INLAND DREDGING, In the Matter of the Complaint of Inland Dredging Company, LLC, Owner v. Ricardo Sanchez

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United States Court of Appeals
Fifth Circuit
F I L E D
October 27, 2006
Charles R. Fulbruge III
Clerk
REVISED NOVEMBER 16, 2006
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
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No. 05-61156
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INLAND DREDGING, In the Matter of the Complaint of Inland Dredging
Company, LLC, Owner and Operator of the M/V Ms Paula, for
Exoneration from Limitation or Liability,
Plaintiff - Appellee
v.
RICARDO SANCHEZ,
Claimant - Appellant
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Appeal from the United States District Court for
the Northern District of Mississippi
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Before JONES, Chief Judge, and REAVLEY and PRADO, Circuit Judges.
REAVLEY, Circuit Judge:
Ricardo Sanchez appeals an injunction preventing him from
proceeding with his Jones Act suit in a different federal court
after the shipowner filed a limitation of liability action in this
federal court and obtained the injunction. We vacate the
injunction.
I.
Ricardo Sanchez claims that he suffered injury while working

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as a seaman aboard the M/V Ms. Paula, a vessel owned by Inland
Dredging Company, LLC (“Inland Dredging”). Aware of Sanchez’s
claim, Inland Dredging filed a petition for limitation of liability
under the Limitation of Liability Act (the “Act” or “Limitation
Act”), 46 U.S.C. app. § 185, in the United States District Court
for the Northern District of Mississippi and then filed an Ad
Interim Stipulation for Value, which stated that the value of the
vessel and her then-pending freight did not exceed $235,000. The
district court approved the Ad Interim Stipulation for Value and
issued an order “restraining and enjoining all claims and
proceedings against the M/V MS. PAULA and/or Inland Dredging
Company, LLC, as owner and operator of the M/V MS. PAULA, in any
court whatsoever, except in this proceeding for limitation . . . .“
Sanchez filed a motion in the Mississippi court to dissolve
the injunction, arguing that he should be allowed to proceed in the
United States District Court in Galveston, and attached a
stipulation to his motion in which he agreed that the Mississippi
court had exclusive jurisdiction to determine Inland Dredging’s
right to limitation of liability and the value of the limitation
fund. Sanchez waived the defense of res judicata with respect to
limitation issues, “based upon any judgment in any other forum of
his choice,” and further agreed not to seek a ruling in the
Galveston court on any of these issues. Sanchez acknowledged that
the Mississippi court had exclusive authority to determine the
value of the Ms. Paula and her then-pending freight. Finally,

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1 46 U.S.C. app. § 185 provides that:
The vessel owner, within six months after a claimant
shall have given to or filed with such owner written
notice of claim, may petition a district court of the
United States of competent jurisdiction for limitation of
liability within the provisions of this chapter and the
owner (a) shall deposit with the court, for the benefit
of claimants, a sum equal to the amount or value of the
interest of such owner in the vessel and freight, or
approved security therefor, and in addition such sums, or
approved security therefor, as the court may from time to
time fix as necessary to carry out the provisions of
section 183 of this title, or (b) at his option shall
transfer, for the benefit of claimants, to a trustee to
be appointed by the court his interest in the vessel and
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Sanchez agreed not to seek execution of any judgment obtained in
the Galveston court in excess of the value of the Ms. Paula and her
then-pending freight as determined by the Mississippi court.
Sanchez contended that as a single claimant who had filed a
stipulation that protected the shipowner’s rights to limitation of
liability, he should be allowed to proceed with his claims in his
chosen forum, the Galveston court. Inland Dredging responded that
because Sanchez pursued remedies in a federal court sitting in
admiralty, rather than a common law state court, he was restricted
to litigating all issues before the Mississippi court. The
district court agreed with Inland Dredging and denied Sanchez’s
motion to dissolve the injunction.
II.
The liability of a vessel owner without fault is limited by 46
U.S.C. app. § 183, and the owner may file in federal court to
effectuate that limit by complying with 46 U.S.C. app. § 185.1

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freight, together with such sums, or approved security
therefor, as the court may from time to time fix as
necessary to carry out the provisions of section 183 of
this title. Upon compliance with the requirements of this
section all claims and proceedings against the owner with
respect to the matter in question shall cease.
2 192 F.3d 41, 48 (2d Cir. 1999).
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This petition for limitation of liability limits the claimant to
recovery of damages, if any, of no more than the value of the
vessel and cargo (subject to the provisions of § 183).
The last sentence of § 185 reads:
Upon compliance with the requirements of this section all
claims and proceedings against the owner with respect to
the matter in question shall cease.
The question here is the meaning of that sentence. Does it
provide that proceedings respecting limitation of the shipowner’s
liability are confined to the limitation court, or does it prohibit
any other proceeding respecting the fact of the shipowner’s
liability? If it is given the latter meaning, then a conflict must
be found in the law (as by the “saving to suitors” reservation of
the general jurisdiction statutes, 28 U.S.C. § 1333) before a
related action may proceed.
We agree with the Second Circuit in Kreta Shipping v. Preussay
International Steel Corp.,2 which followed the language of the
Supreme Court in Lake Tankers v. Henn, saying “The [Limitation] Act
is not one of immunity from liability but of limitation of it and
we read no other privilege for the shipowner into its language over

