Morgan v. Water Toy Shop, Inc.
3:16-cv-02540
D.P.R.Mar 30, 2018Background
- Plaintiffs Morgan and Kennedy rented a jet ski in Isla Verde, Puerto Rico; they and the alleged driver (Castro) signed a Rental Agreement and Declaration of Fitness before boarding.
- The Rental Agreement included an extensive exculpatory waiver releasing the owner/operator from liability for negligence (except gross negligence) and statements that renters were trained and would follow instructions.
- While drifting near buoys, plaintiffs’ jet ski was struck at high speed by a jet ski operated by Castro, who failed to appear in the case and is in default.
- Defendants (Water Toy Shop and its owner Axel Acosta, and insurer Ironshore) moved for summary judgment arguing federal maritime law governs, the waiver bars plaintiffs’ claims, and there is no causal link between alleged regulatory violations and the collision.
- Plaintiffs argued Puerto Rico law (Articles 1802/1803 and Law 430) imposes direct or vicarious liability on the owner/operator and that the waiver is unenforceable.
- The district court granted summary judgment for defendants, enforcing the waiver (except as to Acosta Water Sports) and finding no adequate causal nexus between asserted regulatory violations and plaintiffs’ injuries.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Governing law | Puerto Rico tort law and Law 430 apply to impose liability on owner | Federal admiralty/maritime law governs; state law cannot impose conflicting standards | Admiralty law governs; Puerto Rico law may supplement only if not locally inapplicable or preempted |
| Vicarious/strict liability under Law 430 | Owner is vicariously liable when vessel operated with owner’s tacit/express authorization | Limitation of Liability Act and federal maritime negligence standard preempt Law 430’s strict/vicarious rule | Law 430 cannot impose owner liability contrary to federal Limitation of Liability Act; plaintiffs cannot rely on Law 430 to impose vicarious liability absent owner negligence |
| Causation from alleged regulatory violations | Violations of permit/license/safety rules made collision foreseeable and caused harm | No evidence those regulatory violations were the adequate/proximate cause of the collision | Plaintiff failed to show foreseeability/adequate causal link; alleged regulatory breaches do not support liability |
| Enforceability of exculpatory waiver | Waiver invalid as against public policy, ambiguous, or adhesive; does not except "fault" | Waiver is clear, voluntary, not adhesion for recreational activity, and valid except for gross negligence | Waiver enforceable: bars negligence claims against Water Toy and Axel Acosta (but not Acosta Water Sports); gross negligence claims limited to Castro |
Key Cases Cited
- Yamaha Motor Corp., U.S.A. v. Calhoun, 516 U.S. 199 (admiralty jurisdiction brings substantive maritime law)
- Kermarec v. Compagnie Generale Transatlantique, 358 U.S. 625 (shipowner owes passengers reasonable care under circumstances)
- Kossick v. United Fruit Co., 365 U.S. 731 (federal maritime law may be supplemented by local law if not disturbing uniformity)
- Guerrido v. Alcoa Steamship Co., 234 F.2d 349 (admiralty/maritime law applies in Puerto Rican waters except where locally inapplicable or inconsistent legislation applies)