PATRICK E. HIGGINBOTHAM, Circuit Judge:
Plaintiff-appellant Marquette Transportation Company Gulf-Inland LLC challenges the district court's dismissal of its limitation action as untimely. Finding no error, we affirm.
Claimant-appellee Lorne Jackson was a crew member of the M/V ST. ANDREW, a 65-foot tug owned and operated by appellant Marquette.
On April 28, 2009 Jackson served Marquette with a Texas state court complaint alleging the February 28 accident was caused by the unseaworthiness of the M/V ST. ANDREW and by the negligence of Marquette and its employees.
Following discovery, Jackson made a settlement demand for $3 million on December 2. Marquette refused. On January 18, 2010 Marquette filed an action for exoneration from or limitation of liability in federal district court to cap its liability at $750,000, the value of the M/V ST. ANDREW and its pending freight at the time of the accident. Jackson responded with a motion to dismiss, which the district court denied without prejudice. In July, Jackson renewed his motion, and the district court granted it.
We review de novo a district court's ruling on a motion to dismiss for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1).
The Limitation of Shipowners' Liability Act allows a vessel owner to limit its liability in certain actions for damages to the value of the vessel (and pending freight) on which the incident giving rise to the litigation occurred.
Marquette first challenges the district court's treatment of Jackson's motion to dismiss as an attack on subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1). His argument is two-fold: (1) timeliness is not a jurisdictional issue, and (2) Marquette did not have notice that Jackson was disputing the court's jurisdiction.
This circuit, like several other courts, has held that a party alleging a limitation petition was not timely filed challenges the district court's subject matter jurisdiction over that petition.
That the district court has original jurisdiction over admiralty claims does not change this.
Finally, Jackson's pleadings gave adequate notice to Marquette that he was mounting a challenge to the district court's jurisdiction based on the untimely filing of Marquette's limitation action, even though they did not actually cite to Fed.R.Civ.P. 12(b)(1). The motion's primary argument for dismissal was that Marquette had missed the six-month filing deadline. The first paragraph of Jackson's renewed motion to dismiss declared that "[t]he six-month time limit is jurisdictional and this matter is time-barred." Jackson also made the jurisdictional argument explicit in his answer to the limitation complaint. The original answer stated that "Claimant admits the admiralty and maritime jurisdiction of this Honorable Court, but denies the Petitioner's right to claim limitation or exoneration from liability in this case." Following a hearing on his motion, however, Jackson obtained leave to amend his answer. The only change in the amended version was to this paragraph, which now read: "Claimant denies the admiralty and maritime jurisdiction of this Honorable Court because this limitations action was not filed within six months from the time limitation plaintiff received notice of claim."
Because a challenge to the timeliness of a limitation action is a challenge to the district court's subject matter jurisdiction and because Marquette had notice Jackson was mounting such a challenge in his motion to dismiss, the district court did not err by construing Jackson's motion as a Rule 12(b)(1) jurisdictional attack.
Marquette next argues that the district court erred by dismissing its limitation action because the complaint was filed before the six-month deadline expired. Under the Limitation Act, the six-month deadline begins to run only when the "claimant gives the owner written notice of a claim."
The Limitation Act's six-month timeline does not automatically begin to run when a vessel owner learns a claimant has filed a lawsuit. It is triggered only if and when the written notice reveals a "reasonable possibility" that the claim will exceed the value of the vessel, and therefore that the vessel owner might benefit from the Limitation Act's protection.
Jackson's state court complaint established a reasonable possibility that his claim might exceed $750,000, the value of the M/V ST. ANDREW. In his complaint, he alleged that his injuries occurred on the M/V ST. ANDREW, that Marquette was liable for those injuries due to its negligence, and that he was seeking economic and non-economic damages. This put Marquette on notice that it would have to defend itself against a claim that might fall under the Limitation Act.
Marquette complains the complaint never indicated a dollar amount sought, and that it was filed before the full extent and permanence of Jackson's injuries were definitively known. This argument fails to recognize that the claimant need only raise a "reasonable possibility" that the damages sought will exceed the value of the vessel. While this standard is not toothless, it is also not particularly stringent. Once a reasonable possibility has been raised, it becomes the vessel owner's responsibility to initiate a prompt investigation and determine whether to file a limitation action.
If anything, Marquette's investigation into the incident after it received Jackson's complaint should have demonstrated that there was more than a reasonable possibility that Jackson's claim might exceed $750,000. Marquette has monitored Jackson's medical condition since the accident as part of its cure obligation. During his initial two-week hospitalization, Jackson underwent multiple surgeries including debridement, the insertion of hardware to treat his bone fractures, and a skin graft. Doctors determined at that time that injuries to his leg, ligaments and soft tissue were extensive, and that his knee was "globally unstable." An eyewitness at the scene of the accident recalled that Jackson's "foot was hanging off of his leg at a 90—a 90 degree angle. It was just hanging off....It had blood everywhere."
The two Fifth Circuit cases and the Second Circuit case relied on by both parties in this litigation are not to the contrary.
It is an established principle that a petition for limitation of liability cannot be sustained where the amount claimed is concededly less than the value of the vessel. Where the vessel owner, however, receives notice of a claim for less than the value of the vessel, yet he is also aware that other claims likely to be the subject of litigation arising out of the same occurrence may exceed the value of his ship, he must then file his petition within six months of receiving notice of any claim, no matter how small, or otherwise be barred from asserting limitation of liability.
Jackson was under no obligation to specify an amount claimed in his initial state court complaint, and never asserted that the damages he sought were less than $750,000. Because his complaint alleging catastrophic and permanent injuries raised at least a reasonable possibility that his claim might exceed the value of the M/V ST. ANDREW, it was Marquette's responsibility to conduct an investigation, and to file a limitation action within six months if it wanted to avail itself of that statute's generous protection. The district court did not err in concluding that the six-month deadline was triggered when Jackson delivered his complaint to Marquette on April 28, 2009, and that Marquette's January 18, 2010 petition was untimely filed.
In its final challenge to the district court's judgment, Marquette contends it was deprived of an opportunity to be heard because the court failed to hold an evidentiary hearing on Jackson's motion to dismiss.
We review a district court's denial of an evidentiary hearing for abuse of discretion.
In this case, Marquette had notice that Jackson was challenging the district court's jurisdiction on the basis that its limitation petition was not filed in a timely manner. Both Marquette and Jackson conducted several months of discovery before Jackson renewed his motion to dismiss, and both made multiple filings in the district court presenting their arguments regarding the petition's timeliness as well as the evidence they had accumulated in support of those arguments. Under these circumstances, Marquette had notice and an opportunity to be heard. Because Marquette does not give us any reason to believe that it was unable to adequately present its evidence in writing or that it would have been able to make different or more persuasive arguments at an oral hearing, we conclude that the district court did not abuse its discretion when it opted not to hold such a hearing.
The judgment of the district court is AFFIRMED.