Editor: Frank P. DeGiulio

At it Again — The Calhoun Saga Continues

Nearly a decade after twelve year old Natalie Calhoun’s tragic death in a jet ski accident in Puerto Rico waters, the U.S. District Court for the Eastern District of Pennsylvania has written the latest chapter in the on-going saga. Calhoun v. Yamaha Motor Corporation, 40 F.Supp.2d 288, 1999 AMC 1777 (E.D.Pa. 1999). Rather than bringing the story to a close, the District Court’s decision appears to lay the foundation for Calhoun II — the sequel.

In July 1989, Natalie Calhoun, a Pennsylvania resident vacationing with her family in Puerto Rico, was killed when a jet ski that she was operating collided with an anchored pleasure boat near Palmas Del Mar. Her parents filed suit against the jet ski manufacturer under the Pennsylvania Wrongful Death and Survival Statutes in the U.S. District Court for the Eastern District of Pennsylvania, seeking damages for loss of earnings, support, services and society, as well as funeral expenses and punitive damages.

In a 1993 decision, the District Court concluded that federal maritime law and not state law governed the remedies available for the death of a non-seaman in state territorial waters. The District Court, therefore, found that the plaintiffs’ claims for loss of future earnings and punitive damages were precluded.

On appeal, the Third Circuit reversed, holding that “in the absence of clear federal interest, the balance tips in favor of allowing state law to apply” and remanded the case to the District Court to determine whether the law of Pennsylvania or Puerto Rico should be applied to define the remedies available. Calhoun v. Yamaha Motor Corp., 40 F.3d 622, 1995 AMC 1 (3d Cir. 1994) (reported in 4 Boating Briefs No. 2 (Mar.L.Ass’n. 1995)). Yamaha petitioned for certiorari to the U.S. Supreme Court.

In a decision perceived by many practitioners as result-oriented and one having profound impact on the law of recreational boating, the Supreme Court unanimously affirmed the Third Circuit’s decision in Yamaha Motor Corp. v. Calhoun, 516 U.S. 199, 1996 AMC 305 (1996). The Court squarely held that state law is to be applied to determine the remedies available for the death of a non-seafarer in state territorial waters. See 5 Boating Briefs No. 1 (Mar.L.Ass’n. 1996). The case was remanded to the District Court for further consideration of whether the law of Pennsylvania or Puerto Rico would apply to determine what damages were recoverable.

The latest pronouncement by the District Court appears to set the stage for yet another run to the Supreme Court. On remand, consistent with the directives of the Third Circuit and the Supreme Court, the District Court first considered the issue of whether the law of Pennsylvania or Puerto Rico should apply to define the damages available for Natalie’s death. The District Court concluded that federal choice of law rules should guide the analysis since the Supreme Court agreed that the action fell within the court’s admiralty jurisdiction. Applying this analysis, the District Court concluded that Puerto Rican law applied to the Calhouns’ punitive damages claim which was, therefore, precluded because Puerto Rico does not permit recovery of punitive damages. Further, the court found that the law of Pennsylvania should apply to define the scope of available compensatory damages.

But the District Court did not stop there. Relying on the final footnote of the Supreme Court’s decision, the District Court concluded that another issue remained to be decided. In the closing footnote of its opinion, the Supreme Court had stated:

The Court of Appeal also left open, as do we, the source — federal or state — of the standards governing liability, as distinguished from the rules on remedies. We thus reserve for another day reconciliation of the maritime personal injury decisions that rejected state substantive liability standards, and the maritime wrongful-death cases in which state law has held sway.

The District Court took this comment as a directive from the Supreme Court to decide the issue of whether substantive federal or state law was to apply to define the standards governing liability.

The District Court reviewed the convoluted history of Supreme Court decisions which have addressed the substantive rights and remedies available for personal injury and death of non-seamen in territorial waters. The Supreme Court decisions clearly mandate that federal maritime law is to govern both the substantive rights and the available remedies of a non-seafarer who is injured in state waters. Before Calhoun, nearly all federal courts also applied federal maritime law to define the substantive rights and available remedies in the case of the death of a non-seafarer in state waters.

