Opinion
Civil Action No: 02-1073 Section: "R"(2)
July 30, 2002
ORDER AND REASONS
Before the Court is Mike's, Inc., plaintiff-in-limitation, which moves for leave to file an amended Complaint in Limitation that joins as petitioner Turner Marine Fleeting, Inc. d/b/a Pelican Marine Fleeting ("Pelican"). Pelican's claim has prescribed. Because the Court finds that the amended complaint does not relate back to the filing of the original complaint, the Court DENIES leave to amend the complaint in limitation.
I. Background
On or about August 11, 1999, claimant, Edward Hebert, Jr., was a seaman aboard the M/V JIM MARKO, a vessel owned and/or operated by the petitioner and defendant-in-claim, Mike's, Inc. At the time, Hebert was employed by Pelican Marine Fleeting ("Pelican"), the charterer of the M/V JIM MARKO. Hebert slipped, fell and allegedly sustained various injuries while aboard petitioner's vessel. Hebert filed suit against Mike's, Inc. and Pelican in Louisiana state court and on October 16, 2001, both Mike's, Inc. and Pelican received written notice of the suit. Nearly six months later, on April 10, 2002, Mike's, Inc. filed a complaint in limitation before this Court. Six weeks later, Mike's, Inc. moved for leave to amend this complaint in limitation in order to add Pelican as petitioner.
II. Discussion
A. Prescription
The Limited Liability Act, 46 U.S.C. app. § 181, et seq. (the "Limitation Act"), allows a shipowner to limit liability for damages arising from a maritime accident to the "amount or value of the interest of such owner in such vessel, and her freight then pending." 46 U.S.C. § 183(a). By Congressional design, the Limitation Act is designed to protect shipowners when the losses claimed exceed the value of the vessel and its freight. See Magnolia Marine Transp. Co. v. Laplace Towing Corp., 964 F.2d 1571, 1575 (5th Cir. 1992). Charterers "shall be deemed the owner" of the vessel and may seek limitation if they "man, victual, and navigate (the) vessel" at their own expense. 46 U.S.C. § 186.
Admiralty Rule F governs the procedure for limitation proceedings in federal court. The Rule states that "[n]ot later than six months after receipt of a claim in writing, any vessel owner may file a complaint in the appropriate district court, as provided in subdivision (9) of this rule, for limitation of liability pursuant to statute." FED R. Civ. P. F(7). The six-month prescriptive period was added to 46 U.S.C. § 185 by Congress in 1936. If a petition is not filed within the six month period, the Court must dismiss it as untimely. Exxon Shipping Co. v. Cailleteau, 869 F.2d 843, 846 (5th Cir. 1989).
The Fifth Circuit has noted that a shipowner may choose to set up a defense of limitation of liability in one of two ways. First, the shipowner may file a § 185 petition in a federal district court within the six-month time period. Vatican Shrimp Company, Inc., v. Solis, 820 F.2d 674, 678 (5th Cir. 1987); see also Karim v. Finch Shipping Company, LTD., 265 F.3d 258, 263 (5th Cir. 2001). Second, the shipowner may establish the defense by pleading the substantive provisions of § 183 in a properly filed answer in any court. While § 183 does not itself contain a six-month prescription period, the Fifth Circuit has noted that "to ensure access to limitation of liability, shipowners must . . . file § 185 petitions in federal court to account for the possibility that the petitions may be contested." Karim, 265 F.3d at 266 n. 10. This is because defensive pleading in the state court answer does not provide the federal court with jurisdiction to hear the shipowner's limitation claim. Vatican Shrimp Company, 820 F.2d at 677. Therefore, "a shipowner cannot always rely upon raising limitation in a state court answer because, once the limitation is contested, it falls within the exclusive jurisdiction of a federal admiralty court. As such, if a shipowner has not filed its § 185 petition within the six-month time frame, it forfeits that defense." Karim, 265 F.3d at 266 n. 10.
The prescriptive period requires the shipowner to act promptly to gain the benefit of the right to limit liability, id., and the rule prevents the shipowner from waiting to file until later stages of the state court litigation. In re The Specialty Marine Services, Inc., 1999 WL 147680, *1 (E.D. La. 1999). pelican failed to file a complaint in federal court for limitation of liability within the six-month prescriptive period set forth in § 185. Thus Pelican's claim for limitation has prescribed.
