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U.S. Government Cannot Challenge a Limitation Proceeding Without First Filing a Proof of Claim

November 25, 2013


Even if a U.S. Claim is Not Subject to Limitation

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A party who does not first file a claim in response to a petition for exoneration from a limitation of maritime liability has no standing to contest the petition, according to the Eighth Circuit Court of Appeals.

The owner of a towboat that lost four barges on the Mississippi River, causing extensive damage to a lock and dam, filed a petition for exoneration or limitation of liability and notified the federal government of its action. The government did not file a proof of claim or answer as required by the rules, but instead appeared in the proceeding and filed a motion to dismiss. It argued that its claims were not subject to limitation under the Rivers and Harbors Act.

Rule F(5) of the Supplemental Rules for Admiralty provides that anyone wishing to contest a vessel owner’s right to limitation must file a proof of claim and an answer. The district court dismissed the action, finding that the federal government’s claim was not subject to the Limitation Act, and there were no other claimants.

The Eighth Circuit reversed. Assuming the government had a claim not subject to limitation under the Rivers and Harbor Act, the government did not have to appear at all in the limitation proceeding. It could prosecute its claim separately. But if the government chose to appear in the proceeding, it would have no standing to make any motion unless it first filed a claim in accordance with Rule F(5), the same as any other claimant. (American River Transportation Company v. U.S.A. Cargo of Engineers.)

This article is from Montgomery McCracken’s Fall/Winter 2013 Maritime and Transportation Newsletter.