Editor: Frank P. DeGiulio

Boat Owner Not Entitled to Recover Loss of Use Damages

In 1988 the corporate owner of the yacht Blackhawk contracted for the use of a floating dry dock to conduct repairs to the vessel. Although apparently used for business purposes, the Blackhawk was documented as a pleasure boat under U.S. law. The boat was extensively damaged when the bilge and keel blocks gave way during the attempt to secure the boat in the dry dock. There was no evidence that the vessel had ever been chartered by the owner. The owner brought suit against the owner and the builder of the drydock claiming the cost of repairs and loss of use during the repair period. The district court entered judgment in favor of the boat owner but held that the owner was not entitled to recover for loss of use.

The boat owner appealed. In Central State Transit & Leasing Corp. v. Jones Boat Yard, Inc., __ F.3d __, 2000 WL 292573 (11^th Cir., March 20, 2000) the Eleventh Circuit Court of Appeals considered the issue of whether the owner of a pleasure boat may recover loss of use damages in connection with a maritime tort claim. The Court of Appeals affirmed the district court’s denial of loss of use damages, holding that the boat owner had not proved “that profits had actually or may reasonably supposed to have been lost.” The court relied on the U.S. Supreme Court’s 1897 decision in The Conqueror, 166 U.S. 110, 17 S.Ct. 510 (1897), which it referred to as “[t]he seminal case regarding damages for loss of use of a pleasure boat....”

The decision in The Conqueror is generally viewed as establishing the parameters for recovery of loss of use damages arising from a collision or other maritime tort whether related to a pleasure craft or a commercial vessel. In that case, Frederick W. Vanderbilt sued the U.S. Custom Service on the grounds that his private yacht was improperly seized for import duties allegedly owed. Vanderbilt claimed damages for loss of use of $100 per day during the five months that the boat was detained. Following a trial the district court awarded Vanderbilt $15,000 for loss of use. At trial Vanderbilt had introduced the testimony of several yacht brokers as expert witnesses with regard to the charter value of the yacht. However, there was no evidence that Vanderbilt actually chartered the boat. To the contrary, the evidence established not only that Vanderbilt intended to use the yacht solely for his personal pleasure but that he would not have used the yacht at all during the winter off season in New York when the vessel was under seizure.

On appeal, the Supreme Court reversed the decision of the district court and held that “loss of use will be allowed only when profits have actually been, or may reasonably supposed to have been, lost, and the amount of such profits is proven at trial.” The Court found the testimony of Vanderbilt’s experts to be speculative, of questionable credibility and insufficient to establish a right to loss of use damages. The Court recognized the fact that some pleasure boats are let to hire and earn profits for their owners, thereby leaving open the possibility that such owners could recover loss of use in an appropriate case. As regards Vanderbilt the Court held that mere deprivation of use was insufficient as “[t]here must be a pecuniary loss, and not a mere inconvenience arising from the inability to use the vessel for purposes of pleasure....”

In its appeal of the Central States Transit decision, the defendant boat yard seized upon language in the Supreme Court’s subsequent decision in Brooklyn Eastern District Terminal v. U.S., 287 U.S. 170, 53 S.Ct. 103 (1932), to argue that the rule of The Conqueror, requiring a pleasure boat owner to prove pecuniary loss as a prerequisite to loss of use damages, had been overturned by implication. Brooklyn Eastern involved a towing company’s claim for loss of use its tug boat due to a collision. Justice Cardozo, reviewing the principles governing the right to recover for loss of use arising from a maritime tort, strongly suggested that the holding in The Conqueror was subject to question:

The vessel may be a yacht, employed for pleasure and not for business. Even then, in the judgment of many courts, the value of her use may be considered by the triers of the facts in fixing the recovery if there has been a substantial impairment of that enjoyment for which such vessels are used. [citations omitted] There are statements to the contrary in The Conqueror that may be in conflict with that view, but they are were not essential to the judgment and in the light of later decisions as to the loss of pleasure vehicles are unquestionably in opposition to a strong current of authority.

