Plaintiff-in-Limitation Law: Another Risk for the Underinsured?

[Kings Gambit]

So, there is an Admiralty law dating to more than a century ago that allows skippers, in accidents which they cause, to limit, or to escape entirely, payment of damages. Of course, this means their insurers also escape. Apparently, this law can be invoked in any setting on the navigable waters of the United States, including inside marinas. Even if your boat is at rest, tied to the dock, and another vessel allides with it and severely damages your boat, you may not be able to recover any damages from the other skipper. With successful application of Plaintiff-In-Limitation the offending skipper, likely at the behest of his/her insurer, effectively makes you a defendant in a legal action, but where you now must prove in federal court the other guy’s negligence to have a successful claim. The amount that can be received is limited to the offending skipper’s monetary interest in the value of the vessel, post accident. So, if it sinks or burns up, the value may be effectively zero; subsequently then, zero monetary interest. Plainly put—you’d get nothing from that skipper or his insurance provider.

Thus, it would be up to your insurance provider to repair your vessel up to the policy limit. If the vessel is totaled far below replacement value, and the other guy’s provider gets off the hook, you’re screwed.

 

[ontherocks83]

do you know of any examples of this actually happening?

 

[Kings Gambit]

do you know of any examples of this actually happening?

Yes. But the most sensational example is with regard to the recent boat fire off Santa Cruz Island where the owners of that vessel, the Conception, have filed a Plantiff-in-Limitation suit in federal court to escape paying damages to the victims’ families, so it has been reported.

 

[Tally Ho]

I am curious about the waiver that almost always required when someone signs up for a boat ride, or whatever. Even when my wife and I go out for a whale watch with Pacific Whale Foundation, we have to sign a waiver. Honestly, I have never read it, but I assume it says we are taking the boat ride at our own risk, and we can’t sue.

i would imagine that the divers on Conception also had to sign something similar. Assuming they did, how does the family sue?
Here is the disclaimer on their website...but I recall signing waivers every time we booked a whale watch last year...

All activities are at your own risk. No liability, expressed or implied, rests with PWF Eco-Adventures, Pacific Whale Foundation, or its subsidiaries or officers. All reservations are non-refundable and changes are not permitted within 48 hours prior to the scheduled check-in. Check-in is at least 45 minutes prior to scheduled departure time. All no-shows are non-refundable. Pacific Whale Foundation reserves the right to reschedule or cancel due to weather, sea state or other exigent circumstances at the discretion of the Captain. Destinations, menus, vessels and equipment subject to change without notice. By purchasing your cruise ticket you agree to receive confirmation and promotional emails from us. You may opt-out of promotional emails at any time using the unsubscribe link.


Greg

 

[Kings Gambit]

Interesting point. I suppose if the owners thought they could depend on that, they wouldn’t need to file. Also, the families of the victims did not sign a waiver; then there is also the crew, one of whom died. Plaintiff-in-Limitation also serves to consolidate all existing and pending actions to be heard by one judge at one time. Any award that might result would be doled out to the claimants up to the limit of the liability, as described above. Rather like bankruptcy court.

 

[ontherocks83]

Do we know why this law was enacted in the first place? Was it to protect or prevent a certain action that is no longer applicable, or what it just successfully lobbying of Congress by shipping companies back in the day?

 

[Kings Gambit]

Do we know why this law was enacted in the first place? Was it to protect or prevent a certain action that is no longer applicable, or what it just successfully lobbying of Congress by shipping companies back in the day?

It once applied only to commercial shipping. Rather recently, the law was amended to include recreational vessels as well. So, who knows? I suspect insurance companies are involved b/c it’s a tried and true way for them out of paying damages.

 

[Kings Gambit]

All activities are at your own risk. No liability, expressed or implied, rests with PWF Eco-Adventures, Pacific Whale Foundation, or its subsidiaries or officers.

Greg

Also, I don’t see how anyone could consciously accept the “risk” for the consequences of an accident that occurred while asleep on a USCG-inspected vessel and which destroyed it, etc. You can hardly call sleeping an “activity” that involves risk. I don’t think the company would get too far with that one in front of a jury.

