Saving Stipulations: How a Single Claimant May Lift a Limitation Restraining Order Against Their State Court Action
In Re Chem. Carriers Towing, LLC, No. 21-1025, 2023 WL 196465, 2023 U.S. Dist. LEXIS 7376 (E.D. La. Jan. 17, 2023)
Author: Jonathan Henneberg
In In Re Chem. Carriers Towing, LLC, the Eastern District of Louisiana explained what may qualify as sufficient stipulations that a claimant must make to lift a restraining order imposed on their state court action by a Petitioner’s filing of a limitation action in federal court.[1] Here, Claimant was injured when the bed in which he slept broke free from the wall of the Petitioner’s vessel.[2] The Claimant filed an action in state court, the Civil District Court for the Parish of Orleans, seeking Maintenance and Cure and damages under the Jones Act for the injuries he sustained.[3] The vessel’s owner (Petitioner) filed a Complaint in Federal Court, the Eastern District of Louisiana, to limit its liability under the Limitation of Ship Owner’s Liability Act.[4]
In this proceeding, the claimant was the sole party asserting a claim against the vessel owner.[5] Thus, following Supreme Court precedent, the Claimant moved to dissolve the injunction against him and to stay the limitation action so that he may pursue his claim in his chosen state court after making appropriate stipulations to protect the vessel owner’s limitation interests.[6] The Plaintiff in limitation conceded that a single Claimant may generally dissolve the restraining order against them and continue their action in State Court.[7] However, the vessel owner claimed that the original stipulations made by the Claimant, in this case, were inadequate to protect the Petitioner’s limitation rights, namely, that the claimant failed to stipulate to the exclusive jurisdiction of the federal court to determine limitation.[8] The sole Claimant responded by agreeing to make amendments to the original stipulations to meet the Petitioner’s demands.[9]
The Eastern District held that the amended stipulations by the Claimant were sufficient to protect the vessel owner’s limitation interests and justified and lifting of the restraining order.[10] The stipulations were as follows: (1) the federal court will retain exclusive jurisdiction to determine all of the petitioner’s rights under the limitation action with the Claimant reserving the right to deny and contest assertions made against him in the limitation action. (2) The Claimant will not seek to enforce a judgment obtained in state court that exceeds the limitation fund plus pending freight unless the Federal forum finds that the vessel owner is not entitled to limitation. In that case, the Claimant may seek to enforce any state court judgment that they receive, even if it exceeds the limitation fund. (3) Finally, the Claimant will not seek a state court ruling or judgment on limitation. Furthermore, the Claimant waives the defense of res judicata and venue in the case that a judgment is rendered in any state court action now pending or brought.[11]
The Eastern District’s holding provides an example of appropriate stipulations that would allow a single Claimant to continue their state court action while a federal court limitation action is pending while protecting the limitation interests of the vessel owner.
