Recreational Boating Newsletter, Spring 2001
Editor: Frank P. DeGiulio
Source: MLA
Date: May 4, 2001


Editor: Frank P. DeGiulio

CALHOUN v. YAMAHA IV: Third Circuit Holds That Federal Maritime Law Governs Liability Standards

In June, 2000, the Third Circuit Court of Appeals issued the most recent decision in the decade old litigation arising from Natalie Calhoun’s tragic death in a jet ski accident in Puerto Rico waters. Calhoun v. Yamaha Motor Corporation, U.S.A., 216 F.3d 338, 2000 A.M.C. 1865 (3rd Cir. 2000).

In July, 1989, twelve year old Natalie Calhoun, a Pennsylvania resident vacationing with her family in Puerto Rico, was killed when a rented jet ski that she was operating collided with an anchored pleasure boat near Palmas Del Mar. Her parents filed a products liability action 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, and sought compensatory damages for loss of earnings, support, services and society, as well as funeral expenses and punitive damages. The Calhouns have consistently argued for the application of state law to both the damages and liability aspects of the case.

The most recent opinion by the Third Circuit involved a certified interlocutory appeal from the 1999 decision, Calhoun v. Yamaha Motor Corporation, 40 F.Supp.2d 288, 1999 AMC 1777 (E.D.Pa. 1999), reported in 8 Boating Briefs No. 1 (Mar.L.Ass’n. 1999). The district court’s opinion followed the U.S. Supreme Court’s decision in the case, Yamaha Motor Corp. v. Calhoun, 516 U.S. 199, 1996 AMC 305 (1996), in which the Court held that state law governs the damages and 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 then remanded to the district court for further consideration of whether the law of Pennsylvania or Puerto Rico should govern the scope of recoverable damages.

On remand, 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 determined that federal choice of law rules should guide the analysis since the action fell within the court’s admiralty and maritime jurisdiction. Applying this analysis the district court first concluded that the law of Puerto Rico, the situs of the accident, applied to the Calhoun’s punitive damages claim. The court then granted summary judgment in favor of Yamaha because punitive damages are not recoverable under Puerto Rico law and dismissed the Calhoun’s punitive damages claim. Further, the court found that the law of Pennsylvania should apply to define the scope of available compensatory damages for Natalie’s death.

In addition to its choice of law analysis and findings regarding applicable state law remedies and damages, the district court found that state substantive law, rather than federal maritime law, should govern the liability standards in the case of the death of a non-seafarer in state waters. In the closing footnote of its opinion in the case, the Supreme Court in Calhoun had said as follows:

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 interpreted this comment as a directive to decide whether substantive federal maritime law or state law should define the standards governing liability of the parties. The district court determined that Puerto Rican substantive law should supply the operative standards of liability.

The Calhouns had consistently argued throughout the litigation that state substantive law rather than federal maritime law should govern the standards of liability as well as damages. The issue is potentially significant to the ultimate outcome of the case because if federal maritime law applies, the principle of pure comparative fault will permit the defendants to introduce evidence of Natalie’s own negligence to reduce recoverable damages under the Supreme Court’s decision in United States v. Reliable Transfer Co., 421 U.S. 397, 95 S.Ct. 1708 (1975). Conversely, under Pennsylvania law contributory and comparative negligence are not defenses to a strict products liability claim and Yamaha would be barred from introducing evidence of Natalie’s negligence.

The district court certified its findings to the Third Circuit Court of Appeals. On appeal, the Third Circuit affirmed the district court’s decision with respect to the applicability of Puerto Rico and Pennsylvania law to determine the scope of recoverable damages but reversed the district court’s finding that state law should also control the standards of liability.

In reviewing the district court’s finding that Pennsylvania law should govern the Calhoun’s claim for compensatory damages and that the law of Puerto Rico should govern their claim for punitive damages, the Third Circuit initially considered whether the district court had properly applied federal maritime choice of law rules in light of the Supreme Court’s holding in the case that state law governs damages arising from the death of a non-seafarer in territorial waters. Noting that the appropriate choice of law rules are controlled by the basis of the court’s subject matter jurisdiction, the Third Circuit analyzed whether the circumstances of the accident brought the case within federal admiralty jurisdiction under the Supreme Court’s decisions in Foremost Ins. Co. v. Richardson, 457 U.S. 668, 102 S.Ct. 2654 (1982) and Sisson v. Ruby, 497 U.S. 358, 110 S.Ct. 2892 (1990). Concluding that the circumstances of Natalie Calhoun’s accident were “virtually identical to the accident that occurred in Richardson,” the circuit court held that admiralty jurisdiction was present and that the district court properly applied the federal maritime choice of law rules enunciated in Lauritzen v. Larsen, 345 U.S. 571, 73 S.Ct. 921 (1953).