 

[dlochner]

Interesting legal issue. And as is the case with many legal issues, it gets pretty complicated and convoluted. I'm not an attorney and I don't play one on TV, however, I did find this article on the issue with a few key points.

It appears that Plaintiff in Limitation and most, if not all, admiralty law cases are not entitled to a jury trial. The judge (or judges in an appeal) get to decide.

One protection for claimants (victims) is that all cases arising from the accident are joined as one case. This makes it easier for the courts and avoids competition amongst claimants.

The claimants have to demonstrate the accident was caused by "negligence or vessel unseaworthiness" once that is established, the vessel owner must prove that he didn't know about the unseaworthiness or the conditions that caused the accident.

Here's a link to the article I read, it can be long and tedious.

Limitation of Liability | Mt. Pleasant Maritime Liability Attorney

Limitation of Liability Admiralty lawyers practice in one of the oldest and most specialized areas of the law. It has often been written that the general maritime law of the United States is unique and different than land based law. A prime example of this difference is the Limitation of...

www.bluesteinlawoffice.com

 

[Kings Gambit]

Thanks for your comments. I was referring above to a “normal” civil trial by jury where there had been no filing for limitation, which (limitation) is decided before a judge, as you say.

 

[uncledom]

If this were true, none of us would need insurance at all. I'm going to talk to my underwriter about the real life implications of this. Thanks for the info KG

 

[dlochner]

If this were true, none of us would need insurance at all. I'm going to talk to my underwriter about the real life implications of this. Thanks for the info KG

We need insurance so the insurance company pays the attorney fees, not us.

Also make sure you have hull insurance, not just liability and uninsured boaters insurance.

If you read the article there are some exceptions the Plaintiff in Limitation rule, one of them being an oil spill. Exxon Valdez anyone?

 

[Will Gilmore]

The claimants have to demonstrate the accident was caused by "negligence or vessel unseaworthiness" once that is established, the vessel owner must prove that he didn't know about the unseaworthiness or the conditions that caused the accident.

Limitation of Liability | Mt. Pleasant Maritime Liability Attorney
"A vessel owner, pursuant to the Limitation Act, is entitled to limit its liability after a maritime incident or casualty to the post casualty value of the vessel and the pending freight, except when the loss occurred due to its "privity or knowledge." 46 U.S.C. App. §183(a). In other words, privity or knowledge will be found to exist where the acts of negligence or unseaworthiness that caused the casualty were known or should have been know by the vessel owner. Farrell Lines, Inc. v. Jones, 530 F.2d 7 (5th Cir. 1976), rehearing denied 532 F.2d 1375 (5th Cir. 1976)."
After reading this article, it seems like there is a recognition of the "act of God" nature of being on the water. Even though it may be your vessel that caused the damages, because of the nature of the maritime environment, it would seem unreasonable to hold you responsible for all damages your property may cause when there is always the possibility that even the most experienced and competent sailor may lose to Nature's might. Limiting the liability to the post value of vessel and cargo may be in recognition that the defendant, just as much a victim as the claimant, may not have more to pay than his vessel and its cargo. The surprise is that the value of insurance coverage isn't a consideration. Obviously insurance companies have a strong lobby.
Like dlochner, I don't play a lawyer on tv nor in real life.

-Will (Dragonfly)

 

[shemandr]

Soundings Magazine has a regular column on Maritime Law. A recent one written by James Mercante dealt with the limit of liability issue. I think the dive boat tragedy has brought a lot of attention to this law. I suppose if a ship’s owner had to be responsible for all of the damages that could follow an accident there would be no shipping industry. More cynical observers may conclude that the shipping industry had great lobbyists. I just read Six Frigates, a history of the early American navy. It details how important shipping was to the U.S. in it’s early history. That context is the only way I can make sense of this seemingly unfair law.

