Opinion
Civil Action No. 99-0951, C/W NO. 99-1346, C/W NO. 99-0984, SECTION "N"
August 17, 2001
ORDER AND REASONS
Before the Court are defendant Diamond "B" Marine Services motions to enjoin further prosecution of the third party demand of Texaco Exploration and Production in State court and to hold Texaco Exploration and Production and its attorneys in contempt and defendant Texaco's motion to recognize Texaco's contractual rights to Diamond B's insurance proceeds. For the following reasons, the defendant Diamond B's motions are DENIED and Texaco's motion is DENIED.
A. BACKGROUND
This case arises from the March 25, 1999 collision of Trico Marine's downbound vessel, the OSV CANE RIVER, and Diamond B Marine's upbound vessel, C/B MISS BERNICE, while operating on the Mississippi River below Venice, Louisiana. The issue now presented is whether this Court may enjoin the prosecution of the third party demand by Texaco against Diamond B in a state court suit arising out of the same accident.
As this matter has already resulted in several written rulings, the Court shall set forth only those facts necessary to the instant motions.
Following the March 25, 1999 collision of the CANE RIVER and the MISS BERNICE, three cases were filed in federal court. First, Trico filed suit in federal court against Diamond B for damages in admiralty. Subsequently, both Trico and Diamond B filed petitions for exoneration and/or limitation of liability, and these proceedings were consolidated with Trico's original suit. On May 3, 1999, this Court issued an order enjoining the further prosecution of all actions and the commencement of any action against Diamond B and its insurers pursuant to 46 U.S.C. § 181, et seq. Lonnie Fontenot, Wayne Thibodaux and Alan LeBlanc, all of whom were passengers aboard the MISS BERNICE at the time of the collision, filed claims in both of the limitation proceedings, individually and on behalf of their dependent children.
"Trico" refers collectively to Trico Marine Assets, Inc. and Trico Marine Operators, Inc., the owners/operators/owners pro Hac vice of the CANE RIVER. See Trico's Memorandum in Support, p. 2 n. 2.
"Diamond B" refers to Diamond B Marine Services, Inc., the owner and operator of the MISS BERNICE.
Fontenot, Thibodaux and LeBlanc were all Texaco employees at the time of the accident. On April 7, 2000, Texaco Exploration Production Inc. ("Texaco") and Cigna and/or Ace U.S.A., Texaco's compensation carrier, moved for leave to file a petition of intervention, which was granted on May 17, 2000.
On March 23, 2000, the passenger claimants filed a Petition for Damages in Louisiana state court against the captain of the MISS BERNICE, the captain and mate of the CANE RIVER, and Texaco. In most respects, the state court Petition mirrors the federal court claims. As a result of the filing of the state court suit, Trico and Diamond B moved this Court to enjoin the state court from entertaining the passenger claimants suit on April 28, 2000. On June 5, 2000, this Court, while acknowledging that the passenger claimants were clearly attempting to assert claims that this Court has ruled they cannot assert as a matter of law, denied the motions to enjoin the state court action. In their arguments to enjoin the state court action, Trico and Diamond B claimed that this Court should enjoin the state court action under the authority of the Limitation of Vessel Owner's Liability Act, 46 U.S.C.App. § 181 et seq. ("Limitation Act") and the Anti-Injunction Act, 28 U.S.C. § 2283. This Court refused to enjoin the state court action under the Limitation Act stating that "the Limitation of Liability Act is very specific about applying only to ship owners." Terminals Partnership v. Hilimore Maritime Inc., 2000 WL 351429 (E.D. La. April 3, 2000). Since the state action did not involve Trico nor Diamond B, the Limitation Act did not apply to require enjoining the state court suit.
On June 22, 2001, Texaco, a defendant in the state court action, filed a third party demand against Diamond B in state court. Diamond B now moves this court to enjoin Texaco's third party demand against Diamond B as a violation of the stay order granted by this Court on May 3, 1999 and requests that this Court hold Texaco and its attorneys in contempt for violating said order. Diamond B asks the Court to enjoin the third party demand pursuant to its authority under the Anti-Injunction Act, 28 U.S.C. § 2283.
B. LAW AND ANALYSIS 1. The Anti-Injunction Act
Diamond B argues that the Anti-Injunction Act authorizes the Court to enjoin Texaco's third party demand against Diamond B in the state court action. The Anti-Injunction Act forbids a federal court from granting an injunction to stay proceedings in a state court except (1) as previously authorized by Act of Congress, or (2) where necessary in aid of its jurisdiction, or (3) to protect or effectuate its judgment. See 28 U.S.C. § 1651. In general, these three exceptions are narrowly construed, see Next Level Communications LP v. DSC Communications Corp., 179 F.3d 244, 249 (5th Cir. 1999) (citing Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 146, 108 S.Ct. 1684, 100 L.Ed.2d 127 (1988), and Atlantic Coast Line R.R. v. Brotherhood of Locomotive Eng'rs, 398 U.S. 281, 286, 90 S.Ct. 1739, 26 L.Ed.2d 234 (1970)), and any doubts as to the applicability of the Act are to be resolved in favor of allowing the state court action to proceed. See Texas Employers' Ins. Ass'n v. Jackson, 862 F.2d 491, 499 (5th Cir. 1988) (en banc).