B. Relation Back
Whether to grant a Rule 15(a) motion to amend a complaint is committed to the sound discretion of the district court. Jacobsen v. Osborne, 133 F.3d 315, 318 (5th Cir. 1999). Nevertheless, the motion should not be denied unless there is a substantial reason to do so. Id. Adequate grounds for the denial of a Rule 15(a) motion to amend include undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party, and futility of amendment. Id.; Ynclan v. Department of the Air Force, 943 F.2d 1388, 1391 (5th Cir. 1991). "Futility of amendment" includes situations in which a complaint is amended to raise claims that have prescribed. Jacobsen, 133 F.3d at 318. Therefore, the proposed amendment is futile unless, under Rule 15(c), it relates back to the date of original filing.
Rule 15(c), as amended in 1991 and 1993, provides for relation back of amendments under the following circumstances:
An amendment of a pleading relates back to the date of original pleading when
(1) relation back is permitted by the law that provides the statute of limitations applicable to the action, or
(2) the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, or
(3) the amendment changes the party or the naming of the party against whom a claim is asserted if the foregoing provision (2) is satisfied and, within the period provided by Rule 4(m) for service of the summons and complaint, the party to be brought in by amendment (A) has received such notice of the institution of the action that the party will not be prejudiced in maintaining a defense on the merits, and (B) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the party.
FED. R. Civ. PRO. 15(c). In a limitation proceeding, the petitioner shipowner asserts a claim that is defensive in nature. Nevertheless, when one petitioner seeks to amend its complaint to join another petitioner the situation is most akin to an amendment adding a plaintiff.
Although Rule 15(c) does not address the relation back of amendments that propose to add or substitute plaintiffs, the Fifth Circuit has looked to Rule 15(c) when faced with such situations. Summit Office Park v. United States Steel Corporation, 639 F.2d 1278, 1282 (5th Cir. 1981) ; Williams v. United States, 405 F.2d 234, 236 (5th Cir. 1968). Indeed the Advisory Committee Note to Rule 15(c) states that "the attitude taken in [the rule] toward change of defendants extends by analogy to amendments changing plaintiffs." FED. R. Civ. PRO. 15(c), Advisory Committee Note; but see Newell v. Harrison, 779 F. Supp. 388, 391 (E.D. La. 1991).
An amendment that seeks to add a new plaintiff has been found to relate back (1) when it substitutes the real party in interest, Allied International, Inc., v. International Longshoremen's Association, 814 F.2d 32, 36 (1st Cir. 1987), (2) when the new plaintiff shares an identity of interest with the original plaintiff so as to put the defendant on notice that the new plaintiff was always involved with the litigation, Besig v. Dolphin Boating and Swimming Club, 683 F.2d 1271, 1278 (9th Cir. 1982), (3) when the claims of the new plaintiff are identical to those of an original plaintiff and the defendant was on notice of the claim, Andujar v. Rogowski, 113 F.R.D. 151, 158 (S.D. N.Y. 1986), and (4) when the original plaintiff asserts a claim in a different capacity if the defendant was already on notice of the claim, Williams, 405 F.2d at 238-39. Conversely, an amendment that seeks to add a new plaintiff asserting a different claim will not relate back. Summit Office Park, 639 F.2d at 1282; Leachman v. Beech Aircraft Corp., 694 F.2d 1301 (D.C. Cir. 1982); Sanderson v. H.I.G. Capital Management, Inc., 2001 WL 96384, *4 (E.D. La. 2001); WRIGHT MILLER, Federal Practice and Procedure: Civil § 1501. The Fifth Circuit has noted that "notice is the critical element involved in Rule 15(c) determinations." Williams, 405 F.2d at 236.
In Olech, the court articulated a four-factor inquiry to determine whether the Rule 15(c) requirements of fair notice and lack of prejudice have been met. "These factors include whether or not (1) the new plaintiff's claim arose out of the same conduct, transaction or occurrence set forth in the original complaint; (2) the new plaintiff shares an identity of interest with the original plaintiff; (3) the defendants have fair notice of the new plaintiff's claim; and (4) the addition of the new plaintiff causes the defendants prejudice." Olech v. The Village of Willowbrook, 138 F. Supp. 1036, 1044 (N.D. Ill. 2000) (internal citations omitted).
