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In re Bald Head Island Transportation, Inc.

United States District Court, E.D. North Carolina, Southern Division, Admiralty

December 23, 2014

In the Matter of: Bald Head Island Transportation, Inc. (


ROBERT B. JONES, Jr., Magistrate Judge.

This matter comes before the court on motion by Plaintiffs to clarify the court's amended scheduling order. [DE-55]. Claimants have responded in opposition. [DE-58]. The matter is ripe for a ruling and for the reasons stated below, the motion is allowed in part.


Plaintiffs, Bald Head Island Transportation, Inc., and Bald Head Island Limited LLC, as the alleged owner and manager/owner pro hac vice of the vessel M/V ADVENTURE, respectively, filed a verified complaint seeking exoneration from or limitation of liability by vessel owner in this admiralty action. [DE-l] ¶¶ 2, 4.[1] According to the complaint, on December 17, 2013, the passenger ferry M/V ADVENTURE (the "Vessel") ran aground on a sandbar in the Cape Fear River, North Carolina, southeast of marker 16 and Battery Island, during the course of its 9:00 a.m. ferry run from Deep Point Marina, Southport, North Carolina, to the Village of Bald Head Island, North Carolina (the "Voyage"). Id. ¶ 5. Plaintiffs have alleged further that the Vessel sustained damage as a result of the Voyage, and that certain passengers and members of the Vessel's crew have alleged injuries and damages proximately caused by the voyage. Id. ¶¶ 6, 8. Plaintiffs instituted this action on April 23, 2014, pursuant to 46 U.S.C. § 30501, et seq., Fed.R.Civ.P. 9(h) and Rule F of the Supplemental Rules for Admiralty or Maritime Claims ("Supplemental Rules"), seeking exoneration from or limitation of liability of any claim or damage arising from the Voyage. On April 29, 2014, the district court approved as security for the benefit of Claimants an Ad Interim Stipulation ("Stipulation") of not less than or equal to Plaintiffs' interest in the Vessel and their pending freight in the amount of $500, 000. [DE-9]. As part of its order, the court enjoined the commencement or further prosecution of any action against Plaintiffs with respect to any claims for which Plaintiffs seek exoneration from and/or limitation ofliability arising out of the incident alleged in the complaint. Id. On May 1, 2014, the clerk of this court issued notice of Plaintiffs' complaint pursuant to 46 U.S.C. § 30501 et seq., directing all persons having claims for loss, destruction or damage arising out of the Voyage to file such claims on or before June 15, 2014 or be defaulted. [DE-11].

The court is unaware of any actions filed in other fora asserting claims arising from the Voyage, and following the district court's injunction, five individuals ("Claimants") timely filed answers to Plaintiffs' complaint, and asserted claims against Plaintiffs in this forum. In particular, Claimants Strickland, Springmeier, Donecker and Scearce filed claims under Supplemental Rule F(5), the maritime law of the United States and 28 U.S.C. § 1333, purportedly reserving their rights to proceed in a forum of their choice outside the petition for exoneration/limitation after those issues have been resolved.[2] Each of these Claimants is alleged to have been a passenger aboard the vessel at the time of the Voyage and each asserts purported causes of action of negligence and punitive damages. [DE-18] ¶¶ 2, 28-34; [DE-23] ¶¶ 2, 28-34; [DE-25] ¶¶ 49-56; [DE-29] ¶¶ 2, 28-34. Claimant Cockerell has filed her claim pursuant to Supplemental Rule F(5), the maritime laws of the United States, 28 U.S.C. § 1333, as well as the Jones Act, 46 U.S.C. § 30104. [DE-20] ¶ 1. Cockerell alleges that at all relevant times she was a seaman under the Jones Act acting as a crew-member and deck-hand aboard the Vessel. Id. ¶ 3. Cockerell has purportedly reserved her right to proceed in the forum of her choice outside the petition for exoneration/limitation after such issues have been resolved. Id. ¶ 4. Cockerell asserts purported claims of negligence under the Jones Act, unseaworthiness, maintenance and cure and punitive damages. Id. ¶¶ 30-49. All Claimants admit to the admiralty and maritime jurisdiction of the court for purposes of determining the exoneration/limitation action, but specifically demand the right to a jury trial in a forum of their choice. [DE-35, 42, 43, 45, 46]. Furthermore, each Claimant disputes the sufficiency of the Stipulation and that Plaintiffs are entitled to limitation or exoneration. [DE-35]; [DE-42] ¶¶ 11, 16; [DE-43] ¶¶ 11, 16; [DE-45] ¶¶ 11, 16; [DE-46] ¶¶ 11, 16. All Claimants reside in Brunswick County except Donecker who resides in New Hanover County. [DE-29] ¶ 2; [DE-23] ¶ 2, [DE-18] ¶ 2; [DE-25] ¶ 2; DE-20] ¶ 2.