Following Calhoun, while it is clear that the remedies available for the death of a non-seafarer in state waters are to be governed by state law, the separate issue of whether substantive federal or state law controls is, according to the Eastern District of Pennsylvania, now in doubt.

The District Court began its analysis of the substantive law issue by voicing its opinion that:

As a conceptual matter...that federal law defines the substantive rights of a claimant seeking redress for a death occurring in territorial waters — would appear to accomplish the reconciliation of personal injury and wrongful death cases averted to by the Supreme Court as a doctrinal goal the Court looks forward to achieving at some future time.

However, following this well reasoned observation, the court proceeded to analyze the decisions of the Third Circuit and the Supreme Court in Calhoun and found that the decisions mandated the conclusion that state substantive law, rather than federal maritime law, governs the rights of the parties in the case of the death of a non-seafarer in state waters.

The District Court certified its findings to the Third Circuit Court of Appeals. The Third Circuit granted the appeal on April 13, 1999 and the case remains pending before that court.

The District Court’s latest decision, if upheld on appeal, will have a
far reaching and perhaps more profound impact on recreational boating
law than the Supreme Court’s Calhoun decision itself. The decision deals yet another body blow to the principle of maritime uniformity. Application of state substantive law to the death of a non-seafarer in state waters will bring to the fore a host of potential conflicts between state and federal maritime law on a variety of issues including applicable statutes of limitation, standards of care, duties, rules governing contributory negligence and joint and several liability, contribution rights and classes of beneficiaries. Stay tuned.

Cruise Line Exonerated in Jet Ski Accident

In the winter of 1997, Barbara Mashburn was seriously injured when a jet ski operated by Mark Hommen collided with a jet ski on which she was a passenger off Coco Cay in the Bahamas. The jet ski on which Mrs. Mashburn was riding was operated by her husband and was stopped when the collision occurred. Both jet skis were owned by Royal Caribbean Cruises, Ltd., which rented them to the respective operators.

Royal Caribbean filed a Complaint for Exoneration from or Limitation of Liability as the owner of both jet skis pursuant to the Limitation of Liability Act, 46 U.S.C. §181 et seq., in the U.S. District Court for the Southern District of Florida. Royal Caribbean posted security in the amount of $7,200 for the combined value of the two vessels pursuant to Rule F of the Supplemental Admiralty Rules.

Mrs. Mashburn filed a claim in the limitation action for her injuries. She alleged that Royal Caribbean, as owner and lessor of the jet skis, was negligent in various respects. Mashburn claimed that Royal failed to properly train and supervise the operators, allowed too many vessels to be operated in a restricted area, failed to enforce safety rules, failed to check operators for intoxication and failed to equip the jet skis with a sound signaling device.

The District Court found that Royal Caribbean was entitled to exoneration from liability and granted its motion for summary judgment. Complaint of Royal Caribbean Cruises, Ltd., __ F. Supp. 2d __, 1999 WL 556892 (S.D. Fla. 1999). In considering the motion for summary judgment, the trial court applied the two-step analysis required in a limitation proceeding under In re Complaint of Hercules Carriers, 768 F.2d 1558 (11th Cir. 1985). Under the two-step analysis, the claimant initially bears the burden of proving negligence or unseaworthiness attributable to the vessel owner. If the claimant fails to carry this burden the vessel owner is entitled to exoneration from liability. If the claimant carries the initial burden, the court must then determine whether the owner lacked privity or knowledge of the acts of negligence or the unseaworthy condition so as to be entitled to limit its liability to the value of the vessel.

The evidence before the District Court demonstrated that the jet ski operators received instructions from Royal Caribbean employees regarding the safe operation of the watercraft and viewed a manufacturer’s instructional video. Operation of the jet skis was permitted only in one direction on a marked course and was supervised by Royal employees. Finally, the operators signed a Waiver and Release pursuant to which they assumed all risk of injury and agreed not to hold Royal Caribbean liable for any loss or personal injuries sustained.

