If you’ve been injured in an accident on the water, whether in a collision between two vessels, an allision where one vessel hits a stationary object, or any injury while you’re a passenger on a boat, you might receive a certified letter in the mail that a Petition for Limitation of Liability has been filed.

This legal action can severely limit your ability to receive full compensation for your injuries and losses, so it is important to understand what you need to do next, because your time to act is limited. It is highly advisable to contact an attorney who understands how to effectively answer a Petition for Limitation of Liability. If the court grants the petition, the funds available to pay claims will be limited to the current value of the vessel, regardless of the amount of insurance coverage available, and those injured may be able to receive only a tiny fraction of what they deserve. In most cases, when you receive notice that a Petition for Limitation of Liability has been filed, you will want to take legal action to fight against it.

In the certified letter, there will be a copy of the Petition for Limitation of Liability that was filed and an order from the judge assigned to handle the case. The order by the judge is very important because it will have set forth deadlines and conditions and sets the value of the Limitation Fund.

What Does This All Mean and What Needs to Be Done?

The judge will set a deadline for all claims that must be filed with the court in accordance with Supplemental Rules for Certain Admiralty and Maritime Claims. What does that mean? The owner of the vessel who is filing the petition must send by certified mail or hand delivery notice of the Petition for Limitation of Liability filed, order(s) by the court and deadline to file a claim to all individuals, entities involved in the incident. The owner must also publish the Notice of Petition for Limitation of Liability in a local newspaper as ordered by the court.

When you receive notice of the Petition, you must file an answer and claim by the deadline set by the judge. If you don’t file a claim and an answer by the deadline, you will be defaulted. You will be forever barred from bringing any other claim in the future. Judges have strictly applied the deadline and have barred people from bringing untimely claims.

All people, estate(s) or entities who file the claim and answer become claimants/defendants and are part of one lawsuit. The answer will usually deny the allegations of the Petition for Limitation of Liability and the Claim will assert cause(s) of action against the vessel owner for personal injury or wrongful death.

Understanding the Impact of Filing a Petition for Limitation of Liability

The judge will have entered the order based on the appraiser’s report submitted by the vessel owner. The report will appraise the fair market value of the vessel and any pending freight. If, for example, the appraisal of the fair market value and pending freight comes to $10,000.00 and the Judge approves it, then the value of the Limitation Fund would be set at $10,000.00.

That means that even if claims of all those who were injured in the incident were valued at millions of dollars and the vessel owner has insurance with millions of dollars in coverage, if the Petition for Limitation is granted, the maximum amount that vessel owner would have to pay out would be only $10,000.00, the value of the Limitation Fund.

In addition, the judge will have essentially put a freeze on the further prosecution of any actions, suits and proceedings commenced involving the incident. If any personal injury or wrongful death actions were filed against the vessel owner prior to the date of the court order, it will be stayed, meaning it will be frozen until the Petition for Limitation is over. This action restrains or stops any future personal injury or wrongful death actions against the vessel owner until the Petition for Limitation is over.

Victims Need to Act Promptly to Protect Their Rights

In a maritime accident, the filing of a Petition of Limitation is done solely for the benefit of the insurance companies. It shields the insurance company from accountability to the detriment of potential claimant(s) and limits their right to recover damages.

Due to the complex nature of a Petition for Limitation of Liability, it is important that you protect your rights and contact an experienced maritime attorney to start the process of preparing an answer to defeat the Petition.

Latti & Anderson LLP has successfully defeated Petitions for Limitation of Liability all around the country for over 60 years. If you have received notice of a Petition for Limitation of Liability and you’d like to discuss your options or you have any questions regarding a Petition for Limitation of Liability, please contact Latti & Anderson LLP.