The Anti-Injunction Act permits injunctions against state court proceedings where Congress has expressly authorized such an injunction. The Limitation Act authorizes a court to enjoin state court actions brought against ship owners, corporate officers and insurers of a vessel. While the Limitation Act does not authorize this Court to enjoin a state court action against captains, mates, or non-ship-owning employers, once a defendant in the state court suit attempts to join with it as a defendant the owner and insurers of a vessel, the Limitation Act applies and the federal court can enjoin the action if the claims fall within the scope of the Limitation Act. As discussed below, if the claims are based on a personal contract between the parties, the Limitation Act does not apply.
The second exception, allowing injunctions "necessary in aid" of a court's jurisdiction, is inapplicable. In general, the "necessary in aid of jurisdiction" exception has been interpreted to permit a federal court to enjoin a later state action involving property in the custody of the federal court, but not a state action in personam involving the same subject matter. See CHARLES ALAN WRIGHT, LAW OF FEDERAL COURTS § 47 at 283 (4th ed. 1983). Although some courts have expanded this exception to include certain subject areas not in rem, e.g., school desegregation, see Id. at 284, Diamond B has pointed to no case in which a court has expanded this exception to the present situation.
The third exception to the Anti-Injunction Act, which permits a federal court to issue an injunction "to protect or effectuate its judgment," is commonly referred to as the "relitigation exception" because it "was designed to permit a federal court to prevent state litigation of an issue that previously was presented to and decided by the federal court. . . ." Next Level, 179 F.3d at 249 (quoting Choo, 486 U.S. at 147, 108 S.Ct. 1684). Diamond B asserts that the third party demand seeks to re-litigate issues already tried before this Court. Yet Diamond B does not point to any issues raised in the third party demand that were litigated in the Limitation proceeding before this Court. More fundamentally, the relitigation exception requires that the judgment in the prior action be final. J.R. Clearwater, Inc. v. Ashland Chemical Co., 93 F.3d 176, 179 (5th Cir. 1996). As the Limitation action is still pending before this Court, there has been no final action.
Diamond B's motion to enjoin, p. 3.
2. The Personal Contract Doctrine
Texaco argues that its claims against Diamond B arise out of contractual agreements between Texaco and Diamond B and are subject to the Personal Contract Doctrine such that the Limitation Act does not prohibit its claims against Diamond B. Texaco asserts that its claims are not within the scope of the stay order issued by this Court. The Limitation Act permits the owner of a vessel "to enjoin all pending suits and to compel them to be filed in a special limitation proceeding so that liability may be determined and limited to the value of the shipowner's vessel and freight pending." 2 Thomas J. Schoenbaum, Admiralty and Maritime Law § 15-1, at 299. (2d ed. 1994). Title 46 U.S.C. § 183 (a) states that
Texaco's memorandum in opposition, p. 2.
the liability of the owner of any vessel, whether American or foreign, for any . . . loss or destruction by any person of any property, goods, or merchandise shipped or put on board 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 such vessel, and her freight then pending.
The Limitation Act limits a shipowner's liability to the value of the vessel and freight pending when the owner is sued "for acts of the master or crew done without [the owner's] privity or knowledge." See Mediterranean Shipping Company S.A. Geneva v. Pol-Atlantic, 229 F.3d 397, 402 (2nd Cir. 2000), citing American Car Foundry Co. v. Brassert, 289 U.S. 261, 264, 53 S.Ct. 618, 77 L.Ed. 1162 (1933). Personal contracts entered into by a shipowner are not subject to the Limitation Act. The Supreme Court has held that while shipowners can limit their liability under the Limitations Act for acts of the master and crew arising out of the conduct of the master and crew, the shipowner remains liable for his own fault, neglect, and contracts. See American Car, 289 U.S. at 264;Richardson v. Harmon, 222 U.S. 96, 106, 32 S.Ct. 27, 56 L.Ed. 110 (1911). The personal contract doctrine "deprives a shipowner of the benefits of limitations and exposes him to the full burden of liability his actions produced." Signal Oil Gas Company v. Barge W-701, 654 F.2d 1164, 11168 (5th Cir. 1981). "In application this is an equitable doctrine based on the proposition that a shipowner should not be able to promise an undertaking or performance that was within his personal control and then turn around and limit liability when his performance was faulty." 2 Schoenbaum § 15-8, at 318; see Richardson, 222 U.S. at 106. "[T]he test of the personal contract exception is . . . whether the obligation (and therefore the breach) was one the shipowner was personally bound to perform, rather than one contemplated he would delegate to his agents and servants." 2 Schoenbaum § 15-8, at 318.
