Keys Jet Ski, Inc. v. Kays

• Decision Date: 06 February 1990
• Docket Number: Nos. 89-5080,89-5187,s. 89-5080
• Citation: 893 F.2d 1225
• Parties: In the Matter of the Complaint of KEYS JET SKI, INC., Sunset Watersports, Inc., and Richard C. Welter, or one or more of them, for exoneration from or limitation of liability as owners of Kawasaki 650 Jet Ski KAW18324F787, Plaintiffs-Appellants, v. Roger KAYS, Bonnie Kays, Claimants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1225

893 F.2d 1225

1990 A.M.C. 609

In the Matter of the Complaint of KEYS JET SKI, INC., Sunset Watersports, Inc., and Richard C. Welter, or one or more of them, for exoneration from or limitation of liability as owners of Kawasaki 650 Jet Ski KAW18324F787, Plaintiffs-Appellants, v. Roger KAYS, Bonnie Kays, Claimants-Appellees.

Nos. 89-5080, 89-5187.

United States Court of Appeals Eleventh Circuit.

Feb. 6, 1990.

Carl R. Nelson, Fowler, White, Gillen, Boggs, Villareal & Banker, P.A., Tampa, Fla., for plaintiffs-appellants.

John T. Biezup, Frank P. DeGiulio, Palmer Biezup & Henderson, for plaintiffs-appellants.

Richard A. Kupfer, West Palm Beach, Fla., claimants-appellees.

Appeals from the United States District Court for the Southern District of Florida.

Before HATCHETT and COX, Circuit Judges, and HENDERSON, Senior Circuit Judge.

HATCHETT, Circuit Judge:

These appeals require that we determine whether a "jet ski" is covered by the Limitation of Liability Act, 46 U.S.C.App. Secs. 181-188 (the "Limitation Act"). The district court ruled that a jet ski is a pleasure craft and that pleasure craft are not properly covered by the Limitation Act. Although we agree that a jet ski is a pleasure craft, we hold that pleasure craft are covered by the Limitation of Liability Act.

I. FACTS

On February 28, 1988, Roger and Bonnie Kays ("the Kays") rented a jet ski from Keys Jet Ski, Inc. for thirty minutes. This jet ski, a Kawasaki 650, is seven feet in length, has a sixty-five horsepower engine, and is capable of reaching speeds in excess of thirty miles per hour. ¹ Keys Jet Ski, Inc., Sunset Water Sports, and Richard C. Welter ("the appellants") share ownership of the jet ski. According to the Kays, an employee of Keys Jet Ski gave the Kays instructions on operating the jet ski, but did not give instructions on safety rules or precautions. While the Kays' 13-year-old son, Kevin, operated the jet ski in crowded waters off Smathers Beach in Key West, Florida, it collided with the VITAMIN C, a 25-foot open fisherman with a 200 horsepower outboard engine. Kevin Kays suffered injuries in this accident that resulted in his death on March 4, 1988.

II. PROCEDURAL HISTORY

On August 24, 1988, the appellants filed a complaint seeking exoneration from or limitation of liability pursuant to the Limitation of Liability Act, 46 U.S.C.App. Secs. 181-188. Upon filing the complaint, the appellants deposited $3,319 in the registry of the district court, representing the value of the jet ski and establishing the limitation fund.

On August 30, 1988, the district court entered an order for appraisal and monition and a separate order for an injunction. The order of monition required anyone with claims against the appellants to file such claims in the limitation proceedings on or before November 1, 1988. The injunction also enjoined anyone who had claims as a result of the incident from proceeding in any other forum against the appellants. Consequently, on October 25, 1988, the Kays filed a claim and an answer in the limitation proceeding based on the wrongful death of their son.

The Kays moved to dismiss the appellants' limitation claim, contending that the Limitation Act should not be applied to accidents involving pleasure craft. On January 6, 1989, the district court granted the motion to dismiss on the basis that the Limitation Act does not apply to pleasure craft in general or jet skis in particular. In re Keys Jet Ski, Inc., 704 F.Supp. 1057 (S.D.Fla.1989). On January 17, 1989, the appellants first appealed from the order granting the motion to dismiss.

The Kays also filed a motion seeking dissolution of the injunction which the district court granted on February 8, 1989. The appellants appealed from that order on February 2, 1989. The two appeals are consolidated.

III. CONTENTIONS OF THE PARTIES

The appellants contend that the district court erred in characterizing the jet ski as a pleasure craft for the purpose of applying the Limitation Act and in finding that the Limitation Act does not apply to pleasure craft. The appellants also contend that the district court erred in lifting the injunction entered pursuant to Supplemental Rule F. Fed.R.Civ.P.Supp. F(3).

The Kays contend that the district court properly found the jet ski to be a pleasure craft, and that this finding is one of fact subject to the clearly erroneous standard. The Kays also contend that the district court properly held that pleasure craft are not covered by the Limitation Act. In addition, the Kays argue that the district court's order should be affirmed because the jet ski owners had "privity or knowledge" of the negligence that caused Kevin's death, thereby excluding them from the Limitation Act's protection.

