Sunken Ship Subject to Admiralty Jurisdiction

The Puerto Rico Ports Authority v. Umpierre-Solares, 2006 U.S. App. LEXIS 18797 (1st Cir. July 27, 2006)

Terra Bowling, J.D.

The U.S. Court of Appeals for the First Circuit has ruled that the Puerto Rico Ports Authority (PRPA) is barred from enforcing a contract to raise and dispose of a sunken vessel. Additionally, the court held that the dispute was subject to admiralty jurisdiction, since the ship was obstructing passage in navigable waters.

Background
“La Isla Nena” sank off the coast of Puerto Rico in 1989 during Hurricane Hugo. In 1991, the United States Army Corps of Engineers (Corps) prompted the owner, the PRPA, to remove the vessel. The PRPA contracted to have the boat removed and disposed of by the defendants, which included a marine salvage company, Divers Service Center (DSC).

In 1992, DSC raised the vessel and moored it at a shipyard, but was unable to obtain the permits required to resink the ship. The PRPA and DSC modified the contract to dispose of the vessel in the “most convenient and speedy way possible.”1 DSC failed to take any action, however, and the vessel subsequently sank after a storm in 1998.

Admiralty Jurisdiction
In 2003, PRPA brought suit in a Puerto Rican court to require the defendants to dispose of the vessel. DSC removed the matter to federal district court based on the exclusive admiralty jurisdiction of the federal courts. The district court held that the PRPA was barred from enforcing the contract, because it waited eleven years to bring the suit.

The PRPA appealed the ruling, citing lack of jurisdiction. The PRPA claimed that the case had been improperly removed to federal court, since the contract involved a “dead ship” to which admiralty jurisdiction did not apply. The dead ship doctrine is applicable when “[a ship’s] function is so changed that it has no further navigation function.”2

The First Circuit declined to determine whether the ship was, in fact, a “dead” or “live” ship. The court agreed with the marine company that in either case the claim was subject to admiralty jurisdiction, because the contract related to the removal of an obstruction to navigation in San Juan Bay.

Laches
The PRPA also appealed the district court’s ruling that it had waited too long to bring its claim. In making its decision, the district court had applied the doctrine of laches. Laches is an equitable doctrine that bars a lawsuit when one party has neglected to enforce a right for an unreasonable period of time, prejudicing the other party.

The PRPA argued that the court should have applied a Puerto Rican law which provided a 15-year statute of limitations for lawsuits related to professional services contracts. The court disagreed, noting that federal or state statutes of limitations do not apply in admiralty suits. The court did point out that the time limitations in federal or state laws could be used “to establish burdens of proof and presumptions of timeliness and untimeliness.” However, the main inquiry is “whether the plaintiff’s delay in bringing suit was unreasonable and whether defendant was prejudiced by the delay.”3

The court noted that the PRPA knew since 1992 that La Isla Nena had not been resunk. Despite that knowledge, it made no attempt to force DSC to remove the vessel. In addition, the court found that the PRPA failed to provide a reasonable explanation for the lack of inaction. The eleven-year delay was therefore unreasonable. The court affirmed the ruling in favor of DSC and ordered the PRPA to pay for the costs of the litigation.