Beiswenger Enterprises Corp. v. Carletta

United States Court of Appeals,

Eleventh Circuit.

No. 95-2272.

In the Matter of Petition of BEISWENGER ENTERPRISES CORP.,
Plaintiff-Appellant,

Kathleen CARLETTA, Pauline Walls, Shante Myers, Yolanda Williams,
Julian Myers, Estate of George Myers, George E. Myers, Jr.,
Claimants-Appellees.

June 27, 1996.

Appeal from the United States District Court for the Middle
District of Florida. (No. 91-149-CIV-T-17C), Elizabeth A.
Kovachevich, Chief Judge.

Before ANDERSON and BLACK, Circuit Judges, and HENDERSON, Senior
Circuit Judge.

ANDERSON, Circuit Judge:

Appellant Beiswenger Enterprises Corporation ("BEC"), the

owner of the M/V "Skyrider Express," brought this admiralty action

under the Limitation of Vessel Owner's Liability Act, 46 App.U.S.C.

§ 181 et seq. (the "Limitation Act"). This statute, originally

enacted by Congress in 1851, limits a vessel owner's liability for

any damages arising from a maritime accident to the value of the

vessel and its freight, provided that the accident occurred without
1
such owner's "privity or knowledge." 46 App.U.S.C. § 183(a).

1
46 App.U.S.C. § 183(a) provides:

The liability of the owner of any vessel, whether
American or foreign, for any embezzlement, loss, or
destruction by any person of any property, goods, or
merchandise shipped or put on board of such vessel, or
for any loss, damage, or injury by collision, or for
any act, matter, or thing, loss, damage, or forfeiture
done, occasioned, or incurred, without the privity or
knowledge of such owner or owners, shall not ... exceed
the amount or value of the interest of such owner in
When BEC filed its petition seeking limited liability, the district

court enjoined the institution or prosecution of other suits

against BEC pending the outcome of the limitation proceeding. See

Fed.R.Civ.P. Supplemental Rule F(3). The damage claimants,

appellees herein, filed a motion in the district court to stay

BEC's limitation action and to lift the injunction against their

state court tort action. The district court granted the damage

claimants' motion, after accepting certain stipulations from the

damage claimants designed to protect the vessel owner's rights

under the Limitation Act. BEC appeals, contending that the amended

stipulations filed by the damage claimants are inadequate. In this

opinion, we address two primary issues. First, we address the

viability in this Circuit of the procedure which allows the damage

claimants in a multiple-claims-inadequate-fund case to proceed

against the vessel owner outside the admiralty court upon the

filing of appropriate protective stipulations. Second, we address

whether the amended stipulations filed by the damage claimants in

this case adequately protect BEC's rights under the Limitation Act.

On December 4, 1990, George Edward Myers and his fiancee

Kathleen Carletta hired BEC to take them parasailing near

Clearwater Beach, Florida. Parasailing is a recreational boating

activity in which the riders, secured to the boat by a tow line,

are pulled aloft by a parachute. Myers and Carletta boarded BEC's

motor vessel, the "Skyrider Express," and they proceeded into the
Gulf of Mexico. As the Skyrider Express maneuvered through the

such vessel, and her freight then pending.
water, the parachute canopy filled with wind, lifting Myers and

Carletta into the air. At the conclusion of the ride, weather

conditions interfered with the boat operator's efforts to retrieve

the parasailors from the air. The operator severed the tow line

connecting the vessel to the riders, causing them to descend to the

water. After Myers and Carletta splashed down, the parachute

canopy again filled with a gust of wind and rose into the air.

Somehow, the tow line had become entangled around one of Myers'

ankles, causing the parachute to pull him, hanging upside down,

toward the sky. As the parachute passed over land, Myers slammed

into several shoreside objects, and sustained serious injuries from

which he died fourteen days later.

Anticipating liability for this event, BEC brought this action

on February 6, 1991, seeking exoneration from or limitation of

liability with respect to any claims arising out of the parasailing

incident. BEC asserted that it was not at fault for the accident,

and that the accident occurred without its privity or knowledge.

On March 15, 1991, the district court approved BEC's security bond

and ad interim stipulation of $40,090.00 as the value of the M/V

Skyrider Express and its freight, and enjoined the institution or

further prosecution of any suits against BEC or the M/V Skyrider

Express in any other forum. See generally 46 App.U.S.C. § 185;

Fed.R.Civ.P. Supplemental Rule F. The district court also issued

a published notice directing all potential claimants to file their

claims in the admiralty court by April 15, 1991.

On April 12, 1991, Carletta filed a claim for damages for her

personal injuries, and, in an answer to BEC's limitation complaint,
disputed BEC's allegations on the central issues of fault and

privity or knowledge. The estate of Myers and two of Myers'

surviving minor children, Shante Denise Myers and Julian Caesar

Myers, also answered BEC's complaint and filed a damages claim.2

More than a year later, in July 1992, Carletta and Myers'

estate filed an action for personal injury and wrongful death in

Florida state court against the following parties: Parasailing

Enterprises, Inc. and Controlled Parasailing Corporation of

America, the manufacturer and seller of the parasailing equipment;

Mark McCulloh, an employee of Parasailing Enterprises and/or

Controlled Parasailing; Roy F. Beiswenger, the operator of the

Skyrider Express at the time of the accident; and William J.

