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Complaint of Urbelis

United States District Court, D. Massachusetts

August 31, 2016

COMPLAINT OF BENJAMIN P. URBELIS FOR EXONERATION FROM AND/OR LIMITATION OF LIABILITY, CIVIL AND MARITIME

          MEMORANDUM AND ORDER

          ALLISON D. BURROUGHS, U.S. DISTRICT JUDGE

         In this maritime action, Petitioner Benjamin P. Urbelis (“Mr. Urbelis”) seeks limitation of liability under 46 U.S.C. § 30501 et seq., in connection with a boating accident on the M/V NAUT GUILTY (the “vessel”), a 29-foot power boat owned by Mr. Urbelis. Before the Court is Claimant Nicole Berthiaume (“Ms. Berthiaume”)'s Motion to Stay this action. [ECF No. 27]. Urbelis opposes the Motion [ECF No. 53], as do two additional Claimants, Volvo Penta of the Americas, LLC [ECF No. 47], and Chaparral Boats, Inc. [ECF No. 52]. For the reasons set forth in this Memorandum and Order, Ms. Berthiaume's Motion to Stay must be DENIED.

         I. BACKGROUND

         On May 30, 2015, the vessel departed Charlestown, Massachusetts and proceeded upon a voyage into Boston Harbor. Aboard the vessel were Mr. Urbelis, Ms. Berthiaume, age 19, and a number of other individuals. At approximately 7:00 p.m., the vessel was anchored off of Spectacle Island. Several people, including Ms. Berthiaume, jumped off of the vessel to swim. Subsequently, someone aboard the vessel started the engines. As Ms. Berthiaume attempted to swim back to the boat, she was severely injured by the engine's moving propellers. Her injuries included, among other things, the loss of her dominant right arm below the shoulder, and other serious lacerations.

         On June 17, 2015, Mr. Urbelis filed his Complaint in this action [ECF No. 1], in which he alleges that the incident and Ms. Berthiaume's resulting injuries were not caused or contributed to by any negligence or fault on the part of Mr. Urbelis, or any other person for whom Urbelis was responsible. Accordingly, Mr. Urbelis seeks exemption from, and/or limitation of liability for any damages or injuries resulting from the accident, pursuant to 46 U.S.C. § 30501 et seq., which is commonly known as the Limitation of Liability Act (the “Act”).

         The purpose of the Act was “to encourage the development of American merchant shipping.” Complaint of Dammers & Vanderheide & Scheepvaart Maats Christina B.V., 836 F.2d 750, 754 (2d Cir. 1988) (quoting Lake Tankers Corp. v. Henn, 354 U.S. 147, 150 (1957)). “The Limitation Act achieves this purpose by ‘exempting innocent shipowners from liability, beyond the amount of their interest [in the vessel].'” In re Self, 172 F.Supp.2d 813, 816 (W.D. La. 2001) (quoting Norwich & N.Y. Transp. Co. v. Wright, 80 U.S. 104, 121 (1871)). Specifically, a vessel owner facing potential liability for a maritime accident may file a petition with the federal district court seeking exoneration from or limitation of liability. “Provided that the accident in question occurred without the vessel owner's ‘privity or knowledge, ' the Limitation Act limits the owner's liability to the value of his interest in the vessel and freight.” In re Self, 172 F.Supp.2d at 816 (citation omitted).[1]

         After the shipowner files a petition to limit liability under the Act, the district court “is empowered to issue a restraining order or an injunction staying all other proceedings against the shipowner arising out of the same mishap.” Complaint of Dammers, 836 F.2d at 755 (internal quotations, alterations, and citation omitted); see also Supp. R. Admiralty or Maritime Claims, Rule F(3).[2] The district court must also notify “all potential claimants to file their claims against the shipowner in the admiralty court within a specified time period.” Complaint of Dammers, 836 F.2d at 755; see also Supp. R. Admiralty or Maritime Claims, Rule F(4). “Thereafter, in a proceeding known as a concursus, the district court, sitting in admiralty without a jury, determines ‘whether there was negligence; if there was negligence, whether it was without the privity and knowledge of the owner; and if limitation is granted, how the [limitation] fund should be distributed.'” Complaint of Dammers, 836 F.2d at 755 (quoting Universal Towing Co. v. Barrale, 595 F.2d 414, 417 (8th Cir. 1979) (alteration in original)). Courts have described this process as a “marshalling of assets, ” followed by a “distribution pro-rata of an inadequate fund amongst claimants, none of whom can be paid in full.” Complaint of Dammers, 836 F.2d at 755 (quoting In re Moran Transp. Corp., 185 F.2d 386, 389 (2d Cir. 1950)).

