COMPLAINT OF TRACEY, Civ. A. No. 84-879-MA.

• Decision Date: 02 April 1985
• Docket Number: Civ. A. No. 84-879-MA.
• Citation: 608 F. Supp. 263
• Parties: In the Matter of the Complaint of Christopher T. TRACEY and Jay C. Miller, Owners of the Yacht Liberty in a Cause of Exoneration From or Limitation of Liability.
• Court: U.S. District Court — District of Massachusetts

608 F. Supp. 263

In the Matter of the Complaint of Christopher T. TRACEY and Jay C. Miller, Owners of the Yacht Liberty in a Cause of Exoneration From or Limitation of Liability.

Civ. A. No. 84-879-MA.

United States District Court, D. Massachusetts.

April 2, 1985.

Thomas J. Muzyka, Glynn & Dempsey, Boston, Mass., for plaintiffs.

Jerome Flanagan, Nunes, Reis & Kutsaftis, Boston, Mass., for defendants.

MEMORANDUM AND ORDER

MAZZONE, District Judge.

This is a petition for exoneration from or limitation of liability. The petitioners, Christopher T. Tracey and Jay C. Miller, seek to avoid or limit their liability to the claimants, Paul M. Reis, Michael J. Nunes, and Michael G. Kutsaftis, for personal injuries and property loss suffered by the claimants as a result of a collision between the parties' respective vessels. The claimants have moved for summary judgment. That motion has been opposed by the petitioners. Jurisdiction is proper pursuant to 46 U.S.C. § 185 and 28 U.S.C. § 1333. The facts are essentially undisputed.

I.

The petitioners are co-owners of the LIBERTY, a thirty-foot Sutphen Ocean Pacer powerboat. The claimants were aboard an eighteen-foot Glastron speedboat. On September 26, 1983, the two boats collided in the navigable waters of Narragansett Bay off Rhode Island. At the time of the collision, neither co-owner was aboard the LIBERTY. Peter McCarthy, the person who usually operates the LIBERTY, was serving as the co-owners' designated operator at the time of the incident. As a result of this collision, both vessels were damaged and personal injuries may have been sustained by individuals aboard both vessels. To date, three written claims have been filed by the claimants against the petitioners for personal injury, loss, or damage resulting from the incident.

The petitioners seek to limit their liability to the claimants under authority of the limitation of liability statutes including, among others, 46 U.S.C. §§ 183-186 as amended (the Limitation Act). These statutes insulate a shipowner who either hires a crew or loans his ship to another from liability in excess of the value of his vessel after the incident. The claimants state that the petitioners' complaint is not a proper matter for a limitation action because neither boat involved in the collision was a commercial vessel. They claim that the statute applies only to commercial vessels. In contrast, the petitioners contend that subsequent amendments to the original Limitation Act demonstrate that Congress intended to include non-commercial vessels within the scope of protection of the Act.

II.

The applicable standard for analyzing a motion for summary judgment is clear. The record must be viewed in the light most favorable to the non-moving party. Poller v. Columbia Broadcasting System, 368 U.S. 464, 473, 82 S.Ct. 486, 491, 7 L.Ed.2d 458 (1962). Further, all inferences must be drawn in favor of the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962); Stephanischen v. Merchants Despatch Transportation Corp., 722 F.2d 922, 938 (1st Cir.1983). Nonetheless, it is the function of summary judgment to "`pierce formal allegations of facts in the pleadings ...' and to determine whether further exploration of the facts is necessary." Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir.1975), cert. denied, 425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 754 (1976), quoting Schreffler v. Bowles, 153 F.2d 1, 3 (10th Cir.1946).

In a short section of the petitioners' brief, the petitioners claim that there is a genuine issue of material fact as to whether their boat was a "commercial" or "pleasure" vessel. The basis of this claim, the petitioners contend, is that "it may be possible ... to impute a `commercial' use" to the vessel. (Petitioners' Opposition to Claimants' Motion p. 2). However, "an adverse party may not rest upon the mere allegations or denials of his pleadings, but ... must set forth specific facts showing that there is a genuine issue for trial. If he does not respond, summary judgment, if appropriate, shall be entered against him." Fed.R.Civ.P. 56(e). Here, the petitioners have produced no evidence contradicting the facts in the record which show that the LIBERTY was used for pleasure purposes. Nor have they provided specific facts which demonstrate that the LIBERTY was used as a commercial vessel. In fact, there is no indication that either vessel involved was ever used for anything but pleasure purposes.

