COMPLAINT OF THREE BUOYS HOUSEBOAT VACATIONS USA

• Decision Date: 27 June 1988
• Docket Number: No. 88-141A-(1).,88-141A-(1).
• Citation: 689 F. Supp. 958
• Parties: In the Matter of the Complaint of THREE BUOYS HOUSEBOAT VACATIONS U.S.A., LTD., etc.
• Court: U.S. District Court — Eastern District of Missouri

689 F. Supp. 958

In the Matter of the Complaint of THREE BUOYS HOUSEBOAT VACATIONS U.S.A., LTD., etc.

No. 88-141A-(1).

United States District Court, E.D. Missouri, E.D.

June 27, 1988.

Joseph A. Murphy, Peter M. Maginot, Lucas & Murphy, St. Louis, Mo., James R. Sutterfield, James R. Holmes, Carmouche, Gray & Hoffman, New Orleans, La., for plaintiff.

James E. Hullverson, Stephen H. Ringkamp, Hullverson, Hullverson & Frank, Inc., Sandor Korein, Joseph L. Bauer, Jr., St. Louis, Mo., for defendant.

MEMORANDUM

NANGLE, Chief Judge.

This matter is now before the Court on claimants' motions to dismiss plaintiffs complaint for lack of subject matter jurisdiction. Two jurisdictional questions are presented in this case: (1) whether Lake of the Ozarks, a reservoir formed by Bagnell Dam and located entirely within the State of Missouri, is a "navigable" body of water within the Court's federal admiralty jurisdiction; (2) whether an action pursuant to the Limitation of Liability Act is within the Court's federal question or commerce clause jurisdiction.

I. Background.

Plaintiff Three Buoys Houseboat Vacations U.S.A., Ltd. (Three Buoys) is a Missouri corporation engaged in the business of chartering houseboats on Lake of the Ozarks. Lake of the Ozarks is a body of water in central Missouri which was created by impounding the Osage River by construction of the Bagnell Dam, a dam with no locks to allow passage of vessels. This case arises from a collision between a twenty-foot fiberglass vessel operated by an employee of Three Buoys and the Kantafordit houseboat. The collision occurred at approximately 2:00 a.m. on August 2, 1987 on Lake of the Ozarks. As a result of the collision, two passengers on the houseboat were killed, three other passengers on the houseboat and plaintiff's employee sustained personal injuries, plaintiff's vessel sank and the houseboat sustained property damages. Several wrongful death, personal injury, and property damage claims have been filed in state court against Three Buoys and its vessel. (Plaintiff's Complaint, ¶ 10; Plaintiff's Affidavit of Mailing Notice filed March 1, 1988).

Three Buoys filed the present complaint for exoneration from or limitation of liability pursuant to the Limitation of Liability Act, 46 U.S.C.App. §§ 181 et seq., to limit its liability in connection with the collision that occurred on Lake of the Ozarks. Plaintiff's complaint alleges that the Court has admiralty jurisdiction pursuant to 28 U.S.C. § 1333, or in the alternative, has jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337. Plaintiff posted security and requested an order restraining and enjoining the prosecution of all suits or legal proceedings against it and issuing notice to claimants directing them to file their claims in federal court. See 46 U.S.C.App. § 185. On January 26, 1988, this Court issued a restraining order enjoining suits and issued notice to all claimants directing the filing of claims. Claimants move to dismiss plaintiff's complaint on the ground that Lake of the Ozarks is not a "navigable" body of water within the admiralty jurisdiction of this Court.

II. Admiralty Jurisdiction.

The admiralty jurisdiction of the federal district court is set forth in 28 U.S.C. § 1333, which provides in pertinent part:

The district courts shall have original jurisdiction, exclusive of the courts of the States, of:

(1) Any civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled.

Congress extended admiralty and maritime jurisdiction to cases arising from personal injury or property damage sustained on navigable waters in the Admiralty Jurisdiction Extension Act, which provides in pertinent part:

The admiralty and maritime jurisdiction of the United States shall extend to and include all cases of damage or injury, to person or property, caused by a vessel on navigable water, notwithstanding that such damage or injury be done or consummated on land.

46 U.S.C.App. § 740.

Under the Limitation of Liability Act, a ship owner's liability for personal injury or property damage is limited to the value of the vessel and its pending freight when the loss is incurred without the owner's privity or knowledge. 46 U.S.C.App. § 183(a);¹ Valley Line Co. v. Ryan, 771 F.2d 366, 369 (8th Cir.1985). This limitation of liability extends to "all seagoing vessels" and to "all vessels used on lakes or rivers or inland navigation." 46 U.S.C. App. § 188.² The Limitation of Liability Act was enacted to encourage investments in shipbuilding and to provide an opportunity for the complete disposition of claims against a vessel and its owner. Just v. Chambers, 312 U.S. 383, 385-386, 61 S.Ct. 687, 690, 85 L.Ed. 903 (1941).

