Fifth Circuit Nixes Trial Court’s Novel Approach to Lifting Limitation Stay
Jason Lanclos, a deckhand and member of the crew of M/V KENNETH J. DEVALL, was injured breaking the tow of the vessel M/V ZELAND M. DELOACH, JR. Both his employer, Devall Towing & Boat Service of Hackberry, L.L.C., and the owner of M/V ZELAND M. DELOACH, JR., Deloach Marine Service, L.L.C., filed to limit their liability in federal district court in the Western District of Louisiana after receiving notice of Lanclos’s intent to file suit. In responding to the complaint of Deloach, Devall made claims of contribution and indemnity from Deloach. In the meantime, Lanclos also filed suit in Louisiana state court which was stayed by the federal district court pursuant to Supplemental Rule of Civil Procedure F(3).
Lanclos agreed to a stipulation that he would not seek to enforce any judgment exceeding the value of the limitation fund or assert res judicata. However, Devall would not enter into the stipulation and opposed Lanclos’s motion to lift the stay.
Initially, the trial judge was inclined to deny Lanclos’s Motion, but decided to resolve the conflict between the right of the vessel owner to limit liability and the right of the personal injury claimant and seaman to pursue a common law remedy in state court under the “saving to suitor’s clause” of 28 U.S.C. Sec. 1333(1) by taking “a novel approach” (2020 U.S. App. LEXIS 28819 at *3) and enjoined all parties from prosecuting claims but allowing discovery, pre-trial matters and trial to proceed in Cameron Parish including the indemnity and contribution claims of Devall against Deloach. (Id.) The parties were also enjoined from enforcing any judgment or asserting res judicata or issue preclusion in state or federal court. (Id. at *3-4)
Devall was granted an interlocutory appeal. The appellate panel in a per curiam opinion reviewed the matter for abuse of discretion. Though the U.S. Supreme Court most recently in Lewis v. Lewis & Clark Marine, Inc., 531 U.S. 438 (2001) held that a limitation injunction may be dissolved by the district court when it is satisfied that the owner’s right to limit is protected (2020 U.S. App. LEXIS 28819 at *7), the decision does not stand for the proposition that a trial court has broad authority to force a party into a position as Devall was in this case. (Id.) “Discretion to lift a stay when all claimants submit the necessary stipulations does not mean discretion to impose those stipulations by injunction.” (Id.) The trial court abused its discretion; and the lifting of the stay was reversed. The Limitation Act mandates that all proceedings are stayed absent the consent to a stipulation by all parties in the limitation proceeding. (Citing: Odeco Oil & Gas Co.,Drilling Div. v. Bonnette, 74 F.3d 671 [5th Cir. 1996])
