Revised March 12, 1999
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 97-41414
_____________________
IN THE MATTER OF THE LIBEL AND PETITION OF KRISTIE LEIGH
ENTERPRISES, INC, AS OWNER OF M/V KRISTIE LEIGH; ET AL,
Plaintiffs,
IN THE MATTER OF THE LIBEL AND PETITION OF KRISTIE LEIGH
ENTERPRISES, INC, AS OWNER OF M/V KRISTIE LEIGH,
Plaintiff-Appellee,
GATEWAY TUGS, INC, AS OWNER PRO HAC VICE, OF THE M/V KRISTIE
LEIGH,
Plaintiff-Appellant-Cross-Appellee,
v.
AMERICAN COMMERCIAL LINES, INC,
Defendant,
AMANDO AYALA; BARNEY JOE EDMONSON; ADALBERTO RAMIREZ,
Individually and as representative of the Estate of Felix
Ramirez, Deceased; MARIA TERESA RAMIREZ, Individually and as
representative of the Estate of Felix Ramirez, Deceased,
Claimant-Appellee-Cross-Appellant.
_________________________________________________________________
Appeals from the United States District Court
for the Southern District of Texas
_________________________________________________________________
February 22, 1999
Before KING, Chief Judge, JONES and SMITH, Circuit Judges.
KING, Chief Judge:
Following a district court judgment ordering a shipowner to
pay the entire amount of a limitation fund to the non-settling
claimants in this admiralty action, both parties appeal portions
of the district court order. The shipowner contends on appeal
that the district court erred in failing to reduce the limitation
fund to reflect dollar-for-dollar crediting of a previously
entered into settlement. The non-settling claimants cross-
appeal, arguing that the district court erred in reducing the
value of the limitation fund. We affirm.
I. FACTS AND PROCEDURAL BACKGROUND
On May 9, 1992, barges being pushed by the M/V Kristie
Leigh, a tug bareboat chartered by Gateway Tugs, Inc. (Gateway),
struck two fishing boats. Two occupants of the fishing boats,
Daniel Castillo (age twenty-three) and Felipe Ramirez (age
eleven) died, and three others suffered injuries.
Gateway sought exoneration from, or limitation of, its
liability under the Limitation of Liability Act, 46 U.S.C.
§§ 181-196 (the Act or the Limitation of Liability Act). Kristie
Leigh Enterprises (the owner of the tug), Gateway (the tug owner
pro hac vice), and the Valley Line Company (the barge owner),
without division among them, posted an ad interim stipulation of
$685,000, representing the value of the tug and barges. Gateway
had insurance policies totaling $3,000,000. Each of the fishing
boat occupants and their families filed claims. For the purpose
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of this appeal, there are two relevant classes of claimants. The
first group, the Castillo family (the Castillo claimants),
settled with Gateway, while the second group, constituting the
rest of the claimants (and referred to collectively as the
Ramirez claimants), are the appellees/cross-appellants in this
appeal.
Before the district court ruled on whether Gateway could
limit its liability under the Act, the Castillo claimants and
Gateway agreed on a settlement amount of $500,000. However,
before the settlement hearing took place, the district court held
that Gateway was not entitled to limit its liability under the
Act. At the Castillo settlement hearing, a guardian ad litem
appointed to protect the interest of a Castillo minor refused to
agree to the settlement. Gateway then appealed the limitation
question to this court, and while that appeal was pending and the
resolution of the limitation of liability question was still
uncertain, the Castillo claimants and Gateway entered into a
second settlement agreement, this time for $650,000. The
district court approved the settlement, granting the Castillo
claimants’ unopposed motion to dismiss their claims with
prejudice.
This court reversed the district court on the limitation
question, ruling that the Limitation of Liability Act applied to
limit Gateway’s liability. See Gateway Tugs, Inc. v. American
Commercial Lines, Inc. (In re Kristie Leigh Enters., Inc.), 72
3
F.3d 479, 482 (5th Cir. 1996). On remand, the district court
reduced the limitation fund from $685,000 to $190,000, the value
of the M/V Kristie Leigh itself without the barges, and ordered
that Gateway distribute that amount among the Ramirez claimants.
The district court did not further reduce the liability amount to
reflect any crediting for the Castillo settlement. It is
uncontested that the Ramirez claimants sustained damages in
excess of $190,000.
