An interesting decision involving the Shipowner’s Limitation of Liability Act was recently handed down in a ferryboat / speed boat collision case. The accident occurred on February 16, 2013. The ferryboat, carrying approximately five hundred passengers, was ten minutes into its thirty-minute voyage when it collided with the speed boat. One man aboard the speed boat died from injuries and another was hospitalized. No one aboard the ferryboat was hurt. The captains of both the ferryboat and privately owned speed boat (pictured to the right) claim they did not see each other until it was too late to take corrective action to avoid the collision. Evidence established that the ferryboat captain was using his mobile phone immediately prior to the accident. The decedent’s estate and the injured victim claim that the ferryboat captain was distracted by using his phone and was therefore negligent in causing the fatal collision.
A favor tactic of defendants (and their insurance company appointed attorneys) in serious boating accidents is to file what is known as a petition for exoneration from or limitation of liability. Under a century and a half old federal law, a defendant shipowner is allowed to file a lawsuit asking a federal judge to determine liability and to even limit an injured plaintiff’s recovery to the post lost value of the vessel. This means that the damages available for plaintiff who is seriously injured could be capped at the value of a severally damaged vessel. This federal law has been widely criticized by the courts some going as far as stating its, “a holdover from the days when encouraging commerce by sea was considered more important than providing full redress to victims of maritime accidents.” Though generally not liked by the courts, the Limitation Act is still the law of the land and will be applied under the right circumstances.
In order to limit one’s liability under the federal law, the shipowner must provide that any negligence causing the accident was not within its “privity or knowledge.” In order words, the shipowner was unaware and could not become aware of the negligent act where a reasonable investigation would have led to the request knowledge. In this case, the owner of the ferryboat filed a limitation case in federal court arguing that it should be able to limit its liability to the value of the ferryboat at it was unaware the captain’s negligence of using his mobile phone. The federal court rejected the ferryboat owner’s argument. It found that there was no company policy that its captain could not use their phones when operating the ferryboats and that it knew that captains carried personal mobile phones while operated the ferries and permitted their use. Based upon these factual finding, the court denied the ferryboat owner’s petition to limit liability to the vessel’s post loss value.