By Daniel Wiessner

ALBANY, N.Y., Nov 29 (Reuters) - New York state is not liable for the 20 deaths and nine injuries that resulted after a Lake George tour boat capsized in 2005, the state's top court has ruled.

The Court of Appeals on Thursday unanimously held that the state had no "special duty" to the 47 people who boarded the Ethan Allen before it sank. Federal investigators found that state inspectors had significantly overestimated the boat's maximum capacity.

State law requires inspectors to certify the safety of tour boats, including the maximum number of passengers allowed onboard.

"However, these statutory obligations do not create a special duty of care owed by the state to particular passengers," Chief Judge Jonathan Lippman wrote for the court.

When the Ethan Allen was first inspected by the state in 1979, its passenger maximum was set at 48. The boat was inspected annually, and it was substantially modified in 1989, the court said. Inspectors "rubber stamped" the boat's capacity despite the modifications, the court said.

On Oct. 2, 2005, 47 passengers and the captain, Richard Paris, filled the boat, when it capsized. Twenty passengers died and nine were injured.

According to a 2006 report from the National Transportation Safety Board, the boat was capable of safely carrying only 14 passengers and it sank because its total load was more than three times what it should have been.

The boat's owner, Shoreline Cruises, and Paris were convicted in 2007 of criminal negligence and fined $250 each. Shoreline subsequently settled civil claims filed by 17 of the passengers and their relatives for an undisclosed sum.

Nine survivors and the relatives of the 20 people who died sued the state in 2009, claiming inspectors were negligent. The state claimed it had sovereign immunity.

Court of Claims Judge James Ferreira in 2010 denied the plaintiffs' motion to dismiss the state's immunity defense. The Appellate Division, Third Department, last year reversed, finding that the boat inspectors may have failed to exercise discretion in certifying the boat's capacity.

The Court of Appeals on Thursday disagreed.

"Although the law is clear, the upshot is that, regardless of any negligence on the part of the state, the victims of this disastrous wreck are essentially left without an adequate remedy," Lippman wrote.

The plaintiffs' attorney, James Hacker, said he and the plaintiffs were disappointed.

The lesson is that "when any safety inspection performed by New York state is incorrect and injures somebody, (the victims) have absolutely no remedy," he said.

The Attorney General's office declined to comment.

The case is Richard Metz v. State of New York, New York State Court of Appeals, No. 208.

For the plaintiffs: James Hacker of Hacker Murphy.

For the state: Andrew Bing of the state Attorney General's office.

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