his pleasure craft,” he will have “privity or knowledge”
with respect to its operation. The M/V Sunshine, II v. Beavin, 808
F.2d 762, 765 (11th Cir. 1987) (quoting Fecht v. Makowski, 406 F.2d
721, 722 (5th Cir. 1969)). But we’ve held that “[t]he owner’s pres-
ence is not necessarily fatal” to his rights under the Act “if the evi-
dence suggests that his conduct was in all respects prudent.” Id.
(quotation omitted); cf. also Suzuki, 86 F.3d at 1062 (holding that
in a limitations action, the “damage claimants bear the initial bur-
den of establishing liability (i.e., negligence or unseaworthiness)”).
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21-13465                   Opinion of the Court                               5

        In any event, to invoke the Act’s protections, the shipowner
must file his limitation action “within 6 months after a claimant
gives the owner written notice of a claim.” 46 U.S.C. § 30511(a).
Not just any written notice will suffice to trigger the limitations
period; as we recently held, the notice must “reveal a ‘reasonable
possibility’ that the claim will exceed the value of the offending ves-
sel[].” Orion Marine Constr., Inc. v. Carroll, 918 F.3d 1323, 1331
(11th Cir. 2019).
                                       B
       With the law in view, we turn to the Ruslis’ arguments.
They assert that Knight’s conduct was sanctionable for three rea-
sons. First, Knight “knew his action was not timely as filed.” Sec-
ond, “there is no question that [Knight] was in privity with the neg-
ligence or conditions which caused the incident.” And third,
Knight “persisted in litigating the action with purely dilatory and
vexatious conduct for 10 months, despite knowing his allegations
were entirely unsupported by the facts and law.” We conclude that
none of those arguments suffices to show that the district court
abused its discretion when it declined to impose sanctions.
      Take the timeliness argument first. Knight acknowledged in
his amended complaint that the respondents had sent him letters
about a potential claim. 1 He alleged, however, that the notices

1 The Ruslis argue at length that Knight should be sanctioned because he failed

to read the letters prior to commencing suit, sending them directly over to his
insurance company. But that failure to read is irrelevant to whether the letters
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6                           Opinion of the Court                        21-13465

“did not contain sufficient information or documents to put [him]
on notice that [the] claim alone could reasonably exceed the post-
loss value of the Vessel,” which was $325,000. The district court
ultimately disagreed and determined that the letters triggered the
limitations clock. But that disagreement doesn’t suffice to show
that Knight’s allegation was deserving of sanctions. See Baker v.
Alderman, 158 F.3d 516, 524 (11th Cir. 1998). After all, a “legal
claim is frivolous,” and thus sanctionable, only “when it has no rea-
sonable chance of succeeding.” Gulisano v. Cohen, 34 F.4th 935,
942 (11th Cir. 2022). And a “factual claim is frivolous when it has
no reasonable factual basis,” not when the evidence supporting it
is “merely weak.” Id. (quotation omitted). We share the district

“reveal[ed] a ‘reasonable possibility’ of a claim that [would] exceed the value
of the vessel[] at issue.” Orion, 918 F.3d at 1338. As explained above the line,
Knight’s allegation that the letters didn’t satisfy that objective test wasn’t friv-
olous. And to the extent the Ruslis take issue with the original complaint’s
failure to mention the letters, that’s not a proper basis for their Rule 11 sanc-
tions motion. Knight promptly amended his complaint to acknowledge the
letters once they were brought to his attention. And that cured any potential
Rule 11 violation in the original complaint. See Fed. R. Civ. P. 11(c)(2) (re-
quiring a party to serve a motion for sanctions on the opposing party before
filing it, and prohibiting the filing or presentation of the motion “to the court
if the challenged paper, claim, defense, contention, or denial is withdrawn or
appropriately corrected within 21 days after service”); 2 Moore’s Federal Prac-
tice - Civil § 11.22[1][b] (2022) (“If the party . . . withdraws or corrects the pa-
per within the safe-harbor period, any alleged violation of Rule 11 is cured.”);
see also TVPX ARS, Inc. v. Genworth Life & Annuity Ins. Co., 959 F.3d 1318,
1327 (11th Cir. 2020) (“Once an amended complaint is filed, the original plead-
ings are considered abandoned and are no longer a part of the plaintiff’s aver-
ments.” (cleaned up)).
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21-13465               Opinion of the Court                         7

