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Maritime Laws

Lloyds Open Form

Removal to Federal Court

Limitation of Liability Actions

Jurisdictional Issues For SCUBA cases

Independent Contractors with Seamen Status

Prejudgment Interest in Admiralty

Maritime Jurisdiction and Statute of limitation thereof

Contract for sale of boat -- Subject to report of marine surveyor

The Clean Vessel Act by Boaters

Going Down On Legal Diving Issues

  1. The International Group
    The International Group is an association of P&I clubs. This is an international multi club group that helps define the standards of P&I clubs globally. The International Group of P. & I. Clubs is headquartered at 78 Fenchurch Street, London EC3M 4BT.
    Tel: +44 (0)20 7488 0078
    Fax: +44 (0)20 7480 7877

  2. Uberrimae Fidae
    A marine insurance contract is one of "Unberrimae Fidei," requiring the utmost good faith by both parties to the contract. This duty has been recognized since as early as 1766. This concept came about due to the fact that the insurer of lacks the practical means to verify the accuracy or sufficiency of the facts given to him while establishing a contract for insurance. The assured is required to disclose every fact within his knowledge that is material to the risk, even if no direct inquiry is made. Emberime Fedi allows a policy to be void by admission. The Courts have sated that there is no is no meeting of the minds regarding a material fact of the contract. Thus, there is no valid contract, and the "void at inception rule" works with Emberime Fedi to express that the policy language then should not exist. The importance of making a full discloser of the material facts when negotiating a marine insurance policy was shown in the case of Wilburn Boat where the Court pointed out that it was a firmly established principle of marine insurance that "a mistake or commission material to a marine risk, whether it be a willful or contractual, or a result form mistake, negligence or voluntary ignorance, avoids the policy."

  3. Materiality (in the context of a prospective insured's representations)
    In the absence of fraud, a fact concealed or misrepresented will not void the insurance policy unless it is material. The test of materiality is whether the fact would have influenced the underwriter as to whether to accept the risk or as to the premium to be charge for such risk. This misrepresentation or concealment need not bear directly upon the risk or the premium to be declared material. The question if the act of misrepresentation or omission is material by influencing the underwriters judgment is a question for the jury "or the Court in the absence of jury." King v. Alstate There are reciprocal duties to act in good faith by both parties. There is an obligation to disclose to the underwriters and insurers all details that deal with risk. This is true whether this information is asked or not. This is 20 X 20 hindsight test whereby a misrepresentation concealment, breach, or conditions, will not be a basis to avoid the policy unless 1 of 3 things is believed to be the result of the truth. 1 would not have insured the risk 2 would not have insured the risk at the premium 3 or would not have insured under the same terms.

  4. Advance Calls
    "Advanced calls" are associated with P&I associations. Usually these associations operate by having each of their members make initial payments of a certain amount per ton for each vessel they enter into the club. Out of this fund "and profits made on this initial investment" club managers "Whom are usually elected from within the members," pay any losses falling within the coverage. In most cases there is some type of deductible, and if losses are particularly excessive in a certain year members may have to responded to an " Advance call" to cover the unexpected expenditures. This "advance call" will ask the members to pay an upfront payment made on a pro rata share to cover the expenses "or expected expenses" that were not calculated for in the regular payments. Advanced calls are very much frowned upon in the industry due to the fact that businesses want to have certainty in their insurance bills, and also due to the fact that the P&I clubs must have done a poor job of assessing the proper premiums or risks assigned.

  5. Seaworthiness
    Seaworthiness under American law is an "absolute, non-delegable, and continuing" duty of the shipowner to provide a vessel that is seaworthy to the passengers and crew. The standard of seaworthiness is not perfection, but reasonable fitness: not a ship that will weather every conceivable storm or withstand every imaginable peril of the sea, but a vessel reasonably suitable for her intended service. This is a duty on the part of the shipowner to furnish a vessel appurtenances, and crew which are reasonably fit for use. Seaworthiness can best be defined by looking to see what Courts have considered unseaworthy. There is a substantial amount of case law that has defined what has in fact made the vessel or her crew unseaworthy.

  6. General Average
    "General Average" is a marine insurance concept of sharing loss. A classic example is cargo thrown overboard in order to save the ship and the remaining cargo. General average is a loss "Loss is really the meaning of the word term 'Average," involving 1) a common danger of imminent peril, and 2) a voluntary sacrifice of cargo which is 3) successful in avoiding a peril. In Sea-Land Service, Inc. V. Aetna Insurance Co., the second Circuit traced general average back to its ancient origins and explained it as: "one who partakes in a maritime venture incurres loss for the common benefit, it should be shared ratably by all who participate in the venture." The Court further noted that most bills of laden provide for adjustment of general average by the York-Antwerp Rules which define a general average act and allow for losses which are a direct consequence of that act.

  7. Marine Insurance Act of 1906
    The Marine Insurance Act of 1906 was passed by Parliament to codify the law relating to marine insurance as practiced in England. Section 1 of that Act defines a contract of marine insurance as a contract whereby the insurance undertakes to indemnify the assured, in a manner and to the extend thereby agreed against marine loss.

  8. Marine Insurance Syndicate at Lloyd's of London
    Syndicates are groups of underwriters that get together to form their own "clubs" that specialize in one type of insurance at Lloyd's. These syndicates are often "Groups of Names," with great underwriting capacity. They can write motor, non-marine, aviation, marine, but often specialize in one area. A marine syndicate will therefore specialize in writing marine insurance.

  9. Lloyd's List
    The information received from Lloyd's agents and other sources which at one time was passed from underwriter to underwriter at Lloyd's coffee shop now appears as the Lloyd's List, which is a "news" paper produced externally to Lloyd's that specializes in marine insurance. The Lloyd's list is used to tell arrivals and departures of vessels, and now has evolved into news and energy prices. The Lloyd's List has been a printed news paper science 1734. The cost is about $1700 a year for the paper, and with the website it is $2700 a year. The Lloyd's shipping index now is responsible for listing where a ship is located.

