HM&B Gets Eleventh Circuit Court of Appeals to Clarify What Constitutes Notice Under The Shipowner’s Limitation of Liability Act

Orion Marine Construction, Inc. v. Carroll, 918 F.3d 1323 (11th Cir. Mar. 20, 2019)

HM&B Gets Eleventh Circuit Court of Appeals to Clarify What Constitutes Notice Under The Shipowner’s Limitation of Liability Act

In Orion Marine Construction, Inc. v. Carroll, 918 F.3d 1323 (11th Cir. Mar. 20, 2019), the U.S. Court of Appeals for the Eleventh Circuit defined the limits of written notice under the Shipowner’s Limitation of Liability Act, 45 U.S.C. §§ 30501, et seq. Robert Birthisel, Jules V. Massee, Michael J. Dono, and Jolieann Brooks of Hamilton, Miller & Birthisel represented Orion in the appeal. The case was argued by Jules V. Massee.

Orion contracted with the Florida Department of Transportation in 2011 to build the Pinellas Bayway Bridge in Pinellas County. Hundreds of property owners in St. Pete Beach claimed the vibrations caused by Orion’s pile-driving activities damaged their properties. Accordingly, Orion filed a limitation action under the Shipowner’s Limitation of Liability Act in the U.S. District Court for the Middle District of Florida. Of the hundreds of claimants, only nine made complaints more than six months before Orion filed its limitation action. Orion’s action was ultimately dismissed by the district court which concluded Orion had received adequate notice of the claims against it more than six months before it filed and, thus, its action was time-barred. Orion appealed the dismissal.

In considering jurisdiction, the Eleventh Circuit concluded the 6-month time bar to file for limitation is a non-jurisdictional claim-processing rule. Consequently, Claimants’ motion to dismiss for lack of jurisdiction pursuant Federal Rule of Civil Procedure 12(b)(1) should have been regarded as a motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6) instead. Further, because the district court considered materials outside of the pleadings and directed discovery on the jurisdictional issue, Claimants’ motion to dismiss was converted into a motion for summary judgment which the Eleventh Circuit court reviewed de novo.

With the procedural matters out of the way, the court evaluated the merits of the parties’ contentions. First, the Eleventh Circuit court decided the test established in Doxsee Sea Clam Co. v. Brown, 13 F.3d 550 (2d Cir. 1994) exclusively governs the determination whether a claimant’s notice is sufficient under § 30511(a) of the Limitation Act. In Doxsee, the Second Circuit court stated “[n]otice will be sufficient if it informs the vessel owner of an actual or potential claim … which may exceed the value of the vessel … and is subject to limitation .Id. at 554. The Seventh Circuit court adopted this standard in In re Complaint of McCarthy Bros. Co./Clark Bridge, 83 F.3d 821 (7th Cir. 1996). The Doxsee/McCarthy test requires that the notice reveal a “reasonable possibility” that the claim will exceed the value of the offending vessel(s).

With this legal framework, the Eleventh Circuit court moved on to discuss what constitutes “written notice of a claim” under the Limitation Act. The court held that “to trigger the six-month filing period, a claimant (not someone else) must provide the shipowner or its agent (not someone else) with written (not oral) notice that reveals a ‘reasonable possibility’ that his claim will exceed the value of the vessel(s) at issue.” Even oral complaints memorialized in writing do not make the cut. Accordingly, only those written claims sent directly to Orion or FARA, Orion’s agent, satisfied the Act’s writing requirement. As a result, the district court erred when it considered all of the claims submitted by the nine original claimants prior to November 11, 2014.

Nonetheless, even if all claims lodged by those claimants prior to November 11, 2014 were considered written claims under the Act, the court concluded these “notices still fail the Dosxsee/McCarthy test because they don’t reveal a ‘reasonable possibility’ that the claims, even considered (as the district court put it) ‘in the aggregate,’ would exceed the value of Orion’s barges.” The nature and severity of the property damage alleged by claimants (mostly wall cracks and pool leaks) did not reveal a reasonable possibility that these claims would exceed the barges’ $1,258,217.00 value.

Lastly, the Eleventh Circuit court concluded the district court erred in imposing on Orion a duty to investigate immediately upon knowing of the first claims. “Because Orion’s duty to investigate didn’t arise ‘automatically’ or ‘immediately’ upon the filing of claims but only if the notice reveals a reasonable possibility that the underlying claim exceeds the value of the vessel(s), it didn’t violate that duty in the way the district court concluded.” Importantly, the court stated the district court also got it wrong on the facts by stating “Orion did nothing.” The undisputed facts showed that, in response to first several complaints, Orion sent one of its agents to investigate and conduct vibration monitoring and determined the damage was minor.

In conclusion, the notices provided by the first nine claimants failed to reveal the required reasonable possibility, and thus neither started the six-month clock nor obligated Orion to investigate. Accordingly, Orion’s limitation action was timely filed. The appellate court reversed and remanded.