Despite Remand and Order to Find Negligence Trial Court Limits Liability of Vessel Owner for Lack of Privity or Knowledge

In re Manhattan by Sail, 2018 U.S. Dist. LEXIS 157262

By Keith Accardo

In this limitation proceeding decision, the United States District Court for the Southern District of New York found that Manhattan by Sail and Shearwater Holdings’ (Petitioners) liability was limited in accordance with the Limitation Liability Act 46 U.S.C. § 30501 et seq. and Supplemental Rule F of the Federal Rules of Civil Procedure in an incident involving the negligence of a crewmember of the petitioner’s pleasure cruise sailing vessel. In this situation, the crewmember lost control of the sail’s halyard, which subsequently injured the Respondent. At the bench trial, the court ruled in favor of Limitation Petitioners, finding that the Respondent failed to establish that either Petitioners or the captain and crew of the vessel had been negligent.On appeal, (Manhattan by Sail, Inc. v. Tagle, 873 F.3d 177 (2d Cir. 2017)) Respondent raised the sole issue on whether the District Court should have applied res ipsa loquitur. However, the Second Circuit remanded the case with instructions that the District Court find Petitioners were negligent because the crewmember “failed to use the care and skill required of the seaman to avoid an obvious danger to a passenger,” and to determine whether Petitioner’s liability should “be limited to the value of the vessel.” In re Manhattan by Sail, Inc., 2018 U.S. Dist. LEXIS 157262.In its determination of liability on remand, the trial court examined the Limitation of Liability Act, which establishes that liability of a vessel owner is limited to the “owner’s proportionate interest in the vessel and pending freight” when harm occurs without the owner’s privity or knowledge. In this situation, the trial judge considered the privity and knowledge of the vessel’s managing officer instead, and determined there was no evidence indicating the officer knew or should have known of the crewmember’s negligence.Factual findings established that the vessel’s managing officer was not aboard the vessel on the day of the incident and had no actual knowledge of it. Additionally, the court noted the crewmember’s history of being a safe and proficient deckhand, and there had been no other injuries from improperly handling the lines from other crewmembers. Thus, there was no indication the halyard would be improperly handled and evidence did not establish that the managing officer nor the vessel’s captain, who was manning the wheel and also did not observe the incident, knew or should have known of any negligent operation of the vessel’s sailing lines. Additionally, because Respondent did not appeal any other factual findings, the crew was found to be competent and their procedures were considered reasonable.In consideration of these facts, the trial judge ruled the negligence was equivalent to a “spontaneous navigational error not caused by a lapse in hiring, equipment, or procedures,” which would ordinarily allow Petitioners to limit liability for two reasons. First, when a vessel owner uses due care in hiring a competent managing officer his obligations are exonerated, and he is able to rely on the officer’s proficiency. Secondly, the officer’s negligence should not be imputed to the vessel owner when the owner is so far removed that he cannot direct the officer’s actions. Therefore, the judge ultimately found Petitioners did not have privity or knowledge regarding the negligence and were properly allowed to limit their liability.Though the Second Circuit reversed the initial finding of the trial judge and remanded the case directing the trial court to find negligence, the vessel owner was still granted the relief sought. In doing so the judge stated: “The negligence identified by the Second Circuit is narrower and involves Biggins’s loss of control of the line, which, in the absence of other evidence of cause, proves that Biggins failed to handle the line with due care. There was no evidence presented at trial to connect that negligence to the Petitioners.” (2018 U.S. Dist. LEXIS 157262 at *12).