The District Court concluded that the collision and Mrs. Mashburn’s injuries were caused solely by the individual negligence of the operator of the other jet ski and that Royal Caribbean was not negligent in any respect and was entitled to exoneration. In the alternative, the court also found that even if Royal had not been entitled to exoneration, it would be entitled to limit its liability because none of Royal’s owners or senior management were present at the scene or had knowledge of any alleged act of negligence.

Primary Assumption of Risk Doctrine Bars Claim by Tube Rider

In Record v. Reason, 86 Cal. Rptr. 2d 547, 1999 AMC 2380 (Cal. Ct. App. 1999), the Court of Appeal held that “tubing” is a sport to which the doctrine of primary assumption of risk applies. The doctrine bars recovery for a defendant’s negligence not rising to the level of intentional or reckless conduct. In June 1994, Michael Record accompanied Brian Reason and others for a day of water skiing and “tubing” on Castaic Lake. Record suffered spinal injuries when he fell off an inner tube being towed by a boat operated by the defendant Reason.

Michael Record brought a civil action against Reason in California state court to recover for his injuries. The defendant filed a motion for summary judgment, arguing that the primary assumption of risk doctrine precluded any recovery against the defendant as a matter of law. Conflicting evidence was presented to the trial court in connection with the defendant’s motion. The defendant testified that he was operating the boat at a speed of no more than 25 miles an hour in accordance with the safety instructions on the inner tube, that the incident occurred during a gradual left turn and that the plaintiff had fallen off the tube on two prior occasions the same day without incident or complaint. The plaintiff presented testimony from a witness who claimed that the boat’s speed was at least 30 miles an hour, that the incident occurred when the defendant made a sharp turn to the left and that the defendant had previously stated that the “object” was to try to knock the rider off the tube. In addition, the plaintiff testified that the defendant was aware of his prior neck injury and that, prior to the ride, he told the defendant to “go slow and take it easy because I don’t want to get hurt.” The plaintiff admitted that falling off a tube is a common occurrence and that some people try to turn sharply to increase the thrill of the ride.

The trial court concluded that there was no triable issue of fact regarding application of the primary assumption of risk doctrine and granted summary judgment in favor of the defendant. The plaintiff appealed.

On appeal the plaintiff contended that “tubing” is not a sport to which the primary assumption of risk doctrine applies or, in the alternative, that the existence of triable issues of fact rendered the trial court’s grant of summary judgment improper.

The California Court of Appeals began its analysis by noting that the issue of whether the doctrine of primary assumption of risk applies in a particular case is a question of law for the court. The court also distinguished the primary assumption of risk doctrine from the assumption of risk defense under California law, noting that when applicable, the doctrine serves as a complete bar to recovery. The court held that when the doctrine applies, the plaintiff is held as a matter of law to have relieved the defendant of a duty of reasonable conduct.

Noting that the issue of whether the assumption of risk doctrine applies to “tubing” appeared to be one of first impression, the Court of Appeals reviewed numerous decisions in which the doctrine had been applied to water skiing, sport fishing, white water rafting, downhill skiing, baseball, fishing and golf. The court held that the doctrine applies when a plaintiff voluntarily participates in a sporting event or activity involving certain inherent risks. The doctrine reduces the applicable duty of care based on the rationale that “the activity involves inherent risks which cannot be eliminated without destroying the sport itself.” The court held that the doctrine applies to a recreational or sporting activity “if the activity is done for enjoyment or thrill, requires physical exertion as well as elements of skill, and involves a challenge containing a potential risk of injury.” The court held that “tubing” meets these criteria and rejected the plaintiff’s argument that the doctrine was inapplicable.

The plaintiff argued in the alternative that even if the doctrine applies generally to “tubing,” the trial court erred in granting summary judgment because the doctrine’s application in the particular case depended on resolution of triable issues of fact. The plaintiff contended that the doctrine would not apply if the jury believed his alleged admonition to the defendant to “go slow and take it easy.” The Court of Appeals, however, rejected this argument, holding that “a party cannot change the inherent nature and risk of a sport by making a unilateral request that other participants play less vigorously...a defendant’s liability must be based on ‘the nature of the sport itself’ rather than ‘the particular plaintiff’s subjective knowledge and expectations.’”

