In re Complaint of Aloha Jetski, LLC

920 F.Supp.2d 1143

In the Matter, of the Complaint of ALOHA JETSKI, LLC, a Hawaii Limited Liability Company, as Owner of a 2010 Yamaha VX110 Personal Watercraft and a 2011 Yamaha VX110 Personal Watercraft, for Exoneration from or Limitation of Liability, Plaintiff.

Civil No. 12–00548 LEK–RLP.

United States District Court, D. Hawai‘i.

Jan. 29, 2013.

Patrick F. McTernan, Cronin Fried Sekiya Kekina & Fairbanks, Honolulu, HI, for Claimant.

Catherine L. Aubuchon, Margery S. Bronster, Bronster Hoshibata, Attorneys at Law, a Law Corporation, Honolulu, HI, for Plaintiff.

AMENDED ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S EX PARTE MOTION FOR ORDER: 1) APPROVING AD INTERIM STIPULATION FOR VALUE, 2) DIRECTING THE ISSUANCE AND PUBLICATION OF REQUIRED NOTICE, AND 3) ISSUING INJUNCTION

LESLIE E. KOBAYASHI, District Judge.

Before the Court is Limitation Plaintiff Aloha Jetski LLC's (“Limitation Plaintiff”) Ex Parte Motion for Order: 1) Approving Ad Interim Stipulation for Value, 2) Directing the Issuance and Publication of Required Notice, and 3) Issuing Injunction (“Motion”), filed on October 11, 2012. Claimants Evangaline Canton, individually and on behalf of and as Representative of the Estate of Kristen Fonseca, Mario Alberto Canton, Monique Sanchez, and Kevin Fonseca, Jr. (“Claimants”) filed their objection on October 12, 2012, and Limitation Plaintiff filed its reply on October 15, 2012. This matter came on for hearing on October 25, 2012. Appearing on behalf of Limitation Plaintiff was Margery Bronster, Esq., and appearing on behalf of Claimants were Patrick McTernan, Esq., and Richard Fried, Esq. After careful consideration of the Motion, supporting and opposing memoranda, and the arguments of counsel, Limitation Plaintiff's Motion is HEREBY GRANTED IN PART AND DENIED IN PART for the reasons set forth below.¹

BACKGROUND

Claimants filed a complaint in the Circuit Court of the First Circuit, State of Hawai'i on August 13, 2012, and their First Amended Complaint (“state court complaint”) on August 28, 2012.² The claims arise out of a jet ski accident that occurred on August 5, 2012, in which Tyson Dagley, while operating a jet ski, collided into a jet ski operated by Claimants' decedent, Kristin Fonsenca, who suffered fatal injuries. Limitation Plaintiff rented the jet skis to Mr. Dagley and Ms. Fonseca. The state court complaint names as defendants Limitation Plaintiff, and Glenn Cohen, who is Limitation Plaintiff's sole member and manager, as well as an employee. [Mem. in Supp. of Motion at 2–4.] The state court complaint alleges that Limitation Plaintiff and Mr. Cohen were negligent, and that Limitation Plaintiff is vicariously liable for the personal negligence of Mr. Cohen.

Limitation Plaintiff filed its Complaint for Exoneration from or Limitation of Liability (“Complaint”) in this Court on October 10, 2012, pursuant to the Limitation of Liability Act, 46 U.S.C. § 30505 et seq. (“Limitation Act” or “the Act”), seeking to invoke the benefits of exoneration from and limitation of liability, and in the same proceeding, to contest its liability and the liability of the jet ski vessels, for any loss or damage arising from the August 5, 2012 incident. [Complaint at ¶ 18.]

I. The Motion

Limitation Plaintiff asks the Court to enter an order approving:

1) the amount, form and content of Plaintiff's Ad Interim Stipulation for Value (“Stipulation”) filed October 10, 2012; 2) the issuance and publication of Plaintiff's Notice of Complaint for Exoneration from or Limitation of Liability in the form and content as required by Supplemental Admiralty Rule F(4); and 3) an injunction pursuant to 46 U.S.C. § 30511 and Supplemental Admiralty Rule F(3).

[Mem. in Supp. of Motion at 2.]