Texaco's third party demand against Diamond B arises out of the Contract for Marine Transportation ("Contract") between Texaco and Diamond B. Texaco has three claims against Diamond B arising out of the Contract which are raised in the state action. First, Texaco points to the Contract to show that Diamond B warranted the seaworthiness of its vessels. Texaco's second claim against Diamond B is for indemnity and contribution which was expressly provided for in the Contract. Texaco's third claim is that the Contract provided that Diamond B would provide adequate insurance for any vessel chartered to Texaco and that Texaco would be named an additional insured under Diamond B's policy. The Supreme Court has established that the Limitation Act "does not protect a vessel owner from liability arising out of personal contractual obligations." Kattelman v. Otis Engineering Corp., 701 F. Supp. 560, 563. (E.D. La. 1988). When a shipowner personally warrants the seaworthiness of a vessel, such warranty is a personal contract and is not subject to the limitation of the Limitation Act. See Mediterranean Shipping, 229 F.3d at 403; Pendelton v. Benner Line, 246 U.S. 353, 355, 38 S.Ct. 330. 62 L.Ed. 770 (191 8). Likewise, contracts for indemnity and contribution are personal as are insurance agreements. See Kattleman, 701 F. Supp at 563; In re M/V Thunder USA, 1993 WL 121265 (E.D.La. 1993). The Court finds that the Contract is a personal contract between Diamond B and Texaco; therefore, Diamond B cannot enjoin a state court action based on claims that are outside the scope of the Limitation Act.
Texaco's opposition to Diamond B's motion to enjoin further prosecution of the third party demand Exhibit A.
Diamond B argues that Texaco does not explain why its third party demand against Diamond B in state court does not fall under the stay order. Diamond B asserts that the relevant inquiry is whether Texaco "had a right to pursue any claims against Diamond B in state court without coming to this Court first." Texaco's position is that the claims asserted against Diamond B in its third party demand are contractual and therefore personal in nature such that the Limitation Act does not apply and the stay order does not include Texaco's contractual claims against Diamond B. The Court agrees. Diamond B further claims that Texaco's position "confuses the validity of the [stay] order with the enforceability of the order." Diamond B asserts that Texaco should have the stay order declared invalid before it can file claims against Diamond B. This claim is without merit. Texaco is not asserting that the stay order is invalid. Texaco argues that the order does not include liability claims arising out of personal contractual obligations. The claims asserted by Texaco in its third party demand filed in state court arise out of the Contract for Marine Transportation between itself and Diamond B. This contract is personal in nature and the Limitation Act does not limit the liability of a shipowner from such claims.
Diamond B's Reply Memorandum, p. 6.
Id. at 3.
Accordingly, Texaco's third party demand against Diamond B in the state court proceeding is not a violation of the May 3, 1999 stay order and Texaco nor its attorneys should be held in contempt.
3. Recognition of a contractual obligation
Texaco claims that Diamond B has a contractual obligation to Texaco for its insurance and indemnity and requests that this Court recognize the contractual obligation. Nowhere does Diamond B deny the existence or the validity of the Contract between Texaco and itself. Texaco requests that the Court disburse any funds from the limitation proceedings to Texaco before any other claimant in light of Texaco's status as a named additional assured under the Contract. This request is not in line with Texaco's position that its claims against Diamond B in the state court action fall outside of the Limitation Act and are therefore not barred by it. Texaco did not request that this Court's stay order be lifted. Texaco's claims for indemnity and insurance are outside of the limitation as they are claims based on a personal contract between the parties. InW.E. Hedger Transp. Corp. v. Gallotta, 145 F.2d 870, 872 (2d Cir. 1944), Judge Learned Hand stated that "the justification for the limitation proceedings is that there is a fund to be distributed among the several claimants. . . .The jurisdiction of the admiralty court to adjudicate the merits of claims is derivative from, and ancillary to, these considerations; it does not extend to a claim which is not subject to limitation." See Mediterranean Shipping, 229 F.3d at 403-4. Because Texaco's claims arise outside of the limitation proceeding, this Court declines to recognize Diamond B's obligation to Texaco as that matter is or should be before the state court.
Texaco's Opposition, p. 11.
C. CONCLUSION
For the reasons set forth above, IT IS ORDERED that Diamond B's motion to enjoin further prosecution of Texaco's third party demand in state court is DENIED. Diamond B's motion to hold Texaco and its attorneys in contempt is DENIED. It is further ordered that Texaco's motion to recognize Texaco's rights to Diamond B's insurance proceeds is DENTED.