  10. Perils of the Sea
    The term "Perils of the sea" is defined in the Marine Insurance Act as the fortuitous accident or casualties of the seas, and not the ordinary action of wind and waves. (Rule for Construction of Policy, No. 7). This part of the act was based on Thomas Wilson v. The Xantho (12 App. Cas. 503), and later followed and expanded in Freedman& Slater v. M.V. Tofevo, (1963 A.M.C. 1525) where the Court quoted the following form Giulia (218 Fed. 744): "Perils of the sea' are understood to mean those perils which are peculiar to the sea and which are of an extraordinary nature, or arise from irresistible force or overwhelming power, and which cannot be guarded against by ordinary exertion of known skill and prudence." Collision between vessels is sometimes included as perils of the sea, but is usually defined and expressed in the "collision clause." There is also a presumption that a vessel that is lost without a trace is to be presumed to be lost through some peril of the sea.

  11. Barratry
    Barratry comprises a loss that results from mariners including: every species of fraud and knavery intentionally committed by master or mariners with the intention of benefiting themselves at the expense of their owners, and any gross malversation, or criminal negligence by whatever motive whereby the owners or the charterers of the ship are in fact damnified. Fraudulent or grossly negligent conduct by a master or crew that is prejudicial to a shipowner. "Blacks" Barratry is usually covered as a named peril in H&M policies.

  12. Sue and Labor
    The sue and labor clause written into many Hull policies makes the assurer liable, in addition to his liability for loss or damages to the vessel, for expenses reasonably incurred by the assured in attempting to recover or preserve the insured property. Sue and labor charges arise when the assured, his servants, factors, or assigns incur expenditure to minimize or avert a loss which has occurred or is threatened. The loss minimized or averted must be one for which the underwriters are liable, and must arise out of the basic perils insured against and not be due to those perils especially covered by the collision clause. Munson v. Standard Marine Ins. Co., 156 Fed. Rep 44.

  13. Constructive Total Loss
    It is a general rule in the United States, that if a vessel or goods insured are damaged to more than half of the value, by a peril insured against, or more than half of the freight is lost the assured may abandon and recover for a total loss. This legal formula as described by Phillips is not applicable to underwriters, who will most certainly stipulate in their hull and machinery policies that there will be no recovery for a constructive total loss unless the expense of recovering and repairing the vessel exceeds the insured value. Moreover the assured must give notice of the abandonment to his underwriters within a reasonable time after receipt of reliable information of the loss. Thus the recent American Hull Clauses state: There shall be no recovery for a constructive total loss hereunder unless the expense of recovering and repairing the vessel would exceed the agreed value. In making this determination, only expenses incurred by reason of a single accident or sequence of damages arising form the same accident shall be taken into account.

  14. Contra Proferentum
    "Contra Proferentum" means "against the stipulator". It has been interpreted by the Courts in maritime claims to state the concept that "A contract is interpreted against the stipulator." Ontario Bus Industries v. The Federal Calumet (1992) 1 F.C. 245 at p. 255 (Fed. Ct. of Canada). 15. Protection and Indemnity Associations "Protection and Indemnity Associations" are mutual clubs that were introduced in the United Kingdom in the second half of the 19th century to cover those liabilities not covered, or only partially covered by the standard hull and policies. At this time many liabilities "Collision" were only covered by payment of additional premium, and this coverage was usually limited to only ¾ protection. Moreover protection and indemnity associations are the affiliations where a shipowner can get coverage for loss of life and personal injury which are not covered by most insurance companies H&M policies.

  15. Latent Defect
    A defect has been said to be latent when it cannot be discovered by a person of competent Skill using ordinary care. The words "latent defect" as ordinarily understood apply to something existing at the time the vessel or other vehicle was constructed, and such as was not discovered and might not be discovered by ordinary methods of examination. The Carib Prince, 63 Fed. Rep. 267 A latent defect within the meaning of the Inchmaree clauses is any defect which has not resulted form wear and tear and which cannot be discovered by a diligent assured by the use of the methods available to him. Tulane Law Review, Vol. Xli, p. 337 A flaw in welding existing at the commencement of the voyage and not discoverable with the exercise of due care. The Rover, 33 Fed. Rep. 515.

  16. Inherent Vice
    Inherent vice has been defined as "anything which by reason of its own inherent qualities is lost without negligence by anyone" Greensheilds v. Stephens, 1908 1 K. B. 51 other definitions include "the natural behavior of the subject matter being what it is, in the circumstance in which it is carried." Much cargo is subject to inherent vice "Bananas," and it is the duty of the insurer to prove that the inherent vice was the proximate cause of the loss or damage if he seeks to avoid liability. The assured may be called upon to produce evidence that the damages did not arise solely form natural causes, and not from the negligence of the carrier.

  17. Warehouse to Warehouse Clause
    "Warehouse to warehouse clauses" are usually included in the marine extensions clauses that can be added to cargo policies. Under basic warehouse to warehouse cargo policies the insurance attaches from the time the goods leave the warehouse/ location named in the policy, for the commencement of the transit, including customary transportation and transshipment "Trucks," until the goods are delivered to the final warehouse named in the policy. Under some warehouse to warehouse policies the insurers will provide maximum time limits of coverage by express intention in the contract.

  18. Maintenance and Cure
    "Maintenance" is a per diem payment intended as a living allowance. The purpose is to provide subsistence and lodging, not as a compensation for injury or damage. This amount should relate to food and lodging expenses of the local that the injured seamen is residing. "Cure" is the payment is medical expenses. Both maintenance and cure are to be paid by the ship owner until such point as the injured seamen reaches "maximum cure." "Maintenance and cure" are said to be an ancient duty of the shipowner to provide aid to seamen that become ill or injured while in the service of the ship. This implicit relationship between the seamen and their employer are without regard to negligence and unseaworthiness. The only exception to this duty is the willful misconduct of the seamen. Maintenance and cure has arisen in law and practice to encourage marine commerce, while at the same time protecting seamen form the unique hazards of their work and the unscrupulous actions of ship owners.