Beiswenger, the parasailing instructor and trainer. Because this

state court complaint did not name BEC as a party, the district

court refused to enjoin its prosecution.3

At some point, appellees decided that they wanted to add BEC

as a party to the pending state court action. On September 14,

2
Myers was also survived by two other minor children:
George Edward Myers, Jr. and Tiffany E.M. Carter (who was later
renamed Tiffany Myers). These children, through their guardians,
eventually joined the limitation action and adopted all the
pleadings of the estate.
3
According to BEC, William J. Beiswenger is the sole officer
and shareholder of BEC. In the district court, BEC argued that
by naming William J. Beiswenger as a party to the state court
action, the damage claimants effectively violated the injunction
restraining the institution of suits against BEC. See Flink v.
Paladini, 279 U.S. 59, 62-63, 49 S.Ct. 255, 255, 73 L.Ed. 613
(1929) (holding that the stockholders of a corporation owning a
vessel are entitled to invoke the Limitation Act). The district
court rejected BEC's arguments without explanation, thus allowing
the state court suit against William J. Beiswenger to proceed.
BEC has not appealed from the district court's orders allowing
William J. Beiswenger to be sued, and we do not address that
issue.
1994, they filed a motion to stay the limitation of liability

proceeding and to lift the injunction against suing BEC in state

court. Appellees attached to this motion a series of stipulations

designed to protect BEC's rights under the Limitation Act. The

magistrate judge identified several perceived deficiencies in these

stipulations, and recommended that the motion to lift the

injunction be denied without prejudice. In response to the

magistrate judge's concerns, appellees filed the following amended

stipulations on October 6, 1994:

AMENDED STIPULATIONS OF THE RESPONDENT/CLAIMANTS IN SUPPORT OF
MOTION TO STAY LIMITATION OF LIABILITY ACTION AND TO LIFT
INJUNCTION RESTRAINING ACTIONS AGAINST PETITIONERS

Provided the Court lifts its Injunction of March 15, 1991
and stays this action to permit the Claimants to proceed
against the Petitioner in a state court action for personal
injury and wrongful death, the Respondent/Claimants, KATHLEEN
CARLETTA and ELNORA MYERS, as Personal Representative of the
Estate of George Edward Myers, stipulate and agree as follows:

1. That the Petitioner, BEISWENGER ENTERPRISES CORP., has the
right to litigate the issue of whether it is entitled to limit
its liability under the provisions of the Limitation of
Liability Act, 46 U.S.C. § 181 et seq., in this Court, and
this Court has exclusive jurisdiction to determine that issue.

2. That the Petitioner has the right to have this Court
determine the value of the M/V Skyrider Express immediately
following the incident at issue, and this Court has exclusive
jurisdiction to determine that issue.

3. That the Respondent/Claimants will not seek a determination
of the issues set forth in paragraphs (1) and (2) above in any
state court, and consent to waive any res judicata effect the
decisions, rulings or judgments of any state court might have
on those issues.

4. That the Respondent/Claimants will not seek to enforce any
judgment rendered in any state court, whether against the
Petitioner or another person or entity that would be entitled
to seek indemnity or contribution from the Petitioner, by way
of cross-claim or otherwise, that would expose the Petition
[sic] to liability in excess of $40,090.00, until such time as
this Court has adjudicated the Petitioner's right to limit
that liability.
5. That, in the event this Court determines that the
Petitioner is entitled to limit its liability, the
Respondent/Claimants agree that any claim based upon fees
and/or costs awarded against Petitioner and in favor of any
party in any state court proceeding will have first priority
against the available fund.

6. That, in the event this Court determines that the
Petitioner is entitled to limit its liability, the
Respondents/Claimants agree that, following payment of the
claims, if any, described in paragraph 5 above, the claim of
ELNORA MYERS, as Personal Representative of the Estate of
George Edward Myers, Deceased, shall have second priority
against the limitation fund and priority over the claim of
KATHLEEN CARLETTA.

R-2-81.

After reviewing these amended stipulations, the district court

stayed the federal limitation proceeding and lifted the injunction,

thus allowing appellees to proceed against BEC in state court.

This appeal followed.

II.

In the mid-nineteenth century, Congress passed the Limitation

Act4 "to encourage ship building and to induce capitalists to

invest money in this branch of industry." Norwich & N.Y. Transp.

Co. v. Wright, 80 U.S. (13 Wall.) 104, 121, 20 L.Ed. 585, 591

(1871). The Act achieves this purpose by "exempting innocent

shipowners from liability, beyond the amount of their interest."

Id. When faced with liability for a maritime accident, a vessel

owner may file a petition in federal court seeking protection under

the Limitation Act. Provided that the accident in question

occurred without the vessel owner's "privity or knowledge," the Act

limits the owner's liability to the value of his or her interest in

4
Act of Mar. 3, 1851, ch. 43, 9 Stat. 635 (codified as
amended at 46 App.U.S.C. §§ 181-189).
the vessel and its pending freight. 46 App.U.S.C. § 183(a). After

the vessel owner deposits with the court an amount representing the

value of the vessel and its freight (the "limitation fund"), the

district court stays all related claims against the vessel owner

pending in any other forum, and directs all potential claimants to

file their claims against the vessel owner in the district court

within a specified period of time. 46 App.U.S.C. § 185;

Fed.R.Civ.P. Supplemental Rules F(3), F(4); see In re Dammers &

Vanderheide & Scheepvaart Maats Christina B.V., 836 F.2d 750, 755

(2d Cir.1988); Universal Towing Co. v. Barrale, 595 F.2d 414, 417

(8th Cir.1979).

When the damage claims have been filed, the district court

proceeds to resolve the vessel owner's claim to limited liability.

See Dammers, 836 F.2d at 755. In a typical limitation proceeding,

the court undertakes the following two-step analysis. "First, the

court must determine what acts of negligence or conditions of

unseaworthiness caused the accident. Second, the court must

determine whether the shipowner had knowledge or privity of those

same acts of negligence or conditions of unseaworthiness."

