In re Three Buoys Houseboat Vacations U.S.A., Ltd.

The Lake of the Ozarks is a large lake located entirely within the state of Missouri. The lake supports boat traffic, but a large dam blocks any vessel from navigating out of the lake into the Osage River. Three Buoys Houseboat Vacations U.S.A., Ltd. (Three Buoys) (defendant) offered chartered houseboats on the lake. In August 1987, a service vessel belonging to Three Buoys was sent out on the lake to perform a service call for one of its charters. The service vessel struck a houseboat that had not been chartered from Three Buoys. Two passengers on that houseboat were killed, three other passengers and a Three Buoys employee were injured, and the service vessel sank. A number of the victims of the accident (the victims) (plaintiffs) brought wrongful-death, personal-injury, and property-damage claims against Three Buoys in Missouri state courts. Three Buoys sought to avoid full liability for these claims by petitioning the federal district court for the protections of the Limitation of Liability Act, 46 U.S.C. § 181, a federal statute that limits liability for the operator of a vessel in maritime accidents to the amount of the salvage value of that vessel. The Limitation of Liability Act only applies to claims arising on navigable waters, however. The district court held that the Lake of the Ozarks was not navigable and that Three Buoys had not stated a claim. Three Buoys appealed.