Legal Blog

Defending Maritime Cases: The Shipowner’s Limitation of Liability Act

Many seafaring ship owners and shipping companies are probably familiar with the federal Shipowner’s Limitation of Liability Act (“LOLA”), 46 U.S.C. §§ 30505-30513. Arguments have been made that LOLA is applicable to small crafts, as well. See, for example, Keys Jet Ski, Inc. v. Kays, 893 F. 2d 1225 (11th Cir. 1990) (“Absent congressional determination that similar small pleasure craft are not entitled to protection under the Limitation Act, we hold that a jet ski is a “vessel” covered by the Limitation Act.”).

LOLA was originally enacted to put American shipowners on the same footing as other shipowners from other commercial seafaring nations, principally Great Britain. LOLA permits a shipowner to limit his or her liability to the post-accident value of the vessel. So, if the vessel has collided with another and, after the collision/allision, the vessel is worth $100,000, the vessel owner can limit his or her liability to $100,000 if the statutory requirements of the LOLA are satisfied.

Defending Maritime Cases: What is the Limitation of Liability Act?

Various courts have held that the LOLA applies to numerous types of maritime claims including those related to personal injuries, deaths, fire, collisions/allisions, sinking, salvage, lost cargo, and more. In general, these can be divided into negligence claims under statutes like the Jones Act and common law claims of unseaworthiness. Louisiana courts have held that LOLA applies to both negligence and unseaworthiness cases. See Graham v. Offshore Specialty Fabricators, 37 So. 3d 1002 (La. App. 1st Cir. 2010).

As noted, the LOLA allows a vessel owner to limit his/her liability to the post-accident value of the vessel and pending freight. Section 30505(a) states, in pertinent part:

“(a) In general—Except as provided in section 30506 of this title, the liability of the owner of a vessel for any claim, debt, or liability described in subsection (b) shall not exceed the value of the vessel and pending freight.”

The key to a successful claim under LOLA is showing that the owner of the vessel had no knowledge of the dangerous condition.

Section 30505(b) state in pertinent part:

“(b) Claims subject to limitation—Unless otherwise excluded by law, claims, debts, and liabilities subject to limitation under subsection (a) are those arising from … any act, matter, or thing, loss, damage, or forfeiture, done, occasioned, or incurred, without the privity or knowledge of the owner.”

Furthermore, when a personal injury or death occurs, LOLA imputes the privity or knowledge of the ship’s master or captain or agent at the beginning of the voyage to the vessel’s owner.

LOLA applies to “seagoing vessels and . . . all vessels used on lakes or rivers or in inland navigation.” A LOLA claim can be filed in a federal district court, but can also be asserted as an affirmative defense/counterclaim in Louisiana state court. See Howell v. American Cas. Co. of Reading, 691 So. 2d 715 (La. App. 4th Cir. 1997).

Defending Maritime Cases: Privity or Knowledge Under LOLA

The burden of proving lack of privity or knowledge falls on the vessel’s owner. It can be difficult to prove. As an example, in Graham v. Offshore Specialty Fabricators, above, the jury held that the vessel owner proved lack of privity/knowledge, but that part of the verdict was overturned on appeal. The Court of Appeals admitted that no evidence was presented that the vessel owner had actual or constructive knowledge of holes in the decking of the vessel. However, the Court of Appeals essentially charged the vessel owner with being willfully blind to hazards. As such, the court held: “Limitation of liability is not available to a vessel owner who takes a ‘hands-off’ approach and totally fails to evaluate a vessel’s seaworthiness or to take other steps to address potential safety issues.”

Despite the sometimes difficult burden of proving lack of privity/knowledge, a LOLA defense should still be contemplated when a plausible case can be made. Examples might include mechanical failure or a manufacturing defect.

Louisiana Maritime Defense

If you need additional information, contact Louisiana defense attorney Kristin M. Lausten. Ms. Lausten has experience in maritime law and defends complex tort litigation in both state and federal courts. She can be contacted at 504.377.6585 or via email at kristin@kristinlausten.com.

The author may be contacted at:

Kristin M. Lausten

New Orleans, Louisiana
Telephone: 504.377.6585
E-mail: kristin@kristinlausten.com
Web: www.kristinlausten.com

This article is provided as an educational service for general informational purposes only. The material does not constitute legal advice or rendering of professional services.