court’s view that “there was a non-frivolous argument that the
written notification at issue failed to trigger the six-month dead-
line.” In fact, a magistrate judge agreed with Knight in a report and
recommendation that the letters didn’t start the clock. That was
because, although one letter referred to “significant monetary
damages” and “extensive physical injuries to Nadine Rusli” which
“may affect” her ability “to return to work as a nurse,” neither let-
ter quantified those damages or detailed the nature of Nadine’s in-
juries or medical treatment she had received. We think that
Knight’s position, which was adopted by an impartial magistrate
judge, was not so unreasonable as to be frivolous.
        As to the Ruslis’ second argument, they appear to accept
that it wouldn’t have been frivolous for Knight to pursue this action
if he reasonably believed that he didn’t negligently cause the colli-
sion. Cf. Beavin, 808 F.2d at 764–65; Aetna Ins. Co. v. Meeker, 953
F.2d 1328, 1331 (11th Cir. 1992). But, they say, no reasonable per-
son could have understood the factual circumstances to have sup-
ported Knight’s allegation that “[t]here was no negligence on” his
part “that caused or contributed to any alleged injury or loss or
damage.”
        Although we think this is a close call, we don’t believe that
the district court abused its discretion. Whether Knight could have
reasonably believed that he didn’t negligently cause the accident is
a factual issue. And that means we can reverse the district court
only if we are “left with the definite and firm conviction that a mis-
take has been committed.” TVPX ARS, Inc. v. Genworth Life &
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8                       Opinion of the Court                 21-13465

Annuity Ins. Co., 959 F.3d 1318, 1325 (11th Cir. 2020) (quotation
omitted).
       We don’t think that standard is met here. It’s true, as the
Ruslis stress, that Knight admitted in his deposition to traveling at
“30, 35 miles an hour” and that he estimated he was looking down
at his gauges and GPS—rather than straight ahead—for some-
where between “30 seconds [and] 60 seconds” before the collision.
The district court acknowledged those facts. But as the district
court further pointed out, Knight’s civil charges for “careless oper-
ation of a vessel” had recently been dismissed with no findings of
fault against him. On top of that, the Ruslis hadn’t yet been de-
posed in the litigation. So the entire picture wasn’t necessarily clear
to Knight when he filed this action—or even prior to its dismissal.
His answers during discovery bear that out. In an interrogatory
response, Knight claimed that he believed Erwin Rusli was “at
fault” because he had apparently “turn[ed] his vessel to port” in the
channel “when he was required to give way to [Knight’s] vessel.”
During his deposition, Knight elaborated that he held that belief
due to the angle of collision, which showed that Rusli had
“cross[ed] the front of [his] path.” Knight also testified that he was
“looking back and forth” between his gauges and “straight ahead,”
and when he was looking up, he didn’t see any other boats in the
channel. That complete lack of traffic would have made it more
reasonable for him to look down at his instruments momentarily
to assist with navigation. And as to the length of time that Knight
had been looking down prior to the collision, he clarified in his
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21-13465                Opinion of the Court                           9

deposition that he “d[id]n’t know exactly” how long that was. Tak-
ing all of that into consideration, we cannot say that the district
court clearly erred in finding that Knight could have reasonably
thought that the boating accident wasn’t caused by his negligence.
       The Ruslis’ third and final argument is essentially a repack-
aging of the first two. They submit that Knight “vexatiously pur-
sued [this] futile action.” But the reason they urge that Knight
acted in bad faith is that he litigated a “clearly frivolous” case for 10
months. As already explained, we don’t believe the district court
abused its discretion in concluding that Knight’s pursuit of this ac-
tion wasn’t frivolous.
                                * * *
        Even if we might have viewed the sanctions issue differently
if presented to us in the first instance, our review here isn’t de novo.
We are limited to determining whether the district court abused its
discretion. It did not. Accordingly, we AFFIRM.