Lawyers’ Corner: Boat Ownership in Williams v Kennedy

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In a boat injury accident, a lot rides on the question of who owned the boat. State laws assign liability for injuries caused by a ship to its owner. But boat ownership isn’t always as clear as trial attorneys might like.

Questions of boat injury liability can be complicated. Boat insurance is not mandatory in Michigan. Whether a particular insurance policy will apply depends greatly on the policy holder’s liability. And that, in turn, depends on boat ownership. A recently published Michigan Court of Appeals decision, Williams v Kennedy, explains.

On September 1, 2013, Madison Williams, a child, was struck by a boat causing the partial amputation of her right foot. Madison’s mother, Kellie Williams sued Defendant Mark Kennedy, who was piloting the vessel, and Michael Metcalf, who she claimed was the owner.

On August 26 – 6 days before the accident – Metcalf sold the vessel in question to Kennedy for $45,000. In exchange for the money, Metcalf signed the boat’s “Watercraft Certificate of Title” including the “Title Assignment by Seller” and gave the boat and its title to Kennedy. Kennedy took the Watercraft Certificate of Title to the Secretary of State office on August 28 and August 30, but long lines prevented him from applying for a transfer of legal title. After the accident, Kennedy went back and obtained the transfer on September 5, 2013, based on the purchase date of August 26, 2013.

Boat Ownership and Liability

MCL 324.80157 states:

“The owner of a vessel is liable for any injury occasioned by the negligent operation of the vessel, whether the negligence consists of a violation of the statutes of this state, or in the failure to observe such ordinary care in the operation as the rules of the common law require. . . .”

Thus, liability for Madison’s injuries depended on who owned the boat at the time of the accident. Boat ownership, including the transfer of title, is governed by the Natural Resources and Environmental Protection Act (NREPA). MCL 324.80304 states:

“(1) A person, except as provided in section 80306, shall not sell or otherwise dispose of a watercraft without delivering to the purchaser or transferee of the watercraft a certificate of title with such assignment on the certificate of title as is necessary to show title in the purchaser.

(2) A person shall not purchase or otherwise acquire a watercraft without obtaining a certificate of title for it in the person’s name pursuant to this part.”

To complete the transfer of legal title, the application for a certificate of title must be filed with the Secretary of State “15 days after the date of purchase or transfer.” The application must include the certificate of title together with the assignment.

There was no question whether any of these provisions had been satisfied in the transaction between Metcalf and Kennedy. Metcalf successfully delivered the assigned certificate of title to Kennedy at the time of the sale. Kennedy took his time getting to the Secretary of State office, but was well within the 15 day limit set by the statute.

Does Boat Ownership Change Upon Sale or Transfer of Title?

The key question for Metcalf was whether he was still considered the owner of the boat that hit Madison on September 1, 2013. In legal terms, the question was whether boat ownership changed upon sale or the legal transfer of title by the Secretary of State office.

On August 2, 2016, the Michigan Court of Appeals ruled in favor of the sale. Even though Metcalf was still listed as having legal title of the vessel in the Secretary of State register on September 1, the court determined that he was no longer the owner. In making its decision, the court relied on MCL 324.80307(1), which states in part:

“If satisfied that the applicant is the owner of the watercraft and that the application is in the proper form, the secretary of state shall issue a certificate of title.”

The court determined:

“This sentence suggests that ownership precedes completion of legal transfer of title with the Secretary of State. Indeed, legal transfer is impossible if the Secretary of State is not satisfied that “the applicant is the owner” of the watercraft. The statute implies, then, that Kennedy, not Metcalf, was the owner at the time of the accident.”

The court’s decision was supported by the NREPA’s definition of owner as “a person who claims or is entitled to lawful possession of a vessel by virtue of that person’s legal title or equitable interest in a vessel.”

Once the sale was completed on August 26, Metcalf had no legal claim to lawful possession of the vessel. Nor did he have an equitable interest by virtue of the legal title registration with the Secretary of State. He had no good faith claim of ownership since he expressly transferred his interest in the boat to Kennedy at the time of the sale.

If there was any question as to the validity of the sale, the court reasoned, it would have prevented the Secretary of State from transferring the legal title of the boat ownership to Kennedy on September 5. Because there were no problems with the transfer, Metcalf clearly terminated his ownership interest at the time of sale.

The result of all this was that Metcalf could not be sued as an owner of the vessel. By transferring his boat ownership to Kennedy, Metcalf protected himself from any liability for Kennedy’s negligent behavior following the sale. And that included Madison’s injuries.

David Christensen is a boat accident attorney at Christensen Law in Southfield, Michigan. He has been helping the victims of boating injuries for over 20 years. If your client has been injured in a boat collision, contact Christensen Law today for a referral.