In affirming the district court’s finding that the Calhoun’s recoverable damages were governed in part by the law of Puerto Rico and in part by the law of Pennsylvania the Third Circuit approved the district court’s use of the doctrine of “depeÁage,” the use of the law of different states to resolve different issues in the same case. The court rejected the Calhoun’s argument that the situs of the accident was merely fortuitous and that Puerto Rico’s interest in applying its law should therefore be given little or no weight in the choice of law analysis. In so doing, the court distinguished prior decisions involving air crashes, holding that unlike circumstances where a mechanical failure or human error might result in a crash anywhere along an interstate route, “Natalie intentionally traveled to Puerto Rico and intentionally operated the Wavejammer in Puerto Rico’s territorial waters.”

The Third Circuit, noting that the purpose of punitive damages is to punish and deter future conduct, held that the district court had properly concluded that the law of Puerto Rico, the situs of the accident, should apply to the Calhoun’s punitive damages claim. Because the accident occurred in Puerto Rico’s territorial waters, the court held that Puerto Rico’s interest in regulating activities within its waters dominates any interest that Pennsylvania might have in this respect.

Conversely, the court held that Pennsylvania law should govern compensatory damages. Noting that the Calhouns were residents of Pennsylvania and had virtually no connection to Puerto Rico, the court held that Pennsylvania’s interest in obtaining compensation for its citizens dominated any interest that Puerto Rico might have with regard to this aspect of the claim.

After affirming that portion of the district court’s opinion regarding the applicability of state law to the Calhoun’s damage claims, the Third Circuit considered whether the district court had erred in its conclusion that the substantive law of Puerto Rico, rather than federal maritime law, should govern the standards of liability. The Third Circuit reversed this aspect of the district court’s decision and held that federal maritime law provides the standards of liability in an admiralty action for the death of a non-seafarer in territorial waters brought pursuant to state wrongful death or survival statutes.

According to the Third Circuit, resolution of the issue of whether federal maritime law or state law should provide the standard of liability in the case of a death of a non-seafarer in state territorial waters depends on whether the Supreme Court’s 1959 decision in The TUNGUS v. Skovgaard, 358 U.S. 588, 79 S.Ct. 503 (1959) remains good law in light of the court’s subsequent decision in Moragne v. States Marine Lines, Inc., 398 U.S. 375, 90 S.Ct. 1772 (1970). In The TUNGUS, the Supreme Court held that no federal common law cause of action existed for a wrongful death in territorial waters based on its own prior decision in The HARRISBURG, 119 U.S. 199, 7 S.Ct. 140 (1886). Accordingly, The TUNGUS, and other cases decided contemporaneously by the Supreme Court, held that when such an action was brought the court was required to apply state law with respect to all substantive and procedural issues. In its 1970 decision in Moragne, the Supreme Court overruled The HARRISBURG and created a federal cause of action under the federal common law for the wrongful death of seamen in territorial waters. However, the Moragne decision did not expressly overrule The TUNGUS and related decisions.

The district court in Calhoun based its decision that state law governs liability arising form the death of non-seafarers in territorial waters on the holding in The TUNGUS, concluding that “in this circuit, The Tungus, with all its Harrisburg-era warts, remains good law with respect to the proposition that ërights of non-seamen killed in state territorial waters depend on state wrongful death statute [sic]’.” 40 F.Supp.2d at 295.

However, the Third Circuit disagreed, concluding that the specific holding of The TUNGUS — that all facets of state law must be applied when a plaintiff utilizes a state wrongful death remedy to recover for a death in territorial waters—was effectively overruled by Moragne. Further explaining its reasoning, the court held that The TUNGUS remained good law only insofar as it stands for the proposition that state law may provide a procedure or remedy by which a plaintiff may bring a action for wrongful death in territorial waters, a proposition consistent with the Supreme Court’s holding in Calhoun.

