Those pesky statutes of limitation. Usually such statutes operate to prevent plaintiff's untimely claims. But, in this case, the statute of limitation acted to preclude a defendant's limitation of liability defense.
The case is new from the Fifth Circuit Court of Appeals, it is Eckstein Marine Service v. Jackson, 2012 U.S. App. LEXIS 3480 and can be found here.
In the maritime context, federal law allows shipowners to limit their liability for certain actions by bringing a limitation action in federal court. 46 U.S.C. 30501. With certain exceptions, a vessel owner can have their liability capped at the value of the vessel. But, the limitation statute has a six month statute of limitation. [Author note: not intended to be funny, but it is].
In this case, the shipowner filed the limitation action eight and half months after it was served with a state court complaint. The trial court dismissed and the appeals court affirmed.
On appeal, the owner argued that the state court complaint did not give the owner notice that its liability could exceed the value of the vessel. The owner cited a Second Circuit case, Complaint of Morania Barge No. 190, which held that an owner only needed to file the limitation action if there was a "reasonable possibilty" that its liability would exceed the value of the vessel.
The appeals court reviewed the allegations in the state court complaint noting that the injuries alleged were "permanent and catastrophic" with damages sought for past loss of earning, future loss of earning capacity, disability, disfigurement, medical expenses and pain and mental anguish. No dollar figure was sought, so the owner argued it wasn't on notice until much later (when the statute of limitation would not bar its limitation action).
The appeals court noted that a "reasonable possibility" is not a particularly "stringent" standard and affirmed the dismissal of the limitation action.