Opinion
No C 03-5639 VRW.
November 30, 2004
ORDER
Pursuant to FRCP 12(b)(1), respondent Kevin Finicum (Finicum) seeks to dismiss for lack of subject matter jurisdiction this proceeding for limitation of liability under 46 USC § 185. Doc #25. For the reasons set forth below, the court GRANTS Finicum's motion.
I
On October 13, 2001, while employed as a deck hand aboard the F/V DARIN ALAN, Finicum was involved in a fork lift accident with a fellow crew member. Doc #26 at 1. The F/V DARIN ALAN is owned by Darin Alan, Inc. Doc #29 at 3. As a result of the accident, Finicum sustained extremely serious, potentially permanent, injuries to his left arm, wrist and hand. Id at 1-2. In the months that followed the accident, Finicum underwent several orthopedic surgeries at Bay Area Hospital in Coos Bay, Oregon. Id at 2. From December 2001, to the present Finicum has been treated by Leonard Gordon, MD, a hand and microsurgeon in San Francisco. Id. Finicum's most recent surgery was performed by Dr Gordon on February 27, 2003. Id at 3. Soon after the October 2001, accident, Finicum retained Eugene Brodsky (Brodsky) of Brodsky, Baskin Miller, Inc to represent Finicum's interests relating to the accident. Id at 4.
Darin Alan, Inc, as owner of the F/V DARIN ALAN, had an insurance policy on the vessel. Doc #29. The insurance company (Underwriters) hired Arnold Arnold, Inc (Arnold) to "investigate and adjust" the accident involving Finicum. Doc #27, Ex 2 at 1.
On November 5, 2001, Brodsky sent a letter to Arnold informing the adjuster that Brodsky had been "formally retained by Mr Finicum to represent him in connection with injuries he suffered while in service of the F/V DARIN ALAN." Doc #27, Ex 1. Brodsky also requested Arnold to forward copies of Finicum's medical records. Id. The "Re:" line of the correspondence read: "Finicum v. F/V DARIN ALAN." Id.
On November 15, 2001, Brodsky sent a fax to Arnold stating that the current amount of maintenance Finicum was receiving, $20 per day, was legally inadequate and Brodsky desired to discuss increasing this amount. Doc #27, Ex 3.
On December 6, 2001, Arnold finally responded to Brodsky's correspondences in the form of a letter stating that Arnold was investigating and adjusting the accident for Underwriters. Doc #27, Ex 2. Arnold also forwarded copies of Finicum's medical records. Id. Arnold's correspondence listed the "insured" party as David Evanow (the principal shareholder of Darin Alan, Inc), the "insured vessel" as the "Darin Alan" and the "type of claim" as "crew injury." Id.
On December 14, 2001, Arnold sent a letter to Dr Gordon stating that Arnold was adjusting and investigating the accident. The letter requested that Dr Gordon provide Arnold with Finicum's continuing "duty status, prognosis and anticipated return to work date." Doc #27, Ex 5.
On January 29, 2002, Brodsky again wrote to Arnold stating that Finicum was legally entitled to more than $20 per day in maintenance. Brodsky stated he would be sending proof and records showing that Finicum was entitled to $35 per day in maintenance. Doc #27, Ex 7.
On February 8, 2002, Arnold wrote to Brodsky stating that Underwriters had approved Dr Gordon's request to conduct new MRI, EMG/NCV and x-ray scans. Doc #27, Ex 8.
On May 1, 2002, Brodsky sent a letter to Arnold confirming an apparent oral agreement of a new maintenance amount for Finicum — $30 per day. Doc #27, Ex 10. Brodsky also confirmed that Finicum was entitled to back-pay for past deficiencies in maintenance. Id.
Apparently only oral communication took place between Brodsky and Arnold following the May 1, 2002, letter, because the next letter on file is dated December 5, 2002. Doc #27, Ex 11. The importance of this December 5, 2002, letter, which appears to confirm important oral communications between Brodsky and Arnold, cannot be overstated. In this letter, Arnold writes to Brodsky "confirm[ing] [Finicum's] position that [Finicum] was not inclined to pursue any action against Hallmark Fisheries," the owner of the fork lift involved in Finicum's injury. Id (emphasis added). Moreover, Arnold states it "appreciate[s] the fact that [Finicum] [is] willing to attempt informal settlement of this matter without the need for litigation." Id.
