United States District Court, W.D. Louisiana, Lake Charles Division
IN THE MATTER OF THE COMPLAINT OF TEXAS PETROLEUM INVESTMENT COMPANY, as owner and operator of M/V MICHELLE, for EXONERATION FROM OR LIMITATION OF LIABILITY
KATHLEEN KAY JUDGE.
G. JAMES UNITED STATES DISTRICT JUDGE.
before the Court is a Motion to Enter Stipulation and to Lift
Injunction and Stay of Proceedings, filed by
Defendant/Claimant Gentry Hebert (“Hebert”).
[Doc. No. 24]. The motion is opposed by Plaintiff Texas
Petroleum Investment Co. (“Texas Petroleum”),
[Doc. No. 26]; Defendants/Claimants Gray Insurance Co.
(“Gray Insurance”) and Prosper Operators Inc.
(“Prosper”), [Doc. No. 27]; Defendant/Claimant
Phoenix Forge Group LLC (“Phoenix”), [Doc. No.
28]; and Defendant/Claimant JIREH Oilfield Services
(“JIREH”), [Doc. No. 29]. Magistrate Judge
Kathleen Kay issued a Report and Recommendation, in which she
recommends that the motion be denied because Hebert's
proffered stipulations were not joined by the other
defendants/claimants and are, therefore, not sufficient to
protect Texas Petroleum's right to limit its liability.
[Doc. No. 34]. Hebert filed objections. [Doc. No. 37');">37]. Texas
Petroleum and Phoenix filed responses to Hebert's
objections. [Doc. Nos. 39 & 40]. Having conducted a
de novo review of the record, including the
objections and responses, the Court finds that Magistrate
Judge Kay correctly stated and applied the law and ADOPTS her
Report and Recommendation. The Court issues this Ruling to
address Hebert's objections. Objections to a magistrate
judge's report and recommendation on dispositive matters
are reviewed de novo. 28 U.S.C. § 636(b)(1)(C);
claims that Magistrate Judge Kay erred by not determining
whether the proposed stipulations “adequately protect
the vessel owner from excess liability, regardless of whether
all claimants entered into, signed, or crafted their own
stipulations.” [Doc. No. 37');">37, p. 2]. Hebert claims that
his stipulations adequately protect Texas Petroleum's
rights to limit liability because they include, inter
alia, that he will:
1) not enforce a judgment against any of the
defendants until after the limitation proceedings is
concluded; and 2) that any reimbursement claim for medical
and indemnity benefits paid by [Prosper] and [Gray Insurance]
to [Hebert], whether the payments represent medical and/or
indemnity benefits under the Louisiana Workers'
Compensation Act or maintenance and cure benefits paid to or
on behalf of [Hebert], shall be given preference and priority
ranking over the claims of [Hebert] subject to the limitation
fund and will not be enforced by [Hebert] against [Texas
Petroleum] itself or by enforcement against any third
parties, including [Prosper], [Gray Insurance], [JIREH], [XYZ
Corporation], and [Phoenix].
[Doc. No. 37');">37, pp. 3-4]. Hebert claims that these stipulations
“eliminate the possibility that competing claims
would exhaust the limitation fund before the admiralty court
has the opportunity to determine whether to grant limited
liability to the vessel owners.” Id. at p. 4.
Hebert cites In re Self, 172 F.Supp.2d 813
(W.D. La. 2001), In re Two “R” Drilling Co.,
Inc., 943 F.2d 576 (5th Cir. 1991), and Kattelman v.
Otis Eng'g Corp., 696 F.Supp. 1111, 1116 (E.D. La.
1988), as purported examples of courts holding or implying
“that a damage claimant's stipulation does not
require the consent of third party claimants seeking
indemnity and contribution if the damage claimant's
stipulation adequately protects the vessel owner from excess
liability.” [Doc. No. 37');">37, p. 3].
Hebert's stipulations appear to acknowledge that Prosper
and Gray Insurance have claims in this limitation action that
are not derivative of Hebert's petition for damages in
his state court lawsuit. Even assuming that Hebert's
stipulations would suffice to protect Texas Petroleum from
excess liability against the indemnity and contribution
claims in this limitation action, Hebert's stipulations
are not sufficient on the whole because Prosper and Gray
Insurance, who have independent claims against Texas
Petroleum for reimbursement, have not “stipulate[d]
that the admiralty court reserves exclusive jurisdiction to
determine all issues related to the shipowner's right to
limit liability, and that no judgment against the shipowner
will be asserted to the extent it exceeds the value of the
limitation fund.” Magnolia Marine Transport Co.,
Inc. v. Laplace Towing Corp., 964 F.2d 1571, 1575 (5th
Cir. 1992); see also Odeco Oil and Gas Co., Drilling Div.
v. Bonnette, 74 F.3d 671, 674 (5th Cir. 1996). In the
Fifth Circuit, these stipulations are required of all
claimants when the limitation fund is inadequate to satisfy
all claims. Odeco, 74 F.3d at 674. Thus, in
agreement with the Magistrate Judge, this Court is not
satisfied that Hebert's unilateral stipulations are
sufficient to protect Texas Petroleum's right to limit
its liability, and, therefore, do not provide an adequate
basis for lifting the stay and allowing Hebert's state
court action to proceed. See [Doc. No. 34, p. 5].
Accordingly, IT IS ORDERED, ADJUDGED AND
DECREED that Hebert's Motion to Enter
Stipulation and Lift Injunction and Stay of Proceedings,
[Doc. No. 24], is DENIED.
 Prosper and Gray Insurance claim to
have already paid more than $220, 000 “to or on behalf
of Gentry Hebert in workers' compensation medical and
indemnity benefits under the Louisiana Workers'
Compensation Act, and maintenance and cure” and seek
reimbursement for these payments from Texas Petroleum. [Doc.
No. 7, pp. 7-8].
 Prosper is a co-defendant with Texas
Petroleum in Hebert's state court lawsuit. See