The Third Circuit also based its holding that federal maritime law must govern liability arising from the death of a non-seafarer in territorial waters on the need for uniformity in federal maritime law. Reviewing Supreme Court decisions supporting the need for uniformity, the Third Circuit noted that adoption of the district court’s finding would require the application of the substantive liability law of the state where the accident occurred, thereby eliminating national uniformity in liability standards for maritime accidents.


The Eleventh Circuit Court of Appeals held that a written release signed by the deceased prior to a diving trip is effective to bar a wrongful death action against the dive boat operators under state law. Schultz v. Florida Keys Diving Center, Inc., 224 F.3d 1269 (11th Cir. 2000).

Patricia Schultz drowned during a diving trip in Florida waters. On the day before the trip Schultz signed a document releasing the dive operators from liability for all claims, including claims arising from their own negligence or gross negligence. While diving, Schultz and her husband surfaced a significant distance from the dive boat and were unable to swim back to the boat. Patricia Schultz became unconscious and drowned before being picked up by the boat. Schultz’s estate commenced a wrongful death action against the dive instructors and the dive boat owners in Florida federal court invoking diversity jurisdiction.

We have previously reported state and federal court decisions involving the validity of similar releases under maritime law: Matter of Pacific Adventures, Inc, 5 F.Supp.2d 874, 1998 AMC 2857 (D.Hi. 1998) (release invalid under Limitation Act) reported in 8 Boating Briefs No. 1 (Mar. L. Ass’n. 1999); Borden v. Phillips, 752 So.2d 69 (Fla.1st DCA 2000) (federal maritime law inapplicable; release valid under state law) reported in 9 Boating Briefs No. 1 (Mar. L. Ass’n. 2000); Waggoner v. Nags Head Water Sports, Inc., 141 F.3d 1162, 1998 AMC 2158 (4th Cir. 1998) (release valid under federal maritime law or state law) reported in 7 Boating Briefs No. 1 (Mar. L. Ass’n. 1998).

In Schultz the decedent’s estate argued that the release was rendered invalid and unenforceable either by the provisions of the Limitation of Liability Act, 46 U.S.C. § 183c, or under federal maritime law. Section 183c of the Limitation Act provides 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.

In Shultz, the district court had granted summary judgment in favor of the defendants and found that although the accident giving rise to the claim was within federal admiralty jurisdiction, §183c of the Limitation Act did not invalidate the release signed by Schultz which was otherwise valid and enforceable under Florida state law. The estate appealed.

On appeal the Eleventh Circuit affirmed the trial court’s decision. The circuit court initially considered the applicability of §183 of the Limitation of Liability Act. The court held that the Act was inapplicable because the dive boat was not “transporting passengers” within the meaning of the Act and the legislative history revealed no intention by Congress to invalidate releases for scuba diving excursions.

The Eleventh Circuit then addressed the estate’s alternative argument that the release was invalid under general principles of federal maritime law. Although upholding the validity of the release under state law, the district court had found that the accident satisfied the test for admiralty jurisdiction and that federal maritime law was therefore applicable.

The Eleventh Circuit observed that most of the decisions in which diving accidents have been held to fall within admiralty jurisdiction involved injuries related to the operation or management of dive boats. The court specifically distinguished the decision in Matter of Pacific Adventures, Inc., 5 F.Supp.2d 874, 1998 AMC 2857 (D.Haw. 1998), in which it was held that §183c of the Limitation Act invalidated a similar release signed by a dive participant. 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. The Eleventh Circuit noted that Patricia Schultz’s drowning related only to the act of scuba diving and was unrelated to the operation of the dive boat itself.

Although the Eleventh Circuit questioned whether Schultz’s accident would support admiralty jurisdiction and indicated that the issue was in its view “not free from doubt,” the court stated that no established principle of federal maritime law would invalidate the release signed by Schultz. Specifically, the court held that to the extent that principles of federal maritime law limit the enforceability of releases in certain circumstances, those principles are limited to the context of common carriers and are, therefore, inapplicable in the case of a diving excursion boat.

Based on its holding that the release was not invalidated by the application of the Limitation Act or any principle of federal maritime law, the Eleventh Circuit concluded that the district court had properly applied Florida state law as the law governing the validity of the release.