 

[Kings Gambit]

I think it probably was a good law historically, for commerce, and may still be in some aspects—the Conception situation notwithstanding. It’s gotten off track, off its intended purpose IMHO, with the relatively recent amendment to include recreational vessels. By this, I mean privately-owned vessels used for personal recreation, such as fishing and other water activities. The law extends to all US navigable waters, including inside harbors and marinas.

Imagine this. You’re among a group of vessels assembled in a harbor to watch a boat parade or fireworks show. Someone loses control of one large boat with a big engine. It runs amok, spins around a couple of times knocking out two or three nearby vessels, damaging them severely. Lots of liability now; several potential lawsuits, etc. The insurance provider advises the owner/skipper of the offending vessel to file a Plantiff-in-Limitation complaint in Admiralty court, then hires a lawyer to do it for him as it is a bit complicated. If successful, the federal judge hearing the complaint stays all pending and in-progress litigation. Claims have to be presented to that presiding Admiralty court judge within a certain period, not long. The amount of money available for settlement is restricted.

 

[Mechone]

On the Conception weren't the divers locked into the cabin? Even signing a wavier ,this action whether criminal or just accidental ,I don't think the owners will get out of this. I am quite sure no one would sign something allowing themselves to be locked down at night and the crew jump ship. They signed up for a diving trip not a cremation and risks associated with diving. In Canada and I don't know about U.S A wavier is not worth the paper it's written on ,if you circumvent the law or don't allow for legal advise .

 

[Kings Gambit]

On the Conception weren't the divers locked into the cabin? Even signing a wavier ,this action whether criminal or just accidental ,I don't think the owners will get out of this. I am quite sure no one would sign something allowing themselves to be locked down at night and the crew jump ship. They signed up for a diving trip not a cremation and risks associated with diving

No. There were no locks although there may have been a door or doorway leading to the bunk area. Somebody might have said that a hatch or door was “blocked” (although that’s not even true), and some press person turned that utterance into “locked.” Then it took off. The fake news world at work.

 

[FastOlson]

On the part of this worrisome discussion about signing waivers, many years ago when I was on the board for a yacht club with a strong racing program, our lawyer-board member (and a very well regarded attorney, at that), strongly advised the club to have high blanket liability insurance coverage for all of the Board and RC members. Her explanation was that signing a form never stopped anyone from suing and that the costs of a defense would usually be greater than even the potential $ loss. In those days, however, USYRU provided/channeled just such a policy at an acceptable cost.

 

[Mechone]

In Canada we also have due diligence laws , where you as an owner took every step even above the law to ensure worker and passenger safety. An example would be did the crew members have fire fighting training,/first aid were all extinguishers up to date ,hydro tested and monthly inspected, were there enough, was a fire drill held with passengers , all routes labelled and clear ,a fire safety plan posted and certified . Can your crew members even swim is anyone certified in life saving ? Any one of these not met and a prosecutor would try to prove the wavier means nothing and most likely win. A teacher was just charged because a student was not given a swim test before a trip and couldn't swim even thou a wavier was signed and drown in a lake . Criminal negligence causing death.The school board is also now on the hook for civil liability

 

[dlochner]

In Canada we also have due diligence laws , where you as an owner took every step even above the law to ensure worker and passenger safety. An example would be did the crew members have fire fighting training,/first aid were all extinguishers up to date ,hydro tested and monthly inspected, were there enough, was a fire drill held with passengers , all routes labelled and clear ,a fire safety plan posted and certified . Can your crew members even swim is anyone certified in life saving ? Any one of these not met and a prosecutor would try to prove the wavier means nothing and most likely win. A teacher was just charged because a student was not given a swim test before a trip and couldn't swim even thou a wavier was signed and drown in a lake . Criminal negligence causing death.

There are two related but separate issues, one is criminal liability, i.e, was criminal law broken and civil liability, i.e., is the party liable for damages. The Plaintiff in Liability law is a civil issue, must the vessel owner pay damages. The vessel owner or the Captain could face criminal action even if the vessel owner is not liable for monetary damages. As I understand it, the Plaintiff in Liability does not protect anyone from going to jail, it just protects the vessel owner from owing more than the vessel is worth.