Choice of Forum not Granted in Favor of Vessel Owner in Limitation Action

By Francis Waguespack

In Offshore of the Palm Beaches, Inc. v. Lynch, No. 13-11092 (11th Cir. 2/3/2014), Lisa Lynch (“Lynch”) was injured on a boat owned by Offshore of the Palm Beaches, Inc. (“Offshore”) when it hit the wake of another boat. Before Lynch filed suit, Offshore filed a limitation action in the U.S. District Court for the Southern District of Florida. In her response, Lynch filed a motion invoking the single claimant exception to the Limitation Act to stay the injunction so she could file suit in state court. The district

court granted the motion, and Lynch was allowed to litigate in a Florida state court.On appeal, Offshore argued its choice of forum should be honored since they filed before Lynch. Offshore also argued federal admiralty jurisdiction applied despite the fact that Lynch had filed her claim in the same district as the Limitation Act proceedings. Citing 28 U.S.C. § 1292(a)(1), the Fourth Circuit affirmed the district court’s grant of the motion to stay the limitation and rejected both arguments.Regarding the first argument, the court analyzed it as a race to the courthouse that would enable the first party that filed to earn “suitor” status and to choose its desired forum. The Limitation Act did not afford Offshore this right, and the court ruled Ms. Lynchwas the only “suitor” in this case, since she was the injured party. The court stated that the purpose of the Limitation Act was to protect vessel owners from limited liability and was not a weapon for vessel owners to choose a desired forum.As for the second argument, the Court reasoned that a vessel owner’s limitation action does not preclude a “suitor” from filing a claim in state court. Lynch’s claim was “premised on Florida common law,” and she did not make a Rule 9(h) designation. Regardless of when and where a vessel owner files a limitation action, the single claim exception is applicable and allows the “suitor” to litigate in state court.Thus, the district court did not abuse its power by ruling Ms. Lynch could proceed with her state law tort claim before Offshore’s action to limit its liability to the value of the vessel.