  19. The Jones Act
    In 1920, the United States Congress passed the Jones Act which permitted a seamen injured in the course of his employment by the negligence of the shipowner, master, or fellow crew members to recover damages for his injuries. Prior to the Jones act proximate cause of any injury was relevant. The Congress abolished contributory negligence as a defense under the Jones act. As this act is very pro labor rights, Longshoremen where also held to be "seamen" and covered under the Jones Act as well. Seas Shipping Co. v. Sieracki, 328 U.S. 85. Moreover, the Jones Act has made it a duty on the part of shipowner to exercise reasonable care.

  20. Excess Insurance
    "Excess insurance" is cheap liability insurance that acts as an "Umbrella policy" which gives overhead protection. This excess insurance only gets reached when primary policy has been exhausted. This type of insurance is very much determined by the clear language of the policy, because most excess insurance is written on a following form that adds on to the first primary contract. Thus the excess insurance usually follows the form and exclusions of the primary policy. Most excess insurance is written to exclude drop down coverage if primary insurer becomes insolvent. The law states that the primary insurer owes a duty to the excess insurer to act in good faith, and to act as a prudent uninsured would.

  21. Piracy
    Robbery, kidnapping, or other criminal violence committed at sea. A similar crime committed aboard a plane or other vehicle; hijacking. The unauthorized and illegal reproduction or distribution of materials protected by copywrite, patent, or trademark law. "Blacks"

  22. Wet Marine Insurance (The Florida Definition)
    Marine insurance and indemnity insurance are insurance against, or against legal liability of the insured for the loss, damage, or expense arising out of, or incident to, the ownership of any vessel, or any instrumentality in use on water including liability of the insured for personal injury. Illness, death or loss of or damage to the property of another. "Wet marine insurance" is that part of marine insurance that includes only:
    1. Insurance upon vessels, crafts, and hulls including interests therein or with relation thereto:
    2. Insurance of marine builders' risk, marine war risks, and contracts of marine protection and indemnity insurance;
    3. Insurance of freights and disbursements pertaining to a subject of insurance coming within this definition; and
    4. Insurance of personal property and interests therein, in the course of exportation from or importation into any country, or in the course of transportation by any means from the point of origin to the final destination.
    5. This insurance covers all loss or damage associated with any risk or peril of navigation, transit, or transportation while being prepared for and awaiting shipment, and during delays, storage, transshipment, or reshipment incident thereto.

  23. Bill of Lading
    A "bill of lading" is document of title acknowledging the receipt of goods by a carrier or by the shippers agent. An "order bill of laden" is a negotiable bill of lading stating that the goods are consigned to the order of the person named in the bill. A "straight bill of lading" is a nonnegotiable bill of lading that specifies the consignee to whom the carrier is contractually obligated to deliver. "Blacks"

Lloyd's Open Form

The Lloyd's Open Form "LOF" is an internationally recognized standard salvage agreement that is carried on the bridge of virtually every vessel in the world. The updated and improved version "Which was launched on Friday 1 September 2000" marks its tenth revision since Lloyd's of London first devised the contract in 1908. The new version of the form has been shortened from six pages to just two by removing most of the legal and procedural information and placing it in a separate reference document. The language used has also been simplified to take account of the increasingly international nature of ships' crews. The form was created by Lloyd's in order to save a ship's master from having to take part in time consuming contract negotiations while the vessel was in jeopardy. The LOF has been based on a "No Cure No Pay" relationship between the salvor and the shipowner. Agreement on the use of the contract means that all parties know exactly what terms are being signed, so that salvage services can commence with a minimum of delay. The form also provides a framework for the collection of security to protect a salvor's claim and arbitration machinery in the event that salvors and the owners of the vessel cannot agree on the payment for successful services. Although Lloyd's plays no part in the arbitration, it retains the services of a panel of experienced arbitrators to hear cases arising under the form.

Removal to Federal Court

A defendant or defendants desiring to remove any civil action or criminal prosecution from a State court shall file in the district court of the United States for the district and division within which such action is pending a notice of removal signed pursuant to Rule 11 of the Federal Rules of Civil Procedure and containing a short and plain statement of the grounds for removal, together with a copy of all process, pleadings, and orders served upon such defendant or defendants in such action.
(b) The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.
If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action.

Since the procedure in removal cases is now governed by the Federal Rules of Civil Procedure [Rule 81(c) ] and Federal Rules of Criminal Procedure [Rule 54(b) ], the detailed directions of the various sections with respect to such procedure were omitted as unnecessary.

1949 Acts. Subsection (b) of section 1446 of Title 28, U.S.C., as revised, has been found to create difficulty in those States, such as New York, where suit is commenced by the service of a summons and the plaintiff's initial pleading is not required to be served or filed until later.

The first paragraph of the amendment to subsection (b) corrects this situation by providing that the petition for removal need not be filed until 20 days after the defendant has received a copy of the plaintiff's initial pleading.

This provision, however, without more, would create further difficulty in those States, such as Kentucky, where suit is commenced by the filing of the plaintiff's initial pleading and the issuance and service of a summons without any requirement that a copy of the pleading be served upon or otherwise furnished to the defendant. Accordingly the first paragraph of the amendment provides that in such cases the petition for removal shall be filed within 20 days after the service of the summons.

The second paragraph of the amendment to subsection (b) is intended to make clear that the right of removal may be exercised at a later stage of the case if the initial pleading does not state a removable case but its removability is subsequently disclosed. This is declaratory of the existing rule laid down by the decisions. (See for example, Powers v. Chesapeake etc., Ry. Co., 169 U.S. 92.)

Plaintiff waived any objection to defendant's alleged failure to verify removal petition by not raising issue before district court. Financial Timing Publications, Inc. v. Compugraphic Corp., C.A.8 (Minn.) 1990, 893 F.2d 936.

Procedural defects in removal of action may be waived by failure to make timely objection before case proceeds to merits; however, defects going to subject matter jurisdiction of court cannot be waived and may be raised at any time. Libhart v. Santa Monica Dairy Co., C.A.9 (Cal.) 1979, 592 F.2d 1062.

