Boat accidents are nothing new in Miami. Sun, fun, inexperienced operators and alcohol all play a role in both recent and past boating tragedies. After such horrific events there is a public outcry for more law enforcement and tougher laws aimed to prevent more injuries and deaths. This is a normal and well intended reaction. However, flying under the radar from public scrutiny is an over 150-year-old Federal law that allows boat owners, or should it be said the boat owners’ insurance companies, the ability to limit the amount of money damages paid to the victims of the boat accidents to the post-loss value of the vessels. This law, known as the Limitation of Liability Act, can be devastating to an already overwhelming situation. Imagine a situation where a boat passenger who one minute was enjoying a holiday weekend and the next cannot walk or the children left parentless after the accident. This statute allows the boat owners to ask a Federal judge to limit the amount they must compensate these victims to a few thousand dollars or less.
Given the extraordinary benefits to boat owners, the Limitation of Liability Act is applied regularly. Take for example the highly publicized case involving Ernesto Hernandez who died of propeller injuries after being backed over by a boat operated by popular Miami radio personality DJ Laz (whose real name is Lazaro Mendez). The boat Mendez was operating was owned by Voli Spirits – the Vodka brand he was promoting. Our law firm learned the boat owner is exploring its limitation options and most likely will file a limitation proceeding in the United States District Court for the Southern District of Florida. Our firm is currently handling a case where a deckhand was killed while working aboard a tug. Days after the complaint was filed, his employer (who also owns the tug) filed a Limitation Action in Federal Court. Another case our law firm is handling involves a personal watercraft collision where a rider suffered multiple facial and vertebral fractures, sustained a brain injury, and has a permanent facial disfiguration due to nerve damage. The rental concessionaire company filed a limitation proceeding seeking to limit its liability to only Three Thousand Dollars. In short, boat owners will take advantage of the Limitation of Liability Act at any opportunity.
In addition to allowing boat owners to limit their liability, the law provides various strategic advantages to boat owners. The first advantage is boat owners can initiate the litigation. This is the exact opposite of a traditional litigation where the victim starts legal proceedings. By being allowed to initiate proceedings, boat owners can set the tempo and even scare victims into not bringing a claim. In addition, if the victims had already brought a lawsuit in the local state court, the statute allows the boat owners to stay those proceedings in favor of a Federal Judge deciding the case. Part and parcel of staying the state court action, the victims loses the right of having a jury decide the case.
Despite providing multiple benefits to boat owners, the Limitation of Liability Act can be overcome in certain situations. For example the law carries a strict statute of limitations. This means if boat owners do not timely file limitation proceedings the Federal Court will dismiss the limitation proceeding. Additionally, boat owners cannot limit liability in situations where the negligent action or vessel unseaworthiness was within their privity or knowledge. Furthermore, in certain instances the Federal limitation proceeding could be stayed allowing victims to proceed in state court with a jury trial. However, once the state court jury trial concludes, the case will be reinstated before the Federal judge who will decide issues of limitation.
Though the Limitation of Liability Act has outlived its stated purpose of promoting American ship building, it is still a Federal law and will be enforced by the courts. Victims of boating accidents should be aware of its existence. A detailed explanation of the Act can be found in the linked article The Shipowner’s Limitation of Liability Act: Pitfalls for the Unwary which was written and presented by our lawyers at the Southeastern Admiralty Law Symposium.