Apparently, informal settlement was not productive, for on April 7, 2003, Brodsky sent a letter to Arnold stating that Finicum had instructed Brodsky to "proceed with the litigation" unless good faith settlement negotiations were commenced expeditiously. Doc #27, Ex 12.
On May 15, 2003, Brodsky sent a fax to Arnold requesting "laser copies of the photographs [Arnold] took with respect to the general area that [sic] the accident occurred." Doc #27, Ex 13 at 1.
On May 19, 2003, Arnold forwarded to Brodsky Finicum's recent medical records and six laser photos Arnold had taken of the accident site. Doc #27, Ex 14.
On August 28, 2003, Arnold sent a fax to Brodsky stating that Dr Gordon "feels that further surgery [on Finicum] is not indicated at this time." Doc #30, Ex A. Accordingly, Arnold stated "Finicum has reached maximum cure and is due no further Maintenance and Cure." Id.
This did not sit well with Brodsky. On September 19, 2003, Brodsky stated that he intended to "file suit on behalf of [Finicum] against the vessel owner and the F/V DARREN ALLEN [sic], in rem." Doc #30, Ex B.
On October 13, 2003, Brodsky sent Arnold a copy of the complaint Brodsky intended to file in this court seeking damages for "personal injuries, maintenance and cure and unseaworthiness." Doc #30, Ex C. The complaint named David Evanow (individually), Darin Alan, Inc and the F/V DARIN ALAN all as defendants. Id.
On October 14, 2003, Arnold sent a fax to Brodsky informing Brodsky that the law firm of Gibson, Robb Lindh, LLP had been retained by Underwriters to defend Darin Alan, Inc in the suit, should Brodsky actually file the complaint for damages. Doc #30, Ex D.
Finally, on December 15, 2003, Darin Alan, Inc filed, in this court, a verified petition for limitation of liability pursuant to 46 USC § 185. Doc #1.
Finicum moves to dismiss Darin Alan, Inc's limitation of liability petition for lack of subject matter jurisdiction because the petition was untimely. Doc # 25. Darin Alan, Inc opposes this motion, contending that the petition was "clearly" filed in a timely fashion. Doc #29.
II
Section 185 is referred to as the Limitation of Vessel Owner's Liability Act. Under § 185, "a shipowner, even without incorporation, may, on the occurrence of some event for which the ship is liable * * * to employees * * * restrict his liability to whatever value the ship may have after the event." Grant Gilmore and Charles L Black, The Law of Admiralty § 10.1 (Foundation Press 2d ed 1975). Essentially, § 185 "provides a mechanism in which a shipowner may limit its liability * * * to the value of the vessel and its pending freight." In re Salty Sons Sport Fishing, Inc, 191 F Supp 2d 631, 633 (D Md 2002).
But in order to avail itself of the limitation of liability granted by § 185, a vessel owner must "within six months after a claimant shall have given to or filed with such owner written notice of claim, * * * petition a district court * * * for limitation of liability * * *." 46 USC § 185. In normal parlance: "a petition [to limit liability] must be filed within six months after written notice of a claim" is delivered to the vessel owner. Salty Sons, 131 F Supp 2d at 633. "The `requirement that a petition under § 185 be filed within six months notice has been held to be a condition precedent which must be met in order for an admiralty court to have jurisdiction of a limitation proceeding.'" Id (quoting Cincinnati Gas Electric Co v. Abel, 533 F2d 1001, 1003 (6th Cir 1976)); see also In the Matter of UFO Chuting of Hawaii, Inc, 233 F Supp 2d 1254, 1256 (D Hawaii 2001) ("Whether a limitation action is filed within six months is an issue that goes to this court's subject matter jurisdiction."). Accordingly, if a petition is untimely filed, a district court lacks subject matter jurisdiction over the petition and must dismiss the petition pursuant to FRCP 12(b)(1).
The sole issue underlying this motion is the timeliness of Darin Alan, Inc's § 185 petition. In order to determine if Darin Alan, Inc's petition was timely, the court must determine exactly when the six-month filing period was triggered (i.e., when Darin Alan, Inc received written notice of Finicum's claim). Finicum himself states the issue quite succinctly in his motion: "In order for Mr Finicum to succeed in dismissing the limitation proceeding, he must prove that Darin Alan, Inc had sufficient notice of his claim [for damages] more than six months before the limitation petition was filed on December 15, 2003." Doc #26 at 3.