Even if the non-moving party has failed to offer responsive affidavits or other materials, the burden remains on the moving party to clearly establish the lack of any triable issues of fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 160, 90 S.Ct. 1598, 1609, 26 L.Ed.2d 142 (1970). The claimants have met this burden. As the claimants' brief demonstrates, the petitioners acquired the boat for pleasure purposes only, (Miller Depo. p. 9), and their motive for purchasing the boat was only to enjoy it. (Miller Depo. p. 15). Funds from the petitioners' corporation were not used to purchase, maintain, or finance the boat. (Tracey Depo. p. 8). Miller and Tracey owned the LIBERTY as joint tenants. (Miller Depo. p. 8). Tracey testified that neither customers nor prospective customers of their business were taken out on the boat for business purposes. (Tracey Depo. p. 12).

Even viewing all the evidence in the light most favorable to the petitioners, there is no genuine factual dispute as to the pleasure use of the LIBERTY. The only issue remaining, then, is whether claimants are entitled to judgment as a matter of law.

III.

The only legal question before this Court is whether the Limitation Act of 1851, as amended, applies to pleasure craft. At first glance, the language of the statute might appear to apply to such vessels. However, the language is far from conclusive on this issue. In the discussion below, I turn first to the purpose of the 1851 Act and examine both the Supreme Court's interpretation of it and the Congressional intent underlying it. Second, I discuss the extension of the Act to pleasure boats. Since the Supreme Court has not ruled squarely on this issue and the First Circuit has not interpreted the Act's applicability to pleasure boats, I then seek further guidance from decisions in other districts. Finally, I discuss the soundness of an interpretation of the Act that would limit the liability of pleasure boat owners.

1. Purpose of the 1851 Act

The original limitation of liability statute was enacted in 1851, when the first great American merchant marine was on the rise and long before pleasure powerboats were even on the horizon. The heart of this Act, presently set forth in 46 U.S.C. § 183(a), allows the owner of a vessel to limit his liability to the value of his vessel after an accident, provided the damage or injury with respect to which limitation is sought did not occur with the "privity or knowledge" of the owner:

The liability of the owner of any vessel, whether American or foreign, for any embezzlement, loss or destruction by any person of any property, goods, or merchandise shipped or put on board of such vessel, or for any loss, damage or injury by collision, or for any act, matter or thing, loss, damage, or forfeiture, done, occasioned, or incurred, without the privity or knowledge of such owner or owners, shall not ... exceed the amount or value of the interest of such owner in such vessel, and her freight then pending.

46 U.S.C. § 183(a).

In its initial encounter with the Act, the Supreme Court reasoned that the Act's purpose was to encourage shipbuilding and place the American merchant marine on an equal footing with that of England and the other maritime nations of Europe, where shipowners had benefited from various systems of limitation for many years. Norwich Co. v. Wright, 80 U.S. (13 Wall.) 104, 121, 20 L.Ed. 585 (1781). Limited liability was essential due to the high risk involved in worldwide commercial shipping at that time. Id. The investor who supported a shipping venture had no control over the conduct of his ship once it left port. Given the primitive vessels and the hazards of the sea, the potential common law liabilities of the shipowner as principal made the shipping industry an unattractive investment. Greater liability would result in greater cost. Leaving the United States shipowner without protection would put him at a competitive disadvantage in the world shipping market. See generally Hartford Accident & Indemnity Co. v. Southern Pacific Co., 273 U.S. 207, 214, 47 S.Ct. 357, 358, 71 L.Ed. 612 (1927); The Main v. Williams, 152 U.S. 122, 128, 14 S.Ct. 486, 487, 38 L.Ed. 381 (1894); Comment, Pleasure Boat Owner Tort Liability In Admiralty: An Examination Of The Limited Liability Act And A Proposal For Reform, 50 So. Cal.L.Q. 549, 572-74 (1977).

The Supreme Court's "commercial" interpretation is clearly supported by the Congressional history of the Act. The Senators who considered adoption of the Act viewed the English as the primary competition for American shippers. Senator Hamlin of Maine, the bill's sponsor, remarked that the Act "places our commercial marine upon the same basis as that of England." 25 Cong.Globe 713, 31st Cong., 2d Sess. (1851). Senator Davis of Massachusetts added, "We are carriers side by side with that nation, in competition with them, and we cannot afford very well to give them any great advantage over us...." Id. at 714. Senator Cass summed up his view of this debate with the rhetorical question, "How are we to continue our commercial interest on a firm foundation unless we put our shipowners on the same footing with those of other countries? Is there a more important matter than one like this, in which the interest of our whole commercial marine is at stake?" Id.

2. Judicial Extension of the 1851 Act to Pleasure Boats

With this judicial and Congressional background, in one of the first cases that...