                                                          United States Court of Appeals
                                                                   Fifth Circuit
                                                                 F I L E D
                         REVISED NOVEMBER 16, 2006
                                                                 October 27, 2006
                  IN THE UNITED STATES COURT OF APPEALS
                                                              Charles R. Fulbruge III
                           FOR THE FIFTH CIRCUIT                      Clerk

                           ----------------------

                                No. 05-61156

                          -----------------------


INLAND DREDGING, In the Matter of the Complaint of Inland Dredging
Company, LLC, Owner and Operator of the M/V Ms Paula, for
Exoneration from Limitation or Liability,

                         Plaintiff - Appellee

     v.

RICARDO SANCHEZ,

                         Claimant - Appellant

                         ------------------------

          Appeal from the United States District Court for
                the Northern District of Mississippi

                         --------------------------

Before JONES, Chief Judge, and REAVLEY and PRADO, Circuit Judges.

REAVLEY, Circuit Judge:

     Ricardo Sanchez appeals an injunction preventing him from

proceeding with his Jones Act suit in a different federal court

after the shipowner filed a limitation of liability action in this

federal   court    and    obtained   the   injunction.   We   vacate    the

injunction.

                                     I.

     Ricardo Sanchez claims that he suffered injury while working

                                      1
as a seaman aboard the M/V Ms. Paula, a vessel owned by Inland

Dredging Company, LLC (“Inland Dredging”).              Aware of Sanchez’s

claim, Inland Dredging filed a petition for limitation of liability

under the Limitation of Liability Act (the “Act” or “Limitation

Act”), 46 U.S.C. app. § 185, in the United States District Court

for the Northern District of Mississippi and then filed an Ad

Interim Stipulation for Value, which stated that the value of the

vessel and her then-pending freight did not exceed $235,000.               The

district court approved the Ad Interim Stipulation for Value and

issued   an   order   “restraining       and    enjoining   all   claims   and

proceedings against the M/V MS. PAULA and/or Inland Dredging

Company, LLC, as owner and operator of the M/V MS. PAULA, in any

court whatsoever, except in this proceeding for limitation . . . .“

     Sanchez filed a motion in the Mississippi court to dissolve

the injunction, arguing that he should be allowed to proceed in the

United   States   District   Court       in    Galveston,   and   attached   a

stipulation to his motion in which he agreed that the Mississippi

court had exclusive jurisdiction to determine Inland Dredging’s

right to limitation of liability and the value of the limitation

fund.    Sanchez waived the defense of res judicata with respect to

limitation issues, “based upon any judgment in any other forum of

his choice,” and further agreed not to seek a ruling in the

Galveston court on any of these issues.           Sanchez acknowledged that

the Mississippi court had exclusive authority to determine the

value of the Ms. Paula and her then-pending freight.                 Finally,

                                     2
Sanchez agreed not to seek execution of any judgment obtained in

the Galveston court in excess of the value of the Ms. Paula and her

then-pending freight as determined by the Mississippi court.

      Sanchez contended that as a single claimant who had filed a

stipulation that protected the shipowner’s rights to limitation of

liability, he should be allowed to proceed with his claims in his

chosen forum, the Galveston court.        Inland Dredging responded that

because Sanchez pursued remedies in a federal court sitting in

admiralty, rather than a common law state court, he was restricted

to   litigating   all   issues   before   the   Mississippi   court.   The

district court agreed with Inland Dredging and denied Sanchez’s

motion to dissolve the injunction.

                                    II.