See also Atlantis Plastics Corporation v. Sammons, 558 A.2d 1062, 1065 (Del.Ch. 1989).
Here, the amended complaint does not relate back because it seeks to add an entirely new petitioner asserting a different claim for limitation. First, Mike's, Inc., the vessel owner, and Pelican, the charterer, are distinct corporate entities. Nothing in the record indicates that the ownership or management of the companies overlaps in any way. Although both companies may wish to limit liability for the same accident, vessel owners and charterers are often adverse parties in personal injury maritime actions. See ADM/Growmark River System, Inc., v. Lee Roy Lowry, 234 F.3d 881 (5th Cir. 2000); Western Tankers Corporation v. United States, 387 F. Supp. 487 (S.D. N.Y. 1975). Since the two parties are distinct, they do not share an "identity of interest" such that when Mike's, Inc. petitioned for limitation, Edward Hebert should have been on notice that Pelican was also seeking imitation of liability.
The term "identity of interest" is used to determine whether two parties are "are so closely related in their business operations or other activities that the institution of an action against one serves to provide notice of the litigation to the other." Jacobsen, 133 F.3d at 320. The analysis generally collapses into one of notice. Williams, 405 F.2d at 238; Nielsen v. Professional Financial Management, Ltd., 682 F. Supp. 429, 436 (D. Minn. 1987).
When an amended complaint seeks to add a new defendant, the inquiry is whether the new defendant shares an identity of interest with the original defendant such that the new defendant had clearly been put on notice of the litigation. For example, an identity of interests exists between "John Doe" sheriffs' deputies named as defendants in an original complaint and the actual officers named in an amended complaint because the city's attorneys had been on notice of the litigation. Jacobsen, 133 F.3d at 320. In Lagana, a plaintiff who had originally filed suit against a vessel owner was granted leave to amend to add a bareboat charterer because the record indicated that when the plaintiff sued the owner, the charterer had been put on notice. Lagana v. Toyofuki Kaiun, 124 F.R.D. 555, 558 (S.D. N.Y. 1989). In Logwood, by contrast, the plaintiff was not granted leave to amend a complaint against a vessel owner to add a time charterer because the time charterer had not been on notice. Logwood v. Apollo Marine Specialists, Inc., 772 F. Supp. 925 (E.D. La. 1991).
When amended complaints seek to add new plaintiffs, the inquiry is whether the original complaint put the defendant on notice of the claim attempted to be asserted by the new plaintiff. In Leachman, for example, an existing plaintiff and a corporation wholly owned by that plaintiff were deemed not to share an identity of interests because there was no showing that the defendant was on notice of the relationship between the existing plaintiff and her wholly-owned corporation. Leachman, 694 F.2d at 1309. Similarly, in the case before the Court, it may not be said that the original complaint filed by Mike's, Inc. served to put Hebert on notice of the Pelican's claim for limitation. As stated above, Mike's, Inc. and Pelican are distinct and potentially adverse corporate entities. To be sure, Hebert had sued both Mike's, Inc. and Pelican in state court before the proposed amendment. Hebert's knowledge that he had a claim against the charterer, however, does not mean that he had notice that the charterer has a limitation defense.
