Under the federal statute allowing for the filing of a limitation of liability action by a vessel owner, 46 U.S.C. § 30511(a) permits the owner of a vessel to bring such action in a United States District Court, as long as it is brought “within six months after a claimant gives the owner written notice of a claim.” However, § 30511(a) does not define what constitutes “notice” to trigger the six-month deadline to file the limitation action.
The District Court for the Eastern District of Virginia recently addressed the issue of what constitutes enough “notice” to start the six-month clock for limitation in the Matter of Vulcan Construction Materials, LLC, No. 2:18CV668, 2019 WL 2016706 (E.D. Va. May 7, 2019), reconsideration denied, No. 2:18CV668, 2019 WL 3208648 (E.D. Va. July 16, 2019).
Vulcan owned and operated a vessel, JEANIE CLAY. Dervishian was neither a seaman nor an employee of Vulcan. Dervishian claimed that Captain Kim Todd, an employee of Vulcan, operated a tugboat owned by Vulcan known as the JEANIE CLAY. The tug assisted in the mooring of barges at the terminal located at Shirley Plantation in Charles City, Virginia. Dervishian alleged the actions of the tug caused the barges to shift which, in turn, caused Plaintiff to lose his balance and fall approximately 8 feet from the deck of one barge onto the deck of another barge. The fall allegedly caused “multiple, severe injuries, including left leg fractures requiring amputation of the left leg.” This incident occurred on February 22, 2018.
On April 19, 2018, a written note was hand-delivered to Vulcan’s registered agent. At no time did Vulcan dispute that it received the note. On October 23, 2018, just over six months after delivering such note, Dervishian filed a Complaint in the Circuit Court for the City of Norfolk asserting a personal injury cause of action against Vulcan and Captain Todd, seeking $45,000,000.00. On December 17, 2018, Vulcan filed its Complaint in Limitation seeking exoneration from or limitation of liability to the value of the JEANIE CLAY, or the sum of $375,000.
Dervishian then brought a Motion to Dismiss that the filing of the limitation action was beyond the six month period after receipt of the handwritten note. Accordingly, the Court’s analysis hinged on whether the April 18, 2018 note was sufficient to constitute notice of a claim under 46 U.S.C. § 30511, which states: “The owner of a vessel may bring a civil action in a district court of the United States for limitation of liability under this chapter. The action must be brought within 6 months after a claimant gives the owner written notice of a claim.” The statute does not elaborate on what constitutes appropriate notice, although “[i]t is well-settled that a letter sent by a claimant (or claimant’s attorney) to a vessel owner may constitute notice of a claim, and such notice may be sufficient to trigger the six month statute of limitations.” However, “[b]ecause the statute requires vessel owners to post security” or transfer their interest in the vessel to a trustee “at the time of filing a limitation of liability action, courts have traditionally been hesitant to require that such an action be filed in response to a vague letter which fails to specifically threaten suit or give some approximation as to the extent of the owner’s liability.
The Court here noted that there were two key tests courts have employed to determine the sufficiency of a letter. Under the first test, sufficiency is determined by the following factors: “whether the letter (1) informs the vessel owner of claimant’s ‘demand of a right or supposed right,’ (2) blames the vessel owner for ‘any damage or loss,’ or (3) calls upon the vessel owner for something due claimant.” Under the second test, courts “place[ ] heavy emphasis on whether the letter” indicates “a reasonable possibility that the claim[ ]” may “exceed the value of the ship.”
The Court described the note that was sent: “On April 19, 2018, a courier hand-delivered the note to the corporate office of Vulcan’s registered agent. ECF No. 18-4. The note consisted of an 8.5 x 11 sheet of paper with no written material other than the following:
April 19, 2018
NOTICE OF CLAIM
To: Corporation Service Company
Registered Agent for Vulcan Construction Materials, LLC
100 Shockoe Slip
Richmond, Virginia 23219
Please be advised that we represent Robert Dervishian, Jr., in connection with serious personal injuries he sustained on February 22, 2018 at the Shirley Plantation Dock due to the alleged negligence of the employee of Vulcan Construction Materials, L.L.C., Kim Todd, while Mr. Todd was operating the Jeanie Clay tugboat. A claim may be filed.