Gateway filed a notice of appeal, claiming that the district
court erred in not reducing the limitation amount dollar-for-
dollar to reflect the Castillo settlement. The Ramirez claimants
also appeal the district court order, arguing that the district
court improperly reduced the limitation amount below the original
$685,000 security.1
II. DISCUSSION
In admiralty cases tried by the district court sitting
without a jury, the district court's findings of fact are subject
1
The Ramirez claimants also initially argued on appeal that
the district court improperly exonerated Kristie Leigh
Enterprises from liability. In their reply brief, however, they
concede that the district court’s inclusion of Kristie Leigh
Enterprises as a named party in its order concerning the
limitation of liability issue did not reflect the district
court’s prior order exonerating Kristie Leigh Enterprises, and we
find that the record, taken as a whole, supports Gateway’s
contention that the district court properly exonerated Kristie
Leigh Enterprises. Cf. In re Kristie Leigh Enters., Inc., 72
F.3d at 480 n.1 (noting that both Kristie Leigh Enterprises and
Valley Lines Company were exonerated by the district court at the
close of trial).
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to the clearly erroneous standard of review, while questions of
law are subject to de novo review. See Mendes Junior Int’l Co.
v. M/V Sokai Maru, 43 F.3d 153, 155 (5th Cir. 1995); Avondale
Indus., Inc. v. International Marine Carriers, Inc., 15 F.3d 489,
492 (5th Cir. 1994). The questions presented in this case are
entirely legal and are therefore reviewed de novo.
A. Settlement Crediting
Gateway argues in this appeal that the district court should
have reduced the limitation fund dollar-for-dollar to reflect the
Castillo settlement.2 The eventual limitation fund amount was
$190,000, the Castillo claimants settled for $650,000, and
Gateway therefore argues that the Castillo settlement exhausted
the limitation amount and that the Ramirez claimants should take
nothing.
This contention lacks merit. Dollar-for-dollar crediting of
settlement amounts is incompatible with Supplemental Rule F(8),
which states that “[u]pon determination of liability,” the
limitation fund “shall be divided pro rata, . . . among the
several claimants in proportion to the amounts of their
2
At oral argument Gateway urged that, in the alternative,
it was entitled to a pro rata settlement credit to reflect the
Castillo settlement. Gateway did not present this argument in
its briefs to this court, and we therefore consider it waived.
See Strong v. Bellsouth Telecomm. Inc., 137 F.3d 844, 853 n.9
(5th Cir. 1998) (stating that party waived issue it argued at
oral argument but did not address in its briefs). The question
whether or how a shipowner can assert a right of subrogation to a
settling party’s claims within the concursus is thus left for
another day.
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respective claims.” Fed. R. Civ. P. Supp. Rule F(8). A rule
that the limitation fund should be reduced, dollar-for-dollar, by
the amount of the settlement entered into by the shipowner is
thus inconsistent with the approach taken in F(8), which simply
divides the entire limitation amount among claimants. See
Bouchard Transp. Co. v. Updegraff, 147 F.3d 1344, 1347 (11th Cir.
1998) (“Rule F implements the provisions of the Limitation Act by
providing a mechanism for the pro rata distribution among
claimants of the fund created by the Limitation Act’s liability
limits.”). Therefore, the district court did not err in refusing
to decrease the limitation fund available to the Ramirez
claimants to reflect dollar-for-dollar crediting of the Castillo
settlement.
B. The Reduction of the Limitation Fund
The Ramirez claimants appeal the district court’s final
judgment ordering Gateway to distribute $190,000 among them, as
opposed to the original $685,000 stipulation amount. Gateway,
Kristie Leigh Enterprises and the Valley Line Company, without
division among them, initially signed an ad interim stipulation
in which they posted a security of $685,000, equal to the value
of the Kristie Leigh and the barges. The district court then
reduced the amount of the security to $190,000, the value of the
Kristie Leigh, based on the pure tort exception to the flotilla
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rule.3 The Ramirez claimants argue that despite the later
reduction in the stipulation amount, Gateway contractually
obligated itself in the ad interim stipulation to be responsible
for the original $685,000.
We find this argument unavailing. The ad interim
stipulation explicitly allowed “such decreases . . . [to the
posted security] as this Honorable Court may from time to time
order.” In addition, the Limitation of Liability Act itself
permits the court “from time to time [to] fix as necessary [the
limitation fund] to carry out the provision of section 183.” 46
U.S.C. § 185. Therefore, the court had the authority under § 185
to reduce the amount of the limitation fund, and thus, under the
terms of the ad interim stipulation, the amount for which Gateway
is responsible.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of the
district court.
3
The pure tort exception to the flotilla rule provides that
“[w]here the injury is to a third person, to whom the shipowner
owes no duty based upon consent, he may limit his liability to
the ship against which a maritime lien would arise from the
wrong,” as opposed to the value of the entire flotilla. Brown &
Root Marine Operators, Inc. v. Zapata Off-Shore Co., 377 F.2d
724, 727 (5th Cir. 1967). The Ramirez claimants do not contend
that the district court improperly applied the pure tort
exception; their only contention is that the language of the ad
interim stipulation signed by Gateway obligated Gateway to pay
the original $685,000, despite any later alterations to the
stipulation amount.
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