A ship owner whose vessel was involved in a collision with a fishing boat that killed a young girl wanted to limit the amount of liability it could have to pay in a lawsuit, but a federal appeals court says the company waited too long to file its paperwork.

RLB contracting says it was served with a wrongful death suit in July 2012, and submitted its limitation of liability action in December 2012, within the six-month deadline. But the plaintiffs argued that the shipping company was aware of the possibility of litigation because of correspondence with counsel since July 2011, a year before the suit was actually filed. 

The U.S. Court of Appeals for the Fifth Circuit agreed with the plaintiffs, and rejected the limited liability claim on Dec. 3.

Case background

On July 1, 2011, the dredge vessel, the "Jonathan King Boyd," owned by RLB Contracting Inc., was engaged in dredging operations near Anahuac in Chambers County. A fishing boat carrying Mark Butler, his 12-year-old daughter Sammi Butler, his son Joseph Sigle and Sigle’s son B.S. was sailing in the area.

Court papers state the Butlers’ fishing boat collided with a floating dredge pipe being used by the Jonathan King Boyd.

All of the occupants of the fishing boat were thrown overboard and suffered various injuries. Sammi Butler was killed.

The Butlers contend that the dredge pipe was inadequately marked and that RLB Contracting negligently failed to post warnings of ongoing dredging operations in the area.

Mark Butler filed suit against RLB in Texas state court on June 14, 2012.

Limitation of Liability

In response to the suit, RLB filed a limitation of liability claim in federal court on Dec. 28, 2012, seeking to limit its liability to the $750,000 value of the dredge vessel.

But the Butlers filed a motion to dismiss the federal limited liability action, claiming that more than six months had elapsed since RLB had received notice of the suit against it.

The plaintiffs asserted that their counsel and lawyers for RLB exchanged numerous emails between July 26, 2011, and June 14, 2012, “each of which addressed the Butler’s pending claim.”

A magistrate judge agreed that on the basis of the emails, “RLB had received the required notice and thus missed the six-month window for filing a limitation action,” court papers state.

The district judge then dismissed the limitation action as time-barred.

RLB then took the matter to the federal appeals court.

The Fifth Circuit’s opinion states that the series of letters and emails between RLB counsel Andrew Schulz and the Butler’s counsel, Frank Daniel are at the “heart” of the appeal.

First, on July 26, 2011, Daniel notified Schulz via fax that he had been retained by the Butlers, requested any information about the cause of the accident and informed Schulz he would be open to discussion of a discussion about settlement.

Schulz responded the same day, via email, and stated that the U.S. Coast Guard was investigating the collision and that any information would remain work product of Schulz’s firm until the investigation was complete.

In August 2011, Daniel sent an email to Schulz that “it might behoove them to seriously consider mediation before any lawsuit,” the court papers say.

Schulz rejected the mediation offer and said they would wait for the Coast Guard report.

A few more emails were exchanged until Oct. 28, 2011, and then the correspondence stops for seven months.

After the Coast Guard investigator released his report, Daniel sent a final mediation offer to Schulz on May 30, 2012. Daniel also said he would be taking a statement from another boater who had hit the dredge pipe on the same day as the Butlers.

On June 8, 2012, Schulz received an email from Daniel that his clients had asked him to file suit in Chambers County and that it would be in the 253rd District Court. The Chambers County clerk’s office mailed the notice of suit on June 19, and RLB was served on July 2, 2012.

The Butlers claimed damages of $3 million.

The company sought to limit the damages to $750,000 and submitted paperwork to federal court in December 2012.

According to court papers, the Limitation Act allows a vessel owner to limit liability for damage or injury to the value of the vessel or the owner’s interest in the vessel.

“To invoke the protections of the Act, the vessel owner must bring an action in district court ‘within six months after a claimant gives the owner written notice of a claim,’” the Fifth Circuit wrote.

The court emphasizes that the standard is a “reasonable possibility” not a “reasonable probability” that a claim will be filed and/or that the claim’s value will exceed the value of the vessel.

The justices agreed that considering all the correspondence as a whole, the vessel owner should have thought there was a “reasonable possibility” of a potential claim and should have realized the potential for damages to exceed the vessel’s value of $750,000 was likely in a case involving the death of a child.

But the company claimed the correspondence from Daniel in 2011 did not count as written notice of the lawsuit.

The justices, however, wrote that the statute did not mandate that the written notice contain “magic words.”

In a per curium opinion Dec. 3, the Fifth Circuit affirmed the district court’s dismissal of RLB’s federal limitation of liability complaint as time-barred.

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