Fahey v. Gledhill

Decision Date26 May 1983
Citation33 Cal.3d 884,663 P.2d 197,191 Cal.Rptr. 639
CourtCalifornia Supreme Court
Parties, 663 P.2d 197 Frank FAHEY, Plaintiff and Appellant, v. Fred GLEDHILL, Defendant and Respondent. AETNA INSURANCE COMPANY, Plaintiff and Appellant, v. Fred GLEDHILL, Defendant and Respondent. L.A. 31549.

Richard P. MacNulty, San Diego, for plaintiff and appellant Fahey.

Lewis D. Jones, Marina Del Rey, for plaintiff and appellant Aetna.

C. Douglas Alford, San Diego, for defendant and respondent.

BROUSSARD, Justice.

Plaintiffs Frank Fahey and his insurer appeal from a judgment denying recovery for injury to Fahey's 50-foot yacht.

Fahey brought his yacht to defendant's marine repair facility in San Diego to have the bottom cleaned and painted and certain repair work done. He signed a work order containing an exculpatory clause. It provided that defendant would "not be liable for any loss of, or damage to said vessel, its contents or gear, or any loss of the use thereof from any cause whatsoever, excepting only willful misconduct on your part. It is understood that the vessel, its contents and gear is not insured or protected to the amount of the actual cash value against loss occasioned by fire, theft, vandalism, malicious mischief, loss of use or any other cause while it remains at the BOATYARD .... I acknowledge receipt of a copy hereof."

Defendant hauled the boat out of the water and did the agreed work. As defendant's employees were relaunching the vessel, it fell from defendant's marine railway and was badly damaged. Defendant hauled approximately 800 boats out of the water per year.

Fahey brought an action claiming negligence and gross negligence on the part of defendant, and the action was consolidated with an action brought by Fahey's insurer, as subrogee, for $125,000 it paid to Fahey. Pursuant to defense motion, the court first tried the issue of the validity and effect of the exculpatory clause.

The court found that Fahey had brought his yacht to defendant for maintenance and repairs on at least five prior occasions and signed an identical work order, that Fahey was aware of the exculpatory clause when he signed the work order, that at least one other marine repair facility available for the repairs in the San Diego area did not require execution of an agreement precluding liability for negligence, that Fahey, a sophisticated businessman, and defendant were in equal positions with respect to the marine repair contract, and that the exculpatory clause was neither ambiguous nor overbroad. 1

The court concluded that the work order constituted a maritime contract with its validity and interpretation governed by federal maritime law and that under federal law the contract validly exempted defendant from responsibility for negligent damage to the vessel while it was in his custody for repairs.

I. FEDERAL OR STATE LAW

The basis of admiralty jurisdiction of the federal courts is article III, section 2 of the United States Constitution, and under the supremacy clause of article VI, the admiralty rules are applicable in state court litigation. State law is inapplicable to a maritime cause of action if it works material prejudice to the characteristic features of the general maritime law or interferes with the proper harmony and uniformity of that law in its international and interstate relations. (Intagliata v. Shipowners & Mer. etc. Co. (1945) 26 Cal.2d 365, 372, 159 P.2d 1 (rejecting state defenses of contributory negligence and assumption of risk).)

"The boundaries of admiralty jurisdiction over contracts--as opposed to torts or crimes--being conceptual rather than spatial, have always been difficult to draw. Precedent and usage are helpful insofar as they exclude or include certain common types of contract: a contract to repair, Endner v. Greco, 3 F. 411, ... is maritime, but a contract to build a ship is not. People's Ferry Co. v. Beers, 20 How. 393 ." (Italics added.) (Kossick v. United Fruit Co. (1961) 365 U.S. 731, 735, 81 S.Ct. 886, 890, 6 L.Ed.2d 56.) While Kossick did not involve an agreement to repair a boat, numerous other cases have held that such agreements are maritime contracts to which admiralty law is applicable. (E.g., United New York Sandy Hook Pilots Ass'n. v. Rodermond Indus. (3d Cir.1968) 394 F.2d 65, 71; Booth Steamship Co. v. Meier & Oelhaf Co. (2d Cir.1958) 262 F.2d 310, 312; Hall-Scott Motor Car Co. v. Universal Ins. Co. (9th Cir.1941) 122 F.2d 531, 534; Standard Oil Co. v. Intrepid, Inc. (1972) 26 Cal.App.3d 135, 139, 102 Cal.Rptr. 604.)