Despite this rather strong language from a renowned jurist, the Eleventh Circuit in Central States Transit rejected the defendant’s argument and held that they were bound by The Conqueror to affirm the district court’s denial of loss of use damages.

Federal Court Holds That Limitation Act Provides
Independent Basis of Subject Matter Jurisdiction

In the summer of 1997 Michael Bergeron was seriously injured in a boating accident on Lake Winnisquam in New Hampshire. Bergeron was riding in an innertube towed by a pleasure boat owned by Gary and Claire Berstein. Bergeron, a minor, filed suit against the owners in Massachusetts state court. The Bersteins then filed a limitation action in Massachusetts federal district court under the Limitation of Liability Act, 46 U.S.C. § 181 et seq. (“the Limitation Act”). The state court action was stayed.

Bergeron moved to dismiss the limitation action for lack of admiralty subject matter jurisdiction. In a decision which stands alone among those courts which have considered the issue in recent times, the District of Massachusetts concluded that it was bound to apply the Supreme Court’s decision in Richardson v. Harmon, 222 U.S. 96 (1911), and held that the Limitation Act provides an independent basis of admiralty subject matter jurisdiction over torts involving vessels. Complaint of Berstein, 2000 AMC 760 (D. Mass. 1999).

In moving to dismiss the limitation proceeding, Bergeron argued that the action did not fall within the court’s admiralty jurisdiction because Lake Winnisquam is wholly within the State of New Hampshire and is not capable of supporting interstate navigation in its present state due to the existence of lockless dams. Bergeron therefore argued that the “situs” test for admiralty tort jurisdiction was not satisfied because the accident did not occur on navigable waters.

In response to Bergeron’s motion, the boat owners first presented the court with evidence that the lake could and did support interstate navigation via Silver Lake and the Winnipesaukee and Merrimack Rivers prior to the construction of the dams. The owners urged the court to adopt an “historical” test for determining navigability. However, the District Court rejected the owner’s argument after noting that prior decisions which had adopted a “historical” navigability test had been overruled or superceded by subsequent case law.

The owners argued in the alternative that the Limitation Act itself provided an independent basis for admiralty subject matter jurisdiction based on the decision in Richardson v. Harmon. In Richardson, a vessel owner had attempted to limit its liability for damages arising from a collision with a bridge. In 1911, prior to passage of the Admiralty Extension Act, admiralty tort jurisdiction did not extend to shoreside damage caused by a vessel. However, the vessel owner argued that an 1884 amendment to the Limitation Act, now 46 U.S.C. § 189, expanded the scope of the Act to include all liabilities involving vessels, whether or not such liabilities fell within the traditional scope of admiralty jurisdiction. The Supreme Court agreed that the 1884 amendments were intended “to add to the enumerated claims of the old law any and all debts and liabilities not theretofore included.” As a result the Court held that the Act encompasses “all claims arising out of the conduct of the master and crew, whether the liability be strictly maritime or from a tort non-maritime.”

Between 1911 when Richardson was decided and the end of the 1980’s, only a handful of decisions had addressed the issue of whether the Act provides an independent basis of subject matter jurisdiction. Ironically, a number of these cases were decided by the Massachusetts District Court. In each case the courts followed Richardson. See The Trim Too, 1941 AMC 1147 (D. Mass 1941) (explosion on pleasure boat ashore for winter storage); City of Bangor, 1936 AMC 615 (D. Mass. 1936); The Irving F. Ross, 1923 AMC 1015 (D. Mass. 1923).