In support of their claims, Claimants allege that Plaintiffs' senior management encouraged and directed its captains to operate their vessels outside marked navigation channels in order to shorten the distance and time required for the voyage, to reduce fuel and to make up for late departures from the marina. [DE-18] ¶¶ 11, 31-24; [DE-20] ¶¶ 12-13, 46-49; [DE-23] ¶¶ 31-34; [DE-29] ¶¶ 31-34. According to Claimants, members ofPlaintiffs' management were actually aboard the Vessel at the time of the Voyage allegedly condoning the captain's negligent operation of the Vessel. See Cl.'s Brf. [DE-58] at 2 (citing Pl.'s Initial Discl. [DE-58-1]). Claimants further describe Plaintiffs' purported policy of directing their captains to depart from marked channels for reasons including "fuel savings [and] making up time, etc." Id. at 3 (citing Ex. E. [DE-58-5]).

On July 25, 2014, the parties submitted their Joint Rule 26(f) Report ("Discovery Plan") [DE-47] in which the parties agreed that the discovery and trial schedule should be bifurcated into two phases: a liability phase (Phase I) and a damages phase (Phase II). Id. at 2.[3] On August 21, 2014, after having conferred with the parties, this court entered a scheduling order, adopting the parties' bifurcation proposal. [DE-51]. In particular, the court's order stated:

As described by the parties in the Discovery Plan, this action will be bifurcated into two phases, wherein the primary focus of Phase I will be issues related to exoneration and limitation of liability under Rule F of the Supplemental Rules; in the event there are parties remaining in this action at the conclusion of Phase II and who proceed in this court, the focus of Phase II will be Claimants' respective damages.

Id. at 1. On September 25, 2014, upon the parties' joint motion, certain dates in Phase I of the scheduling order were modified without effecting the bifurcation of the issues as set out in the scheduling order. [DE-54].

According to Plaintiffs' instant motion and Claimants' response, the parties disagree whether, pursuant to the scheduling order, Plaintiffs' liability for punitive damages is an issue that may be determined along with all issues of liability within Phase I before this court, or in Phase II, either in this court or in the forum of Claimants' choice. [DE-55]. In other words, the issue has been framed should the court's adjudication ofliability related to exoneration and liability within Phase I of this lawsuit include determining Plaintiffs liability for punitive damages.


The dispute between the parties results from the friction created by the nature of the claims before the court. In re Hill, 935 F.Supp. 710, 711 (E.D. N.C. 1996). Plaintiffs bring their petition in admiralty pursuant to the Limitation of Liability Act, 46 U.S.C. §§ 30501 et seq. According to the Act, a vessel owner's liability for a personal injury claim may be limited to the value of the vessel and its pending freight if the act or condition giving rise to the alleged injury occurred without the privity or knowledge of the owner. Id. § 30505(a)-(b). Once a limitation action is filed, the district court must enjoin the prosecution of any claims subject to the limitation action. Fed.R.Civ.P. Supplemental Rule F(3). Sitting in admiralty the court then conducts a concursus, in which the court determines whether there was negligence and, if so, whether it was without the privity and knowledge of the vessel owner. Hill, 935 F.Supp. at 711 (citing In re Great Lakes Dredge & Dock Co., 895 F.Supp. 604, 608 (S.D.N.Y. 1995)).

Because no right to a jury trial exists in actions in admiralty and because the court has enjoined claimants from prosecuting any state court action on their claims arising from the Voyage, this procedure denies claimants their right to pursue their claims before a jury.[4] Id. (citing Fitzgerald v. United States Lines Co., 374 U.S. 16, 20 (1963)). This result necessarily conflicts with 28 U.S.C. § 1333, providing that district courts shall have exclusive original jurisdiction of"[a]ny civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled." 28 U.S.C. § 1333(1).

As recognized by several courts, the Limitation of Liability Act was intended to be a shield for vessel owners to limit liability for losses occasioned without privity or knowledge, rather than a sword to deprive claimants of their common law rights. Wheeler v. Marine Navigation Sulphur Carriers, Inc., 764 F.2d 1008, 1011 (4th Cir. 1985); In re Complaint of Cameron Boat Rentals, Inc., 683 F.Supp. 577, 582 n.6 (W.D. La. 1988) (citations omitted); see also Pickle v. Char Lee Seafood, Inc., 174 F.3d 444, 449-50 (4th Cir. 1999) (remanding to the district court with instructions, in the event that limitation is denied, to ...

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