Ochoa v. Material Serv. Corp.

590 F.Supp.3d 1109

Mariana M. OCHOA, as Independent Administrator of the Estate of Victor Lobato Ochoa, deceased, Plaintiff,

v.MATERIAL SERVICE CORPORATION d/b/a Hanson Material Service Corporation ; Lehigh Hanson Services LLC; Lehigh Hanson Inc.; Captain Kenneth L. Stubbs; and Celio San Gabriel, Defendants.

In the Matter of the Complaint of Hanson Aggregates Midwest, Inc. f/k/a Material Service Corporation d/b/a Hanson Material Service Corporation for Exoneration from, or Limitation of, Liability

No. 21 C 3936

No. 21 C 4295

United States District Court, N.D. Illinois, Eastern Division.

Signed March 9, 2022

Michael L. Gallagher, Wise Morrissey, LLC, Chicago, IL, for Plaintiff.

Jacob Daniel Curtis, Pro Hac Vice, Goldstein and Price, L.C., St. Louis, MO, Paul W. Carroll, Gould & Ratner, Chicago, IL, for Defendants Material Service Corporation, Lehigh Hanson Services LLC, Heidelberg Cement Group, Kenneth L. Stubbs.

Neal W. Settergren, Goldstein & Price, St. Louis, MO, for Defendants.

OPINION AND ORDER

SARA L. ELLIS, United States District Judge

On July 22, 2020, a motorboat operated by Celio San Gabriel that carried nine individuals capsized on the Chicago River. Victor Lobato Ochoa, one of the motorboat's passengers, drowned. On July 1, 2021, his mother and the administrator of his estate, Mariana Ochoa, filed a lawsuit against Defendants Material Service Corporation d/b/a Hanson Material Service Corporation ("Hanson"), Lehigh Hanson Services LLC ("Lehigh LLC"), Heidelberg Cement Group ("Heidelberg"), and Kenneth L. Stubbs in state court. Mariana claimed that a towboat and barge that Stubbs operated as an employee of Hanson, Lehigh LLC, and Heidelberg caused the motorboat to capsize. Hanson, Lehigh LLC, Heidelberg, and Stubbs removed Mariana's wrongful death case, No. 21 C 3936, to this Court pursuant to admiralty and diversity jurisdiction, 28 U.S.C. §§ 1332(a), 1333(1), on July 24, 2021. Mariana filed a second amended complaint on August 31, 2021, naming Hanson, Lehigh LLC, Lehigh Hanson, Inc. ("Lehigh Inc."), and Stubbs (collectively, the "Hanson Defendants"), as well as San Gabriel as defendants. Mariana also filed a motion to remand the case to state court on August 23, 2021, which she supplemented with an amended motion on September 3, 2021, after she filed her second amended complaint.

Meanwhile, Hanson filed a limitation of liability case, No. 20 C 4295, seeking exoneration from or limitation of its liability for any loss, injury, or damage resulting from the July 22, 2020 incident pursuant to Supplemental Rule F of the Federal Rules of Civil Procedure and the Limitation of Liability Act (the "Limitation Act"), 46 U.S.C. § 30501 et seq.¹ On September 8, 2021, the court entered an order requiring all persons having claims arising out of the July 22, 2020 incident to file claims with the Clerk of Court by November 1, 2021. The court also stayed all proceedings arising out of or connected with the July 22, 2020 incident, a stay that reached the wrongful death case. Mariana filed an answer on October 29, 2021, but no other individual filed a claim as ordered by the court. The court then entered default against all persons except Mariana and allowed Mariana to file a belated claim, which she did on December 20, 2021. Mariana also filed a motion to lift the stay so that she can pursue her wrongful death case in state court.

The Court now addresses the two interrelated motions pending in these cases: Mariana's motion to lift the stay in the limitation of liability case [No. 21 C 4295, Doc. 17] and Mariana's motions to remand the wrongful death case to state court [No. 21 C 3936, Docs. 13, 17]. The Court finds it appropriate to lift the stay in the limitation of liability case to allow Mariana to proceed with her wrongful death case because she is the only individual asserting a claim involving the July 22, 2020 incident. And having lifted the stay, the Court must remand the wrongful death case to state court because Mariana originally filed suit in state court pursuant to the saving to suitors exception to federal courts’ exclusive admiralty jurisdiction and the addition of San Gabriel as a defendant means that diversity jurisdiction no longer supplies the required additional jurisdictional basis to support the case's removal to federal court.

I. Motion to Lift the Stay in the Limitation of Liability Case, No. 21 C 4295

The Limitation Act "allows a vessel owner to limit liability for damage or injury, occasioned without the owner's privity or knowledge, to the value of the vessel or the owner's interest in the vessel."