Plaintiff waived timeliness of notice of removal as basis for remand where plaintiff did not serve or otherwise provide defendant with copy of original complaint more than 30 days prior to filing of notice of removal, and plaintiff failed to raise timeliness of notice of removal as basis for remand. Haisch v. Allstate Ins. Co., D.Ariz.1996, 942 F.Supp. 1245.

Notice of removal given to plaintiff's counsel four days after removal petition was filed and 28 days after action was originally filed in state court was timely. Barrett v. Southern Ry. Co., D.C.S.C.1975, 68 F.R.D. 413.

David A. Neblett

Limitation of Liability Actions

LOLA only permits boat owners to limit their liability for loss, damage, or injury if the act, damage or injury occurred without the owner's privity or knowledge or malfeasance and/or nonfeasance. 46 U.S.C.App. § 183 Determining whether LOLA applies instead requires the Court to go through a two-step analysis. Hercules Carriers, Inc. v. Florida, 768 F.2d 1558, 1563-64 (11th Cir.1985). First, the court must determine what acts of negligence or conditions of unseaworthiness caused the accident. Second, the court must determine whether the shipowner had actual knowledge or privity of those same acts of negligence or conditions of seaworthiness. Id.

Jurisdictional Issues For SCUBA Cases

Borden v. Phillips, 752 So.2d 69, 72-73 (Fla.1st DCA 2000) concluded that admiralty jurisdiction did not exist and upheld a release under Florida law. In Borden, the diver surfaced and waived his hand in distress, but the captain misinterpreted the signal as an "o.k." signal and detached the emergency "tag line"--a floating rope enabling divers to pull themselves to the boat. See 752 So.2d at 71. The court held that admiralty jurisdiction was lacking over the wrongful death claim, because the activity at issue was scuba diving, not boating: [T]he decedent intentionally departed the [dive boat] to dive. This activity, scuba diving, was not dependent on his passage in the [dive boat]. Further, decedent ceased being a passenger when he entered the water. That the crew was allegedly negligent when it failed to respond to decedent's signal did not involve the operation or maintenance of the [dive boat], but was related solely to the activity of scuba diving.

In addition to Borden, the Florida state court case, two federal district courts have held there to be no admiralty jurisdiction in recreational scuba diving cases. In In re Kanoa, Inc., 872 F.Supp. 740 (D.Haw.1994), a scuba diver died when his lungs exploded from surfacing too rapidly without breathing. Although the dive began from a dive boat, the court held that admiralty jurisdiction did not exist, reasoning that the "relevant activity" was scuba diving, not boat transportation. 872 F.Supp. at 745-46. In Tancredi v. Dive Makai Charters, 823 F.Supp. 778 (D.Haw.1993), a scuba diver drowned during a dive from a dive boat. The court held that admiralty jurisdiction was lacking over plaintiff's tort claim, because the boat had "little, if any, impact on the events that transpired during Tancredi's dive that led to his death." Instead, the death was attributable to "negligent dive planning and supervision and the actions of the dive master in taking Tancredi to unsafe levels." 823 F.Supp. at 784. But see McClenahan v. Paradise Cruises, Ltd., 888 F.Supp. 120, 121-23 (D.Haw.1995) (holding that admiralty jurisdiction existed in recreational scuba-type diving case, and concluding that Kanoa, Inc. and Tancredi were overruled at least in part by Jerome B. Grubart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 534, 115 S.Ct. 1043, 130 L.Ed.2d 1024 (1995), a Supreme Court case not involving recreational scuba diving).

Although admiralty jurisdiction has been recognized in other recreational scuba diving cases, many of those cases are distinguishable by the role played by the boat in causing the injuries. As the court did in Cutchin, 1999 AMC at 1379-81, admiralty jurisdiction was held to exist in a case involving recreational scuba diving, despite the absence of direct involvement of a boat. See Kuntz v. Windjammer "Barefoot" Cruises, Ltd., 573 F.Supp. 1277, 1280 (W.D.Pa.1983). Admiralty jurisdiction also existed where the dive boat crew failed to render medical assistance to a diver after reboarding the dive boat. See Sinclair v. Soniform, Inc., 935 F.2d 599, 600-02 (3d Cir.1991).(federal court has admiralty jurisdiction over claim arising from vessel's crews' failure to administer proper care for decompression sickness suffered during scuba diving excursion in navigable waters); Courtney v. Pacific Adventures, Inc., 5 F.Supp.2d 874 (D.Hi.1998)(finding that a diving accident in navigable waters had a potentially disruptive impact on maritime commerce and dive boats were engaged in activity substantially related to traditional maritime activity). See also Mink v. Genmar Indus., Inc., 29 F.3d 1543, 1545-46 (11 Cir.1994).

Independent Contractors with Seamen Status

Illustrative of the unbroken line of federal cases holding that persons working on ships for independent contractors or persons rightfully transacting business on ships can recover for damages due to shipowners' negligence are: Leathers v. Blessing, 1882, 105 U.S. 626, 26 L.Ed. 1192; The Max Morris, 1890, 137 U.S. 1, 11 S.Ct. 29, 34 L.Ed. 586; Gerrity v. The Kate Cann, D.C.1880, 2 F. 241; The Helios, D.C.1882, 12 F. 732, decision by Judge Addison Brown; Grays Harbor Stevedore Co. v. Fountain, 9 Cir., 1925, 5 F.2d 385; Tide Water Associated Oil Co. v. Richardson, 9 Cir., 1948, 169 F.2d 802; Brady v. Roosevelt S.S. Co., 1943, 317 U.S. 575, 577, 63 S.Ct. 425, 426, 87 L.Ed. 471. See also cases collected in 44 A.L.R. 1025--1034.

Craig v. M/V Peacock On Complaint Of Edwards, 760 F.2d 953, 961 (9th Cir.1985) citing Bullis v. Twentieth Century Fox Films Corp., 474 F.2d 392, 394 n. 10 (9th Cir.1973) (wherein the court noted it might be conceivable for an actor, bartender or musician aboard a vessel to qualify for seaman status, where for instance, a cruise ship advertised a Shakespearean festival en route, then the festival actors might be considered seaman since they contribute to the function of the vessel or to the accomplishment of its mission).

