Statutory Interpretation – Limitation Act

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7^th Circuit Court of Appeals

Case Name: Roen Salvage Company v. Julie Sarter

Case No.: 20-3433

Officials: EASTERBROOK, ROVNER, and KIRSCH, Circuit Judges.

Focus: Statutory Interpretation – Limitation Act

Donald Sarter drowned after the vessel Monark #2 capsized in Lake Superior. His employer Roen Salvage, which owned Monark #2, filed this federal action under 46 U.S.C. §30505(a), asking the court to limit its liability to $25,000, which it says is the amount of its interest in the vessel. It also asked for exoneration from all liability, a possibility missing from §30505(a) (commonly called the Limitation Act) but mentioned in Rule F(2) of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions, an appendix to the Federal Rules of Civil Procedure.

The first question for us is whether any federal statute entitles a vessel owner to have a federal judge determine exoneration. The answer is no. Certainly §30505(a) does not do so. It reads: “Except as provided in section 30506 of this title, the liability of the owner of a vessel for any claim, debt, or liability described in subsection (b) shall not exceed the value of the vessel and pending freight. If the vessel has more than one owner, the proportionate share of the liability of any one owner shall not exceed that owner’s proportionate interest in the vessel and pending freight.” And §30506, to which the Limitation Act refers, likewise does not mention exoneration. Thus any entitlement to exoneration lies in the common law of admiralty. That’s how the Justices understood Rule F in Lewis—as a restatement of old admiralty decisions. It would be hard to see Rule F as a free-standing limit of liability or a reservation of exclusive federal jurisdiction, given the language in the Rules Enabling Act that the federal rules are not supposed to abridge substantive rights. 28 U.S.C. §2072(b). And Fed. R. Civ. P. 82 proclaims that the Rules of Civil Procedure do not affect subject-maker jurisdiction either.

Because Julie Sarter has promised that she will not plead res judicata should Roen Salvage return to federal court under §30505(a), and because Roen does not possess a right to have a federal court determine its claim to exoneration from liability, we need not remand for the district court to make these makers explicit in its order allowing state litigation. In the future, district judges should choose appropriate language that will obviate the sort of dispute the parties to this case have had about exactly what words a would-be state-court plaintiff must use in order to protect the vessel owner’s rights.

Affirmed
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Derek A Hawkins is Corporate Counsel, at Salesforce.