WASHINGTON — A house that floats on the water and has no power to move on its own is a home, not a vessel, the Supreme Court ruled Tuesday.
The 7-2 decision upholds laws in California, Washington and other states that say floating homes that are attached to the shore and do not travel are governed by local laws applying to homes, not by federal admiralty law regulating ships and boats.
The ruling could have an impact in Egg Harbor Township, as it hosts the area of Sea Village off the Margate Bridge Causeway. These homes could now be taxed if they fit the criteria of homes.
Mayor James “Sonny” McCullough said it is the only area in the region with houseboats docked on the water. But because of recent damage to the properties from Hurricane Sandy, the mayor said he doubted the new ruling would provide much benefit for the township, because the property values would be fairly low.
“Sea Village is one of a kind,” he said. “I can’t see a big impact on the municipality.”
McCullough also said the new taxes would be a burden for the residents, because they have had to deal with damage to their homes and already pay dock fees.
Homeowners are able to rely on an array of state and local laws that protect property owners, and, with this decision, the same is now true for the owners of moored casinos and restaurants. State laws give some protection to store owners for accidents and injuries suffered by their customers or their employees. But federal admiralty law gives more generous protections to sailors and harbor workers who are injured working on vessels.
In Tuesday’s opinion, the high court narrowed somewhat the definition of a vessel.
It is not “anything that floats,” explained Justice Stephen G. Breyer, but something “actually used for transportation.”
The court ruled for Fane Lozman, who had parked his two-story floating home at a marina in Riviera Beach, Fla. City officials tried to evict him from the marina and later sued him under federal admiralty law over unpaid docking fees. They eventually seized the structure as an abandoned vessel and had it destroyed. In upholding this decision, a federal judge and the U.S. Court of Appeals in Atlanta said the floating home was a vessel because it was capable of moving on the water, and indeed, had been towed several times, including one trip of 200 miles.
Lozman appealed, arguing his home should have been protected under ordinary real estate laws, not classified as a ship subject to being seized.
The Supreme Court, in Lozman v. City of Riviera Beach, agreed and said a “reasonable observer” looking at the plywood box home would conclude it was a home, not a vessel. It was not “designed to any practical degree for carrying people or things on water,” Breyer said. He noted the home had no rudder, no steering mechanism and no source of propulsion.
The justices sent the case back to Florida, where Lozman can seek to recover a $25,000 bond taken out before his home was seized and destroyed.
“Our clients are thrilled. This ‘reasonable observer’ test may seem like an obscure technicality, but it’s big news for hundreds of floating homeowners we represented in Sausalito and Seattle, and for hundreds of others throughout the nation,” said Michelle Friedland, a lawyer in San Francisco. “They live in homes that are designed to remain stationary and are affixed to the land through electrical and other utility connections.”
Judy Patterson, executive director of the American Gaming Association, said the ruling “will have a positive impact on our industry, framing the right of riverboat casino operators and ensuring they do not face overly broad liability, as would have been the case if the Supreme Court had ruled the other way.”
Breyer also said that a vessel, once moored, can lose its legal status as a vessel. “For example, an owner might take a structure that is otherwise a vessel (even the Queen Mary) and connect it permanently to the land for use, say, as a hotel,” he said.
In dissent were Justices Sonia Sotomayor and Anthony M. Kennedy. They said Breyer’s “reasonable observer” standard will likely cause confusion in the lower courts.
Staff writer Joel Landau contributed to this report.