Similarly, exculpatory agreements for ship accidents would ordinarily be maritime in character. "Through long experience, the law of the sea knows how to determine whether a particular ship is seaworthy, and it knows the nature of maintenance and cure. It is concerned with maritime liens, the general average, captures and prizes, limitation of liability, cargo damage, and claims for salvage." (Italics added.) (Executive Jet Aviation v. City of Cleveland (1972) 409 U.S. 249, 270, 93 S.Ct. 493, 505, 34 L.Ed.2d 454.)

Kossick recognized that, although a maritime contract was involved, there was a further question whether the contract was maritime and local "in the sense that the application of state law would not disturb the uniformity of maritime law." (365 U.S. at p. 738, 81 S.Ct. at p. 891.) In that case, a seaman became ill, and the owner sent him to the United States Public Service Hospital. The seaman, believing the treatment would be unsatisfactory, wanted private treatment, and the shipowner orally promised if he would enter the hospital, to assume responsibility for all consequences of improper or inadequate treatment. The seaman subsequently sued the shipowner for injuries received as a consequence of improper treatment at the hospital. Holding that maritime law rather than New York's statute of frauds was applicable, the court reasoned that seamen were entitled to maintenance and cure at the first available port when they fell ill, that the contract was one which might have been made anywhere in the world, and that the New York law would invalidate the contract rather than supplement remedies available in admiralty, which permitted enforcement of the oral agreement. (365 U.S. at p. 738, 81 S.Ct. at p. 891 et seq.)

However, the court rejected the view that a maritime interest, "no matter how slight or marginal," would displace necessarily a local interest, "no matter how pressing and significant," and concluded that the process was one of accommodation, "entirely familiar in many areas of overlapping state and federal concern, or a process somewhat analogous to the normal conflict of laws situation where two sovereignties assert divergent interests in a transaction as to which both have some concern." (365 U.S. at p. 739, 81 S.Ct. at p. 892.)

In Wilburn Boat Co. v. Fireman's Ins. Co. (1955) 348 U.S. 310, 321, 75 S.Ct. 368, 374, 99 L.Ed. 337 marine insurance, while within admiralty jurisdiction, was held to be a matter of state regulation rather than admiralty law. The court relied upon a history of state regulation without significant congressional interference and the fact that there was no admiralty rule governing the matter in issue.

In contrast there is a long history of admiralty courts regulating the liability of boat repair and service contractors, and the rights of boatowners to recover for injury and to be indemnified for loss. (E.g., Italia Soc. v. Ore. Stevedoring Co. (1964) 376 U.S. 315, 318, 84 S.Ct. 748, 750, 11 L.Ed.2d 732 et seq.; Ryan Co. v. Pan-Atlantic Corp. (1956) 350 U.S. 124, 132, 76 S.Ct. 232, 236, 100 L.Ed. 133 et seq.; United New York Sandy Hook Pilots Ass'n v. Rodermond Indus., supra, 394 F.2d 65, 70-72.) Similarly, admiralty courts have in numerous cases considered the validity and effect to be given to exculpatory clauses like that before us. Nor does it appear that California's policy against agreements exonerating a party for his own negligence is so overwhelming as to compel disregard of admiralty law. Our law recognizes the validity of such agreements in some circumstances. (See Tunkl v. Regents of University of California (1963) 60 Cal.2d 92, 97, 32 Cal.Rptr. 33, 383 P.2d 441 et seq.)

It must be concluded that admiralty law in general governs the validity and interpretation of ship repair contracts, including exculpatory clauses. To conclude generally that all such contracts are maritime but local would in effect be contrary to the numerous cases applying admiralty law.

It is urged that admiralty law should not be applicable to noncommercial pleasure boats. Pointing out that admiralty law and jurisdiction were created to serve commercial shipping interests by providing a uniform body of law for the resolution of legal disputes arising among those engaged in it, Professor Stolz has urged that states should be permitted to regulate private pleasure craft aside from rules of the road, and laws relating to lights, maintenance of lifesaving and safety equipment, and similar matters. (Stolz, Pleasure Boating and Admiralty: Erie at Sea (1963) 51 Cal.L.Rev. 661.) As Professor Stolz points out, there are numerous differences between admiralty law, common law as developed by the states or some of them, and state statutory law; admiralty law applies comparative fault rather than contributory negligence, prohibits contribution between tortfeasors permitted in some states, requires total indemnity in a number of situations where common law courts deny indemnity or permit partial equitable indemnity, does not have statutes of limitation, and imposes a uniform duty of care to all visitors without regard to whether they are business invitees or social guests. 2 (51 Cal.L.Rev. at pp. 662-663.)

Obviously, noncommercial pleasure boats by definition do not involve maritime commerce, and the other basis for admiralty jurisdiction and law, uniformity, does not seem entitled...

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