My Boat Sank Twice, and I Want to Sue My Boatyard. Where Do I Start?

I took my boat to a yard earlier this year and experienced a series of problems that ultimately led to the boat sinking at the dock — twice. The first sinking was due to a bad seal on the installation of a new fishfinder transducer, and the second incident was related to a failure to properly secure a raw water intake hose. I have reviewed my invoice (the only documentation I have from the yard) and there is no “exculpatory clause” or “red letter clause.” I am considering filing a lawsuit against them. Would I need to file the lawsuit in state or federal Court? What are some of the legal issues I should be concerned about?

Frequent readers of this column know that the first “legal issue” our reader should be concerned about is the question of whether to hire an attorney. He is considering a lawsuit in connection with a claim for maritime negligence, and he should at the very least consult with an experienced maritime attorney before proceeding any further. With that admonition in mind, we can offer him a few general observations that will be relevant to a case like this.            

First, our reader said nothing about an insurance claim, but assuming the boat was insured, he should immediately submit a claim to his insurance company.            

Many boat owners are concerned that an insurance claim will cause their rates to increase, and they are reluctant to submit a claim for minor damage. This may be true under certain circumstances, but a “minor” claim may evolve into a major claim as the extent of the damage is determined.            

In addition, a delay in tendering a claim to an insurance company may provide the company with a legitimate reason to deny the claim. It is always safer to tender the claim right away.            

Our reader is considering a lawsuit against the boatyard for damage caused by multiple sinkings that were presumably caused by the negligent work of the yard employees. As a preliminary matter, we should therefore take a look at exactly what we mean when we say someone is “negligent.”            

All of us owe a duty to those around us to act reasonably to avoid harming those around us. We are “negligent” when we breach that duty to act reasonably, and we can be held liable for the harm caused by our negligence.            

In the case of our reader, we must determine whether the quality of the work done by the boatyard was reasonable under the circumstances.            

Assuming our reader can prove that the boat sank as a direct consequence of something that was done — or not done — by the yard workers, it should be a simple matter to prove that the quality of the work was not reasonable under the circumstances. In many cases, however, the cause-effect relationship is not so clear, and expert testimony may be required to establish negligence.
             
On the question of whether the suit should be filed in state or federal court, our reader is actually able to choose either venue.
             
For a case such as this, involving property damage alleged to have been caused by negligent work on a boat, the case could be filed in federal court under that court’s Admiralty Jurisdiction. However, federal admiralty cases that do not involve an injured maritime worker are heard by a judge alone, without a jury.            

If the reader would like the case to be decided by a jury, he could file the lawsuit in state court. The state court would technically be obliged to apply federal maritime legal principles, but that has no bearing on its power to hear the case.            

Let’s look next at the “exculpatory clause” (also known as a “red letter clause”) that our reader was concerned about. This is a provision in a contract that calls for one party to hold the other party harmless from any liability for damages, even if the damage was caused by the negligence of the offending party.            

These provisions are generally enforceable in a contract for maritime services, so long as the language is prominent and unambiguous. Our reader indicated that there was no such provision in his agreement with the yard, so it is not a concern here.             
Given the facts presented by our reader, it does appear that he has a solid case against the yard for negligence, and he may bring the case in either state or federal court. We should note that the yard will not be off the hook if our reader is paid by his insurance company for the damage.            

Marine insurance policies include “subrogation” provisions, which require the boat owner to assign to the insurance company his or her right to file a lawsuit against a third party. In our reader’s case, the insurance company may step into the shoes of the boat owner and sue the yard under the subrogation and claim assignment provisions of the insurance policy.            

In view of the foregoing, it seems that our reader may pursue a recovery either through his insurance policy or through a lawsuit against the yard. Regardless, he should seek the advice of a qualified attorney, who will be better able to assist after reviewing all of the relevant facts.