Alternatively, the plaintiff contended that there was a triable issue of fact as to whether the defendant’s conduct rose to the level of recklessness. The Court of Appeals recognized that the primary assumption of risk doctrine does not insulate a defendant from liability resulting from intentional or reckless conduct that is “totally outside the range of ordinary activity involved in the sport.” Nonetheless, the court held that, even assuming the truth of all evidence submitted by the plaintiff, the defendant’s conduct was merely negligent and within the inherent risk of the “tubing” activity.

Recreational Use Immunity Statutes

A number of states have enacted recreational use statutes that may be relevant to claims arising in connection with the use and operation of pleasure craft. See, e.g., Cal.Civ.Code § 846, Conn.Gen.Stat. § 52-557, 7 Del.Code Ann. § 5904, Fla.Stat.Ann. § 375.251, N.J.Stat.Ann. § 2A:42A, 68 Pa.Stat.Ann. § 477, Wash.Rev.Code § 4.24.210. While the specific provisions vary, each statute is intended to provide immunity from negligence to landowners who permit their property to be used for recreational purposes without charge. Most statutes contain exceptions for intentional or reckless conduct and for injuries caused by dangerous latent conditions. Recreational use statutes figured prominently in two recent recreational boating cases.

In Howard v. United States, 181 F.3d 1064 (9th Cir. 1999), the Ninth Circuit considered whether the U.S. Government was immune from liability for negligence under the Hawaii Recreational Use Statute, Haw.Rev.Stat. § 520-1 et seq., in connection with a claim for personal injuries sustained by the plaintiff at Hickam Air Force Base on Oahu. The plaintiff, the wife of a military officer, was injured on a recreational boating dock located on the base while attending a sailing instructor course offered by a non-governmental organization. The dock facility was not open to the general public and the plaintiff paid an attendance fee to the sailing course organizers. The plaintiff sued the federal government for her injuries. The District Court granted summary judgment in favor of the United States based on the Hawaii Recreational Use Statute. Plaintiff appealed.

On appeal, the Ninth Circuit noted that under the Hawaii statute, a landowner is immune from liability for ordinary negligence if the land is made available for recreational use without charge. The plaintiff advanced various arguments as to why the statute should not apply. The court rejected the plaintiff’s arguments, including her contention that the act should not apply because she was a business invitee who was present only to attend a paid instructional course and not for recreational purposes. The decision of the District Court was affirmed.

The Supreme Court of Washington considered the applicability of Washington’s Recreational Use Statute to a pleasure boat casualty in Ravenscroft v. Washington Water Power Co., 136 Wash.2d 911, 969 P.2d 75 (Wa. Sup.Ct. 1999). Robert Ravenscroft was seriously injured when a boat in which he was a passenger struck a submerged tree trunk while operating on Long Lake reservoir. Ravenscroft sued the land owner, Washington Water Power Company, and Spokane County, alleging that the county was responsible for regulating boating safety on the lake.

The evidence demonstrated that the power company had raised the level of Long Lake, thereby submerging a formerly wooded area where the accident occurred. The trees were cut off but the stumps remained, submerged below the water surface. No buoys or warning signs marked the submerged stumps. It was undisputed that the reservoir was available to the public for boating without charge.

At the trial court level, the power company moved for summary judgment on the basis of Washington’s Recreational Use Statute, RCW 4.24.200 et seq. The trial court denied the defendant’s motion, ruling that an exception to the statute for “known, dangerous, artificial, latent conditions” could apply in the circumstances of the case. The Washington statute provides that: “Nothing...shall prevent the liability of...a landowner...for injuries sustained to users by reason of a known dangerous artificial latent condition for which warning signs have not been conspicuously posted...” On appeal, the Court of Appeals reversed the trial court and remanded with directions to dismiss the plaintiff’s claim. Review was granted by the state Supreme Court.