In 1998 Jeanne Kulesza suffered serious permanent injuries when she was thrown from a twenty foot sport fishing boat on which she was a passenger. Kulesza was thrown overboard when the captain’s chair that she was holding onto allegedly came off the post to which it was attached. Kulesza fell from the stern and her arm was severed by the boat’s propeller.

Kulesza brought suit against the builder, Scout Boats, Inc., and the manufacturers and suppliers of the captain’s chair and its component parts, in federal court in the eastern district of Pennsylvania. In her Complaint, Kulesza alleged subject matter jurisdiction based solely on diversity of citizenship and demanded a jury trial. Only one of the defendants raised the applicability of federal maritime law in its answer.

Prior to trial a dispute arose concerning the applicable law. The issue was put to the court in the form of a motion and submitted to a federal magistrate judge for decision. The choice of law issue is decided in Kulesza v. Scout Boats, Inc., 2000 WL 1201457 (E.D.Pa. Aug. 8, 2000).

Three of the defendants argued that New York substantive law governed the dispute because the plaintiff alleged diversity of citizenship as the sole basis for subject matter jurisdiction. The plaintiff and the boat builder argued that federal maritime law applies regardless of the alleged basis for jurisdiction. According to the court, the choice of law issue was of vital importance to the litigants. First, several of the defendants raised the affirmative defense of assumption of the risk, a defense permitted under New York State law but not generally available under federal maritime law. Second, federal maritime law applies the principle of joint and several liability among joint tortfeasors while under New York law a party that is less than fifty percent at fault cannot be held jointly liable for economic losses.

The magistrate judge, citing the Supreme Court’s decision in Pope & Talbot, Inc. v. Hawn, 346 U.S. 406 (1953) and numerous circuit and district court opinions, concluded that under the “reverse-Erie Doctrine...once a claim falls within the bounds of admiralty jurisdiction, substantive admiralty law applies to govern the claim, regardless of whether or not admiralty jurisdiction was actually invoked in the complaint.” The magistrate judge went on to conclude that the tort in question satisfied the test for admiralty jurisdiction and, therefore, federal maritime law governs the claims and defenses.

The court’s decision is consistent with black letter law and the overwhelming majority of reported decisions in which the specific issue has been addressed. However, the Kulesza decision is significant due to a the existence of a disturbing contrary opinion issued by the Third Circuit Court of Appeals in Fedorczyk v. Caribbean Cruise Lines, Ltd., 82 F.3d 69 (3rd Cir. 1996), which the Kulesza court might have considered to be controlling precedent.

Fedorczyk involved a cruise passenger’s claim for personal injuries allegedly sustained in a slip and fall incident on board one of the defendant’s vessels. The plaintiff originally sued in state court and the defendant removed the case. Not surprisingly, the state court complaint made no mention of admiralty jurisdiction. Although recognizing that the claim was an “admiralty tort” which could have been brought pursuant to the court’s admiralty jurisdiction, the Third Circuit held that if a complaint does not identify the claim as an admiralty and maritime claim, substantive admiralty law will not be applied regardless of whether the claims would otherwise support admiralty jurisdiction. The Third Circuit specifically rejected the “reverse-Erie doctrine,” holding that in the circumstances it would apply state choice of law rules and state substantive law to the dispute.

Although noting that the Third Circuit’s decision in Fedorczyk had not been overruled, the Kulesza court rejected both the holding and the reasoning of the decision. To distinguish the case, the magistrate concluded that the appellate court’s discussion was mere dicta, and therefore non-binding, because the decision itself stated that the parties had agreed that New Jersey state substantive law rather than federal maritime law should be applied.

The magistrate judge also concluded that the Fedorczyk decision is in direct conflict with the policy of promoting uniformity in admiralty law:

...the Fedorczyk reasoning would permit a plaintiff to elect the application of either state or admiralty substantive law, depending on which one was more favorable to him or her, simply by bringing the case either under diversity jurisdiction or admiralty jurisdiction. Such freedom of choice would, in turn, result in plaintiffs with identical maritime tort claims being judged under varying standards of liability, thereby destroying the very uniformity which the framers set out to create.