As the district court in Berstein noted, since 1989 no fewer than seven U.S. Circuit Courts of Appeal have rejected the argument that the Limitation Act provides an independent basis of subject matter jurisdiction. See e.g., Seven Resorts, Inc. v. Cantlen, 1995 AMC 2087 (9^th Cir. 1995). In addition, Courts of Appeal in the Fourth, Fifth, Seventh, Eighth and Eleventh Circuits have held that the Limitation Act does not provide a separate basis for subject matter jurisdiction. However, a number of these decisions failed even to mention, let alone attempt to distinguish, Richardson v. Harmon. The issue was also before the Supreme Court on two occasions in the 1990’s in Sisson v. Ruby, 497 U.S. 358 (1990) and in Jerome B. Grubart, Inc. v. Great Lakes Dredge and Dock Co., 513 U.S. 527, 1995 AMC 913 (1995). In each case, however, the Supreme Court decided the appeal on other grounds and, therefore, found it unnecessary to reach the issue.

Despite the overwhelming weight of recent contrary authority, the District Court in Berstein concluded that Richardson v. Harmon had not been overruled by the Supreme Court and that it was bound by stare decisis to follow Richardson. Accordingly, the District Court in Berstein found that subject matter jurisdiction existed under the Limitation Act despite the fact that the circumstances surrounding the underlying tort claim failed to satisfy the contemporary tests for admiralty subject matter jurisdiction.

Federal Regulations Limit PWC Use in National Parks and
Recreation Areas

The National Park Service recently implemented regulations designed to limit the use of Personal Watercraft (“PWC”) in national parks. The Final Rule, published in the Federal Register at 65 Fed. Reg. 15077 (March 21, 2000), became effective on April 20, 2000. The regulations do not impact recreational boating other than PWC.

The regulations prohibit the use of PWC in any national recreation area unless the Park Service specifically determines through formal rulemaking that PWC use is permissible based on a review of various public interest factors. There are currently 87 areas within the National Park System where recreational boating is generally permitted. According to the background information published with the Final Rule, PWC use was observed in 32 of these areas.

The regulations carve out an exception for ten designated recreation areas where the primary use is recreational boating. In these areas PWC use may continue subject to regulation by local National park officials. The ten areas are Amistad and Lake Meredith in Texas, Bighorn Canyon in Montana, Chickasaw in Oklahoma, Curecanti in Colorado, Gateway in New York, Glen Canyon in Arizona/Utah, Lake Mead in Arizona/Nevada, Lake Roosevelt in Washington and Whiskeytown-Shasta in California.

The Final Rule also establishes a two-year grace period for eleven other recreation areas. In these designated areas PWC use may continue until April 20, 2002, subject to regulation by local park officials. After the expiration of the grace period, PWC use in these areas will be prohibited unless authorized by a special rulemaking. The eleven areas subject to the two-year grace period are Assateague in Maryland/Virginia, Cape Cod in Massachusetts, Cape Lookout in North Carolina, Cumberland Island in Georgia, Fire Island in New York, Gulf Islands in Florida, Padre Island and Big Thicket in Texas, Indiana Dunes in Indiana, Pictured Rocks in Michigan and Delaware Water Gap in Pennsylvania/New Jersey.

The Park Service received approximately 20,000 responses to the proposed rule, originally published and opened to comment in September, 1998. The most common objection to the rule (i.e., some 12,700 responses), according to the Park Service, was that it unreasonably discriminates against one form of recreational vessel. The Park Service answered this objection by citing Personal Watercraft Industry Association v. Department of Commerce, 48 F.3d 540 (D.C. Cir. 1995). In that decision, the circuit court had held that a federal agency may discriminate and manage one type of vessel differently than others as long as it has a rational basis for doing so. The Park Service compared its approach to PWCs to its regulation of snowmobiles and off-road vehicles.

Inquiries regarding the Final Rule may be directed to National Park Service, Ranger Activities Division, Room 7408, 1849 C Street NW, Washington, D.C. 20240.

Florida State Court Holds That Dive Accident is Not Subject to Maritime Law; Limitation Act Does Not Invalidate Release

In April 1995, Kenneth Borden tragically drowned while participating in an off-shore scuba diving class in Florida. Before participating in the class, Borden signed a document which purported to release the organizers and dive instructors from liability for their own negligence. Borden drowned after the boat captain detached the dive “tag line” from the boat, preventing Borden from pulling himself towards the boat. Borden’s estate commenced a wrongful death action against the dive instructors, the dive boat owner and PADI (Professional Association of Diving Instructors) in Florida state court.