Hercules Carriers, Inc. v. Claimant State of Florida, 768 F.2d

1558, 1563-64 (11th Cir.1985) (quoting Farrell Lines, Inc. v.

Jones, 530 F.2d 7, 10 (5th Cir.1976)). The damage claimants bear

the initial burden of establishing liability, and the shipowner

then bears the burden of establishing the lack of privity or

knowledge. Id. If the vessel owner is found liable, but

limitation is granted, the admiralty court distributes the

limitation fund among the damage claimants in an equitable
proceeding known as a concursus. See S & E Shipping Corp. v.

Chesapeake & Ohio Ry. Co., 678 F.2d 636, 643 (6th Cir.1982) ("The

purpose of the concursus, the proceeding before the admiralty court

in which all competing claims must be litigated, is to provide for

a marshalling of assets and for a setting of priorities among

claims where the asserted claims exceed the value of the vessel and

its freight."); In re Moran Transp. Corp., 185 F.2d 386, 389 (2d

Cir.1950) ("[T]he purpose of limitation proceedings is not to

prevent a multiplicity of suits but, in an equitable fashion, to

provide a marshalling of assets—the distribution pro rata among

claimants, none of whom can be paid in full."), cert. denied, 340

U.S. 953, 71 S.Ct. 573, 95 L.Ed. 687 (1951).

Federal courts have exclusive admiralty jurisdiction to

determine whether the vessel owner is entitled to limited

liability. See Ex Parte Green, 286 U.S. 437, 439-40, 52 S.Ct. 602,

603, 76 L.Ed. 1212 (1932) (holding that the admiralty court's

jurisdiction over issues bearing on the right to limited liability,

such as "privity or knowledge," is exclusive); Langnes v. Green,

282 U.S. 531, 539-40, 51 S.Ct. 243, 246, 75 L.Ed. 520 (1931)

(same); In re Wood, 230 F.2d 197, 199 (2d Cir.1956) ("[T]he issue

of the owner's privity or knowledge must be litigated in the

admiralty court, which has exclusive jurisdiction over that

issue."). In limitation proceedings, as in all admiralty cases,

there is no right to a jury trial. See Waring v. Clarke, 46 U.S.

(5 How.) 441, 459, 12 L.Ed. 226, 235 (1847) (holding that the

Seventh Amendment does not provide for jury trials in admiralty

cases); Newton v. Shipman, 718 F.2d 959, 962 (9th Cir.1983) (per
curiam) (explaining that there is no right to jury trial in a

limitation action).

However, the same statute that grants the federal courts

exclusive admiralty and maritime jurisdiction saves to suitors "all

other remedies to which they are otherwise entitled." 28 U.S.C. §

1333(1). This "saving to suitors" clause of § 1333 embodies a

presumption in favor of jury trials and common law remedies in the

forum of the claimant's choice. See Odeco Oil & Gas Co., Drilling

Div. v. Bonnette, 74 F.3d 671, 674 (5th Cir.1996); In re Dammers

& Vanderheide & Scheepvaart Maats Christina B.V., 836 F.2d 750, 754

(2d Cir.1988). Thus, a certain tension between the exclusive

jurisdiction vested in admiralty courts to determine the vessel

owner's right to limited liability and the saving to suitors clause

has developed. See Dammers, 836 F.2d at 754; Jefferson Barracks

Marine Serv., Inc. v. Casey, 763 F.2d 1007, 1009 (8th Cir.1985)

("The conflict between the Limitation of Liability Act ... and the

"saving to suitors' clause ... has been troublesome for the

courts."). In resolving this tension, the "primary concern is to

protect the shipowner's absolute right to claim the Act's liability

cap, and to reserve the adjudication of that right in the federal

forum." Magnolia Marine Transp. Co., Inc. v. Laplace Towing Corp.,

964 F.2d 1571, 1575 (5th Cir.1992); see also Gorman v. Cerasia, 2

F.3d 519, 526 (3d Cir.1993) (in applying the saving to suitors

clause, the district court must "ensure that the shipowner will not

be exposed to competing claims to the limitation fund").

Courts have attempted to give effect to both the Limitation

Act and the saving to suitors clause whenever possible, by
identifying two sets of circumstances under which the damage

claimants must be allowed to try liability and damages issues in a

forum of their own choosing. The first circumstance arises where

the limitation fund exceeds the aggregate amount of all the

possible claims against the vessel owner. See Lake Tankers Corp.

v. Henn, 354 U.S. 147, 152-53, 77 S.Ct. 1269, 1272-73, 1 L.Ed.2d

1246 (1957) (allowing damage claimants to proceed against shipowner

in state court where stipulations reduced total of all claims to an

amount below limitation fund). In such a case, the vessel owner is

not exposed to liability in excess of the limitation fund, and thus

the vessel owner's rights under the Limitation Act are not

implicated. Id.; see also S & E Shipping Corp. v. Chesapeake &

Ohio Ry. Co., 678 F.2d 636, 643 (6th Cir.1982) ("Where the

limitation fund is sufficient to pay all potential claims ... a

concursus is unnecessary because the claimants need not compete

among themselves for larger portions of a limited fund. This

exception to the concursus proceeding protects the claimant's right

to a jury trial in the forum of his choice without undermining the

Limitation Act's policy of limiting the shipowner's liability to

the value of the vessel and its freight.").

