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In re Complaint of Illinois Marine Towing

April 3, 2006

IN THE MATTER OF THE COMPLAINT OF ILLINOIS MARINE TOWING, INC. A CORPORATION, FOR EXONERATION FROM, OR LIMITATION OF LIABILITY.


The opinion of the court was delivered by: Michael M. Mihm United States District Judge

ORDER

Before the Court is Claimants' Bryan J. Allen, as Administrator of the Estate of Eric M. Allen, deceased, Tim Flemming, Stephen Turner, and Casey A. Barnick's (collectively "Claimants") Joint Motion to Modify Stay and Illinois Marine Towing's ("IMT") Motion to Strike Claimants' Demand for Trial by Jury. For the reasons that follow, the Motion to Modify the Stay [#84] is GRANTED and IMT's Motion to Strike Claimants' Demand for Trial by Jury [#73] is MOOT.

BACKGROUND

On or about May 21, 2004, a marine collision occurred on the Illinois River, involving a towboat (the "M/V Herman Crown"), Barge RMT 315, and a pleasure vessel. Both the M/V Herman Crown and Barge RMT 315 are owned and operated by Illinois Marine Towing ("IMT"). As a result of the collision, several occupants of the pleasure craft were injured and Eric M. Allen was killed.

On July 2, 2004, Joshua Broughton and Tim Flemming, injured occupants of the pleasure craft, brought suit in state court (Case No. 04 L 201) against Inland Marine Service, Inc.*fn1 and Casey Barnick, the individual driving the pleasure craft at the time of the collision. On July 24, 2004, Broughton and Flemming filed a First Amended Complaint in the state court case adding Stephen Turner, another occupant of the pleasure craft, as an additional plaintiff and adding Billy Joe Thomas, the operator of the tug and barge, as an additional defendant.

On February 23, 2005, Illinois Marine Towing, Inc. filed a Complaint in this Court for exoneration from, or limitation of, liability. On the same day, this Court entered an Order Directing Issuance of Notice and Restraining Suits. This Order directed that notice be published and individual notice be given to all known persons involved in the collision. The Order also directed all persons claiming damages from the collision involving the M/V Herman Crown and Barge RMT 315 to file a claim in this court. Finally, the Order stayed and restrained the institution and prosecution of any suits, actions, or legal proceedings arising out of this collision in any court against IMT, the M/V Herman Crown, or Barge RMT 315.

As a result of the Court's Order, all five of the Claimants have filed claims with this Court. These Claimants have filed the instant Joint Motion to Modify Stay because they would prefer to litigate all of their claims in the state courts of Illinois. Specifically, the Claimants have submitted certain stipulations so that this Court may retain exclusive jurisdiction as to all limitation of liability issues, with the stay remaining in effect as against any entry of judgment and consequent enforcement of any recovery achieved in state court or related proceeding pending the outcome of the limitation proceeding. Claimants argue that it is necessary for this Court to partially modify the stay as limited by their stipulations in order to rectify the conflict between the "savings to suitors" clause, 28 U.S.C. § 1333(1), which permits a claimant to litigate his maritime claims in either state or federal court, and the Limitation of Shipowners' Liability Act, 46 U.S.C. §§ 183--189, which allows a shipowner to file a claim in federal court and limit its liability to the value of the ship and its cargo.

IMT opposes the Claimants motion to lift the stay arguing that Claimants do not qualify for a modification of the stay because the stipulations that they have asserted do not protect IMT's statutory rights as guaranteed by the Shipowners' Liability Limitation Act (the "Limitation Act"). IMT argues (1) its rights are not protected because Billy Joe Thomas has not agreed to the stipulations and therefore the stipulations do not adequately protect IMT from a contribution claim by Billy Joe Thomas, and (2) even if Billy Joe Thomas agreed to the stipulations, the stay should not be lifted because the Claimants do not qualify as a single claimant under Seventh Circuit case law.

DISCUSSION

A. Joint Motion to Modify the Stay

In admiralty cases such as this, a federal court should abstain from exercising its jurisdiction and allow the case to proceed in state court in two situations. In re McCarthy Bros Co., 83 F.3d 821, 831 (7th Cir. 1996). First, where the value of the limitation fund, which represents the value of the vessel and its cargo, exceeds the aggregate of the total claims filed against the shipowner. Id. Second, where a single claimant brings an action against the shipowner seeking damages in excess of the value of the limitation fund and the claimant makes sufficient stipulations to protect the shipowner's rights as guaranteed by the Limitation Act. Id. Here, the Claimants do not assert that the value of the limitation fund exceeds the aggregate of the total claims filed against the shipowner. However, the Claimants do argue that this Court should abstain because they have submitted stipulations that allow this Court to consider their claims as those of a single claimant. IMT argues that the Claimants cannot properly be characterized as a single claimant and the stipulations that the Claimants have submitted are insufficient to protect IMT's rights.

IMT initially argued that the stipulations submitted by the Claimants were insufficient because they were not signed by Billy Joe Thomas, the operator of the tug boat. Billy Joe Thomas, however, was not a claimant in the limitation proceeding. As a result of a hearing regarding the pending motions in this case, Billy Joe Thomas has submitted a Withdrawal of Claims indicating that he will not seek indemnification or contribution from IMT as a result of the accident that occurred on May 21, 2004. In light of this agreement, the Court finds that the failure of Billy Joe Thomas to agree to the stipulations does not prevent the Court from modifying the stay because IMT is not subject to the possibility of additional liability above and beyond the amount of the limitation fund. Accordingly, it is necessary for the Court to address the adequacy of the stipulations. If the stipulations are adequate to protect IMT's right to limitation, the stay will be modified.

The Claimants' stipulations are as follows:

1. Claimants concede and agree that The United States District Court for the Central District of Illinois has exclusive jurisdiction over all limitation of liability issues which arose out of a collision occurring on or about May 21, 2004 between a pleasure vessel ...


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