David A. Neblett

Prejudgment Interest in Admiralty

In admiralty cases, prejudgment interest, although within the trial court's discretion, should generally be awarded absent peculiar or exceptional circumstances. City of Milwaukee v. Cement Division, National Gypsum Co., 515 U.S. 189, 115 S.Ct. 2091, 132 L.Ed.2d 148 (1995); Orduna S.A. v. Zen-Noh Grain Corp., 913 F.2d 1149 (5th Cir.1990); Insurance Co. of North Am. v. M/V Ocean Lynx, 901 F.2d 934 (11th Cir.1990); Todd Shipyards Corp. v. Auto Transp., S.A., 763 F.2d 745 (5th Cir.1985); United States v. Central Gulf Lines, Inc., 747 F.2d 315 (5th Cir.1984); Alkmeon Naviera, S.A. v. M/V Marina L., 633 F.2d 789 (9th Cir.1980). The purpose of prejudgment interest is not to penalize the losing party but to fully compensate the prevailing party for the use of funds found to be rightfully his. See City of Milwaukee, 115 S.Ct. at 2096; Insurance Co. of North Am., 901 F.2d at 942.

Traditionally, some of the peculiar circumstances relied upon by various federal circuits to support the denial of prejudgment interests have been: (1) an improper or unwarranted delay of the action attributable to the plaintiff; (2) a genuine dispute over a good faith claim in a mutual fault setting; (3) equitable considerations which caution against an award; and (4) a damage award substantially less than that claimed by plaintiff. Reeled Tubing, Inc. v. M/V Chad G., 794 F.2d 1026, 1028 (5th Cir.1986). Another circuit has denied prejudgment interest where the parties have excluded prejudgment interest in their stipulation of damages, Grace Line, Inc. v. Todd Shipyards Corp., 500 F.2d 361, 366 (9th Cir.1974); or where the parties have asserted claims or defenses in bad faith, Darling v. Scheimer, 444 F.2d 514, 515 (9th Cir.1971). Still another circuit has deemed the uncertainty of the claim or damage as a peculiar circumstance. E.g. Sinclair Ref. Co. v. S/S Green Island, 426 F.2d 260, 262 (5th Cir.1970), contra, Ore Carriers of Liberia, Inc. v. Navigen Co., 305 F.Supp. 895, 896- 97 (S.D.N.Y.1969), aff'd, 435 F.2d 549 (2d Cir.1970).

In the recent City of Milwaukee decision, however, the United States Supreme Court has squarely held that neither a good-faith dispute over liability nor the existence of mutual fault are peculiar or exceptional circumstances which will justify the denial of prejudgment interest in an admiralty case. The court further stated that the liquidated/unliquidated damages distinction is of no significance on the issue of prejudgment interest in admiralty cases:
[T]hat distinction has never become so firmly entrenched in admiralty as it has been at law.... Any fixed rule allowing prejudgment interest only on liquidated claims would be difficult if not impossible to reconcile with admiralty's traditional presumption. Yet unless we were willing to adopt such a rule--which we are not--uncertainty about the outcome of a case should not preclude an award of interest. (citations omitted)City of Milwaukee, 115 S.Ct. at 2096.

Setting the Prejudgment Rate
In setting the rate of prejudgment interest in an admiralty case, the Court has broad discretion and may look to state law or other reasonable guideposts for a fair level of compensation. See Todd Shipyards, 763 F.2d at 753.;Noritake Company, Inc. v. M/V Helenic Champion, 627 F.2d 724, 728-30 (5th Cir. 1980);Platoro Ltd. v. Unidentified Remains of a Vessel, 695 F.2d 893, 907 (5th Cir.), cert. denied, 464 U.S. 818, 104 S.Ct. 77, 78 L.Ed.2d 89 (1983);
A Court may also look to the judgment creditor's actual cost of borrowing money, In Re M/V Vulcan, 553 F.2d 489 (5th Cir.), cert. denied, 434 U.S. 855, 98 S.Ct. 175, 54 L.Ed.2d 127 (1977), to state law, Geotechnical Corp. v. Pure Oil Corp., 214 F.2d 476 (5th Cir. 1954), or to other reasonable guideposts indicating a fair level of compensation. Appellate Courts have ruled that a trial court's establishment of a 10% rate did not constituted an abuse of discretion. Gator Marine Service Towing, Inc. v. J. Ray McDermott & Co., 651 F.2d 1096, 1101 (5th Cir.1981). Moreover, in Todd Shipyards, 763 F.2d at 753. a Louisiana Court believed that the judicial interest rates provided in article 2924 of the Louisiana Civil Code would undercompensate the Plaintiff, but that the prime rates available during the applicable periods were too high. Consequently, that Court adopted the statutory rates but ordered them to be compounded daily to approximate roughly the rate of return Plaintiff could have received. On appeal the appellate Court could find no perceived abuse of discretion either in this methodology or in the resulting award.

Maritime Jurisdiction and Statute of limitation thereof

A party seeking to invoke maritime jurisdiction over a tort claim must satisfy conditions of both location and connection with maritime activity. In applying the location test, a court must determine whether the tort occurred on navigable water or whether injury suffered on land was caused by a vessel on navigable water. 46 U.S.C. App § 740. In applying the connection test, a court first must assess the "general features of the type of incident involved" to determine if the incident has "a potentially disruptive impact on maritime commerce." Sisson v. Ruby, 497 U.S. 358, 363, 364, n. 2, 110 S.Ct. 2892, 2896, 2896 n. 2, 111 L.Ed.2d 292. If so, the court must determine whether the character of the activity giving rise to the incident shows a substantial relationship to traditional maritime activity. Id., at 365, 364, and n. 2, 110 S.Ct., at 2897, 2897-2898, and n. 2. Pp. 1047-1048. Per your hypo all the conditions are in fact meet.

Thus the federal Maritime statute of limitations lies:

Section 763a reads as follows:
"Unless otherwise specified by law, a suit for recovery of damages for personal injury or death, or both, arising out of a maritime tort, shall not be maintained unless commenced within three years from the date the cause of action accrued."