      The liability of a vessel owner without fault is limited by 46

U.S.C. app. § 183, and the owner may file in federal court to

effectuate that limit by complying with 46 U.S.C. app. § 185.1

      1
          46 U.S.C. app. § 185 provides that:

      The vessel owner, within six months after a claimant
      shall have given to or filed with such owner written
      notice of claim, may petition a district court of the
      United States of competent jurisdiction for limitation of
      liability within the provisions of this chapter and the
      owner (a) shall deposit with the court, for the benefit
      of claimants, a sum equal to the amount or value of the
      interest of such owner in the vessel and freight, or
      approved security therefor, and in addition such sums, or
      approved security therefor, as the court may from time to
      time fix as necessary to carry out the provisions of
      section 183 of this title, or (b) at his option shall
      transfer, for the benefit of claimants, to a trustee to
      be appointed by the court his interest in the vessel and

                                     3
This petition for limitation of liability limits the claimant to

recovery of damages, if any, of no more than the value of the

vessel and cargo (subject to the provisions of § 183).

      The last sentence of § 185 reads:

      Upon compliance with the requirements of this section all
      claims and proceedings against the owner with respect to
      the matter in question shall cease.

      The question here is the meaning of that sentence.           Does it

provide that proceedings respecting limitation of the shipowner’s

liability are confined to the limitation court, or does it prohibit

any   other   proceeding   respecting   the   fact   of   the   shipowner’s

liability?    If it is given the latter meaning, then a conflict must

be found in the law (as by the “saving to suitors” reservation of

the general jurisdiction statutes, 28 U.S.C. § 1333) before a

related action may proceed.

      We agree with the Second Circuit in Kreta Shipping v. Preussay

International Steel Corp.,2 which followed the language of the

Supreme Court in Lake Tankers v. Henn, saying “The [Limitation] Act

is not one of immunity from liability but of limitation of it and

we read no other privilege for the shipowner into its language over


      freight, together with such sums, or approved security
      therefor, as the court may from time to time fix as
      necessary to carry out the provisions of section 183 of
      this title. Upon compliance with the requirements of this
      section all claims and proceedings against the owner with
      respect to the matter in question shall cease.

      2
          192 F.3d 41, 48 (2d Cir. 1999).

                                   4
and above that granting him limited liability.”3          The Kreta court

held that “the injunction should be lifted irrespective of whether

the claimants wish to assert ‘common-law rights’ in state courts or

other rights elsewhere.”4       The Kreta court was following a prior

opinion of the Second Circuit where Judge Learned Hand wrote that

a federal court in New York would have no justification for

enjoining suits in a federal court in Pennsylvania because “every

claimant has a legally protected interest in choosing his forum .

. . .”    Curtis Bay Towing Co. v. Tug Kevin Moran.5

      This construction of § 185 is consistent with the construction

given generally by federal courts in the context of other statues

that might otherwise be read to vest a putative tort defendant with

a superior right to choice of forum.        For example, we would not

allow a tortfeasor to seek a declaratory judgment of non-liability

and   thereby   “procedurally    fence”   the   injured    party   in   the

tortfeasor’s chosen forum.6      Federal courts also guard against the

use of interpleader actions as devices to procedurally fence




      3
          354 U.S. 147, 152-53; 77 S. Ct. 1269, 1272 (1957).
      4
          192 F.3d at 48.
      5
          159 F.2d 273, 276 (2d Cir. 1947).
      6
        E.g., AmSouth Bank v. Dale, 386 F.3d 763, 786 (6th Cir.
2004) (citing 10B WRIGHT, MILLER & KANE, FEDERAL PRACTICE AND PROCEDURE §
2765 (3d ed. 1998) (citing Cunningham Bros., Inc. v. Bail, 407 F.2d
1165, 1168-69 (7th Cir. 1969))).

                                    5
claimants.7

     Further, the Supreme Court quoted Lake Tankers Corp. v. Henn

in Lewis v. Lewis & Clark Marine, Inc.8 where the court held that

the Limitation Act does not grant vessel owners a “freestanding”

right to obtain exoneration from liability in federal court where

limitation of liability is not an issue.9

     We    do   not   find   anything   in   the   Act’s   text,   legislative

history, or the Supreme Court’s opinions that would lead us to

conclude that only where the Act and the saving to suitors clause

conflict is it appropriate for the limitation court to dissolve its

injunction and allow the claimant to proceed in a different forum.

