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JUDGE SINKS CITY BID TO CAP FERRY PAYOUT

In a ruling that could potentially cost the city billions, a federal judge yesterday refused to limit liability claims in the 2003 Staten Island Ferry crash that killed 11 people.

“Now [the city] must take full responsibility for the negligence of what happened that day,” said Kathy Healy, 45, whose husband, John, died in the crash. “It’s the first step in the right direction.”

”It’s about time. We can finally move to the final stage of the case,” said Lloyd Joseph, 65, a construction worker who has undergone three surgeries as a result of the crash.

The city had sought to cap damages on outstanding cases at $14.4 million – the value of the Andrew J. Barberi ferry – based on a 19th century maritime statute.

The ferry slammed into a concrete maintenance pier on Oct. 15, 2003, after Capt. Richard Smith, who was addicted to painkillers and suffering from exhaustion, passed out at the wheel. Eleven people were killed and scores more injured.

The maritime statute under which the city sought protection says the owner of a vessel is only responsible for the price of the boat itself – if they can prove they didn’t have any knowledge of the circumstances that caused the accident.

But Brooklyn federal Judge Edward Korman ruled that the city Department of Transportation, which owns and operates the ferry, knew full well its “two-pilot rule” was never properly enforced. The rule says that two pilots must be in the pilothouse at all times. Only Smith was at the wheel on the day of the accident.

But lawyers for the city shoved the culpability for the accident back on the ship’s captain yesterday, and said they were considering an appeal.

Since the crash, 119 of 180 claims have been settled for a total of $27.6 million. Sixty-five claims are pending, including the cases of nine people who died on board. Two wrongful death cases have already been settled.

Plaintiffs attorneys believe the remaining lawsuits will cost the city tens of millions of dollars in payouts, despite the fact that the damages named in the remaining lawsuits total $3 billion.

stefanie.cohen@nypost.com