A unique feature of maritime law in the United States is the Limitation of Shipowners’ Liability Act (“Limitation Act”), which provides vessel owners with a federal right to limit their liability for damage or injury following a maritime accident. 46 U.S.C. 30505. The Limitation Act is a powerful tool for maritime defense attorneys. It provides a procedure to enjoin all pending suits and to compel them to be filed in a limitation proceeding so that liability may be determined and limited to the post loss value of the shipowner’s vessel and the amount related to services performed by the vessel (i.e. carriage of cargo). This is especially powerful when the vessel has suffered significant damage due to a casualty; thus significantly reducing its post loss value and creating a substantial financial limitation against potential claims. However, timing is everything and turns on the notice provided to the shipowner.
To be afforded protection under the Limitation Act, the shipowner must bring a limitation action in federal court within six months of receiving notice of a claim. Once the shipowner meets the six-month statutory deadline, all related lawsuits pending against the shipowner shall cease and a limitation fund is created. Thereafter, all claimants are required to pursue their claims in the limitation proceeding.
Earlier this year, the Eleventh Circuit in Orion Marine Construction, Inc. v. Dawson, No. 17-11961 (11th Cir. 2019) issued a much-anticipated ruling addressing the scope of the notice provisions under the Limitation Act. The case involves a limitation action filed by Orion after a number of local residents filed complaints alleging damage to their properties. Orion used barges to drive concrete piles into the bay floor to rebuild a bridge pursuant to a contract with the Florida Department of Transportation (FDOT) and the local residents claimed that their homes were damaged by the vibrations caused by such activities. Originally, between 2012 and 2014 only nine local residents brought complaints against either Orion, FDOT or Orion’s third-party administrator, FARA Insurance. There were eventually 247 claims made against Orion, however, for purposes of analysis and the timing requirement, the court focused on the original nine claims. Those nine claims were made before November 11, 2014, and more importantly for purposes of the court’s analysis, unlike the other claims, these were made more than six months before Orion filed suit on May 11, 2015. Of those nine, two of the original complainants, the Dawsons, moved to dismiss Orion’s limitation action for untimeliness arguing that because Orion had received “written notice of a claim” but had not brought a limitation action “within 6 months after a claimant gives the owner written notice of a claim,” the action was time barred as per §30511(a). Orion responded that it did not receive proper notice under the Act because the complaints were (1) not in writing and, (2) they failed to reveal a “reasonable possibility” that the claims would exceed the aggregate value of the barges used during the project. The District Court subsequently dismissed the motion without prejudice.