Borden’s estate argued that the release was rendered invalid and unenforceable by the Limitation of Liability Act, 46 U.S.C. § 183c. Section 183c of the Act provides in part that:

[i]t shall be unlawful for the...owner of any vessel transporting passengers between ports of the United States...to insert in any...contract or agreement any provision or limitation (1) purporting, in the event of loss of life or bodily injury arising from the negligence or fault of such owner or his servants, to relieve such owner, master or agent from liability...for such loss or injury, or (2) purporting in such event to lessen, weaken or avoid the right of any claimant to a trial...on the question of liability for such loss or injury....All such provisions or limitations contained in any such...contract...are declared to be against public policy and shall be null and void and of no effect.

However, the trial court concluded that §183c of the Limitation Act did not apply and that the release was enforceable, and entered summary judgment against the plaintiffs and in favor of all defendants. The estate appealed.

The Florida Court of Appeal affirmed the trial court’s decision, holding that admiralty law was inapplicable to the accident and, as a result, that §183c did not apply to invalidate the release. Borden v. Phillips, __ So.2d __, 2000 WL 158485 (Fla.App.1st Dist., Feb. 16, 2000). The Court of Appeal first concluded that § 183c was applicable during the voyage to the dive site because the vessel was transporting passengers. However, the court then considered whether the accident itself would fall within admiralty jurisdiction such that admiralty law would apply. Applying the test set forth in Jerome B. Grubart v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 115 S.Ct. 1043 (1995), the court held that the accident would not fall within admiralty jurisdiction because the alleged negligence was unrelated to the operation or maintenance of the vessel. Accordingly, the court held that § 183c was inapplicable to the release.

In reaching its holding, the Florida Court of Appeal distinguished Matter of Pacific Adventures, Inc., 5 F.Supp.2d 874, 1998 AMC 2857 (D.Haw. 1998), in which a federal district court had concluded that § 183c of the Limitation Act invalidated a similar release signed by a dive participant. (See 8 Boating Briefs No. 1 (1999)). Pacific Adventures involved a claim by a dive participant who was injured when her leg became entangled in a boat’s propellor. The District Court for Hawaii found that the plaintiff’s accident fell within admiralty jurisdiction and that the plaintiff’s status as a passenger had not ended even though she was injured while diving. In a dissenting opinion in Borden, a single appellate judge argued that Mr. Borden remained attached to the dive boat as a passenger at the time of his death and that the majority had erred in concluding that the alleged negligence did not relate to the operation of the dive boat.

The applicability of § 183c of the Limitation Act was also considered in a recreational context in Waggoner v. Nags Head Water Sports, Inc. 141 F.3d 1162, 1998 AMC 2185 (4^th Cir. 1998). In Waggoner, the Fourth Circuit Court of Appeals considered whether § 183c invalidated a release in a jet-ski rental agreement. The court held that § 183c was inapplicable on the ground that it applies only to common carriers of passengers for hire. (See 7 Boating Briefs No. 1 (1998)). It does not appear that the decedent’s estate in Borden advanced the argument that a dive boat is not a common carrier of passengers to which § 183c applies. The Waggoner decision was not mentioned by the Court of Appeal in Borden.

Coast Guard Proposes Reduced Standard of Intoxication

On March 16, 2000 the Coast Guard published a Notice of Proposed Rulemaking to reduce the federal Blood Alcohol Concentration (“BAC”) standard for recreational boaters from .10 BAC to .08 BAC. The proposed rule, which would amend 33 CFR Parts 95 and 177, is published at 65 Fed. Reg. 14223.