Lewis v. Lewis & Clark Marine, Inc. , 531 U.S. 438, 446, 121 S.Ct. 993, 148 L.Ed.2d 931 (2001) ; see 46 U.S.C. § 30505(b). The Limitation Act requires that "all claims and proceedings against the owner related to the matter in question shall cease" while a court considers the owner's liability under the Act. 46 U.S.C. § 30511(c). But this stay requirement "must be interpreted in conjunction with the ‘savings to suitors’ clause in 28 U.S.C. § 1333(1), which reserves to suitors in admiralty or maritime cases their common-law remedies," including "the right to select a forum and the right to demand a jury trial." Am. River Transp. Co. v. Ryan , 579 F.3d 820, 825 (7th Cir. 2009). Reading the provisions together gives a court discretion to lift the stay and allow a claimant to proceed on their underlying claim against the owner in state court, while the petition for limitation of liability remains pending in federal court. See Lewis , 531 U.S. at 449, 121 S.Ct. 993. Courts exercise this discretion "when there is only one claimant, or when the total demanded by multiple claimants does not exceed the value set by the Limitation Act." Roen Salvage Co. v. Sarter , 17 F.4th 761, 763 (7th Cir. 2021).

Here, Mariana argues that the Court should exercise its discretion under the single claimant exception to lift the stay and allow the wrongful death case against Hanson to proceed in state court. See id. (where only a single claimant seeks a recovery, the federal court "can set a maximum level of liability based on the criteria in § 30505(a), which will fully protect [the owner's] federal statutory rights" and then "permit the substantive claim to proceed in state court"). Hanson responds that the absence of any claims aside from Mariana's does not sufficiently establish the applicability of the single claimant exception, meaning that any decision to lift the stay is premature.² But the court already entered default against any additional potential claimants, see No. 21 C 4295, Doc. 21, and no indication exists that any of the additional potential claimants would seek to set aside the default and assert a late claim.³ Thus, the Court does not find Mariana's motion to lift the stay premature and instead concludes that the single claimant exception applies.

Next, Hanson argues that the Court should reject Mariana's request to lift the stay because she does not have a pending state court lawsuit, meaning no conflict exists between the Limitation Act and the saving to suitors clause, and this Court can provide her with a jury trial if warranted. But Mariana contests the removal of the wrongful death case from state to federal court, with resolution of her motion to remand in that case stayed in light of the limitation of liability case. To resolve the propriety of the removal of the wrongful death case, the Court must lift the stay imposed by § 30511(c). Therefore, regardless of whether this Court could fashion a proceeding that would simultaneously protect Mariana's right to a jury trial for her wrongful death claims and resolve the questions raised by the limitation of liability case, the Court finds it appropriate to lift the stay to determine whether Marian's wrongful death case should proceed in state or federal court. See Lewis , 531 U.S. at 455, 121 S.Ct. 993 (saving to suitors clause preserves a claimant's right to select a forum).

As Mariana acknowledges, however, lifting the stay on the wrongful death case does not come without limitations, as the Court must ensure that Hanson's "right to seek limitation will be protected." Id. at 454, 121 S.Ct. 993. To that end, Mariana offers to stipulate to the following: (1) this Court has exclusive jurisdiction to decide all limitation of liability issues, including the value of the limitations fund; (2) Hanson has the right to litigate all issues related to limitation of liability, as opposed to exoneration, in the limitation proceeding; (3) Mariana stipulates to the value of the limitations fund determined by the Court as long as she has an opportunity to obtain an independent appraisal or related valuation; (4) she will not enforce or collect any judgment in excess of the limitations fund unless and until the Court adjudicates the limitation of liability case; and (5) she waives any claims of res judicata on issues of limited liability, as opposed to exoneration, based on any judgment she obtains in other proceedings related to the July 22, 2020 incident. See No. 21 C 4295, Doc. 17-1; In re Ill. Marine Towing , 498 F.3d 645, 653 (7th Cir. 2007) (approving similar stipulations as adequately protecting the owner's interests under the Limitation Act while allowing the claimants to pursue their claims in state court); cf. Roen , 17 F.4th at 763–64 (noting that stipulations to protect an owner's liability are not necessary as long as the court makes clear "any provisos that are essential to safeguard the federal right under § 30505(a)"). Hanson has not raised any issues with Mariana's stipulations or argued that they do not adequately protect its interests. In light of Mariana's concessions, which the Court adopts, the Court lifts the stay to allow Mariana to pursue the wrongful death case against Hanson and others while the limitation of liability case remains pending.

II. Motion to Remand the Wrongful Death Case, No. 21 C 4295, to State Court

The Court thus turns to...