Finicum argues that, in the aggregate, all of Brodsky's communications with Arnold during 2001 through May 2003 clearly put Darin Alan, Inc on written notice of Finicum's claim. Doc #26 at 15. Accordingly, the six-month filing period had long since expired by December 2003.
Darin Alan, Inc argues that it did not receive written notice until Arnold received Brodsky's letter of September 19, 2003, when Brodsky threatened to sue Darin Alan, Inc in its individual capacity as vessel owner. Accordingly, less than three months had passed when Darin Alan, Inc filed its petition in December 2003.
On this, the motion turns.
III
"A letter sent to a shipowner by a claimant is sufficient to trigger the six-month period if [1] it informs the shipowner of an actual or potential claim [2] which may exceed the value of the vessel [3] and is subject to limitation." UFO Chuting, 233 F Supp 2d at 1257 (internal citations omitted). Accord Doxsee Sea Clam Co, Inc v. Brown, 13 F3d 550, 554 (2d Cir 1994).
Darin Alan, Inc asserts that none of Finicum's letters to Arnold prior to September 19, 2003, triggered the six-month filing period under the standards of UFO Chuting and Doxsee. Doc #29 at 4. In supporting this assertion, Darin Alan, Inc proffers three distinct arguments.
A
First, Darin Alan, Inc argues that because all of Finicum's letters were sent to Arnold, and not Darin Alan, Inc, none of the letters serves as notice informing the shipowner of a claim. Doc #29 at 4. Darin Alan, Inc states that "[Finicum] did not send [his] letters to the vessel owner, or even [Darin Alan, Inc]'s insurance company, but to Arnold Arnold, Inc * * * who [sic] were hired by underwriters * * *." Id. Darin Alan, Inc asserts that "Arnold Arnold did not hold itself out as an agent of Darin Alan, Inc." Id. This argument does not persuade.
It is well settled, in fact it appears Darin Alan, Inc concedes, that "a notice of claim may be received by an agent of the vessel owner." Doxsee, 13 F3d at 553 (citing Diamond v. Bentel, 247 F2d 604, 607 (5th Cir 1957)). It is not in dispute that Underwriters is an agent of Darin Alan, Inc. Nor is it disputed that Arnold became an agent of Underwriters when Arnold was hired by Underwriters to investigate and adjust the Finicum accident. Accordingly, the issue becomes the "agency" link between Darin Alan, Inc and Arnold based upon intermediary Underwriters. Upon analysis, the court finds Arnold became a "subagent" of Darin Alan, Inc when Arnold was hired by Underwriters as an adjustor on the Finicum claim.
"Authority to appoint a subagent is inferred * * * if [1] the agent is a corporation, partnership or other organization * * * or [2] the appointment of subagents is usual or [3] the principal has reason to know that the agent employs subagents."Restatement (Second) of Agency § 80 (1958). In the present case, it is clear that Underwriters had authority to appoint Arnold as a subagent of Darin Alan, Inc. First, Underwriters is a corporation. Second, the appointment of an adjuster by an insurance company is "ususal." Finally, Darin Alan, Inc had reason to know that Underwriters had hired an adjustor — it is the custom and practice in the maritime industry for underwriters to hire adjustors. Doc #31 at 8.
Moreover, this court is not the first to face this issue. InDoxsee, the Second Circuit held that an adjustor hired by an underwriter was a subagent of the vessel owner for § 185 filing purposes. Doxsee, 13 F3d 554 (holding that under Restatement of Agency § 80, a vessel owner "would have reason to know that a claims adjustor would be employed by [the underwriters] to investigate [an accident]").
The court finds Arnold was cloaked in apparent authority to receive a written claim of notice for Darin Alan, Inc. Accordingly, if written notice of a claim was delivered to Arnold, such delivery triggered the six-month filing period for Darin Alan, Inc.
B
Darin Alan, Inc next argues that, even assuming Arnold was an agent of Darin Alan, Inc, the letters prior to September 19, 2003, were not substantively sufficient to trigger the six-month filing period.