The second circumstance exists where there is only one

claimant. Because a major purpose of the concursus proceeding is

to resolve competing claims to the limitation fund, the single

claimant may try liability and damages issues in another forum by

filing stipulations that protect the shipowner's right to have the

admiralty court ultimately adjudicate its claim to limited

liability. See, e.g., Ex parte Green, 286 U.S. 437, 438-40, 52
S.Ct. 602, 602-03, 76 L.Ed. 1212 (1932); Langnes v. Green, 282

U.S. 531, 540-44, 51 S.Ct. 243, 246-48, 75 L.Ed. 520 (1931).

"Specifically, the claimant must waive any claim of res judicata

relevant to the issue of limited liability based on any judgment

obtained in the state court, and concede the shipowner's right to

litigate all issues relating to limitation in the federal

limitation proceeding." Gorman v. Cerasia, 2 F.3d 519, 524 (3d

Cir.1993); see also In re Midland Enter., Inc., 886 F.2d 812, 814

(6th Cir.1989) (explaining that the single claimant must formally

concede the district court's exclusive jurisdiction to determine

limitation of liability issues, that the value of the vessel and

freight will be the limit of the fund available if limitation is

granted, and that no res judicata arguments will be made based upon

any state court judgment); In re Mucho K, Inc., 578 F.2d 1156,

1158 (5th Cir.1978) (holding that "the claimant in a single claim

situation after appropriate protective stipulations [may] proceed

elsewhere reserving exclusive final determination of the right to

limitation (and the amount of the fund) to the admiralty court")

(quoting Pershing Auto Rentals, Inc. v. Gaffney, 279 F.2d 546, 550

(5th Cir.1960)).5 If the state court (or the law side of the

federal court) holds the vessel owner liable for the accident and

assesses damages exceeding the limitation fund, the parties must

return to the admiralty court for a determination of the privity or

knowledge issues. See Texaco, Inc. v. Williams, 47 F.3d 765, 767

5
In Bonner v. City of Prichard, 661 F.2d 1206 (11th
Cir.1981) (en banc), this court adopted as binding precedent all
of the decisions of the former Fifth Circuit handed down prior to
the close of business on September 30, 1981. Id. at 1209.
(5th Cir.), cert. denied, --- U.S. ----, 116 S.Ct. 275, 133 L.Ed.2d

196 (1995); Magnolia Marine Transp. Co., Inc. v. Laplace Towing

Corp., 964 F.2d 1571, 1575 (5th Cir.1992) (explaining that "[t]he

claimant must stipulate ... that no judgment against the shipowner

will be asserted to the extent it exceeds the value of the

limitation fund"); Avera v. Florida Towing Corp., 322 F.2d 155,

159-60 (5th Cir.1963) (after a state court jury found the shipowner

liable to the damage claimant, the parties returned to the

admiralty court to determine whether any of the acts of negligence

"which were submitted to and impliedly found by the state court

jury" were committed without the privity or knowledge of the

shipowner). If limitation is denied (e.g., because the vessel

owner fails to establish a lack of "privity or knowledge"), the

claimant may then enforce his or her state court judgment for

damages exceeding the limitation fund. Accordingly, the

shipowner's absolute right to claim limited liability, and to

reserve the adjudication of that claim in the admiralty court, has

been fully protected. See Magnolia Marine Transp. Co., Inc. v.

Laplace Towing Corp., 964 F.2d 1571, 1575 (5th Cir.1992).

The instant case appears to present a

"multiple-claims-inadequate-fund" situation. The "adequate fund"

exception does not apply here, because the damage claimants each

seek to recover amounts exceeding the value of the M/V Skyrider

Express and its freight. Nor does the "single claimant" exception

apply, because there are at least two separate claims for damages:

the personal injury claim of Kathleen Carletta and the wrongful

death claim of the estate of George Myers. In genuine
"multiple-claims-inadequate-fund" cases, the courts have not

allowed damage claimants to try liability and damages issues in

their chosen fora, even if they agree to return to the admiralty

court to litigate the vessel owner's privity or knowledge. See

Pershing Auto Rentals, Inc. v. Gaffney, 279 F.2d 546, 549-50 (5th

Cir.1960). This is because, without a concursus in the admiralty

court, the claimants could "secure judgments in various courts

that, in the aggregate, exceed the [limitation] fund." Universal

Towing Co. v. Barrale, 595 F.2d 414, 418 (8th Cir.1979). Thus, the

damage claimants in a true multiple-claims-inadequate-fund case may

not proceed against the vessel owner except in the admiralty court.

In recent years, however, courts have allowed claimants to

transform a multiple-claims-inadequate-fund case into the

functional equivalent of a single claim case through appropriate

stipulations, including stipulations that set the priority in which

the multiple claims will be paid from the limitation fund. By

entering such stipulations, the damage claimants effectively

guarantee that the vessel owner will not be exposed to competing

judgments in excess of the limitation fund. Without such

competition for the limitation fund, a concursus is unnecessary,

just as in a true single claimant case, and the claimants may

litigate liability and damages issues in their chosen fora. See

Gorman v. Cerasia, 2 F.3d 519, 526 (3d Cir.1993) ("[A]s long as the

priority stipulations filed in the district court ensure that the

shipowner will not be exposed to competing claims to the limited

fund representing more than the value of his or her vessel, the

district court may authorize the parties to proceed with the state
court action."); Magnolia Marine Transp. Co., Inc. v. Laplace

Towing Corp., 964 F.2d 1571, 1576 (5th Cir.1992) ("Multiple

claimants may reduce their claims to the equivalent of a single

claim by agreeing and stipulating as to the priority in which the

claimants will receive satisfaction against the shipowner from the

limited fund."); In re Dammers & Vanderheide & Scheepvaart Maats

Christina B.V., 836 F.2d 750, 756 (2d Cir.1988) (explaining that

appropriate stipulations "allow claimants who might not otherwise

be entitled to do so to proceed with common law actions in other

forums"); S & E Shipping Corp. v. Chesapeake & Ohio Ry. Co., 678

F.2d 636, 644 (6th Cir.1982) (explaining that a multiple claims

situation no longer exists, and a concursus is unnecessary, where

the claimants enter priority stipulations); Universal Towing Co.