In its regulatory notice, the Coast Guard cites the concern that alcohol remains a significant factor in boating deaths and the desire to support what is termed a trend toward reduced state boating BAC standards as reasons for the proposed rule. Specifically the Coast Guard notes that while the overall number of boating deaths dropped from 1,100 in 1986 to 821 in 1997, the number of deaths in which alcohol was a factor remained stable. According to Coast Guard statistics, alcohol was consumed by vessel occupants in 27 percent of all boating fatalities in 1997.

The materials accompanying the proposed rule indicate that in 1987 only 21 states had enacted BAC standards for recreational boaters. Nineteen of these 21 states had adopted a BAC of .10 while the remaining two had specified a .08 BAC. By 1999, 54 states and territories had enacted BAC standards for recreational boaters. A BAC of .10 is specified by 34 states. Twenty states specify a BAC of .08 for recreational boaters.

The proposed rule would also amend existing federal regulations by replacing the term “intoxicated” with “under the influence of alcohol or a dangerous drug” as used in connection with the new BAC standard.

The proposed rule, like the existing regulations, would adopt and would not preempt existing state BAC standards for navigable waters wholly within a particular state or within state coastal boundaries. Accordingly, there would be no change in those states that utilize the higher .10 BAC standard. The federal standard applies to navigable coastal waters beyond state boundaries, to vessels owned by U.S. citizens while operating on the high seas and to navigable waters and waters on federal property in those states which have not enacted BAC standards for recreational boating (presently Iowa and New Mexico).

Comments in response to the proposed rule must be submitted by July 14, 2000. Comments may be submitted by mail addressed to Docket Management Facility, U.S. Department of Transportation, Room PL-401, 400 Seventh Street SW, Washington, D.C. 20590, by telefax to 202-493-2251 or by E-Mail to http://dms.dot.gov. Questions concerning the proposed rule may be directed to Carlton Perry, Project Manager, Office of Boating Safety, U.S. Coast Guard by telephone at 202-267-0979 or E-Mail at cperry@comdt.uscg.mil.

Primary Assumption of Risk Doctrine Does Not Bar Tube Rider’s Personal Injury Claim

In Volume 8, No. 2 (Fall/Winter 1999), we reported the decision in Record v. Reason, 86 Cal.Rptr.2d 547, 1999 AMC 2380 (Cal.Ct.App. 1999), wherein the California Court of Appeal held that “tubing” is a sport to which the doctrine of primary assumption of the risk applies. The court held that the doctrine barred the plaintiff’s personal injury claim based on alleged negligence in the operation of the towing boat.

A separate division of the same court recently addressed a similar claim in Bjork v. Mason, 92 Cal.Rptr.2d 49, 2000 AMC 455 (Cal.Ct.App. 2000). Fifteen year old Brian Bjork sustained injuries when a tow rope attached to the inner tube on which he and another boy were riding broke, striking him in the eye. Bjork brought suit against David Mason, the adult owner and operator of the towing boat, in California state court. The incident occurred when the boat operator suddenly accelerated the towing boat while operating in a no-wake zone. The operator testified that he checked the condition of the tow rope before the activity began but he could not recall how old the tow rope was. There was evidence that the tow rope was frayed and damaged. The operator also testified that it is not uncommon for tow ropes to break while “tubing.” The plaintiff alleged that the operator negligently accelerated the boat and negligently furnished a defective tow rope for the activity.

The trial court found that the plaintiff’s claims were barred by the primary assumption of risk doctrine and granted summary judgment in the defendant operator’s favor. The plaintiff appealed.

On appeal the plaintiff argued that summary judgment was improperly granted due to the existence of triable issues of fact regarding whether the doctrine of assumption of the risk barred the plaintiff’s claims under the circumstances. As in Record v. Reason, the Court of Appeal held that “tubing” is a sporting activity to which the doctrine of primary assumption of the risk applies and that the boat operator and tube rider are “co-participants” in the sport. In so holding the court rejected the plaintiff’s first argument that summary judgment was improperly granted with regard to the plaintiff’s allegation that the operator negligently accelerated the boat in a no-wake zone. The court held that changes in speed and turn angle are risks inherent in the sport and that when the doctrine of primary assumption of the risk applies, a co-participant is liable only for intentional or reckless conduct totally outside the range of risk inherent in the activity.