In a recent opinion the Fifth Circuit Court of Appeals joined the Eleventh Circuit in holding that personal injury claims based on the alleged failure to equip a recreational boat with a propellor guard are impliedly preempted by Coast Guard regulatory action taken under the authority of the Federal Boat Safety Act, 46 U.S.C. §§ 4301–4311 (“FBSA”). Lady v. Neal Glaser Marine, Inc., 2000 WL 1405075 (5th Cir., Sept. 26, 2000).

Steven Lady was injured in 1995 when the jet ski which he was operating collided with a pleasure boat manufactured by Outboard Marine Corporation. Lady fell from his jet ski and came in contact with the pleasure boat’s unguarded propellor. He sustained permanent injuries, including the loss of one leg. Lady brought suit in federal court against the manufacturer and distributor of the pleasure boat, alleging that his injuries were caused by the defendants’ failure to design and equip the boat with a propellor guard. In his suit Lady advanced causes of action based on negligence, breach of warranty and products liability under state law.

In Lewis v. Brunwick Corp., 107 F.3d 1494 (11th Cir. 1997), the Eleventh Circuit previously held that the FBSA could not be interpreted as expressly preempting the plaintiff’s common law claims based on the alleged failure to equip a boat with a propellor guard due the existence of the Act’s “savings clause.” The “savings clause” provides that compliance with the Act or regulations issued thereunder “does not relieve a person from liability at common law or under state law.” 46 U.S.C. § 4311(g). However, the Eleventh Circuit held that although the plaintiff’s claims were not expressly preempted, the Coast Guard’s decision that propellor guards should not be required resulted in implied preemption of state law, including common law claims. Specifically, the Eleventh Circuit held that implied preemption of state law may occur where a federal agency makes a determination that a particular subject should not be the subject of regulation. (See 6 Boating Briefs No. 1 (Mar. L. Ass’n. 1997).

The plaintiff in Lewis petitioned the Supreme Court for certiorari on the issue of implied preemption. The Supreme Court granted the petition in November, 1997. 522 U.S. 978, 118 S.Ct. 439 (1997). Briefs were filed and the case was argued before the Supreme Court (The text of the oral argument is available at 1998 WL 106133). Interestingly, the United States filed an amicus brief supporting the plaintiff’s appeal and urging the court to hold that the plaintiff’s state law claims were not expressly or impliedly preempted by federal law or regulation. The parties in Lewis settled the case before the Supreme Court issued its opinion and the appeal was dismissed. 523 U.S. 1113, 118 S.Ct. 1793 (1998). (See 7 Boating Briefs No. 1 (Mar. L. Ass’n. 1998).

The federal district court placed the Lady v. Neal Glaser action on the suspense docket pending the outcome of the Supreme Court appeal in Lewis. The case was reactivated when the Supreme Court appeal was dismissed. Thereafter the district court granted summary judgment in favor of Outboard Marine Corporation on the ground that the plaintiff’s state law claims were preempted by federal law. Lady v. Outboard Marine Corp., 66 F.Supp.2d 818 (S.D.Mo. 1999). The plaintiff appealed.

On appeal the Fifth Circuit affirmed the district court’s decision in Lady and held that “although the FBSA and the Coast Guard’s regulatory decisions do not expressly preempt Lady’s tort claims, implied conflict preemption does preclude his action against OMC, because a state rule requiring propeller guards on recreational vessels would frustrate the Coast Guard’s decision that recreational boats should not be required to be equipped with propellor guards.” The Fifth Circuit’s rationale and holding are entirely consistent with the Eleventh Circuit’s decision in Lewis.

In reaching its holding, the Fifth Circuit in Lady initially considered the plaintiff’s argument that the preemption analysis should begin with a presumption against federal preemption of state common law claims where the claims concern matters of safety and health. Relying on the Supreme Court’s decision in United States v. Locke, 529 U.S. 89, 120 S.Ct. 1135 (2000), the circuit court rejected the plaintiff’s argument and held that a presumption against preemption should not be applied where there is a history of significant federal regulatory presence in the area in question. The court concluded that the regulation of vessels in general and pleasure craft in particular is an area traditionally regulated by the federal government and, accordingly, no presumption could be applied as urged by Lady.