v. Barrale, 595 F.2d 414, 420 (8th Cir.1979) (where two claimants

stipulate the priority in which their claims will be paid from the

limitation fund, the vessel owner is no longer subject to competing

claims and therefore a concursus would serve no purpose); In re

Garvey Marine, Inc., 909 F.Supp. 560, 565 (N.D.Ill.1995) ("The

multiplicity of claims will not bar dissolution of the stay order

if the claimants, by their stipulations, transform the multiple

claims into a single claim for purposes of the exception."); In re

Mohawk Assocs. and Furlough, Inc., 897 F.Supp. 906, 911 (D.Md.1995)

(same).

III.

Although no prior case in this Circuit has employed the

foregoing s t i p u l a t i on method to transform a

multiple-claims-inadequate-fund case into the functional equivalent
of a single claim case, we follow the numerous decisions cited

above in doing so today. As an initial matter, we note that the

Supreme Court has approved the use of stipulations in other

contexts to accomplish similar purposes. In Lake Tankers Corp. v.

Henn, 354 U.S. 147, 77 S.Ct. 1269, 1 L.Ed.2d 1246 (1957), the Court

approved the use of stipulations by multiple claimants to reduce

the aggregate amount of their claims to a level below the

limitation fund. See id. at 149, 77 S.Ct. at 1270-71. The

stipulations thus eliminated the need for a concursus, because the

vessel owner no longer faced the prospect of excess liability. See

id. at 152, 77 S.Ct. at 1272. Significantly, in allowing the state

court action against the vessel owner to proceed, the Court

explicitly rejected the argument that the Limitation Act protects

the vessel owner against a multiplicity of suits. See id. at 153-

54, 77 S.Ct. at 1273. Because of the saving to suitors clause, the

Court reasoned, the shipowner may not force the damage claimants to

litigate their claims in the admiralty court unless a concursus is

necessary to protect the vessel owner's claim of limited liability

under the Act. See id. at 152-54, 77 S.Ct. at 1272-73.

The Lake Tankers case thus establishes that the damage

claimants in a multiple-claims-inadequate-fund case may file

appropriate stipulations to create an adequate fund case, thereby

eliminating the need for a concursus. If the damage claimants can

make a concursus unnecessary by stipulating to the amount of their

claims, it follows that they also should be able to make a

concursus unnecessary by transforming their multiple claims into

the functional equivalent of a single claim. This procedure
protects the vessel owner's rights under the Limitation Act, while

allowing the damage claimants to pursue their common law remedies—a

result consistent with the mandate of the saving to suitors clause.

Cf. Dammers, 836 F.2d at 760 (explaining that "admiralty courts

must strive whenever possible to promote the policies underlying

both [the Limitation Act and the saving to suitors clause]").

The decision of the former Fifth Circuit in Pershing Auto

Rentals, Inc. v. Gaffney, 279 F.2d 546 (5th Cir.1960) does not

preclude our holding that multiple claimants may create the

equivalent of a single claim by entering appropriate stipulations.

In that case, four injured claimants sought damages against the

vessel owner totalling $558,000, but the amount of the limitation

fund was only $500. In an attempt to proceed against the vessel

owner and other defendants in state court, two out of the four

claimants offered to file protective stipulations. The district

court modified its injunction to permit these two claimants to

pursue their state court actions, even though the other two

claimants, who did not offer to file protective stipulations,

sought to recover amounts in excess of the limitation fund. The

Fifth Circuit reversed, explaining that the stipulations were

inadequate, inter alia, because only two out of the four claimants

agreed to sign them. See id. at 549. After reaching this holding,

the Pershing Auto Rentals opinion implies that the damage claims in

a multiple-claims-inadequate-fund case must always be adjudicated

in the admiralty court. See id. at 549-52. However, we do not

believe that such an implication from Pershing Auto Rentals is

controlling here. In Pershing Auto Rentals, only two out of the
four damage claimants agreed to enter protective stipulations;

thus, a concursus was still necessary to ensure that the vessel

owner would not be exposed to competing judgments that could

exhaust the limitation fund. Unlike the case at bar, the court was

not presented with stipulations which might have transformed the

multiple claims into the equivalent of a single claim, thereby

eliminating the competition among claimants for the limitation

fund.6

Finally, we are persuaded by the weight of authority in

accepting the argument that multiple claimants may invoke the

single claimant exception through appropriate stipulations. Every

circuit court of appeals that has expressly addressed this argument

has accepted it. See Gorman v. Cerasia, 2 F.3d 519, 526 (3d

Cir.1993); Magnolia Marine Transp. Co., Inc. v. Laplace Towing

Corp., 964 F.2d 1571, 1576 (5th Cir.1992); In re Dammers &

Vanderheide & Scheepvaart Maats Christina B.V., 836 F.2d 750, 756

(2d Cir.1988); S & E Shipping Corp. v. Chesapeake & Ohio Ry. Co.,

678 F.2d 636, 644 (6th Cir.1982); Universal Towing Co. v. Barrale,

595 F.2d 414, 420 (8th Cir.1979).

IV.

