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

Jul 27, 2011
4,988
Bavaria 38E Alamitos Bay
The problem (escape) with waivers, my opinion, is that someone cannot really be held to consenting to “accepting risks” that they may not even realize exist, and even if so, do not understand. I think a lawyer has only to prove that client did not fully understand what s/he was signing in a waiver to negate it.
 
Jan 11, 2014
11,321
Sabre 362 113 Fair Haven, NY
I have had one experience with a waiver and going to court. At a regatta, one of the participants left some equipment on the dock. The marina staff asked one of the YC members about it and whether it should be placed in the trash. The member said, yes throw it away. The boat owner was a more than a little annoyed. Eventually he took the member to court to get compensation for the damaged items (they were retrieved from the trash, but damaged in the process). He lost because he had signed a waiver saying the YC was not responsible for damages.

A waiver may not fully protect the organizing body or company, but I suspect it makes the plaintiffs attorney work harder to get a judgement. Better to have the waiver than not. I'm sure there is all kinds of case law about this involving all kinds of nuances.
 

SG

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Feb 11, 2017
1,670
J/Boat J/160 Annapolis
Doesn't it also block actions against the captain, passengers, and crew of the offending boat?
 
Jan 11, 2014
11,321
Sabre 362 113 Fair Haven, NY
Doesn't it also block actions against the captain, passengers, and crew of the offending boat?
My reading is that it only limits the financial liability of the offending boat and its owner/operators. And there are a few areas that are exempted, for example, wages due seamen, oil spills, lost cargo, etc. It does not limit criminal liability if a criminal act caused the damage.

Again, my reading is the financial liability is limited to the value of the offending vessel after the accident. Thus if a $100K boat suffers $10K of damage and sinks your $200K boat, the offending boat owner is only liable for $90K, the value of the boat less the repair costs. If the operator was drunk when the accident occurred, he would still be subject to the criminal laws about intoxicated boating. If your boat is going to be in an accident and sunk, hope that the offending vessel is worth a lot more than yours and isn't damaged too badly.
 
Jul 27, 2011
4,988
Bavaria 38E Alamitos Bay
It’s limited to the owner’s financial interest in the vessel’s value post accident. So, if the owner has a $100K vessel that suffers $10K in damages, bringing its value after the accident to $90K, but the owner has only $30K “interest” in the vessel, that would be the liability limit.
 

SG

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Feb 11, 2017
1,670
J/Boat J/160 Annapolis
Your marine policy is going to cover you only to the extent of its terms. That might include some medical expenses (usually pretty limited). Your personal health insurance may provide coverage (which might have deductibles covered between your boat insurance and your health insurance). Who is going to cover your guests and crew is problematic.

You might have to get sued by your guests and crew for your insurance company to cover you. You might be sued anyway on some theory that you didn't do all that was necessary or prudent (e.g., put a standing watch on overnight at the anchorage, or provide fireproof pajamas, or require body armor.)

We have a perception that regardless of why, we should be able to get reimbursed for anything that happens to us. Regardless, if shit happens, someone should be responsible. If a lightning strikes, someone should be called-up on make us whole. The notion of third-party, joint and several liability is an extension of that.

In US Maritime law, as it relates to the shippers -- the law seems aimed at saying to all parties: we're limiting that in this "game", you are participating in this activity, take care of yourself in terms of insurance for yourself and your personnel, etc. ...those are the rules of players.

The consequence is: GET MORE INSURANCE FOR YOURSELF and your CREW. If you don't, you may not get it from the other guy or his insurance policy.

As noted above, this doesn't have anything to do with criminal charges -- but those aren't going to provide economic reimbursement to the damaged. They will only punish the guilty with jail and economic penalties which go to the government.

By the way, I understand that as result of Exxon Valdez diaster, (after hundreds of millions of $'s in legal fees, on both sides) resulted in almost no liability to the plaintiffs which include many fisherman, native peoples, and residents of Alaska. Exxon did spend a lot of money in clean-up activities. It did provide some relief to individuals, businesses, and communities. But they weren't hundreds of $Billions that would have come out of the consolidated class action law suits.
 