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3 354 U.S. 147, 152-53; 77 S. Ct. 1269, 1272 (1957).
4 192 F.3d at 48.
5 159 F.2d 273, 276 (2d Cir. 1947).
6 E.g., AmSouth Bank v. Dale, 386 F.3d 763, 786 (6th Cir.
2004) (citing 10B WRIGHT, MILLER & KANE, FEDERAL PRACTICE AND PROCEDURE §
2765 (3d ed. 1998) (citing Cunningham Bros., Inc. v. Bail, 407 F.2d
1165, 1168-69 (7th Cir. 1969))).
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and above that granting him limited liability.”3 The Kreta court
held that “the injunction should be lifted irrespective of whether
the claimants wish to assert ‘common-law rights’ in state courts or
other rights elsewhere.”4 The Kreta court was following a prior
opinion of the Second Circuit where Judge Learned Hand wrote that
a federal court in New York would have no justification for
enjoining suits in a federal court in Pennsylvania because “every
claimant has a legally protected interest in choosing his forum .
. . .” Curtis Bay Towing Co. v. Tug Kevin Moran.5
This construction of § 185 is consistent with the construction
given generally by federal courts in the context of other statues
that might otherwise be read to vest a putative tort defendant with
a superior right to choice of forum. For example, we would not
allow a tortfeasor to seek a declaratory judgment of non-liability
and thereby “procedurally fence” the injured party in the
tortfeasor’s chosen forum.6 Federal courts also guard against the
use of interpleader actions as devices to procedurally fence

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7 NYLife Distribs., Inc. v. Adherence Group, Inc. 72 F.3d
371, 382-83 (3d Cir. 1995).
8 531 U.S. 438, 121 S. Ct. 993 (2001).
9 531 U.S. at 452-53; 121 S. Ct. at 1003.
10 Weinberger v. Romero-Barcelo, 456 U.S. 305, 313, 102 S. Ct.
1798, 1803 (1982) (citation omitted).
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claimants.7
Further, the Supreme Court quoted Lake Tankers Corp. v. Henn
in Lewis v. Lewis & Clark Marine, Inc.8 where the court held that
the Limitation Act does not grant vessel owners a “freestanding”
right to obtain exoneration from liability in federal court where
limitation of liability is not an issue.9
We do not find anything in the Act’s text, legislative
history, or the Supreme Court’s opinions that would lead us to
conclude that only where the Act and the saving to suitors clause
conflict is it appropriate for the limitation court to dissolve its
injunction and allow the claimant to proceed in a different forum.
The Act’s provision of injunctive relief to protect the shipowner’s
right to limited liability is an equitable remedy, and when the
Congress legislates to affect an area of jurisprudence as well
developed as equity, we presume that the Congress intended to
preserve established principles.10 “[T]he traditional function of
equity has been to arrive at a ‘nice adjustment and reconciliation
of competing claims’ [so that] the court ‘balances the conveniences
of the parties and possible injuries to them [] as they may be

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11 456 U.S. at 312, 102 S. Ct. at 1803.
12 282 U.S. 531, 541, 51 S. Ct. 243, 247 (1931).
13 Id.
14 354 U.S. 147, 152, 77 S. Ct. 1269, 1272 (1957).
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affected by the granting or withholding of the injunction.’”11 What
we and the Supreme Court find essential in construing § 185 is this
balancing of the rights of the parties.
In Lagnes v. Green,12 the Court described the limitation
court’s choice as being between two alternatives: “To retain the
cause would be to preserve the right of the shipowner, but to
destroy the right of the suitor in the state court to a common law
remedy;” whereas “to remit the cause to the state court would be to
preserve the rights of both parties.”13 We find that choice
analogous in this question of forum. To allow the limitation court
to restrain prosecution of the action in the claimant’s chosen
forum would preserve the right of the shipowner to limit his
liability, but would destroy the traditional right of a claimant to
seek redress in his chosen forum. On the other hand, if a claimant
has provided a stipulation that adequately protects the shipowner’s
rights and the limitation court dissolves the injunction, both
parties’ rights are preserved. Similarly, in Lake Tankers Corp.
v. Henn,14 where the Court found that the claimant should be allowed
to proceed in her chosen forum where the shipowner’s fund was
adequate to satisfy any damage award, the Court stressed that to

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15 354 U.S. at 152-53, 77 S. Ct. at 1272.
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expand “the Act to prevent [a claimant] from now proceeding in her
state case would transform the Act from a protective instrument to
an offensive weapon by which the shipowner could deprive suitors of
their common-law rights. . . .” In this case, allowing the
Mississippi court to continue to restrain Sanchez from pursuing his
case in the Galveston court would turn the Act into an offensive
instrument to cut off a claimant’s traditional right to choose his
forum.
And we are, of course, mindful of the Supreme Court’s
admonition that we “read no other privilege for the shipowner into
[the Act’s] language over and above that of granting him limited
liability.”15
We therefore find no principled reason to read the Act to
preclude the traditional right of an aggrieved party to seek
redress in the forum of his choice. We join the Second Circuit and
hold that a single claimant’s choice of forum is a sufficient
interest to warrant the dissolution of an injunction if the
claimant files stipulations that adequately protect the shipowner’s
rights under the Act.
Applying our holding to the facts before us, we conclude that
the district court abused its discretion in refusing to dissolve
the injunction because it rested its decision on an error of law;
specifically, that because the saving to suitors clause did not

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16 See In Re Tetra Applied Techs., L.P., 362 F.3d 338, 343
(5th Cir. 2004) (finding an abuse of discretion where district
court erroneously concluded that stipulations did not adequately
protect shipowner).
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apply, Sanchez was not entitled to proceed in his chosen forum. No
party disputes that Sanchez’s stipulations are adequate to protect
Inland Dredging’s limitation rights under the Act, and the
injunction should be dissolved.16
INJUNCTION VACATED; CAUSE REMANDED.

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