On May 6, 2001, at 1204 hours Pacific daylight time, a Piper PA-24-260, N8710P, sustained substantial damage when it collided with a fence during a forced landing at Napa County Airport, Napa, California. The airplane was being operated by Amphibious Adventures, Inc., under the provisions of 14 CFR Part 91, and flown by a certified flight instructor, in the right seat, who was providing instruction to a private pilot, in the left seat. The instructional flight originated from San Rafael Airport, San Rafael, California, approximately 1130. Neither the two pilots nor the two rear-seated pilot-rated passengers were injured. Visual meteorological conditions prevailed and no flight plan had been filed. The flight instructor stated he was providing an airplane checkout to the left seat pilot. The left seat pilot was making a touch-and-go on runway 18R. After landing and taking off, the airplane's engine sputtered, and then quit between 150 and 200 feet above ground level. The flight instructor took control of the airplane and landed straight ahead on the remaining runway. The airplane touched down near the end of the runway, rolled across a field, struck a fence, and stopped in a ditch. The flight instructor stated that during the preflight inspection, all four fuel tanks were sumped to check for fuel quality and no discrepancies were found. All four fuel tanks were checked for quantity. The two auxiliary fuel tanks were full and the two main tanks were half full, as observed by the fuel gauges. The flight instructor further stated that takeoffs and landings are to be made with fuel drawn from the main tanks only. The airplane had been flying for about 35 minutes at the time of the accident. Upon postaccident inspection, the flight instructor noted that the fuel bladder had pulled away from the tank and may have caused the fuel gauge to give an erroneous reading. A Federal Aviation Administration inspector examined the airplane and confirmed fuel and oil were in the engine, with no obvious discrepancies noted.