The Supreme Court of Washington considered the issue of whether
an unmarked, submerged tree trunk constitutes a known, dangerous, artificial and latent condition within the meaning of the exception to the grant
of immunity under the Washington statute. The evidence showed that
the power company knew of the existence of the stumps and that their presence in the channel constituted a dangerous condition. Although the accident was caused by contact with a submerged, rooted tree stump, the court held that the “condition” was artificial within the meaning of the statute because it existed solely through the human effort of raising the water level, cutting the trees and leaving stumps in the channel. Finally, the court held that the issue of whether the condition was “latent” within the meaning of the statutory exception was a question of fact based on whether the injury causing condition would have been readily apparent to the ordinary recreational user and, therefore, the trial court’s grant of summary judgment was improper.

Court Upholds Prohibition Against Launching of
Recreational Craft at Public Beach

In 1992, the City of North Myrtle Beach in South Carolina enacted an ordinance prohibiting the launching or beaching of motorized watercraft on public beaches between the hours of 9:00 a.m. and 5:00 p.m. from May 15 to September 15 annually. Bob Barnhill, an operator of a jet ski rental business on a public beach within the city limits, commenced a declaratory judgment action seeking the determination that the ordinance was unconstitutional.

A referee appointed by the trial court found that the ordinance was invalid because it exceeded the City’s police power, was preempted by state law and violated the South Carolina Constitution.

The Supreme Court of South Carolina upheld the ordinance in Barnhill v. City of North Myrtle Beach, 333 S.C. 482, 511 S.E.2d 361 (S.C. 1999). The court held that the ordinance was within the City’s police power because it was reasonably related to the purpose of promoting public safety. While affirming the referee’s finding that state statutes preempted the entire field of regulating vessels on navigable waters, the court held that the ordinance was not preempted because it related solely to regulation of the beaches. Finally, the court rejected the referee’s finding that the ordinance violated Article XIV § 4 of the state Constitution which provides that “All navigable waters shall forever remain public highways free to citizens of the State and the United States without tax, impost or toll imposed...” In this regard the court held that although the Constitution does not permit a complete prohibition of the use of navigable water, the public’s access to navigable water is subject to reasonable regulation for a legitimate legislative purpose.

Towing Endorsement Held to Constitute a Warranty

Gary MacLean, the captain of a vessel owned by Flagship Marine Services, Inc., was seriously injured in 1994 while his vessel was towing a 61 foot commercial vessel. Flagship, a licensee of Sea Tow Services, Int’l., was in the business of providing towage assistance to vessels in distress. MacLean sued for his injuries. Flagship agreed to settle his claim for $545,000.

Flagship was insured under a policy issued by Commercial Union Insurance Company. The policy contained a “Tow Endorsement” which provided as follows: “In consideration of the rate and premium charged, it is understood and agreed that coverage is hereby provided for the towage of yachts up to 50 feet in length. The towage of yachts in excess of 50 feet is subject to prior approval of underwriters with additional premium to be agreed, if any.”

Commercial Union denied coverage for MacLean’s injuries based on the Tow Endorsement and commenced a declaratory judgment action in the U.S. District Court for the Southern District of New York. Commercial Union moved for summary judgment on the Tow Endorsement. The District Court, focusing on the use of the term “yacht” in the wording, concluded that the endorsement excluded coverage for towage of yachts (i.e., non-commercial vessels) in excess of 50 feet but did not preclude coverage for towage of commercial vessels, regardless of size. Following a bench trial the District Court entered judgment in favor of Flagship on the question of coverage. Commercial Union appealed.

On appeal, the Second Circuit reversed the decision of the District Court and held that Commercial Union had no duty to defend or provide coverage to Flagship in connection with MacLean’s claims. Commercial Union Ins. Co. v. Flagship Marine Services, Inc., __ F.3d __, 1999 WL 639170 (2d Cir. 1999). In construing the policy, the Second Circuit first considered the issue of whether the Tow Endorsement constituted a warranty or an exclusion from coverage. Flagship contended that the endorsement was merely an exclusion and, therefore, should be construed against the insurer if ambiguous.

