Lawyers seek to circumvent century-old maritime law

Plaintiffs' lawyers are starting to develop potential strategies for circumventing a complicated century-old doctrine boat owners are using to fend off liability from a deadly fire off of Santa Barbara Island on Labor Day.

Even so, questions remain over whether state or federal law defenses and remedies will be used.

The Santa Barbara-based Conception boat was on a dive trip when it caught fire and burned to the waterline in the middle of the night. Thirty-four passengers died, but five crew members survived.

Glen and Dana Fritzler, who operate the boat under their company, Truth Aquatics Inc., immediately invoked the Limitation of Liability Act of 1851 to fend off potential wrongful death and personal injury claims. In the matter of the Complaint of Truth Aquatics, Inc. et al. 2:19-CV-07693 (C.D. Cal., filed Sept. 5, 2019).

The Act is designed to protect a vessels owners from paying beyond its minimum insurance policy by limiting the value of the vessel at the time of any incident, which in this case, would be $0 since Conception sank after catching fire.

The owners' invocation of the Act immediately threw a wrench in litigation, freezing any state court actions and complicating counterclaims filed against the federal statutory defense. Victims have until July to file claims against the boat owners and challenge the Act.

Jeffrey P. Goodman, partner at Saltz Mongeluzzi Barrett & Bendesky, who represented victims of the Table Rock Lake duck boat disaster in Missouri in 2018 that killed 17 people, has teamed up with Robert S. Glassman of Panish Shea Boyle LLP to fight for a potential group of plaintiffs in the Conception case. None of their cases have been filed in either state or federal court, Goodman said.

In November, Goodman successfully defeated the liability limitation lawsuit vessel owners filed in the Table Rock Lake case.

U.S. District Judge Douglas Harpool threw out the vessel owners' lawsuit on the basis the event occurred in a lake and not in navigable waterways, as provided by the Act. 6:1803339-MDH (W.D., Mo., filed Jul. 29, 2018).

The Act's defense is typically unsuccessful in federal court proceedings, according to Goodman. And he conceded the jurisdictional issues arising from the Act in the Table Rock Lake case is very different from the Conception case. The navigable waterways aspect of the Act likely won't be an issue in Conception since the event didn't happen in a lake. But he said there are other avenues claimants could pursue to defeat the Act, such as unseaworthiness or alleging the owners knew about the design of the ship or its maintenance to prove privity.

Two actions against Truth Aquatics have been filed by other lawyers, one on behalf of a surviving crew member and another on behalf of the widow of one of the decedents.

In November, Justin Dignam's widow filed a counterclaim in federal court for damages, asserting causes of action under the General Maritime Law of the United States.

Dignam's lawyer, John R. Hillsman of Law Offices of McGuinn Hillsman & Palefsky, and Truth Aquatics' lawyer, James F. Kuhne Jr. of Gordon Rees Scully Mansukhani LLP, have gone back and forth in court papers over whether state or federal remedies would be available.

Several issues have been hotly contested, including jurisdictional questions and whether causes of action are barred by the defense of primary assumption of risk, or whether there are limits on recovery in maritime cases involving death or injury under the federal Jones Act or the Death on the High Seas Act.

"We don't want to pursue state remedies in this matter and won't pursue them, despite what the Fritzlers have suggested," said Hillsman. "Because the Conception fire satisfies the requirements for maritime tort jurisdiction, the only remedies available to families are those sounding under federal maritime law. Federal remedies are notoriously solicitous of folks killed or injured within the reach of admiralty jurisdiction and, as a rule, are far more generous than state law death remedies."

There is case law that limits claimants' power to choose state law remedies but gives federal courts authority to supplement federal admiralty law with a state law remedy if that remedy is more generous than, and doesn't conflict with, the analogous admiralty remedy, which is very rare, Hillsman said.

Truth's lawyers are "throwing out every single defense they can think of, including the kitchen sink, which is common practice in maritime law," Hillsman said.

"They're asserting admiralty jurisdiction and also inserting the limitation act while invoking state law affirmative defenses like the assumption of risk," Hillsman said. "You can't have it both ways; general maritime law is what governs this case."

For a long time, maritime tort law didn't make any provision for non-seafarers killed on territorial waters, according to Hillsman.

"The law of maritime wrongful death has been described as a crazy quilt because it was stitched together from many sources over many years by many hands on an ad hoc basis in response to immediate concerns," he said.

Congress passed six statutes between 1920 and 1953, each establishing a narrow death remedy for a particular class of victims, according to Hillsman.

Congress has yet to establish any rules listing, restricting or addressing damages due for the death of a non-seafarer, like Dignam, on territorial waters like the Santa Barbara Channel, Hillsman said.

The limitation act has been criticized, and yet Congress hasn't repealed it, and courts continue to apply it, Kuhne argued in court papers. The Act also keeps litigation from spiraling unchecked into 34 potentially different wrongful death suits that could be filed in 34 different venues, he said.

While he said he doesn't believe the Act would be revisited by Congress, Hillsman said he believes there would be a push by state lawmakers to address the insurance limitation problem.

"You don't need Congress to weigh in on insurance. You can get regulations from state or federal government requiring additional insurance," Hillsman said.

The first court date has been scheduled for Jan. 27 before U.S. District Judge Percy Anderson of the Central District of California.