I had an unusual opportunity to work on a maritime appeal.  The appeal focused on the limitation of liability act. This act, under certain circumstances, can limit a vessel owner’s liability to the value of the vessel after the incident that triggers the vessel owner to seek a limitation of liability.

Generally the law on this is as follows:

46 U.S. Code § 30505 – General limit of liability

(a) In General.— Except as provided in section 30506 of this title, the liability of the owner of a vessel for any claim, debt, or liability described in subsection (b) shall not exceed the value of the vessel and pending freight. If the vessel has more than one owner, the proportionate share of the liability of any one owner shall not exceed that owner’s proportionate interest in the vessel and pending freight.

(b) Claims Subject to Limitation.— Unless otherwise excluded by law, claims, debts, and liabilities subject to limitation under subsection (a) are those arising from any embezzlement, loss, or destruction of any property, goods, or merchandise shipped or put on board the vessel, any loss, damage, or injury by collision, or any act, matter, or thing, loss, damage, or forfeiture, done, occasioned, or incurred, without the privity or knowledge of the owner.

(c) Wages.— Subsection (a) does not apply to a claim for wages.

34 CFR § 536.123 – Limitation of liability for maritime claims.

This section reads:

For admiralty claims arising within the United States under the provisions of the Limitation of Shipowners’ Liability Act, 46 U.S.C. app. 181-188, in cases alleging injury or loss due to negligent operation of its vessel, the United States may limit its liability to the value of its vessel after the incident from which the claim arose. The act requires filing of an action in federal District Court within six months of receiving written notice of a claim. Therefore, USARCS, or the Chief Counsel, U.S. Army Corps of Engineers (COE), or his designee, must be notified within 10 working days of the receipt of any maritime claim arising in the United States or on the high seas out of the operation of an Army vessel, including pleasure craft owned by the United States. USARCS or Chief Counsel, COE will coordinate with the Department of Justice (DOJ) as to whether to file a limitation of liability action.

 

The Limitation of Liability Act permits a vessel owner to limit its liability for maritime casualties to “the value of the vessel and pending freight.” 46 U.S.C. § 30505(a). The full application of the Act requires the satisfaction of a two part test.

First, the party asserting a claim against the vessel owner must establish that that the vessel was unseaworthy or engaged in some form of negligence. In re Hellenic Inc., 252 F.3d 391, 394 (5th Cir. 2001) (citing to Brister v. A.W.I., Inc., 946 F.2d 350, 355 (5th Cir. 1991)).

The elements of a maritime negligence cause of action are essentially the same as land-based negligence under the common law. See Withhart v. Otto Candies, L.L.C., 431 F.3d 840, 842 (5th Cir. 2005), citing Kermarec v. Compagnie Generale Transatlantique, 358 U.S. 625, 630, 79 S.Ct. 406, 409, 3 L.Ed.2d 550 (1959).

Second, “if the vessel’s negligence or unseaworthiness is the proximate cause of the claimant’s loss, the plaintiff-in-limitation―the vessel owner―must prove it had no privity or knowledge of the unseaworthy conditions or negligent acts.” Trico Marine, 332 F.3d at 789.

“Privity or knowledge” implies some sort of complicity in the fault that caused the injury.” Brister, 946 F.2d at 355 (citations omitted). The privity or knowledge inquiry is fact intensive. Id. at355−56 (“The question of ‘privity or knowledge must turn on the facts of the individual case.’”).

“The privity or knowledge” standard “does not require a vessel owner to take every possible precaution; it only obliges the owner to select a competent master and [to] remedy deficiencies which [the owner] can discover through reasonable diligence.” In re Omega, 548 F.3d at 374; see also China Union Lines, Ltd. v. A. O. Andersen & Co., 364 F.2d 769, 787 (5th Cir. 1966) (holding privity and knowledge are deemed to exist where the owner had the means of knowledge or, as otherwise stated, where knowledge would have been obtained from reasonable inspection).

The initial plaintiffs have to show the initial defendant’s negligence by a preponderance of the evidence. In re ENSCO Offshore Co., 9 F. Supp. 3d 713, 734 (S.D. Tex. 2014). “A preponderance of the evidence simply means evidence that persuades [the Court] that the plaintiff’s claim is more likely true than not true.” 5th Cir. Pattern Civil Instruction 2.20.