Jeffrey N. Stedman, Esq.
VSB No.: 84496
7130 Glen Forest Drive
Richmond, VA 23226″
The Court noted the remainder of the page was filled with blank space. The note was not signed by Dervishian. The note did not contain any letterhead. Although it stated that “we represent…Dervishian,” there was no indication as to who “we” was. No law firm was identified, nor did the words “attorney” or “lawyer” appear on the note. Other than listing a “VSB No.” and including the suffix “Esq.” after his name, there was no clear indication that Mr. Stedman was a lawyer. Further, there is no “re:” line referencing Dervishian, Vulcan, or any potential claim. Finally, no contact information is provided, other than Mr. Stedman’s address.
The Court went on to analyze the note: “The style of the note here provides little indication of a potential legal claim or the nature of such claim. The note does not contain letterhead indicating that it was sent from a law firm (or any legitimate enterprise, for that matter). While the words “notice of claim” appear at the center, near the top of the page, such heading does not provide sufficient context to warn of the nature of a legal claim.” According to the District Judge, “For these reasons, the Court finds that the style and appearance of the note set a tone of ambiguity and vagueness, failing to provide sufficient context that would put a recipient on notice of a potential claim.”
The Court further found the note did blame Vulcan and while the note stated that “a claim may be filed,” it did not specify against whom such claim may be filed. Further, the note “did not recommend that [Vulcan] contact its insurer” or “refer the matter to his ‘legal representative,’” nor does it “reference depositions or settlement negotiations.” Most importantly, the note was found by the Court to fail to “quantify the claim in any manner.”
In rendering its decision, the Judge remarked courts have consistently found that a sufficient notice of claim must provide some indication of the amount at issue. The Judge further recited cases from several courts which required more than an indication of the amount at issue, imposing a burden on the claimant to “indicate a reasonable possibility that the claims would exceed the value of the ship.” In this case, the Court found it unnecessary to address whether the note at issue provided indication that the claims would exceed the value of the vessel. The fact that the note provided no quantification whatsoever of a potential claim was enough to find the note insufficient, given its tentative nature.
The Judge determined the note provided no indication of the extent of the injuries, which included the amputation of Dervishian’s leg within a month of the incident. The Judge concluded “It would be unreasonable and contrary to the purpose of the statute, to find that the phrase ‘serious personal injuries,’ unaccompanied by any context, is sufficient to put the owner of a vessel worth several hundred thousand dollars on notice of a claim that would warrant filing a petition for limitation of liability.” For those reasons, the Court concluded Dervishian did not provide Vulcan with the required notice of a claim under 46 U.S.C. § 30511 and denied the Motion to Dismiss the limitation proceeding.
Subsequently, this past July 2019, the same Court addressed a Motion for Reconsideration filed on behalf of Dervishian. The Judge addressed the basis on which such a motion could be considered. First, he noted FRCP rule 59(e) governs requests to alter or amend a ‘judgment,’ which is defined by FRCP Rule 54 (a) as ‘a decree and any order from which an appeal lies.’ After noting the three bases upon which such a motion would lie under Rule 59, the court opined that “mere disagreement with the court’s ruling does not warrant a Rule 59 (e) motion.”
The court then went on to evaluate Rule 54(b) which “expressly provides a district court with discretion to revise interlocutory orders, such as an order denying a motion to dismiss, prior to final judgment.” But, here again the Court noted: “As with a motion for reconsideration under Rule 59 (e), “[m]ere disagreement with a court’s application of the law” is insufficient to support a motion for reconsideration under Rule 54 (b).” The District Judge took the opportunity to reiterate its previous finding that the note at issue was insufficient to provide notice of a claim and denied the Motion for Reconsideration.
Both the original decision and the decision on the motion for reconsideration can be accessed below.