Second, although the claim attempted to be asserted by Pelican arises out of the same transaction or occurrence as the one asserted by Mike's, Inc., it is nevertheless a new and distinct claim. A vessel owner (or bareboat charterer) which seeks limitation must show that it lacked privity or knowledge of the negligence. Kristie Leigh Enterprises, Inc., v. American Commercial Lines, Inc., 72 F.3d 479, 481 (5th Cir. 1996). The Fifth Circuit has explained that "privity or knowledge, which is sometimes described as `complicity in the fault,' extends beyond actual knowledge to knowledge that the ship owner would have obtained by reasonable investigation." Cupit v. McClanahan Contractors, Inc., 1 F.3d 346, 348 (5th Cir. 1993). Whether Mike's, Inc., the owner, lacked privity or knowledge is a distinct inquiry from whether Pelican, the charterer, lacked privity or knowledge. Defending against Pelican's claim will require its own discovery and different witnesses. This scenario is distinguishable from the one in Williams, in which an amended complaint belatedly introduced a seemingly distinct claim. There, however, the plaintiff was already involved in the lawsuit in a representative capacity. Williams, 405 F.2d at 238; see also Fleck v. Cablevision VII, Inc., 799 F. Supp. 187, 191 (D. D.C. 1992). Mike's, Inc., by contrast, did not assert Pelican's claim for limitation in its original complaint, and Pelican was not already a plaintiff in this lawsuit in some other capacity. For all of the foregoing these reasons, the amended complaint does not relate back to the original complaint, and the Court denies permission to file the amended complaint because the amendment would be futile.
The two cases that Mike's, Inc. relies upon in support of its motion do not alter the Court's conclusion. In Complaint of Lady Jane, 818 F. Supp. 1470 (M.D. Fl. 1992), the original petitioner, the sole shareholder of a corporation, was allowed to amend its complaint in limitation to join the corporation as petitioner. Importantly, the court noted that "as to this date no claim has been asserted against [the corporation.]" Id. at 1474. Because the corporation had not received a claim in writing, the six-month prescriptive period did not bar the corporation from filing a complaint in limitation (or from joining the existing complaint in limitation). Indeed the prescriptive period as to the corporation had not even begun to run. Thus, the amended complaint in Lady Jane, unlike the amended complaint here, did not have to relate back to the original complaint.
The Lady Jane court further noted that the complaint as amended did not prejudice the claimant, added no new counterclaims against the claimant, and added no new transactions or occurrences to the case. Complaint of Lady Jane, 818 F. Supp. at 1475.
The second case that Mike's, Inc. relies upon in support of its motion is Petition of A/S J. Ludwig Mowinckels Rederi, 268 F. Supp. 682, 682 (S.D. N.Y. 1967). The complaint as amended in Mowinckels did not propose to join any new party that had not already filed a timely complaint in limitation. Id. at 685-86. Moreover, in Mowinckels it was the court itself that ordered the complaint be amended. Id.
A distilled version of the complex facts of Mowinckels is as follows. Bloomfield Steamship Company owned and operated a vessel that collided with another vessel owned and operated by Mowinckels. Mowinckels, 268 F. Supp. at 685. The owner of cargo aboard Mowinckels' vessel sued both Bloomfield and Mowinckels in separate actions, putting both vessel owners on notice. Id. Within six months, Bloomfield filed a complaint in limitation in federal court in New York. Id. The day after (and also within the six-month prescription period), Mowinckels filed a complaint in limitation in federal court in New York, though it excepted Bloomfield. Id. The owner of the cargo moved to dismiss Mowinckels' complaint in limitation as deficient under Rule 51 of the Rules of Practice in Admiralty and Maritime Cases for excepting Bloomfield. Id. The court agreed that the complaint in limitation was deficient, and it ordered Mowinckels to amend the complaint to add Bloomfield. Id. Bloomfield then moved to dismiss the amended complaint for failure to file within the six-month prescription period. The court, noting that "there is no dispute that Mowinckels filed its original petition within six months," denied Bloomfield's motion. Id. at 687.
Mike's, Inc. asserts that it has always been the practice of American Admiralty Courts to allow the parties every opportunity to place their whole case before the court and to enable the court to administer substantial justice between the parties. Mowinckels, 268 F. Supp. at 689. General notions of substantial justice, however, do not empower a court to ignore both case law on relation back and statutes setting forth prescriptive periods. Mike's, Inc. fails to present any compelling justification excusing Pelican's delay. Indeed, Pelican was sued by Hebert in the same state court lawsuit that named Mike's, Inc. as a defendant. The Court thus declines to allow Pelican to file a late limited liability proceeding. The right to bring a limitation proceeding in federal court is a right bestowed by Congress upon only those vessel owners who respond to potential liability in a timely manner.
III. Conclusion
For the foregoing reasons, the Court denies the motion of Mike's, Inc. for leave to amend its complaint in limitation.