Special Fee Shifting Statutes: The Limitation Of Liability Act For Shipowners Required A Reversal Of A Single Claimant’s Foray Into State Court Based On Third-Party Claims And Requests For Attorney’s Fees Under The Act

The Case Was A Multiple Claimants Matter, With All The Claimants Having To Reach Stipulations With Protections To the Vessel Owner Before The Matter Could Return To State Court.

              Well, we have a maritime proceeding to blog on.

               In In re Live Life Bella Vita, LLC, Case No. 23-55613 (9^th Cir. Sept. 12, 2024) (published), the Ninth Circuit considered the Limitation of Liability Act, 46 U.S.C. §§ 30501-30530, which caps liability so that a shipowner is not on the hook for more than value of the vessel and cargo and which sets up special procedures for a federal court to apportion this money among injured parties. 

               This published case involved a sole injured maintenance driver who argued the Limitation Act did not apply because he fell within the “single claimant” exception, even though the Act does limit liability and keeps injured parties from trying to circumvent the cap by going to state court unless protective stipulations are entered into by the parties.  The district court applied the exception, lifting the federal injunction and allowing the matter to proceed in state court—with adequate stipulations by vessel owner—despite claims by third parties and requests for attorney’s fees.  (Parties seeking attorney’s fees are considered separate claimants.)  In light of the third-party claims and specter of fee recovery, the Ninth Circuit reversed, finding that multiple claimants were involved and that all of those claimants had to sign protective stipulations before the matter could return to state court.