United States District Court, S.D. Texas, Galveston Division
C. Hanks, Jr. United States District Judge.
the Court is Claimants' Motion to Dissolve the Limitation
Injunction. Dkt. 23. The Court had previously referred the
case to Magistrate Judge John R. Froeschner. Dkt. 19. Judge
Froeschner's Report and Recommendation
("R&R") recommended denying the motion. Dkt.
28. The Claimants objected to the R&R, arguing that the
Court's refusal to lift the stay would constitute an
abuse of discretion. Dkt. 37. The Court reviews the
Claimants' Motion de novo. Based on the pleadings; the
motions, response, and replies; the applicable law; and the
arguments of counsel, Claimant's Motion is
case stems from an incident at sea in which Claimants Danny
Ritter (individually and as Next Friend of D.R. and D.R.,
minor children) and Richard Hayslip (together, "the
Ritters") chartered a 21' Parker watercraft (the
"Parker") from Petitioner Get Hooked Charters, LLC
("Get Hooked"). The Parker capsized in navigable
waters off Galveston. Ritter filed a maritime personal injury
suit in County Court No. 3 of Galveston County, Texas.
Hooked filed a Verified Complaint for Exoneration from or
Limitation of Liability in this Court. Dkt. 1. Declarations
of Value ($8, 000) and Pending Freight ($750) were attached.
Dkts. 1-1, 1-2. The Court entered a monition; however, no
further parties came forward. The parties' April 2016
Joint Discovery and Case Management Plan ("JDCMP")
stated that "Claimants filed their suit for damages in
Galveston County Court but intend to seek first resolution
and trial of this limitation of liability action, and upon
resolution, proceed with their state court causes of
action." Dkt. 15, ¶ 22. In May 2016, the Court
entered a Docket Control Order, which set intermediate
deadlines in anticipation of a two-day bench trial in July
2017. Dkt. 18.
January 2017, the Ritters filed the instant motion to lift
the stay on the state court proceedings. Dkt. 23. The Ritters
argued that the Court must lift the stay because Ritter had
made all proper stipulations required to lift the stay.
See Odeco Oil and Gas Co. Drilling Div. v. Bonnette,
74 F.3d 671, 674 (5th Cir. 1996). Get Hooked filed a
Response, to which the Ritters did not reply. Dkt. 25. Judge
Froeschner filed his R&R (Dkt. 28), to which the Ritters
objected (Dkt. 37). Get Hooked then responded to the
Ritters' objections. Dkt. 38. Get Hooked argued that the
Court should-in its discretion-deny the motion because the
Ritters waived their right to state court litigation in the
JDCMP. Get Hooked further argued that the Ritters'
stipulation was inadequate. Judge Froeschner agreed. Dkt. 28.
His R&R recommending denial of the motion to lift the
stay relied upon the Ritters' express abandonment of
their Savings Clause option and on the fact that extensive
limitation suit discovery had already occurred.
Ritters Objected, arguing that they never intended to abandon
their state court claim. Dkt. 37. They requested leave, in
the alternative, to re-file the necessary stipulations. On
April 12, the Court emailed the parties and requested that
the Ritters file any necessary stipulations. On April 24,
2017, the Ritters filed the requested stipulations. Dkt. 40.
deciding whether to lift an injunction on state court
proceedings pursuant to the Limitation of Liability Act (the
"Act") (discussed below), "the District
Court's decision is 'one of discretion in every
case.'" Lewis v. Lewis & Clark Marine,
Inc., 531 U.S. 438, 449 (2001) (quoting Langes v.
Green, 282 U.S. 531, 544 (1931)). A district court
finding inadequate protection in state court may adjudicate
the merits of the claim, deciding both liability and
limitation. Lewis v. Lewis & Clark Marine, Inc.,
531 U.S. 438, 454 (2001). A district court may also dismiss
the limitation claim where it finds that the vessel
owner's rights will be protected in state court.
Id. Finally, a district may lift the stay on the
state court proceeding while staying the federal limitation
proceeding "so that it could act if the state court
proceedings jeopardized the vessel owner's rights under
the Limitation Act." Id. at 453-54.
filed their state court petition under the 'savings to
suitors' clause ("Savings Clause"). 28 U.S.C.
§ 1333(1). Get Hooked filed its Verified Complaint in
this Court pursuant to the Limitation of Liability Act, 46
U.S.C. § 30505 et seq. (the "Act").
Under the Act, the vessel owner's liability is generally
limited to the combined value of the vessel and its pending
freight. 46 U.S.C. § 30505(a). The Act applies,
inter alia, to "claims ... arising from ... any
act ...incurred, without the privity or knowledge of the
owner." 46 U.S.C. § 30505(b).
the Act, the vessel owner "may bring a civil action in
[federal court] for limitation of liability ...." 46
U.S.C. § 30511(a). By filing in district court and
depositing funds with the court's registry in the amount
equal to that of the vessel and pending freight, "all
claims and proceedings against the owner related to the
matter in question shall cease." 46 U.S.C. §
interplay between the Act and the Savings Clause is the
subject of a "well-known tension." In re
Bertucci Contracting Co., L.L.C., 544 Fed.App'x 308,
317 n.8 (5th Cir. 2013). Generally, courts of appeal have
permitted claimants to proceed with their claims in state
court where there is only a single claimant ... or where the
total claims do not exceed the value of the limitation fund
...." Lewis, 531 U.S. at 451. The Fifth Circuit
permits district courts to lift the state court injunction
when 1) "the total amount of the claims does not exceed
the shipowner's declared value of the vessel and its
freight"; 2) when the claimants "stipulate that the
federal court has exclusive jurisdiction over the limitation
proceeding"; and 3) when the claimants stipulate that
they "will not seek to enforce a damage award greater
than the value of the ship and its freight until the
shipowner's right to limitation has been determined by
the federal court." Id. (quoting Odeco Oil
& Gas Co. Drilling Div. v. Bonnette, 74 F.3d 671,
674 (5th Cir. 1996)). In weighing the competing interests,
"[t]he shipowner's right to limitation takes
precedence over the claimant's rights to proceed in the
forum of their choice." See Odeco Oil and Gas Co.
Drilling Div. v. Bonnette, 74 F.3d 671, 675 (5th Cir.
the dispositive issues before the court are: 1) whether the
Ritters' stipulations sufficiently protect the rights of
Get Hooked under the Act; and 2) whether the JDCMP statement
effectively waived the Ritters' right to proceed in state
court. The Ritters' initial stipulation-included within
the body of its motion-were inadequate to fully protect the
rights of Get Hooked under the Act. For example, the
stipulation was not signed by the Claimants. See Odeco
675. Further, there was no stipulation regarding the
order in which the four Claimants are to be paid. See
Pershing Auto Rentals, Inc. v. Gaffney, 279 F.2d 546,
550-51 (5th Cir. 1960) (internal citations omitted). However,
the Court finds that the Ritters corrected these deficiencies
in their subsequent filing. See Dkt. 40.
Accordingly, the Court finds that the Ritters' amended
stipulations do fully protect the rights of Get Hooked.
Court therefore finds that it is appropriate to lift the stay
and allow the Ritters to proceed in state court pursuant to
their stipulations. Out of an abundance of caution, the Court
will maintain jurisdiction over this case in the event that
the rights of the parties are not protected in state court.