Dock Leases: Can They Insulate the Landlord From Liability?

The Eighth Circuit Court of Appeal, in the matter of Sander v. Alexander Richardson Investments, 334 F. 3d 712 (8th Cir. 2003), was asked to address the issue of whether a lease which purports to release a dock owner from liability for damages to property or persons is enforceable.  In this case several vessels moored at a yacht club were destroyed due to a fire that originated aboard a vessel whose engine had been repaired by a yacht club employee.  The employee negligently installed a fuel pump which resulted in explosion and fire, which spread to neighboring vessels.  This occurred in St. Louis, Missouri.

The club defended by pointing to language on the owner’s slip agreement which it claimed exonerated it from liability for damages caused by the fire.  The clause stated, in part, that the landlord did not carry insurance covering tenant property, and that Ait will not be responsible for any injuries or property damage caused by or growing out of the use of the dock or harbor facilities and that the tenant releases the landlord from any and all liability.”  The trial court said no, the landlord cannot hide behind that language and was held liable.  The Eighth Circuit reversed and found that the landlord was protected by the exculpatory language in the lease and dismissed the owners claims.

In reaching this result the appellate court found that the lease was a maritime contract and controlled by admiralty law.  The admiralty law requires that the intent to release someone for liability for its own negligent acts must be clearly and unequivocally expressed.  The court reasoned that by stating it would be released from any and all liability that was enough to protect the yacht club.

The court also found that such exculpatory clauses in the context of dock leases did not contravene public policy by releasing a party from all liability

Last, the court found that the owners’ claims that they were required to sign the lease and that they were overreached were not substantiated.  The court found that the owners’ claims that they were less sophisticated than the landlord was not sufficient to void the lease.  It is not enough to assert that one party was less sophisticated than the other.  There must be some evidence that the party holding the superior bargaining power exerted that power in overreaching the less sophisticated party by, for example, engaging in fraud or coercion or by insisting on an unconscionable clause.

This case is important because of the general principals that it illustrates, that being that in the proper circumstances lessor can insulate itself from tort liability. However, be cautioned.  Had this case been decided by Louisiana courts it is likely that the owners would have succeeded.  The Federal (and State) courts in this district, whether applying Louisiana law or admiralty law, almost one hundred percent of the time require language much more explicit than “any and all liability” in order for the lessor escape liability.  In this District the language of the contract must explicitly state that the landlord is being released from the consequences of all acts, including its own acts of neglect.  If that explicit language is not included, Louisiana courts will not allow the landlord to escape liability.