Jan 11, 2014
11,321
Sabre 362 113 Fair Haven, NY
By the way, I understand that as result of Exxon Valdez diaster, (after hundreds of millions of $'s in legal fees, on both sides) resulted in almost no liability to the plaintiffs which include many fisherman, native peoples, and residents of Alaska. Exxon did spend a lot of money in clean-up activities. It did provide some relief to individuals, businesses, and communities. But they weren't hundreds of $Billions that would have come out of the consolidated class action law suits.
Oil spills are specifically exempted from the Plaintiff in Liability law and a few other things. Joe Hazelwood was found guilty of negligent discharge of oil and fined $50K.

Certain claims are not subject to limitation of liability. A vessel owner is not permitted to limit its liability for the following types of claims:
1. Wages owed to seamen. 46 U.S.C. App. §189.
2. Maintenance and cure benefits for an injured seaman. Brister v. A.W.I., Inc., 946 F.2d 350 (5th Cir. 1991).
3. Cargo damage claims caused by a deviation not contemplated by the contract of carriage. The Pelotas, 66 F.2d 75 (5th Cir. 1933).
4. Return of unearned freight. In Re Liverpool & Great Western Steam Co., 3 Fed. 168 (S.D.N.Y. 1880).
5. Personal contracts of the shipowner. Richardson v. Harmon, 222 U.S. 96 (1911). This includes payments due under towage and salvage contracts and contracts for vessel repairs, supplies and services. The St. Jago de Cuba, 22 U.S. (9 Wheat.) 409 (1824); Signal Oil & Gas Co. v. Barge W-701, 654 F.2d 1164 (5th Cir. 1981).
6. Preferred Ship Mortgages. Petition of Zebroid Trawling Corp., 428 F.2d 226 (1st Cir. 1970).
7. Environmental claims under the Oil Pollution Act of 1990 and the Clean Water Act.
Complaint of Metlife Capital Corp., 132 F.3d 818 (1st Cir. 1997).
 
Jan 11, 2014
11,321
Sabre 362 113 Fair Haven, NY
the relatively low cost of making the complaint relative to the cost of paying out damages.
In the final analysis, this is the key. If the insurance company believes it is cheaper to just pay the claim, they will. If not, they will look to reduce their losses, if the legal fees are less than the claim, the lawyers get paid.
 

SG

.
Feb 11, 2017
1,670
J/Boat J/160 Annapolis
Oil spills are specifically exempted from the Plaintiff in Liability law and a few other things. Joe Hazelwood was found guilty of negligent discharge of oil and fined $50K.

Yes, I had read that before I make the post. (I didn't make that clear in my post.) The mater was not subject to a claim of Limitation of Liability exemption. There might have been a Limitation of Liability claim that Exxon filed from the accident that played into the Court of Appeals ruling that gutted lower court verdicts against Exxon.

My observation was spurred by a reference to Exxon above in this topic "thread" In that case, even though there was clearly a huge impact and a lot of litigation, ultimately huge "damage" and widely viewed liability don't always result in what other view as economic justice or vindication.
 
Jan 30, 2012
1,123
Nor'Sea 27 "Kiwanda" Portland/ Anacortes
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.:(
Fascinating proposition but off the mark.

First , the hypothetical proposed here includes the fact that the skipper is the owner. Thus the skipper is in privity with the owner (they are the same person) and so limitation is not available. In addition, if the event occurred because of an unseaworthy condition (the writer does not say why the hypothetical collision occurred) limitation is also not available. The central point is that limitation can immunize only an owner . Others at fault do not qualify for limitation.

There are imaginable circumstances where limitation can apply but this is not a good example.

Still this hypothetical illustrates one important thing - adequate insurance (hull and liability) is worth the price. That way your insurer is bound to hire a sea lawyer to sort things out at their expense not yours. And you don't have to go to sea lawyer school either.