Courts which have considered the question have concluded that section 763a "and its legislative history[ ] clearly evidence a Congressional intent to establish a uniform statute of limitations, consistent with the well- established case law recognizing the need for uniformity with respect to maritime standards." Mink v. Genmar Indus., Inc., 29 F.3d 1543, 1547 (11th Cir.1994). Accord Butler v. American Trawler Co., 887 F.2d 20, 22 (1st Cir.1989) ("words 'unless otherwise specified by law,' refer, not to state law, but to other federal law").

Jerome B. Grubart, Inc. v. Great Lakes Dredge & Dock Co.
115 S.Ct. 1043
Decided Feb. 22, 1995.

130 L.Ed.2d 1024, 63 USLW 4154, 1995 A.M.C. 913

Barge owner brought action seeking to limit its liability for damages resulting from flooding of freight tunnel running under navigable river, which allegedly resulted from use of crane on barge to drive piles into riverbed above tunnel. The United States District Court, Northern District of Illinois, Charles B. Kocoros, J., dismissed, and owner appealed. The Seventh Circuit Court of Appeals, 3 F.3d 225, reversed and remanded. Certiorari was granted. The Supreme Court, Justice Souter, held that district court had admiralty jurisdiction over case.
Justice O'Connor, filed concurring opinion.
Justice Thomas, filed opinion concurring in judgment, in which Justice Scalia joined.
Justice Stevens and Justice Breyer took no part in the decision.
**1045 Syllabus [FN*]

After the Chicago River flooded a freight tunnel under the river and the basements of numerous buildings, petitioner corporation and other victims brought tort actions in state court against respondent Great Lakes Dredge & Dock Co. and petitioner Chicago. They claimed that in the course of driving piles from a barge into the riverbed months earlier, Great Lakes had negligently weakened the tunnel, which had been improperly maintained by the city. Great Lakes then filed this action, invoking federal admiralty jurisdiction and seeking, inter alia, the protection of the Limitation of Vessel Owner's Liability Act. That Act would permit the admiralty court to decide whether Great Lakes had committed a tort and, if so, to limit its liability to the value of the barges and tug involved if the tort was committed without the privity or knowledge of the vessels' owner. The District Court dismissed the suit for lack of admiralty jurisdiction, but the Court of Appeals reversed.
Held: The District Court has federal admiralty jurisdiction over Great Lakes's Limitation Act suit. Pp. 1047-1055.

(a) A party seeking to invoke such jurisdiction over a tort claim must satisfy conditions of both location and connection with maritime activity. In applying the location test, a court must determine whether the tort occurred on navigable water or whether injury suffered on land was caused by a vessel on navigable water. 46 U.S.C. app § 740. In applying the connection test, a court first must assess the "general features of the type of incident involved" to determine if the incident has "a potentially disruptive impact on maritime commerce." Sisson v. Ruby, 497 U.S. 358, 363, 364, n. 2, 110 S.Ct. 2892, 2896, 2896 n. 2, 111 L.Ed.2d 292. If so, the court must determine whether the character of the activity giving rise to the incident shows a substantial relationship to traditional maritime activity. Id., at 365, 364, and n. 2, 110 S.Ct., at 2897, 2897-2898, and n. 2. Pp. 1047-1048.

(b) The location test is readily satisfied here. The alleged tort was committed on a navigable river, and petitioners do not seriously dispute that Great Lakes's barge is a "vessel" for admiralty tort purposes. *528 There is no need or justification for imposing an additional jurisdictional requirement that the damage done must be close in time and space to the activity that caused it. A nonremoteness requirement is not supported by the Extension of Admiralty Jurisdiction Act's language, and the phrase "caused by" used in that Act indicates that the proper standard is proximate cause. Gutierrez v. Waterman S.S. Corp., 373 U.S. 206, 210, 83 S.Ct. 1185, 1188, 10 L.Ed.2d 297, distinguished. Pp. 1048-1050.

(c) The maritime connection test is also satisfied here. The incident's "general features" may be described as damage by a vessel in navigable water to an underwater structure. There is little question that this is the kind of incident that has "a potentially disruptive impact on maritime commerce." Damaging the structure could lead to a disruption in the water course itself and, as actually happened here, could lead to restrictions on navigational use during repairs. There is also no question that the activity giving rise to the incident--repair or maintenance work on a navigable waterway performed from a vessel--shows a substantial relationship to traditional maritime activity. Even the assertion that the city's alleged failure to properly maintain and operate the tunnel system was a proximate cause of the flood damage does not take this suit out of admiralty. Under Sisson, the substantial relationship test is satisfied when at least one alleged tortfeasor was engaging in activity substantially related to traditional maritime activity and such activity is claimed to have been a proximate cause of the incident. There is no merit to the argument that the activity should be characterized at a hypergeneralized level, such as "repair and maintenance," **1046 to eliminate any hint of maritime connection, or to the argument that Sisson is being given too expansive a reading. Pp. 1050-1053.

(d) There are theoretical, as well as practical, reasons to reject the city's proposed multifactor test for admiralty jurisdiction where most of the victims, and one of the tortfeasors, are land based. The Sisson tests are directed at the same objectives invoked to support a multifactor test, the elimination of admiralty jurisdiction where the rationale for the jurisdiction does not support it. In the Extension Act, Congress has already made a judgment that a land-based victim may properly be subject to admiralty jurisdiction; surely a land-based joint tortfeasor has no claim to supposedly more favorable treatment. Moreover, contrary to the city's position, exercise of admiralty jurisdiction does not result in automatic displacement of state law. A multifactor test would also be hard to apply, jettisoning relative predictability for the open-ended rough-and-tumble of factors, inviting complex argument in a trial court and a virtually inevitable appeal. Pp. 1053-1055.
3 F.3d 225 (CA 7 1993), affirmed.

*529 SOUTER, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and O'CONNOR, KENNEDY, and GINSBURG, JJ., joined. O'CONNOR, J., filed a concurring opinion, post, p. 1055. THOMAS, J., filed an opinion concurring in the judgment, in which SCALIA, J., joined, post, p. 1055. STEVENS and BREYER, JJ., took no part in the decision of the cases.