         Soon after Mr. Urbelis filed his Complaint in this action, the Court appointed an appraiser. [ECF No. 8]. After inspecting the vessel, the appraiser determined that the fair market value of the M/V NAUT GUILTY was $29, 000, and the value of its pending freight was $0.00. [ECF No. 12]. In addition, on August 10, 2015, the Court issued an Order directing the issuance of notice to all potential claimants, and restraining all other lawsuits, actions, or proceedings against Mr. Urbelis, pending the resolution of this Limitation of Liability action. [ECF No. 15]. The Court's Order had the effect of staying a separate civil action that Ms. Berthiaume filed against Mr. Urbelis and other defendants in the Massachusetts Superior Court for Suffolk County on July 6, 2015 (the “state-court action”). See [ECF No. 53-1].[3]

         In September 2015, Ms. Berthiaume filed an Answer to Mr. Urbelis' Complaint. [ECF No. 22]. In addition, two new Claimants - Volvo Penta of the Americas, LLC (“Volvo”) and Chaparral Boats, Inc. (“Chaparral”) came forward to file Claims and Answers. [ECF Nos. 20, 23]. Volvo manufactured the boat engines that were in use at the time of the accident, and Chaparral manufactured the vessel itself. Both Volvo and Chaparral deny any liability in connection with the incident, and each claims that it is entitled to complete indemnification from Urbelis and/or other parties, in the event a judgment is rendered against it. Further, both Chaparral and Volvo expressly request attorney's fees and costs as part of their indemnity claims. Alternatively, Volvo and Chaparral assert that they are entitled to contribution from Urbelis and/or other parties for any judgment collected from them.

         After the deadline to file claims had passed, Ms. Berthiaume filed the instant Motion to Stay [ECF No. 27], in which she asks the Court to stay this action and allow her to try her claims against Mr. Urbelis and others before a jury in Massachusetts state court. Ms. Berthiaume contends that this Limitation of Liability action is essentially a single-claimant proceeding, as no other injured parties have come forward as claimants. She argues that in such a case, the Limitation of Liability action may be stayed until the state-court action is resolved, as long as Mr. Urbelis' right to pursue limitation of liability in federal court is preserved and protected by stipulation. Specifically, Ms. Berthiaume has offered a number of stipulations that she claims adequately protect Mr. Urbelis' rights. Those proposed stipulations are as follows:

PROPOSED STIPULATION NO. 1: Berthiaume concedes and agrees that the United States District Court for the District of Massachusetts has exclusive jurisdiction over all limitation of liability issues which may arise from the boating accident which occurred on May 30, 2015 in Boston, Massachusetts, and that Urbelis is entitled to and has the right to litigate all issues relating to limitation of liability pursuant to the provisions of 46 U.S.C. § 30501, et seq.

         PROPOSED STIPULATION NO. 2: Berthiaume concedes and agrees to waive any claim(s) of res judicata pertaining to the issue of limitation of liability based on any judgment obtained in state court or other proceeding based on the boating accident which occurred on May 30, 2015 in Boston, Massachusetts.

PROPOSED STIPULATION NO. 3: Berthiaume concedes and agrees that the United States District Court for the District of Massachusetts has exclusive jurisdiction to determine the value of the limitation fund, and so long as Berthiaume has had an opportunity to obtain an independent appraisal or related evaluation, Berthiaume will stipulate to the value of the limitation fund as determined by said court.
PROPOSED STIPULATION NO. 4: Berthiaume concedes and agrees that should a judgment be obtained in any court or other proceeding and should the United States District Court for the District of Massachusetts determine that limitation of liability is appropriate, Berthiaume will seek only her respective pro rata share(s) of the limitation fund as measured by the respective proportions of any judgment(s) obtained in any state court or other proceeding.
PROPOSED STIPULATION NO. 5: Berthiaume concedes and agrees that should a judgment be obtained on behalf of Berthiaume in any state court or other proceeding against Urbelis and/or other liability parties who may cross-claim or claim against Urbelis, and if the United States District Court for the District of Massachusetts determines that limitation of liability is appropriate and establishes a limitation fund, and said judgment(s) is/are in excess of the value of said limitation fund, in no event will Berthiaume seek to enforce said judgment(s) insofar as same may expose Urbelis to liability in excess of the limitation fund.

[ECF No. 28].

         Mr. Urbelis, Volvo, and Chaparral all oppose Ms. Berthiaume's Motion to Stay. They argue that this is not a single-claimant proceeding, because Chaparral and Volvo have also filed claims against Urbelis, seeking indemnification and/or contribution. They contend that the presence of multiple claims gives rise to competing claims for the limitation fund. They further argue that Ms. Berthiaume's proposed stipulations do not adequately ...


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