With these legal principles in mind, we now address the

adequacy of the stipulations filed by appellees, the damage

claimants, and approved by the district court in this case. First,

we address whether the stipulations have in fact created the

functional equivalent of a single claim situation, or whether a

6
The new Fifth Circuit has also distinguished Pershing Auto
Rentals on this basis. See Odeco Oil & Gas Co., Drilling Div. v.
Bonnette, 4 F.3d 401, 405 n. 7 (5th Cir.1993).
multiple claims situation still exists. Only if the stipulations

produce the functional equivalent of a single claim may the state

court action against BEC proceed. Second, we address whether the

stipulations are otherwise sufficient to protect BEC's right to

claim limited liability.

Have the Stipulations Created the Equivalent of a Single Claim?

There is no question that the personal injury claim asserted

by Kathleen Carletta and the wrongful death claim asserted by the

estate of George Myers are separate claims that would ordinarily

require a concursus. In addition, "[i]t is ... well settled that

the potential for claims for attorneys' fees or costs against a

shipowner by a claimant or a third party creates a multiple

claimant situation necessitating a concursus." Dammers, 836 F.2d

at 756; see also Gorman, 2 F.3d at 528 (same); S & E Shipping,

678 F.2d at 645-46 (same); Universal Towing, 595 F.2d at 419

(same). However, all of these problems are cured by paragraphs

five and six of the amended stipulations, which provide that any

claims for attorneys' fees or costs have first priority, that the

claim of Myers' estate has second priority, and that Carletta's

claim has last priority.

To resolve this case properly, however, we must address two

other sets of potential claims: first, claims that might be

asserted by the four minor children surviving Myers; and second,

indemnity or contribution claims that might be asserted by BEC's

state court co-defendants.

1. Potential Claims by Myers' Surviving Minor Children
The deceased, George Myers, is survived by his mother, Elnora

Myers, and his four minor children: Shante Denise Myers, Tiffany

Elnora Margaret Myers, George Edward Myers, Jr., and Julian Caesar

Myers. The Surrogate's Court for New York County, New York

appointed Elnora Myers as personal representative of her son's

estate. Acting in this capacity, Elnora Myers executed the amended

stipulations at issue in the instant limitation action, and she is

the plaintiff in the suit against BEC (and others) in Florida state

court for the wrongful death of George Myers.

BEC argues that the personal representative's signature on the

amended stipulations is insufficient to protect its rights under

the Limitation Act. According to BEC, this is a multiple claims

case because Myers' four minor children have not themselves signed

any protective stipulations. We disagree. There is only a single

claim arising from Myers' death, and it belongs to the personal

representative of his estate. The beneficiaries of the estate,

including the minor children, are not authorized to bring

independent suits for their individual damages; rather, they must

share in the single judgment, if any, obtained by the personal

representative. This is true under the general maritime law,

Florida law, and New York law. See Fl.Stat. § 768.20 (West 1986)

("The [wrongful death] action shall be brought by the decedent's

personal representative, who shall recover for the benefit of the

decedent's survivors and estate all damages, as specified in this

act, caused by the injury resulting in death."); N.Y. Estates,

Powers and Trusts Law § 5-4.1 (McKinney 1981) ("The personal

representative ... of a decedent who is survived by distributees
may maintain an action to recover damages for a wrongful act,

neglect or default which caused the decedent's death against a

person who would have been liable to the decedent by reason of such

wrongful conduct if death had not ensued."); see also Futch v.

Midland Enter., Inc., 471 F.2d 1195, 1195-96 (5th Cir.1973)

(holding that the only person who can bring a cause of action for

wrongful death under general maritime law is the personal

representative of the decedent); Funchess v. Gulf Stream

Apartments, 611 So.2d 43, 45 (Fla.App. 4 Dist.1992) ("By requiring

the personal representative to bring a single action, the [Florida

wrongful death] statute eliminates the potential for competing

beneficiaries to race to judgment, preferential treatment of one or

more beneficiaries in the disposition of their claims and, most

significantly, multiple claims and lawsuits against the

wrongdoer."); Mingone v. State, 100 A.D.2d 897, 474 N.Y.S.2d 557

(2d Dept.1984) (under New York law, holding that "[a] personal

representative ... is the only party who is authorized to bring a

survival action for personal injuries sustained by the decedent and

a wrongful death action to recover the damages sustained by the

decedent's distributees on account of his or her death"). Because

the result is the same under the general maritime law, Florida law,

and New York law, we do not decide which jurisdiction's wrongful

death law applies in this case. Rather, we merely conclude that,

for purposes of the Limitation Act, the existence of minor children

does not transform the wrongful death cause of action in this case

from a single claim situation to one involving multiple claims.

Accord In re Midland Enter., Inc., 886 F.2d 812, 815-16 (6th
Cir.1989) (holding that a wrongful death action involving a widow

and two children is a single claim for purposes of the Limitation

Act, because only the personal representative of the estate may

bring the claim); In re Mucho K, Inc., 578 F.2d 1156, 1157-58 (5th

Cir.1978) (same).

2. Potential Third Party Claims for Indemnity or Contribution

In addition to suing BEC in the state court action, appellees

have named several other parties as defendants. Because these

third party co-defendants could assert cross-claims against BEC for

indemnification or contribution, a question under the Limitation

Act arises. Does the possibility of such third party claims

present a multiple claimant situation necessitating a concursus?

There appears to be a split of authority among the federal

appellate courts on this issue. In Universal Towing Co. v.

Barrale, 595 F.2d 414 (8th Cir.1979), the court held that an

indemnity claim against the shipowner does not create a multiple

claim situation, because "the indemnity claim is merely derivative

of the one presented by the claimant." Id. at 419. In other

words, "[t]he third party ... can only recover what the claimant

was entitled to recover from the owner, which cannot exceed the

owner's statutory limit." Id. In S & E Shipping Corp. v.