The determination of whether admiralty jurisdiction exists over a maritime tort involves a two-fold inquiry. First, the tort must occur on "navigable" waters. Second, the tort must have a "sufficient nexus" to a traditional maritime activity. Foremost Insurance Co. v. Richardson, 457 U.S. 668, 671-674, 102 S.Ct. 2654, 2656-58, 73 L.Ed.2d 300 (1982); Complaint of Paradise Holdings, 619 F.Supp. 21, 22-23 (C.D.Cal.1984), aff'd, 795 F.2d 756 (9th Cir.), cert. denied, 479 U.S. 1008, 107 S.Ct. 649, 93 L.Ed.2d 705 (1986).

The Eighth Circuit has held that "navigability", for purposes of admiralty jurisdiction is "properly limited" to waters which have "a present capability ... to sustain commercial shipping." Livingston v. United States, 627 F.2d 165, 170 (8th Cir.1980), cert. denied, 450 U.S. 914, 101 S.Ct. 1354, 67 L.Ed.2d 338 (1981). See also Land and Lake Tours, Inc. v. Lewis, 738 F.2d 961, 963 n. 3 (8th Cir.), cert. denied, 469 U.S. 1038, 105 S.Ct. 517, 83 L.Ed.2d 406 (1984) ("present navigability in fact is the linchpin of admiralty jurisdiction"); Edwards v. Hurtel, 717 F.2d 1204, 1205 (8th Cir.1983) (admiralty jurisdiction "turns on contemporary navigability in fact"). In Livingston, the Eighth Circuit held that no admiralty jurisdiction existed over an action arising from a death on the Norfolk River which occurred after construction of a hydro-electric dam had closed the river to commercial activity. The court found that a history of commercial activity on the Norfolk River was not determinative of admiralty jurisdiction and that the closing of the river to commercial traffic eliminated admiralty jurisdiction over the river. Id. at 169-170. The court explained that "absent some present or potential commercial activity, there is no ascertainable federal interest that justifies frustrating the legitimate interests of the states in providing a forum and applying their law to regulate conduct within their borders." Id. at 170. (citing Adams v. Montana Power Co., 528 F.2d 437, 439 (9th Cir.1975)).

In Cooper v. United States, 500 F.Supp. 191 (W.D.Mo.1980), the United States District Court for the Western District of Missouri applied the Livingston decision to an action arising from the death of an individual which occurred as a result of a collision of two motorboats on Lake of the Ozarks. The court held that Lake of the Ozarks was not within the Court's admiralty jurisdiction. Cooper, 500 F.Supp. at 193.³

Plaintiff argues that Lake of the Ozarks is a "navigable" body of water within the admiralty jurisdiction of this Court. Plaintiff points out that at the time that Lake of the Ozarks was constructed by the Bagnell Dam, the Osage River was a navigable stream. Plaintiff relies upon In re Wood's Petition, 145 F.Supp. 848 (W.D.Mo.1956), aff'd sub nom. Loc-wood Boat and Motors v. Rockwell, 245 F.2d 306 (8th Cir.1957). In Wood's Petition, the district court held, based upon the historical navigability of the Osage River, that Lake of the Ozarks was a "navigable" body of water within the admiralty jurisdiction of the court. The decision was affirmed on appeal.

Plaintiff's reliance upon the historical navigability of the Osage River and the Loc-wood Boat and Motors decision is unavailing. In Livingston, the Eighth Circuit specifically rejected reliance upon historical navigability as a basis for establishing present admiralty jurisdiction. Livingston, 627 F.2d at 170. The Livingston court pointed out that in the Loc-wood Boat and Motors decision the parties did not challenge the appropriateness of admiralty jurisdiction and the court was not "squarely faced with the question of whether current navigability in fact is required for admiralty jurisdiction." Livingston, 627 F.2d at 168 and n. 4. Finally, the Livingston court unequivocally stated that "notwithstanding any expressions to the contrary in prior decisions of this court, federal admiralty jurisdiction turns on contemporary navigability in fact," not historical navigability. Id. at 170.

Plaintiff relies upon several regulatory and administrative determinations of navigability to support its contention that Lake of the Ozarks is a "navigable" body of water within the admiralty jurisdiction of this Court. First, plaintiff relies upon an April 9, 1981 order of the Federal Energy Regulatory Commission (FERC) issuing a license to Union Electric for the operation of the Osage project, which states that the project, Bagnell Dam, is located on the Osage River, "a navigable water of the United States." (See Plaintiff's Reply Memorandum, Exhibit A). Under the Federal Power Act, the FERC has authority to issue licenses for the construction of dams and other works. See 42 U.S.C. § 7172. Plaintiff also argues that Congress' declaration that a portion of the Osage River, at a point well upstream from Lake of the Ozarks, is not navigable, see 33 U.S.C. § 41, means that the portion of the Osage River containing Lake of the Ozarks is navigable. Plaintiff contends that the continued issuance of permits by the Army Corps of Engineers for construction of obstructions on Lake of the Ozarks (see Plaintiff's Reply, Exhibit B), also demonstrates that Lake of the Ozarks is a "navigable" water of the...