The plaintiff argued in the alternative that summary judgment was improper in light of his allegation that the owner and operator of the boat negligently furnished a defective tow rope. In considering this argument the Court of Appeal held that the owner/operator of the boat had a dual capacity of co-participant and supplier of equipment in connection with the activity. After reviewing analogous cases outside of the recreational boating context, the court held that “when a person supplies equipment to be used in a sport, even if he or she thereafter becomes a coparticipant in the sport, the act of supplying of the equipment is something separate and distinct from participation in the sport and the tests for liability are accordingly different.” The Court of Appeal held that general negligence rules apply to claims based on the furnishing of equipment for an activity to which the primary assumption of risk doctrine applies, reversed the trial court’s entry of summary judgment and remanded the case for further proceedings on the defective equipment claim.

Other Recent Cases

Krummel v. Bombardier Corp., __ F.3d __, 2000 WL 266543 (5^th Cir. March 27, 2000). Plaintiff who sustained a broken leg while using a PWC, brought a products liability action against the manufacturer, claiming defective design of the craft’s footwells and failure to warn. The district court found that the PWC was not defectively designed but entered judgment against the manufacturer for failure to warn users of the potential risk of leg injuries. On appeal, the Fifth Circuit reversed and rendered judgment for the manufacturer on the basis that the plaintiff had failed to demonstrate that the manufacturer should have foreseen the risk of injury through either a pattern of similar injuries or a design defect.

Naglieri v. Bay, 1999 WL 1611209 (D.Ct. 1999). The estate of decedent who drowned while serving as a volunteer crew member on the defendant’s racing sloop brought a negligence cause of action against the owner under the general maritime law and Connecticut law. The decedent drowned when the sloop broached after encountering a sudden 42 knot wind gust. The decedent, who was not wearing a PFD, was thrown into the water. Efforts by the captain and crew to retrieve him were unsuccessful. Following a bench trial, the district court entered findings of fact and conclusions of law and entered judgment for the defendants.

Olson v. Empire District Electric Co., 2000 WL 140752 (Mo.App.S.D. Feb. 9, 2000). The defendant electric company, a Kansas corporation, owned and operated a dam and lake in Cherokee County, Kansas. Eric Olson, a Missouri resident, was killed in a boating accident on the lake when his boat was swept into the dam. The electric company moved to dismiss a suit brought by the decedent’s estate on the ground that the action was barred by the Kansas Land and Water Recreational Areas Act. The statute immunizes landowners who permit their property to be used by the public for recreational purposes without charge. The trial court granted summary judgment to the defendants. The Court of Appeals affirmed. See discussion of recreational use immunity statutes in 8 Boating Briefs No. 2 (Fall/Winter 1999).

Sprietsma v. Mercury Marine, 2000 WL 355575 (Ill.App. 1 Dist. April 6, 2000). The estate of a decedent killed when struck by a propellor after falling from a pleasure boat brought a wrongful death action against the boat’s manufacturer based on its alleged failure to equip the boat with a propellor guard. The appellate court affirmed the trial court’s entry of summary judgment in favor of the manufacturer on the ground that the plaintiffs’ state law tort claims were impliedly preempted by the Federal Boat Safety Act, 46 U.S.C. § 4301 et seq. See discussion of other cases in 7 Boating Briefs No. 1 (Fall/Winter 1998).

LeBlanc v. Cleveland, 198 F.3d 353 (2^nd Cir. 1999). In a suit arising from the collision of a kayak and a motor boat on the Hudson River 29 miles upstream of Fort Edward, the district court dismissed the action for lack of subject matter jurisdiction, finding that the accident did not occur on navigable waters. The area of the Hudson in question cannot presently support interstate navigation due to the presence of man-made dams. The Second Circuit affirmed the dismissal, rejecting the defendant’s argument that the court should apply an historical navigability test.