Charles
 
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Oct 19, 2017
7,732
O'Day 19 Littleton, NH
The central point is that limitation can immunize only an owner . Others at fault do not qualify for limitation.
Charles, what you say about privity and knowledge is how I read the article. "limit its liability ... 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."
However, it is also my understanding that this law can protect any party that is master of the vessel, including non- owner captains (bare boat charter captains).
From the article I posted a link to in an earlier post (Limitation of Liability | Mt. Pleasant Maritime Liability Attorney):

"II. Who is Entitled to Limit Liability?
As to who is entitled to limit liability, the Limitation Act merely states "the owner of any vessel, whether American or foreign" can limit its liability. 46 U.S.C. App. §183(a). However, courts have interpreted the word "owner" to include parties other than the registered owner of vessels. Courts include those who exhibit some type of domination or control over the vessel. Dick v. U.S., 671 F.2d 724, 727 (2nd Cir. 1982) ("As a general rule, one who is subjected to a shipowner's liability because of his exercise of dominion over a vessel should be able to limit his liability to that of an owner."). Owners include the following:

1. Those possessing legal title to the vessel.

2. President and sole shareholder of the vessel owning company. Complaint of Lady Jane, Inc., 818 F.Supp. 1470 (M.D.Fla. 1992).

3. United States as owner pro hac vice of Coast Guard auxiliary boats, which become "public vessels" when assigned to government service. Dick v. U.S., 671 F.2d at 728.

4. Owners of the vessel at the time of the casually who have sold the vessel at the time of litigation. In re Complaint of Sheen, 709 F.Supp. 1123 (S.D. Fla. 1989).

5. Charterers who "man, victual, and navigate such vessel at his own expense, or by his own procurement shall be deemed the owner of such vessel." 46 U.S.C. App. §186. As such, demise and bareboat charters have been found to be owners, and time and voyage charterers are not considered owners. The Severance, 152 F.2d 916 (4th Cir. 1946). A demise charterer may only be able to limit if the charter relinquishes possession, command and navigation of the vessel. Guzman v. Pichirilo, 369 U.S. 698 (1962).

A vessel's manager, who employed the towboat's crew, was not permitted to limit its liability as it did not exercise sufficient control or dominion over vessel to be considered an owner pro hac vice, for limitation of liability purposes. In re American Milling Co., Ltd., 409 F.3d 1005 (8th Cir. 2005). Agents of owners and technical managers are not permitted to limit liability. Matter of Oil Spill by Amoco Cadiz, 954 F.2d 1279 (7thCir. 1992); Norfolk Dredging Co. v. M/V A/V KASTNER, 264 F.Supp.2d 265 (D.Md. 2003).

Even though the P&I insurer of a vessel is not permitted to invoke the Limitation Act, the P&I insurer can rely upon the Act to limit the amount of its exposure for personal injury damages. In order to do so, the vessel owner must first demonstrate it is entitled to limit liability under the Act. If this occurs, then the P&I insurer may not be liable for any amount beyond the vessel owners judicially approved limitation of liability where the terms of the insurance policy, or club rules, limit liability to the vessel owner's liability. Crown Zellerbach Corp. v. Ingram Industries, Inc., 783 F.2d 1296 (5th Cir. 1986)."
So, insurance companies can only benefit indirectly from this law. The quote specifies "personal injury damage", but it seems as though the insurance company wouldn't have to cover any more damages to the plaintiff than the vessel owner was found to owe.

-Will (Dragonfly)
 
Jan 30, 2012
1,123
Nor'Sea 27 "Kiwanda" Portland/ Anacortes
Right.

At the first level - the case of vessel owner 1 or someone who is injured v. vessel 2 and its owner - the insurer provides defense counsel to represent its insured - vessel 2 and its owner. As you say the bottom line is the insurer will pay no more than its insured - here vessel 2 or its owner is required to pay. In other words the insurer pays indemnity - that which the vessel 2 and its owner are required to pay. So if the vessel 2 owner is entitled to limitation then the insurers liability is no more than the amount the limitations action finally establishes.