Chesapeake & Ohio Ry. Co., 678 F.2d 636 (6th Cir.1982), the Sixth

Circuit followed the reasoning of the Eighth Circuit, and held that

indemnity and contribution claims of joint tortfeasors against the

shipowner do not create a multiple claims situation, because such

claims are "derived from and dependent upon the primary claim
against the shipowner." Id. at 645.7

More recent opinions, however, have disagreed with the

analysis of the Eighth and Sixth Circuits. In In re Dammers &

Vanderheide & Scheepvaart Maats Christina B.V., 836 F.2d 750 (2d

Cir.1988), the Second Circuit held that "the reasonable prospect of

claims for indemnification should constitute a multiple claimant

situation necessitating a concursus." Id. at 757. Following

Dammers, the Third Circuit recently explained why a concursus is

necessary when there are potential third party claims for

indemnification or contribution:

A multiple claimant situation could arise, for example,
if the plaintiffs seek to enforce a state court judgment
against the shipowner up to the value of the limitation fund
and then seek to recover the remaining amount of the judgment
against the shipowner's co-defendants. If the defendants do
not sign protective stipulations with the admiralty court,
they would not be foreclosed from recovering against the
shipowner for contribution, even though his or her liability
(assuming a finding of no privity or knowledge) has already
been exhausted. It is precisely this kind of competition for
the limitation fund that the Act was designed to avoid.

Gorman v. Cerasia, 2 F.3d 519, 527 (3d Cir.1993).8 The Fifth

7
In a separate opinion, Judge Kennedy disagreed with the
majority's holding that indemnity and contribution claims from
joint tortfeasors are merely derivative of the primary claim
against the shipowner. See id. at 646-49.
8
Gorman provided a "practical illustration of why a
co-defendant's contribution claim creates a multiple claimant
situation" by quoting from Judge Kennedy's concurring opinion in
S & E Shipping. See Gorman, 2 F.3d at 527 n. 8. We do the same:

The [plaintiffs] could win a large judgment against
[the shipowner and its co-defendant] jointly in the
state court, say $1,000,000. [The co-defendant] could
also win a judgment in state court entitling it to
contribution from [the shipowner] for anything it pays
the [plaintiffs] in excess of one-half the judgment, or
$500,000. Because of the stipulation they have filed
with the District court, the [plaintiffs] could collect
no more from [the shipowner] than the value of the
Circuit has followed the analysis of the Second and Third Circuits

on this issue. See Odeco Oil & Gas Co., Drilling Div. v. Bonnette,

74 F.3d 671, 675 (5th Cir.1996) (explaining that potential claims

for contribution or indemnity asserted by the vessel owner's

co-defendants must be considered separately in assessing whether a

concursus in the admiralty court is required); In re Port Arthur

Towing Co., 42 F.3d 312, 316 (5th Cir.) (per curiam) (same), cert.

denied sub nom. Jarreau v. Port Arthur Towing Co., --- U.S. ----,

116 S.Ct. 87, 133 L.Ed.2d 44 (1995).
We find the more recent case law more persuasive. Therefore,

to determine whether a multiple-claims-inadequate-fund situation

exists, potential claims for indemnity or contribution from the

vessel owner's co-defendants must be separately considered. In

this case, therefore, we hold that the possibility of claims from

BEC's state court co-defendants creates a multiple claims

situation.

limitation fund as determined by the District Court.
If the fund contains only $250,000 ... then [the
co-defendant], jointly and severally liable, would be
obligated to pay [the plaintiffs] the unpaid balance of
the judgment, or $750,000. Under its right to
contribution [the co-defendant] would be entitled to
recover from [the shipowner] any excess over $500,000
that it paid the [plaintiffs], or $250,000. Since [the
co-defendant] did not stipulate that any state court
judgment in its favor would not be res judicata on the
limitation question, it would then have a $250,000
claim against [the shipowner] that was not subject to
limitation. The result would be that [the shipowner]
would have to pay a total of $500,000 on account of the
injury ... when under the Limited Liability Act it
should only have been liable for the value of the
vessel, or $250,000.

This is a clear violation of the Limited Liability Act.

S & E Shipping, 678 F.2d at 647 (opinion of Kennedy, J.).
None of BEC's state court co-defendants has entered

stipulations protecting BEC's rights under the Limitation Act. The

new Fifth Circuit has suggested that all potential claimants

against the vessel owner, including third parties who might have

contribution or indemnity claims, must sign protective stipulations

in order for the injured claimants to proceed outside of the

limitation action. See Odeco Oil & Gas Co., Drilling Div. v.

Bonnette, 74 F.3d 671, 675 (5th Cir.1996) (holding that all

claimants, including co-defendants who might assert claims for

contribution or indemnity, must enter protective stipulations in

order for the injunction against state court proceedings to be

lifted); In re Port Arthur Towing Co., 42 F.3d 312, 316 (5th Cir.)

(per curiam) ("When the aggregate of the damages being sought by

all claimants exceeds the value of the concursus, actions in state

court cannot proceed unless all claimants enter into a stipulation

that adequately protects the shipowner.... [A] "claimant' in this

context includes a codefendant who is asserting a cross claim for

indemnification, costs, and attorneys' fees."), cert. denied sub

nom. Jarreau v. Port Arthur Towing Co., --- U.S. ----, 116 S.Ct.

87, 133 L.Ed.2d 44 (1995). The basis for this suggestion (that all

potential claimants, including co-defendants, must enter

stipulations) is the lack of assurance that the vessel owner's

right to claim limited liability will be fully protected.

