Parnas v. Murray

• Court: District Court, D. Puerto Rico
• Decided: September 9, 2021
• Docket: 3:21-cv-01061
• Status: Unknown

Opinion

1 UNITED STATES DISTRICT COURT DISTRICT OF PUERTO RICO 2

3 NOA PARNAS,

4 Plaintiff,

5 v. Civil No. 21-1061 (GAG)

6 COLLIN MURRAY; et al.,

7 Defendants.

MEMORANDUM ORDER 9 Presently before the Court is Collin Murray’s (“Defendant”) motion to limit his liability in Noa 10 Parnas’ (“Plaintiff”) above-captioned lawsuit to the value of the maritime vessel involved in the 11 accident pursuant to 46 U.S.C. § 3505. (Docket No. 24). Plaintiff provides the receipt from when he 12 bought the maritime vessel, which states that it is a “Reef Runner 23’” worth $10,000. (Docket Nos. 13 24 ¶¶ 1, 6, 21, 24, 25; 24-5). Thus, Defendant seeks to limit his liability from Plaintiff’s accident to 14 said amount. 15 The Limitation of Liability Act of 1851 grants shipowners the right to limit liability for injury 16 and damage claims arising out of accidents involving their vessels. 46 U.S.C. §§ 30501, et seq. The 17 Supreme Court explained that the purpose of the Act: 18 [W]as to encourage shipbuilding and to induce the investment of money in this 19 branch of industry by limiting the venture of those who build the ships to the loss of the ship itself or her freight then pending, in cases of damage or wrong happening, 20 without the privity, or knowledge of the shipowner, and by the fault or neglect of the master or other persons on board. 21

Hartford Acc. & Indem. Co. of Hartford v. S. Pac. Co., 273 U.S. 207, 214 (1927). As such, the Act 22 provides that the liability of a shipowner arising out of a maritime incident “shall not exceed the value 23 of the vessel and pending freight,” so long as the accident occurred “without the privity or knowledge 24 1 Plaintiff opposes arguing that Defendant’s motion ought to be denied because: (1) the request 2 to limit liability is time-barred and (2) the motion is a premature attempt to file a FED. R. CIV. P. 36 3 motion without the proper opportunity to take depositions or otherwise finish pending discovery.

4 (Docket No. 25). Without addressing the merits of Plaintiff’s arguments in opposition, the Court 5 DENIES without prejudice Defendant’s motion to limit liability at Docket No. 24. 6 I. Discussion 7 Supplemental Rule F for Admiralty or Maritime Claims of the Federal Rules of Civil Procedure 8 dictates the procedure in limitation actions. See Lewis v. Lewis & Clark Marine, Inc., 531 U.S. 438, 9 448 (2001); see also Matter of Weiss, Civil No. 16-529S (PAS), 2016 WL 7383778 (D.R.I. Oct. 18, 10 2016), adopted by Matter of Weiss, 2016 WL 7378894 (Dec. 20, 2016); Matter of Mykolenko, Civil 11 No. 2018-28 (CVG), 2019 WL 1010926 (D.V.I. Mar. 4, 2019). First, a shipowner must file a complaint 12 in an appropriate district court within six months of receiving written notice of a claim. FED. R. CIV. 13 P. Supp. Rule F(1); see also 46 U.S.C. § 30511(a). Thereafter, the shipowner must deposit with the

14 Court “a sum equal to the amount or value of the owner’s interest in the vessel . . . or approved security 15 therefor.” Supp. Rule F(1); see also 46 U.S.C. § 30511(b)(1). If the shipowner opts to provide the 16 Court with approved security for the cost of the vessel, he or she must also give security “for interest 17 at the rate of 6 percent per annum from the date of the security.” Supp. Rule F(1). In addition, Local 18 Admiralty Rule F(1) for the District of Puerto Rico requires that “[t]he amount of security for costs 19 under Supplemental Rule F(1) shall be $1,000; it may be combined with the security for value and 20 interest, unless otherwise ordered.” L. ADM. R. F(1) (D.P.R. 2020); see also 46 U.S.C. § 30511(b)(1). 21 If a claimant wishes to challenge the sufficiency of the security “on the ground that [it is] less than the 22 value of the plaintiff’s interest in the vessel and pending freight,” such claimant may, upon motion,

23 demand that the deposited funds be increased. Supp. Rule F(7); see also Weiss, 2016 WL 7383778, at 24 *2. 1 After a shipowner files a limited liability complaint and complies with the requirements of 2 Supplemental Rule F(1) by depositing the appropriate security with the Court, “all claims and 3 proceedings against the owner or the owner’s property with respect to the matter in question shall

4 cease.” FED. R. CIV. P. Supp. Rule F(3); 46 U.S.C. § 30511(c). Supplemental Rule F(3) further 5 provides the Court with the power to, upon motion by the owner seeking limitation, “enjoin the further 6 prosecution of any action or proceeding against the plaintiff or the plaintiff’s property with respect to 7 any claim subject to limitation in the action.” Supp. Rule F(3); see also In re Paradise Holdings, Inc., 8 795 F.2d 756, 761 (9th Cir. 1986) (noting that a district court has broad discretion in issuance of 9 injunction under FED. R. CIV. P. Supplemental Rule F(3)). 10 Finally, Supplemental Rule F(4) provides that the Court shall issue a notice to all persons 11 asserting claims with respect to which the complaint seeks limitation, admonishing them to file their 12 claims with the clerk, and to serve them on the attorneys for the plaintiff on or before a date to be 13 named in a notice. Supp. Rule F(4).This notice, in turn, shall be published in such newspaper as the

14 Court may direct once a week for four successive weeks prior to the date fixed for the filing of claims. 15 Id. In addition, not later than the day of second publication, the plaintiff must mail a copy of the notice 16 to every person known to have made any claim against the vessel or the plaintiff arising out of the 17 voyage on which the claims sought to be limited arose. Id. After proper notice has been given, “the 18 court, sitting without a jury, adjudicates the claims,” and “[t]he court then determines whether the 19 owner may limit liability.” Id.; see also Weiss, 2016 WL 7383778, at *2. 20 Notwithstanding the above procedure, Local Admiralty Rule F(2) (Order of Proof at Trial) 21 states that “[w]here the vessel interests seeking statutory limitation of liability have raised the statutory 22 defense by way of answer or complaint, the plaintiff in the former or the damage claimant in the latter

23 shall proceed with its proof first, as is normal at civil trials.” L. ADM. R. F(2) (D.P.R. 2020). 24 1 Defendant’s motion is premature because according to Local Admiralty Rule F(2), Plaintiff 2 shall proceed with his proof first as is normal at civil trials. In the present case, Defendant has not 3 submitted a verified complaint as required by the Limitation of Liability Act and Supplemental Rule

4 F for Admiralty or Maritime Claims of Federal Rules of Civil Procedure. If Defendant were to submit 5 a verified complaint in compliance with the Limitation to Liability Act, 46 U.S.C. §§ 30501, et seq., 6 then the proper procedural mechanisms may be pursued. 7 For the foregoing reasons, the Court DENIES without prejudice Defendant’s motion to limit 8 liability at Docket No. 24. 9 SO ORDERED. 10 In San Juan, Puerto Rico this 9th day of September 2021. 11 s/ Gustavo A. Gelpí GUSTAVO A. GELPI 12 United States District Judge 13 14 15 16 17 18 19 20 21 22

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