Outrage over the horrendous deaths of 34 souls aboard the Dive Vessel “Conception” off the coast of Santa Cruz Island on September 2, 2019, is certainly understandable. Equally outrageous is the limitation of liability lawsuit filed by the “Conception’s” owners a mere three days later on September 5, 2019—while bodies had yet to be recovered and the vessel still partially submerged. Adding insult to injury, the limitation action sought to limit victims’ recoverable damages to zero (that’s right, $0), the claimed value of the “Conception” after the fire. See In re Complaint of Truth Aquatics, Inc., Civil Action No. 19-cv-07693 (C. Dist. Cal.). Despite the understandable and justified public outcry, such legal maneuvering is not unexpected and in fact, routinely occurs in the face of the maritime disaster.
Congress passed the Limitation Act in 1851 “to encourage ship-building and to induce capitalists to invest money in this branch of industry.” Lewis v. Lewis & Clark Marine, 531 U.S. 438, 446-47 (2001) (citations omitted). The statute has been criticized as “a relic of an earlier era;” an act of legislation “arthritic with age” (Esta Later Charters, Inc. v. Ignacio, 875 F.2d 234, 239 (9th Cir.1989)) and “hopelessly anachronistic” (University of Texas Medical Branch at Galveston v. United States, 557 F.2d 438, 441 (5th Cir. 1977), cert. denied, 439 U.S. 820 (1978). At least one court has stated that it is “at least doubtful whether the motives that originally lay behind the limitation are not now obsolete; and certainly, we should now have no warrant for extending its scope, when the liability is for personal injury arising from the shipowner’s fault.” In re United States Dredging Corp., 264 F.2d 339, 341 (2d Cir.), cert. denied, 360 U.S. 932 (1959); Lockheed Martin Corp. v. Unknown Respondents, 2007 WL 965451 (N.D.N.Y. 2007) at *4 (“Despite suggestions that the Act was obsolete, Congress amended it on October 6, 2006, leaving it relatively intact.”).
Despite these valid criticisms, the Limitation Act remains on the books and is used by shipowners and their insurance carriers as a roadblock to recovery. Thus, a limitation action requires all potential claimants to assert their rights in the limitation action, which may require claims to be tried non-jury. Additionally, the limitation fund may be limited to the value of the vessel post-casualty, which for “Conception” was zero, and for the “Titanic,” was the value of the fourteen lifeboats found after the vessel’s sinking and pending freight (total: $92,000, despite the deaths of 1517 passengers!).
Limitation actions present a multitude of traps for the unwary, and competent maritime legal representation is essential to defeat a limitation action. These actions should not be entrusted to attorneys without a maritime law background. In fact, many limitation cases are referred to Friedman, James & Buchsbaum LLP too late, after numerous missteps are made by attorneys without the requisite admiralty training and experience, jeopardizing recovery. Our thoughts and prayers are with the victims’ families and friends, and we hope that justice is served.