All or Nothing Approach Pushes the Shipowners Limitation of Liability Act Over the Saving to Suitors Clause.
In Re: Devall Towing & Boat Serv. Of Hackberry L.L.C. v. Lanclos, 2020 U.S. App. LEXIS 28819, 2020 WL 5506594 (5th. Cir. Sep. 11, 2020).
By: Dylan Hoke
On September 11, 2020, the Fifth Circuit reviewed a district court’s decision to lift a stay in a maritime limitation of liability action.[1] Jason Lanclos (“Lanclos”) was a deckhand aboard the M/V KENNETH J. DEVALL, owned by Devall Towing. Lanclos was injured by a falling pipe while assisting the M/V ZELAND M. DELOACH, JR. break its tow. Both Devall Towing and Deloach Marine filed complaints in federal district court to limit their liability to the value of their vessels under the Limitation Act[2] and thus to stay Lanclos’ state court suit. He then moved to lift the stay by stipulating that he would not seek to enforce any judgment in excess of the value of the limitation fund or assert res judicata. However, Devall Towing did not agree to the stipulation. In an attempt to kill two birds with one stone and force the stipulation, the district court entered a Revised Order Restraining Prosecution of Claims which enjoined all parties from prosecuting claims, but allowed the parties to move forward with discovery, pretrial matters and a trial on the merits in the matter filed in Louisiana state court. Both Devall and Deloach appealed.
The Fifth Circuit vacated the district court’s order claiming that there are only two instances in which a district court has the discretion to lift a stay and allow claims to move forward outside the limitation actions. This occurs when (1) the total amount of the claims does not exceed the value of the vessel and its freight, and (2) all claimants stipulate that the federal court has exclusive jurisdiction over the limitation actions, and that the claimants will not seek to enforce a damage award greater than the value of the ship and its freight.[3] Because Devall Towing did not agree to the stipulation, this case did not satisfy either of the exceptions. Furthermore, the Fifth Circuit clarified that the discretion to lift a stay when all claimants agree to the necessary stipulations does not give a district court the discretion to impose the stipulations by injunctions. Therefore, when neither of the two exceptions apply, the shipowners right to limitation takes precedence over the claimants right to sue in the forum of their choice, and all proceedings shall by stayed.
The Fifth circuit decision is beneficial in resolving the conflicting legal principals of the Limitation of Liability Act and the Savings to Suitors Clause[4] and solidify the precedent that you need all claimants need to agree to a stipulation before a stay can be lifted.
[1] In Re: Devall Towing & Boat Serv. of Hackberry L.L.C. v. Lanclos, 2020 U.S. App. LEXIS 28819 (5th. Cir. Sep. 11, 2020).
[2] 46 U.S.C. § 30501 et seq.
[3] In Re: Devall Towing & Boat Serv. of Hackberry L.L.C., 2020 U.S. App. LEXIS 28819.
[4] 28 U.S.C. § 1331(1).