However, the Second Circuit in Dammers has held that the

vessel owner can be protected from excess liability at the hands of

third parties even if those third parties themselves do not enter

any protective stipulations. See id. at 758-59. In Dammers, the
damage claimants entered the following stipulation:

in the event there is a judgment or recovery in any State
Court actions in excess of [the limitation fund] whether
against the [vessel owners], or any other liable parties who
may cross-claim or claim over against the [vessel owners], in
no event will [the damage claimants] seek to enforce said
excess judgment or recovery insofar as same may expose [the
vessel owners] to liability in excess of [the limitation fund]
pending the adjudication of Limitation of Liability in the
District Court.

Id. at 759. Although none of the vessel owners' co-defendants in

Dammers entered stipulations, the Second Circuit held that the

above-quoted stipulation was sufficient to protect the owners from

excess liability at the hands of third parties.9 Thus, the damage

claimants were allowed to proceed against the vessel owners in

state court.

Here, appellees have attempted to cure the problem presented

by the existence of BEC's co-defendants by entering a stipulation

similar to the one approved in Dammers. Appellees have stipulated

as follows:

In our view, this stipulation cures the "multiple claims" problem

9
Although the new Fifth Circuit has suggested that all of
the vessel owner's co-defendants must themselves enter
stipulations, see supra, no Fifth Circuit cases have actually
criticized the stipulation approved in Dammers. Indeed, in In re
Two "R" Drilling Co., 943 F.2d 576, 578 (5th Cir.1991), the new
Fifth Circuit upheld a stipulation that mirrors the stipulation
approved in Dammers.
presented by BEC's state court co-defendants.10 These third

parties' claims against BEC are based solely on their liability to

appellees. Appellees have promised not to enforce any state court

judgment (which would expose BEC to liability in excess of the

limit) against any party, including BEC's co-defendants, until

BEC's right to limitation is adjudicated in the admiralty court.

By giving up such claims unless and until limitation is denied,

appellees have eliminated the possibility that competing claims

will exhaust the limitation fund before the admiralty court has the

opportunity to determine whether to grant limited liability to BEC.

For all of the foregoing reasons, we therefore conclude that

appellees' stipulations have converted this case into the

functional equivalent of a single claim case.

Content of the Stipulations

Even in a single claimant case, the stipulations must fully

protect the vessel owner's rights under the Limitation Act. In

this case, we have three specific concerns with respect to the

amended stipulations, which we direct the district court to

evaluate on remand.

First, the stipulations must protect the vessel owner's right

to litigate its claim to limited liability exclusively in the

admiralty court. In paragraphs one and two of the amended

stipulations, appellees have conceded the admiralty court's

exclusive jurisdiction over all limitation issues, and in paragraph

10
However, further modifications of this stipulation, as
discussed in Part IV B of this opinion, may be necessary to
protect the vessel owner.
three, appellees have promised not to seek a determination of those

limitation issues in their state court action. Moreover, appellees

have consented "to waive any res judicata effect the decisions,

rulings or judgments of any state court might have on those

[limitation] issues." Our concern is this: in order to protect

the vessel owner's statutory rights, this latter stipulation must

not be interpreted too narrowly. The damage claimants must agree

not only to waive a "res judicata" defense, but must also agree to

waive the related defense of issue preclusion with respect to all

matters reserved exclusively for determination by the admiralty

court. For example, suppose that the state court holds that a

single negligent act attributable to BEC caused the accident. The

state court's determination that BEC is liable for the accident

would be binding in the limitation proceeding, and the admiralty

court would determine only whether BEC is entitled to limit that

liability. To receive limitation, BEC would have to prove that it

lacked privity or knowledge of the negligent act. In litigating

this question of BEC's privity or knowledge, appellees may not

assert any defense based on issue preclusion. Thus, it is possible

that several factual issues that were determined by the state court

in resolving the negligence question would have to be relitigated

in the admiralty court in resolving the privity or knowledge

question. On remand, the district court should determine whether

appellees intended to waive the defense of issue preclusion with

respect to all limitation issues. If appellees' waiver was not

intended to be so broad, then the district court should reinstate

the injunction against appellees' state court action. The district
court should also consider whether the language of the amended

stipulations needs to be clarified in light of the concerns we have

identified in this paragraph.

Second, the stipulations must protect the vessel owner from

having to pay damages in excess of the limitation fund, unless and

until the admiralty court denies limited liability. In paragraph

four of the amended stipulations, appellees have promised not to

enforce any judgment in excess of the limitation fund against BEC,

or against any co-liable party, "until such time as [the admiralty

court] has adjudicated the Petitioner's right to limit that

liability." We believe that this stipulation needs clarification,

because it does not spell out what happens in the event that BEC's

limitation petition is granted. Obviously, if limitation is

granted, it would violate the spirit of the Limitation Act for

appellees to enforce any judgment that would require BEC to pay

damages in excess of the limitation fund. On remand, the

stipulation should be clarified accordingly.

Finally, the stipulations must protect the vessel owner from

litigation by the damage claimants in any forum outside the

limitation proceeding. Here, the stipulations refer only to "state

court." Because damage claims also may be heard in other fora

(e.g., the law side of the federal court), the appellees'

stipulations should be amended accordingly.

For the foregoing reasons, we VACATE the order of the district

court lifting the injunction against the state court action, and
REMAND for further proceedings consistent with this opinion.11 On

remand, if the concerns we have identified in Part IV.B. of this

opinion are satisfied, the district court may permit the state

court action against BEC to proceed.

VACATED and REMANDED.

11
We note that the concerns prompting this remand are
relatively minor and that they probably can be remedied on
remand.

Beiswenger Enterprises Corp. v. Carletta

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