Darin Alan, Inc argues that the letters sent by Brodsky to Arnold prior to September 19, 2003, did not inform Arnold that a claim was being asserted against the vessel owner (i.e., Darin Alan, Inc), but rather, the letters only assert a claim against the "F/V Darin Alan" (i.e., the vessel itself). Doc # 29 at 5. This entire argument hinges on the "Re:" line in Brodsky's letters to Arnold. The argument goes as follows: Because the "Re:" line reads "Finicum v. F/V Darin Alan" rather than "Finicum v. Darin Alan, Inc," Arnold could not possibly be expected to know that a claim was being asserted against Darin Alan, Inc in its capacity as vessel owner. This argument also fails to persuade.
As early as December 14, 2001, Arnold's correspondence to Brodsky listed the "insured" as "Darin Alan, Inc" and "David Evanow." Doc #27, Exs 2, 5, 6, 11, 14. If Finicum was asserting a claim for damages, who else would he sue if not the insured person or entity under the insurance policy? Accordingly, to argue that Arnold was completely unaware that Finicum was asserting a claim against Darin Alan, Inc simply because the "Re:" line did not read "Finicum v. Darin Alan, Inc" strains credulity and elevates form over substance.
C
Finally, Darin Alan, Inc argues that even if Arnold was its agent and even if Arnold was on notice of a claim against Darin Alan, Inc itself, the written notice did not alert Arnold that the claim asserted was "subject to limitation" under § 185 as required under Doxsee and UFO. Doc #29 at 5.
Both parties concede that Maintenance and Cure payments are exempt from "limitation" under § 185. Accordingly, written notice of a claim for Maintenance and Cure against a vessel owner does not trigger the six-month filing period because such a claim is not subject to limitation.
Seizing upon this distinction, Darin Alan, Inc argues that, prior to September 19, 2003, Brodsky "wrote letters only as to maintenance and cure," not any "claim subject to limitation, e.g., negligence or Jones Act liability." Doc #29 at 6. Once again, this argument fails to persuade. In fact, Darin Alan, Inc's own documents belie such an argument.
The letter of December 5, 2002, from Arnold to Brodsky discusses "Finicum's desire not to pursue any action against Hallmark Fisheries," the owner of the fork lift involved in the accident. Doc #27, Ex 11 at 2. There is no legal basis for Finicum to assert a maintenance and cure claim against Hallmark Fisheries. Under maritime law, the shipowner/employer has a non-delegable duty to provide maintenance and cure to ill or injured seamen. Calmar Steamship Co v. Taylor, 303 US 525, 527 (1938) (discussing "[t]he ancient duty of a vessel and her owner to provide maintenance and cure for seamen injured or falling ill"). The fact that claims by Finicum against Hallmark Fisheries were being discussed between Brodsky and Arnold demonstrates that actions for negligence were afoot. Moreover, the taking of accident site photos and relaying such photos to Brodsky also smacks of personal injury and negligence rather than maintenance and cure. If the only claims at issue between Brodsky and Arnold were the maintenance and cure claims, there was no reason for Arnold to take photographs of the scene of the accident.
Accordingly, Arnold was not merely investigating and adjusting maintenance and cure claims, the plain evidence belies any contrary argument.
IV
Having dismissed all of Darin Alan, Inc's arguments concerning Finicum's failure to provide written notice, the court must now determine which letter from Brodsky actually triggered the six-month filing period.
In In re Oceanic Fleet Inc, 807 F Supp 1261, 1263 (E D La 1992) the court, in facing the issue currently before this court, stated that "while none of the letters may have individually constituted notice, in the aggregate, there is no doubt that Oceanic * * * had sufficient notice." The court finds the cumulative approach adopted by Oceanic Fleet to be appropriate in determining if a vessel owner had sufficient notice.
In the present case, by April 7, 2003, Arnold was aware that Finicum had retained counsel, aware of the date of and major extent of Finicum's injuries, aware that Finicum had evaluated his negligence claims against several defendants and aware that Finicum had instructed Brodsky to "proceed with litigation." Accordingly, in the aggregate, all of Brodsky's and Arnold's letters up to and including April 7, 2003, were sufficient to serve as written notice of a claim against Darin Alan, Inc.
Accordingly, since Darin Alan, Inc was on notice as of April 7, 2003, it had until October 7, 2003, to file a petition of limited liability under § 185. Darin Alan, Inc did not file it petition until December 15, 2003, and thus its filing was untimely under § 185.
Because the petition was untimely filed under the statute, the court lacks subject matter jurisdiction over the petition. Accordingly, the court GRANTS Finicum's motion to dismiss pursuant to FRCP 12(b)(1) (Doc #25).
IT IS SO ORDERED.