Maritime contract with state choice of law provision: Does the laches doctrine or state statute of limitations apply? The answer is both!

Maritime contract with state choice of law provision: Does the laches doctrine or state statute of limitations apply? The answer is both!

By: Tyler Loga

McGowan v. Pierside Boatworks, Inc., No. 2:16-cv-3529-PMD, 2017 U.S. Dist. LEXIS 24519 (D.S.C.  Feb. 22, 2017).Defendant, Pierside Boatworks, Inc. (“Pierside”), performed repairs on the “True Love,” a sailboat owned by the plaintiff, Francis X. McGowan. When McGowan did not pay the full cost of repairs, Pierside filed a maritime lien on the vessel with the United States Coast Guard. McGowan then filed this action to remove the lien. Pierside subsequently filed a counterclaim seeking the amount owed. McGown then filed this 12(b)6 motion to dismiss the counterclaim on the grounds that it is time- barred.To determine the outcome of the McGown’s motion to dismiss, the court looked to the interpretation of the contract for repairs on the True Love to determine what statute of limitations would apply. McGown argued that because a section of the contract titled “VENUE” provides that “[t]his Agreement shall be construed under the laws of the state of South Carolina,” only South Carolina law applies. By contrast, Pierside points to another section of the contract titled “MARITIME LIEN” which provides: “[t]his Agreement is an Admiralty and Maritime agreement under the General Maritime Laws, Statutes [sic]; and Codes of the United States of America…” The court held that these two provisions together in the same contract read in pari materiae, results in admiralty jurisdiction, and the application of general maritime law and South Carolina law applied as a supplement.For the purposes of the laches doctrine, general maritime law looks to the most similar state statue of limitations to establish a benchmark of timeliness or untimeliness. See Venus Lines Agency, Inc. v. CVG Int’l Am. Inc., 234 F.3d 1225, 1230 (11th Cir 2000). The court here found that it was the intent of the parties to use South Carolina law as the benchmark, and therefore the applicable statute of limitations is three years.Applying the analysis to this case, there is a presumption that Pierside’s claims are untimely because the last invoice to McGovern was in 2012. However, any ruling on whether the laches doctrine applies would be inappropriate because the court must consider the remainder of the laches factors set forth in Dann Ocean Towing, Inc. The complaint here does not contemplate the additional factors, therefore the McGown’s motion to dismiss must be denied.