IV. ISSUES

The issues presented are: (1) whether pleasure craft are covered by the Limitation Act; (2) whether a jet ski is a "vessel" within the meaning of the Limitation Act; (3) whether the district court's order should be affirmed on the alternative ground that the cause of action alleged against the appellants inherently requires their privity or knowledge; and (4) whether the district court erred in lifting the injunction.

V. DISCUSSION

The Kays contend that whether the jet ski is covered under the Limitation Act is a mixed question of law and fact. We disagree. The proper interpretation of a statute as required by the issues here, is purely a question of law. Burns v. United States ex rel. Internal Revenue Service, 887 F.2d 1541 (11th Cir.1989). Because the district court's dismissal is based on conclusions of law, our review is plenary. McDonald v. Hillsborough County School Board, 821 F.2d 1563, 1564 (11th Cir.1987). Even if the issue is correctly characterized as a mixed question of law and fact, the "[c]learly erroneous standard does not apply to findings made under an erroneous view of controlling legal principles." Harris v. Birmingham Board of Education, 712 F.2d 1377, 1381 (11th Cir.1983).

A. Purpose of the Limitation Act

Congress enacted the Limitation of Liability Act in 1851 to promote investment in the domestic commercial shipping industry. ² The Limitation Act restricts the financial liability of a ship owner to the value of the vessel and its freight when the vessel is involved in an accident caused without the ship owner's "privity or knowledge." ³ In its first case interpreting the Limitation Act, the Supreme Court explained its purpose as follows:

The great object of the law was to encourage ship-building and to induce capitalists to invest money in this branch of industry. Unless they can be induced to do so, the shipping interests of the country must flag and decline. Those who are willing to manage and work ships are generally unable to build and fit them. They have plenty of hardiness and personal daring and enterprise, but they have little capital. On the other hand, those who have capital, and invest it in ships, incur a very large risk in exposing their property to the hazards of the seas, and to the management of seafaring men, without making them liable for additional losses and damage to an indefinite amount.

Norwich Co. v. Wright, 80 U.S. (13 Wall) 104, 121, 20 L.Ed. 585 (1871).

B. Application to Pleasure Craft

In its original form the Limitation Act expressly stated that it did not apply to "any canal boat, barge, or lighter, or to any vessel of any description whatsoever, used in rivers or inland navigation." ⁴ Act of Mar. 3, 1851, ch. 43, Sec. 7, 9 Stat. 635. In 1886, Congress amended the Act to extend its application to "all sea-going vessels, and also to all vessels used on lakes or rivers or in inland navigation, including canal-boats, barges, and lighters." 24 Stat. 80 (codified at 46 U.S.C.App. Sec. 188). Following the Act's amendment in 1886, one district court stated that "the evident purpose of the amendment was to make the statute applicable to all vessels, irrespective of the purpose to which they are put." In re Liebler, 19 F.Supp. 829, 832 (W.D.N.Y.1937) (the "FRANCESCA"). See Warnken v. Moody, 22 F.2d 960, 962 (5th Cir.1927) (limitation of liability allowed to owner of thirty-foot pleasure craft). Congress's failure to limit the applicability of the Act when additional amendments were made in 1935, 1936, and 1984, supports the proposition that Congress intended the Act to apply to "any vessel." ⁵

Despite the logical appeal of applying the Limitation Act only to commercial vessels, the language of the statute and Congress's failure to so amend the Act eliminates the necessity for us to determine whether the jet ski is a commercial vessel. Neither the statute nor the cases support the automatic application of the Limitation Act only to vessels denominated as "commercial." See Foremost Ins. Co. v. Richardson, 457 U.S. 668, 676, 102 S.Ct. 2654, 2659, 73 L.Ed.2d 300 (1982) ("Congress defines the term 'vessel,' for the purpose of determining the scope of various shipping and maritime transportation laws, to include all types of waterborne vessels, without regard to whether they engage in commercial activity.").

Recent cases have criticized the Limitation Act as "hopelessly anachronistic." See e.g. University of Texas Medical Branch at Galveston v. United States, 557 F.2d 438, 441 (5th Cir.1977), cert. denied, 439 U.S. 820, 99 S.Ct. 84, 58 L.Ed.2d 111 (1978). The application of the Limitation Act to pleasure craft has also been criticized as illogical. Lewis Charters, Inc. v. Huckins Yacht Corp., 871 F.2d 1046, 1054 (11th Cir.1989) ("owners of pleasure vessels may limit their liability under the Limitation Act [although] ... there is little reason for such a rule."). In Gibboney v. Wright, 517 F.2d 1054, 1057 (5th Cir.1975), the Fifth Circuit acknowledged that application of the Limitation Act to pleasure craft could produce "drastic" results, but recognized that case law and legislative intent required application of the Limitation Act to pleasure craft. ⁶ "[T]he weekend sailor is...