The Second Circuit held that when read in the context of the policy as a whole, the endorsement was a warranty by which the insured promised to limit its towing activities to the towing of yachts less than 50 feet in length. The court then noted that under maritime law and the law of New York, breach of a warranty by the insured is a complete defense to coverage irrespective of causation but that under Florida law (where the incident occurred), the breach must be causally related to the loss so as to result in an increase in the risk assumed by the insurer. The appellate court found it unnecessary to make a choice of law determination based on the facts of the case. The Second Circuit held that the Tow Endorsement was unambiguous on its face when considered in the context of the entire policy. The court concluded that the endorsement was an affirmative statement of coverage which necessarily implied that “towage of anything other than yachts up to 50 feet in length” was not covered. The court supported its opinion by noting that the endorsement replaced a standard provision of the policy excluding coverage for towage of any vessel or craft so that absent the endorsement there would be no coverage whatsoever for towing operations. Flagship admitted that the vessel towed at the time of MacLean’s injuries was a 61' long commercial vessel. The court concluded, thus, that Flagship had breached the warranty. Further, the Second Circuit held that the wording of the endorsement itself, which referred to the premium charged and provided for additional premium for extended coverage, demonstrated that the breach was material to the risk assumed by Commercial Union.

Other Recent Cases

Lady v. Outboard Marine Corp., __ F.Supp.2d __, 1999 WL 641653 (S.D.Miss. 1999). Plaintiff’s product liability claims against a manufacturer for failure to install a propeller guard on a recreational boat are preempted by federal law consistent with the Eleventh Circuit’s decision in Lewis v. Brunswick Corp., 107 F.3d 1494 (11th Cir. 1997).

Beckman v. Rick’s Watercraft Rentals, 719 So.2d 1025, 1999 AMC 678 (Fl.Ct. App. 1998). Plaintiff’s product liability and negligence claims against a jet ski manufacturer and rental agency for personal injuries are barred by the three year maritime statute of limitations, 46 U.S.C. § 763a.

Trump v. Cantieri Di Baia, S.P.A., 1999 WL 705431 (S.D.N.Y. Sept. 10, 1999). Ivana Trump’s suit against the Italian shipyard and seller of the yacht M/Y IVANA for defective design and breach of contract was dismissed for lack of personal jurisdiction under F.R.C.P. 12(b)(2) where, aside from plaintiff’s residence, the only contact with New York occurred when the yacht was present in New York waters for fourteen days.

North American Specialty Ins. Co. v. Bader, __ F.Supp.2d __, 1999 WL 528247 (D.N.J. 1999). An insurer brought a declaratory judgment action seeking a determination of no coverage under a boat policy for a third party death claim arising from a collision with the decedent’s boat. The insurer’s summary judgment motion based upon the defendant/insured’s alleged violation of the doctrine of uberrimae fidei for failure to disclose the replacement of the boat’s existing engines with high performance engines was denied. The evidence failed to show that the alleged misrepresentation would have been material to the underwriter’s evaluation of the risk.

Travelers Property Cas. Corp. v. Pendergraft, 1998 WL 856101 (E.D.La. Dec. 9, 1998). The court granted an insurer’s declaratory judgment motion, finding no duty by the insurer to defend or to provide coverage under a homeowner’s policy for third party liability claims arising from the insured’s operation of a rented 85 horsepower jet ski where the policy contained a watercraft exclusion which limited coverage to claims arising from the operation of craft of 50 horsepower or less if the craft was not owned by or rented to the insured.

Lecy v. Bayliner Marine Corp., 973 P.2d 1110, 1999 AMC 1469 (Wa.Ct.App. 1999). Applying federal substantive admiralty law, a state appellate court granted a new trial and vacated a judgment in favor of the plaintiff on product liability claims following a jury trial. The appellate court found the trial court had erred in allowing a special verdict form which permitted the jury to consider negligence in design after finding that the product was not unreasonably dangerous as designed under a strict product liability theory.