David A. Neblett

Contract for sale of boat -- Subject to report of marine surveyor

This agreement, effective ________[Date], is between ________, with a place of business at ________[address], [city], ________ County, ________[state], referred to as seller, and ________, of ________[address], [city], ________ County, ________[state], referred to as buyer.

A. Seller is the owner of the vessel described below and, subject to the provisions of this agreement, desires to sell such vessel to buyer;
B. Buyer, in accordance with the provisions of this agreement, desires to purchase such vessel from seller.
In consideration of the matters described above, and of the mutual benefits and obligations set forth in this agreement, the parties agree as follows:


Seller sells, and buyer purchases, the ________[type of boat], ________ [name], an undocumented vessel, together with such vessel's ________[indicate included equipment, such as: mast, bowsprit, sails, rigging anchors, tackle, furniture], and all other necessary equipment as such vessel is presently berthed at ________[name of port or marina]. The last certificate of such vessel is in the following words and figures: ________[set out federal or state registration information in full].


The total purchase price of the vessel is ________ Dollars ($________). Seller acknowledges receipt of a deposit of ________ Dollars ($________), and buyer promises to pay the balance, together with ________ percent (________%) interest per annum, before ________[Date]. Seller promises to execute a bill of sale for transfer of title in the vessel and deposit it in escrow with ________[escrow agent] of ________[address], [city], ________ County, ________[state], to be delivered to the buyer on payment in full.


This contract is made subject to an acceptable survey to be made by ________, a marine surveyor chosen by buyer, to be completed within ________ days of the effective date of this agreement. If the findings of the survey indicate that the vessel is not seaworthy and otherwise in good condition, then this contract will be terminated, and seller will return the above-stated deposit made under this agreement. Failure of buyer to give notice to seller of an unsatisfactory survey prior to the date of transfer of possession as set forth in Section Four shall create the presumption that a satisfactory survey was completed.


Subject to the condition of Section Three relating to an acceptable survey of the vessel, buyer will take possession of the vessel, and assume all risk of damage to and loss of the vessel, on ________[Date].


Buyer shall purchase and maintain marine insurance on the vessel from ________[insurance company] in the following amounts:
a. Hull insurance on a declared value of ________ Dollars ($________); and
b. Protection and indemnity in the amount of ________ Dollars ($________).
All policies shall contain a loss-payable clause acceptable to seller, naming seller as loss-payee, and the policies shall be held by seller as security for this contract, and in event of repossession of the vessel, as seller's sole property. Buyer shall not use the vessel and shall not permit it to be used in any way prohibited by or not covered by such insurance.
Buyer shall not remove the vessel beyond ________[describe geographical limitation] without the prior written permission of seller.


Buyer shall not permit any lien or charge having priority to or preference over the title of seller in the vessel to continue beyond ________[15] days after the charge becomes due and payable, and shall pay or cause to be discharged or make adequate provision for the satisfaction or discharge of all lawful claims or demands that might have precedence over the title of seller as a lien or charge on the vessel. Buyer shall carry a properly certified copy of this agreement with the vessel's papers and shall take such other appropriate steps as seller may from time to time direct as will give notice to the public that buyer has no right, power, or authority to suffer or permit to be imposed on or against the vessel any liens or claims that might be deemed superior to or a charge against the interest of seller in the vessel.


Seller expressly warrants that the vessel is not encumbered by any mortgage, bond, or maritime lien.
________[If appropriate, add: Except as so provided, the vessel is sold as is and where is, seller making no guarantee, warranty, or representation, express or implied, as to the kind, size, quality, description, or condition of the vessel, or its fitness for any use or purpose].


The failure of either party to this agreement to insist on the performance of any of the terms and conditions of this agreement, or the waiver of any breach of any of the terms and conditions of this agreement, shall not be construed as waiving any such terms and conditions, but the terms shall continue and remain in full force and effect as if no such forebearance or waiver had occurred.


In the event any action is filed in relation to this agreement, the unsuccessful party in the action shall pay to the successful party, in addition to all the sums that either party may be called on to pay, a reasonable sum for the successful party's attorney fees.


This agreement constitutes, the entire agreement between the parties, and any prior understanding or representation of any kind preceding the date of this agreement shall not be binding on either party except to the extent incorporated in this agreement.


Any modification of this agreement or additional obligation assumed by either party in connection with this agreement shall be binding only if in writing signed by each party or an authorized representative of each party.


The rights of each party under this agreement are personal to that party and may not be assigned or transferred to any other person, firm, corporation, or other entity without the prior, express, and written consent of the other party.


The titles to the paragraphs of this agreement are solely for the convenience of the parties and shall not be used to explain, modify, simplify, or aid in the interpretation of the provisions of this agreement.

In witness whereof, each party has caused this agreement to be executed on the date indicated below.

[Signatures, titles, and date(s) of signing]

The Clean Vessel Act by Boaters

Frequently Asked Questions

What impact does a recreational boaters have on "Clean Water"?
Boaters, more than any other group, want to protect and preserve our water. However, vessel sewage is more concentrated than domestic sewage, as shown below.

Source Typical BOD Levels Boat Sewage 1700-3500 mg/l
Raw Municipal Sewage 110-400 mg/l
Treated Municipal Sewage 5-100 mg/l

Compounding this problem for vessel holding tanks is the presence of chemical additives which have been used to disinfect and deodorize the waste, including formaldehyde, paraformaldehyde, quaternary ammonium chloride and zinc sulfate. Ideally odor-control chemicals should be biodegradable when diluted and contains no dye or perfumes.

What are the coastal boundaries for "State" waters in Florida?
Coastal limits are 9 nautical miles on the Gulf and 3 miles on the Atlantic Ocean.

What are Marine Sanitation Devices?
A Marine Sanitation Device (MSD) is any equipment for installation on board a vessel, other than a toilet, which is designed to receive, retain, treat or discharge sewage and any process to treat such sewage (Florida Statute 327.53).