The Act’s provision of injunctive relief to protect the shipowner’s

right to limited liability is an equitable remedy, and when the

Congress legislates to affect an area of jurisprudence as well

developed as equity, we presume that the Congress intended to

preserve established principles.10           “[T]he traditional function of

equity has been to arrive at a ‘nice adjustment and reconciliation

of competing claims’ [so that] the court ‘balances the conveniences

of the parties and possible injuries to them [] as they may be


     7
        NYLife Distribs., Inc. v. Adherence Group, Inc. 72 F.3d
371, 382-83 (3d Cir. 1995).
     8
          531 U.S. 438, 121 S. Ct. 993 (2001).
     9
          531 U.S. at 452-53; 121 S. Ct. at 1003.
     10
        Weinberger v. Romero-Barcelo, 456 U.S. 305, 313, 102 S. Ct.
1798, 1803 (1982) (citation omitted).

                                        6
affected by the granting or withholding of the injunction.’”11 What

we and the Supreme Court find essential in construing § 185 is this

balancing of the rights of the parties.

     In Lagnes v. Green,12 the Court described the limitation

court’s choice as being between two alternatives:     “To retain the

cause would be to preserve the right of the shipowner, but to

destroy the right of the suitor in the state court to a common law

remedy;” whereas “to remit the cause to the state court would be to

preserve the rights of both parties.”13        We find that choice

analogous in this question of forum. To allow the limitation court

to restrain prosecution of the action in the claimant’s chosen

forum would preserve the right of the shipowner to limit his

liability, but would destroy the traditional right of a claimant to

seek redress in his chosen forum.    On the other hand, if a claimant

has provided a stipulation that adequately protects the shipowner’s

rights and the limitation court dissolves the injunction, both

parties’ rights are preserved.        Similarly, in Lake Tankers Corp.

v. Henn,14 where the Court found that the claimant should be allowed

to proceed in her chosen forum where the shipowner’s fund was

adequate to satisfy any damage award, the Court stressed that to


     11
          456 U.S. at 312, 102 S. Ct. at 1803.
     12
          282 U.S. 531, 541, 51 S. Ct. 243, 247 (1931).
     13
          Id.
     14
          354 U.S. 147, 152, 77 S. Ct. 1269, 1272 (1957).

                                 7
expand “the Act to prevent [a claimant] from now proceeding in her

state case would transform the Act from a protective instrument to

an offensive weapon by which the shipowner could deprive suitors of

their common-law rights. . . .”              In this case, allowing the

Mississippi court to continue to restrain Sanchez from pursuing his

case in the Galveston court would turn the Act into an offensive

instrument to cut off a claimant’s traditional right to choose his

forum.

     And    we   are,   of    course,   mindful    of    the   Supreme    Court’s

admonition that we “read no other privilege for the shipowner into

[the Act’s] language over and above that of granting him limited

liability.”15

     We therefore find no principled reason to read the Act to

preclude the traditional right of an aggrieved party to seek

redress in the forum of his choice.         We join the Second Circuit and

hold that a single claimant’s choice of forum is a sufficient

interest to      warrant     the   dissolution    of    an   injunction   if   the

claimant files stipulations that adequately protect the shipowner’s

rights under the Act.

     Applying our holding to the facts before us, we conclude that

the district court abused its discretion in refusing to dissolve

the injunction because it rested its decision on an error of law;

specifically, that because the saving to suitors clause did not


     15
           354 U.S. at 152-53, 77 S. Ct. at 1272.

                                        8
apply, Sanchez was not entitled to proceed in his chosen forum.          No

party disputes that Sanchez’s stipulations are adequate to protect

Inland    Dredging’s   limitation   rights   under   the   Act,   and   the

injunction should be dissolved.16

     INJUNCTION VACATED; CAUSE REMANDED.




     16
          See In Re Tetra Applied Techs., L.P., 362 F.3d 338, 343
(5th Cir. 2004) (finding an abuse of discretion where district
court erroneously concluded that stipulations did not adequately
protect shipowner).

                                    9