The Fifth Circuit relied heavily on the Supreme Court’s decision in Locke in support of its conclusion that the Coast Guard’s consideration and rejection of a propellor guard requirement impliedly preempted state law claims on the issue. In Locke the Supreme Court held that implied federal preemption exists “when compliance with both federal and state law is impossible, or when the state law stands as an obstacle to the completion and execution of the full purpose and objective of Congress.” The Fifth Circuit held that implied preemption existed in the case of propeller guards because the Coast Guard had purposefully adopted a flexible approach to the subject based on a finding that imposition of a propeller guard requirement would be “substantively inappropriate.”

With regard to the general subject of implied preemption in the recreational boating area the Fifth Circuit specifically held as follows:

[w]here the Coast Guard has been presented with an issue, studied it, and affirmatively decided as a substantive matter that it was not appropriate to impose a requirement, that decision takes on the character of a regulation and the FBSA’s objective of national uniformity mandates that state law not provide a result different than the Coast Guard’s.


In 1994 the pleasure yacht Shango was placed in a floating dry dock owned and operated by Master Marine, Inc. for the purpose of conducting repairs to the boat’s bow thruster. Extensive damage in the form of debonding of internal stiffeners and bulkheads from the fiberglass hull was discovered four days after the boat was placed in the dry dock.

The yacht owner filed a claim with its hull underwriters at Lloyd’s who paid in excess of $800,000. Lloyd’s underwriters and the owner commenced an action against the ship yard in federal court alleging that the damage was caused by the manner in which the yacht was placed in the dry dock. Underwriters sought to recover amounts paid out under the hull policy for physical damage to the yacht. The yacht owner asserted its own claim for damages in the amount of $3 million for alleged loss of charter hire. The plaintiffs advanced theories of common law negligence and breach of a bailment contract by the ship yard. The case was tried and the court entered findings of fact and conclusions of law which are the subject of the reported decision in Frichelle Ltd. v. Master Marine, Inc., 99 F.Supp.2d 1337, 2000 AMC 2329 (S.D.Ala. 2000).

Based on the evidence submitted at trial the district court entered findings of fact in which it concluded that limited debonding of structural members had existed prior to the dry docking and that this condition rendered the vessel unseaworthy. The court also found that the ship yard was not made aware of this pre-existing condition by the owner and that the yard had no reason to anticipate the need to take extra or additional precautions, given that the purpose of the dry docking was limited to the repair of the bow thruster. According to the court, the evidence established that employees of the owner remained aboard the boat in dry dock and that the yard did not have unfettered access to the vessel. In connection with the owner’s loss of hire claim the court found that the boat had been chartered only once in eight years prior to the incident and that the repairs carried out were not necessarily indicative of an intent to charter the vessel following the repairs.

At trial the ship yard argued that no maritime bailment can exist unless the bailee assumes complete and exclusive possession and control of the vessel based on the Fifth Circuit’s decision in T.N.T. Marine Service, Inc. v. Weaver Shipyards & Dry Docks, Inc., 702 F.2d 585 (5th Cir. 1983). The district court, citing Stegemann v. Miami Beach Boat Slips, 213 F.2d 561 (5th Cir. 1954), rejected the shipyard’s argument and held that lack of exclusive possession and control by a bailee does not automatically defeat a maritime bailment but, instead, simply modifies and limits the obligations of the bailee. However, the Frichelle court held that the plaintiffs were unable to establish a prima facie case of negligence by the yard as bailee because they could not prove that the boat was delivered to the yard in good order and condition.

The district court in Frichelle also held that the plaintiffs failed to carry their burden of proof on the common law negligence theory because the evidence established that the yard exercised reasonable care in the manner in which the boat was dry docked. In this regard, the court concluded that the yard had no actual knowledge or reason to believe that any additional or special precautions were required due to the boat’s pre-existing condition. Although the court concluded that the yard was not liable for the alleged damages to the yacht based on the evidence and theories advanced by the plaintiffs, the court also addressed and rejected the yacht owners’ claim for loss of use as a matter of law. Relying in part on the Eleventh Circuit’s decision in Central State Transit & Leasing Corp. v. Jones Boat Yard, Inc., 206 F.3d 1373 (11th Cir., 2000), the Frischelle court held that the yacht owner had not satisfied the requisite standard of proof “that profits had actually or may reasonably supposed to have been lost” applicable when an owner of a pleasure boat seeks loss of use damages. See 9 Boating Briefs No. 1 (Mar. L. Ass’n. 2000) for a discussion of the Central State Transit decision.

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