MSD TYPE 1: Flow-through device that treats sewage by chemical or thermal means
MSD TYPE 2: Device that treats the sewage by biological means and uses bacteria
MSD TYPE 3: Holds the sewage. Prevents direct overboard discharge or sewage

All MSD's have to be US Coast Guard Approved (label affixed for type 1 & 2, or letter/document on board)

How do you tell if the MSD is U.S. Coast Guard approved?
A label is affixed or letter/document on board for Type 1 or 2 MSD; Type 3 does not require a label.

What are the guidelines for "y-valves"?
Under federal law, if your boat has a "Y" valve allowing direct overboard discharge of untreated waste, it must be closed while operating in all inland and coastal waters. It is suggested you use a non-releasable wire tie, lock, or remove the valve handle to secure the device. When you are more than 3 miles offshore in the ocean, the "Y" valve may be open allowing direct discharge overboard.

A "Y" valve may also be found on boats having both a Type I or II and a holding tank. This gives the boater an option to discharge treated waste overboard or to contain it for pumpout later. In certain waters, discharge of all sewage (whether Type I, II or III) is illegal.

What is a "No Discharge Zone"?
Also known as NDZ, a "No Discharge Zone" is approved by the U.S. Environmental Protection Agency which prohibit boats from discharging treated or untreated sewage into water bodies. In these waters, a "Y" valve has to be closed. Currently, there is only one NDZ in Florida; Destin Harbor. In other states, these waters include rivers, lakes, and reservoirs without interstate navigation and where entry or exit by boat is not possible.

Which crafts are required by law (Florida Statute 327.53) to have a working toilet on board when in state waters?

  • Any vessel 26 feet or longer with an enclosed cabin and berthing facilities
  • Any houseboat, defined as a vessel used primarily as a residence and not moved for 21 out of 30 days in a county of this state
  • Any floating structure with enclosed living space with berthing facilities or work space with public access

What impact does contaminated water have on our waterways?
A single overboard discharge of human waste can be detected in up to a one square mile area of shallow enclosed water. Contaminants known from human waste include hepatitis, streptococci, fecal coliform and other bacteria. Marine sanitation devices may also contain harmful chemicals in the disinfectants and deodorants. The highest levels, of boater generated, fecal coliform bacteria are most evident in "hot spot" areas of high boat traffic and low tidal flushing. Florida's "hot spots" include: the enclosed waters of the Indian River Lagoon and Tampa Bay and Palm Beach, Broward, Dade and Monroe Counties.

What is the impact on shellfish as it relates to "Clean Water"?
Shellfish are often referred to as the canary in the mineshaft. Shellfish farmers are almost always the first to know when there is a pollution problem in the watershed. Mollusks (oysters, clams, and mussels) filter tiny particles, including bacteria, as they pump water across their gills and into their stomachs. As a result, they have the ability to absorb the bacteria which are floating in surrounding waters and pass them through onto unsuspecting consumers.

How are houseboats defined?
A houseboat defined by Florida Statute Chapter 327 means any vessel which is used primarily as a residence for a minimum of 21 days during any 30 day period, in a county of this state, and this residential use of the vessel is to the preclusion of the use of the vessel as a means of transportation.

What do houseboats need to do in order to comply?
The houseboat must have a permanently installed toilet connected to a Type III marine sanitation device. The valve directing sewage needs to be set so as to prevent discharge of sewage into Florida waters. Type III marine sanitation devices and holding tanks should be pumped out at the nearest marina with a pumpout station.

What if I already have a Type I or Type II marine sanitation device?
A houseboat which has a Type I or Type II device must install a Type III device.

Our boat has a portable toilet. What do I do?
All waste from portable toilets shall be disposed of in an approved waste reception facility. Restroom toilets are not approved reception facilities. Some of the chemicals used in portable toilets do not break the waste down to acceptable levels nor do they kill disease-causing organisms. Marinas are encouraged to use funds from the grant program to install approved waste reception facilities at their site.

Are marine sanitation devices subject to inspection?
Yes. When the owner or operator is aboard, an officer may board a vessel with consent or if there is probable cause or knowledge to believe that a violation has occurred or is occurring. An officer may also board a vessel if the operator refuses or is unable to display the safety or marine sanitation equipment.

What are the fines for non-compliance?
$50.00 noncriminal infraction for compliance issues
$250.00 Civil penalty for discharge of raw sewage

The Florida DEP Division of Law Enforcement also manages the grant programs for The Clean Marina Program. For more information, contact Jan DeLaney, Program Manager, 850-245-2847

Going Down On Legal Diving Issues
by Mark Ercolin
Attorney At Law

Diving is inherently dangerous. Nature designed humans to be land creatures, and they are normally ill suited for spending long amounts of time underwater. However, since people became interested in exploring the sea, they have also been interested in exploring and working below it, as well.

Interest in remaining under water for a sustained time period can certainly be dated back to the days of Alexander The Great, whom in legend ordered the manufacturing of a glass diving bell, so that he might observe the wonders of the deep.

However, man's ability to stay for long periods under water was fairly much restricted to lung capacity, the limited use of snorkels and the diving bell until the 19th century, when the technology was finally developed to pump air to a person at increased depths in a fully encompassing dive suit.

Then, just before World War II, such pioneers as Jacques Cousteau began to develop methods for people to take delivery of self contained bottled air at depth into the lungs without injury. This was the beginnings of scuba diving (SCUBA is actually an acronym for Self Contained Breathing Apparatus), and a popular increase in diving in not only the work place, but in recreational sport.

Now one might think that this increased interest in a potentially dangerous activity might result in a clear set of laws and precedents which would fully control the actions of those who participate in that activity. But, I have not found that assumption to be particularly true. In fact, much of what occurs in certain areas of diving, such as the recreational sector, is virtually self-regulating.

Basically, Florida has two significant statutes which directly concern diving. One is Fla.Stat. 327.331, that deals most specifically with the use of a dive flag in state waters. The other is Fla.Stat. 381.895, that deals with purity standards for compressed air at diving facilities. (see both statutes in Appendix I).

Significantly, Fla.Stat. 327.331 does actually give a definition for what a diver is:
"Diver" means any person who is wholly or partially submerged in the waters of the state and is equipped with a face mask and snorkel or underwater breathing apparatus.

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