But if the insurance contract makes a master an insured in addition to the owner - and the master is at fault - then claims against the master must be paid by the insurer too no matter the owner has successfully limited its liability.

There is good reason to make sure a hired master an additional insured on an owners policy.

Hope I answered the question you had in mind.

Charles
 
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Jan 1, 2006
7,039
Slickcraft 26 Sailfish
This is an article by Bill Blyer, a well known Newsday boating columnist regarding the limited liability law in regard to tragic and stupid overloaded boat incident in Oyster Bay. This isn't the article cited in my earlier post but came up on a search of the Soundings Magazine Website.

 
Jan 1, 2006
7,039
Slickcraft 26 Sailfish
I found the article I cited. It was in a more local boating publication LIBoating Life. It's a bit tedious but makes the point that there are just different rules for on the water losses:

 
Jul 30, 2019
216
Seaward 25 777 Fort St. James
There is nothing in law that is entirely clear. Otherwise, there would be little need for lawyers. A number of years ago my wife wanted to see if she could challenge what seemed like an unfairly broad non-compete clause in her contract with a former employer. We took the contract to our lawyer who read through the relevant clause carefully and twice. Eventually he looked up and said: "This is written really badly. It is almost incomprehensible. I don't see how we can challenge it."

On the present matter, I found this short piece which actually seems to be written in clear english:

I wonder if this limitation of liability law also applies to Canada? since usually we obediently follow our southern neighbours in everything except using Phillips head screws and, of course, how to spell "neighbours".

Bob
 
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Jan 1, 2006
7,039
Slickcraft 26 Sailfish
I often say that the longer a lawyer talks the less I understand and the bill goes up so I don't ask questions.
 
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SG

.
Feb 11, 2017
1,670
J/Boat J/160 Annapolis
Limitation of Liability's application is a reminder why you should always get your own insurance and not depend on the "other guy" to cover you.

Shemandr,

There was that old funny: A guy goes to a lawyer. He asks the lawyer, "Can I you three question for a hundred dollars?" The lawyer replys, "What is the second question?"
 
Oct 19, 2017
7,732
O'Day 19 Littleton, NH
I once knew a doctor who was always accosted at parties with incessant questions. "Doctor, will you look at my shoulder? I hurt it today.", "Doctor, what would you recommend for my insomnia?, that kind of constant prattle, until he finally escaped for a few moments to get a drink at the bar of one of the parties he was in attendance to. He wound up sitting on a stool next to another mutual friend who was all by himself. He happened to be a lawyer.
My doctor friend started telling the lawyer about his problem (the bartender was at the other end of the bar arguing with a drunk woman about drinking too much of her "rheumatoid" medicine, so he wasn't availible to unloaded on).
"I tell you, I give away thousands of dollars in free medical advice at these parties. Do you have that problem? Being a lawyer, people must be always asking you for legal advice?"
The lawyer agreed that he use to have that problem.
"But I finally figured out how to stop all the insane questions and be left alone."
"How? Please, tell me your secret." Pleaded my doctor friend.
"Well, what I do works like a charm."
"Yes? Go on, I'm listening."
The my lawyer friend then explained, "I am happy to answer all their questions and give them legal advice, but it's not free. At the end of the evening, I go home, total up my hours and have a bill off in the mail to them by the morning.":waycool:
My doctor friend was delighted. That would sure fix them. He thought. The next day he accepted an invitation to another party that he was thinking of turning down, but he wanted a chance to try out his friend's advice. He spends the next day making sure he had a prescription pad, a pen and a billing invoice pad packed in his suit pocket.
It was finally the day of the party and he was eager to try out this new plan. He whistled his happy way out to fetch the paper, take the garbage to the curb and check the mail. As he was walking back to the house he saw a letter from his lawyer friend and opened it. Inside was a bill for two hour's of legal counsel at $400/hr.
;)

Remember it isn't how much they talk, listening also gets billed at the same rate.:beer:

-Will (Dragonfly)
 
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