Limitation Plaintiff is the owner of the two jet skis involved in the collision: a 2010 Yamaha VX110 Deluxe Personal Watercraft and a 2011 Yamaha VX110 Deluxe Personal Watercraft (“Vessels”). As of August 5, 2012, the combined fair market value of the Vessels was $11,000.00. Limitation Plaintiff tendered to the Court $11,500.00, which represents the value of the Vessels, costs and accrued interest. [ Id. at 2–4.] Further, Limitation Plaintiff sought publication of Plaintiff's Notice of Complaint for Exoneration from or Limitation of Liability (“Notice”) as required by Supplemental Admiralty Rule F(4), and provides a proposed form of publication.

Finally, Limitation Plaintiff seeks to enjoin the state court action, Evangaline Canton, et al. v. Aloha Jet Ski, LLC, et al., Civil No. 12–1–2161–08(VLC), and all other potential cases arising from the incident until this Limitation of Liability action is resolved by this Court. It argues that, under Supplemental Admiralty Rule F(4), the state court action and all pending discovery must be enjoined. [ Id. at 3.]

According to Limitation Plaintiff, at the time of the incident, none of its members, managers, employees, or agents was aboard either of the Vessels. Limitation Plaintiff seeks an injunction restraining the state court action and the commencement of any “claims, actions, or legal proceedings of any kind, nature or description against [Limitation] Plaintiff, its affiliates, agents, employees, managers, members, officers, directors, shareholders, vessels, property, underwriters, and insurers with regard to any and all claims and causes of action” arising from the August 5, 2012 incident. [ Id. at 13.]

II. Claimants' Objection

Claimants do not object to the entry of the Stipulation or publication of the Notice; they object to the requested injunction as overly broad, and ask that “any injunction against other proceedings be limited to proceedings against Limitation Plaintiff and its property.” [Mem. in Opp. at 2.] They assert that, although Mr. Cohen is an owner of Limitation Plaintiff, he is not an owner of the Vessels, and he is sued in the state court action “only for his own negligence.” [ Id. at 3.] According to Claimants, the Limitation Act and the Supplemental Admiralty Rules do not authorizean injunction against a vessel owner's employee's own negligence. [ Id. at 6–7.]

III. Limitation Plaintiff's Reply

In its reply, Limitation Plaintiff argues that Mr. Cohen is an “owner” because he is the sole member and manager of Limitation Plaintiff, and has possession and control over the Vessels, and is responsible for their maintenance and operation. [Reply at 2–3.]

It further argues that Claimants rely on cases that are inapplicable here, where Mr. Cohen was not operating the Vessels involved in the accident, with privity or knowledge of the negligence. [ Id. at 4–5.] In any event, argues Limitation Plaintiff, whether an owner is negligent must be determined after an appropriate motion is heard, and not at this time. [ Id. at 7.] It states that this Court cannot skip the first prong of the analysis—what acts of negligence caused the accident—and go straight to the second prong of privity and knowledge. It distinguishes the cases relied upon by Claimants, Fecht v. Makowski, 406 F.2d 721 (5th Cir.1969), In re Ingoglia, 723 F.Supp. 512 (C.D.Cal.1989), and In re X–Treme Parasail, Inc., Civ. No. 05–00790 SOM/BMK, 2006 WL 4701815 (D.Hawai'i July 7, 2006), “because in those cases, the court already issued the injunction, and the determination as to the owner's involvement was made much later after substantive motions were filed and a hearing was held.” [ Id. at 9–10.]

Limitation Plaintiff asks the Court to grant its Motion in its entirety. [ Id. at 12.]

DISCUSSION

I. Injunction Under the Limitation Act Generally

The Limitation Act “allows a vessel owner to limit liability for damage or injury, occasioned without the owner's privity or knowledge, to the value of the vessel or the owner's interest in the vessel.” X–Treme Parasail, Inc., 2006 WL 4701815, at *2. The statute alters the normal rules of vicarious liability. “Instead of being vicariously liable for the full extent of any injuries caused by the negligence of the captain or crew employed to operate the ship, the owner's liability is limited to the value of the ship unless the owner himself had ‘privity or knowledge’ of the negligent acts.” In re City of New York, 522 F.3d 279, 283 (2d Cir.2008).

When, as here, a shipowner invokes the protection of the act, a district court is empowered to issue a restraining order or injunction staying all proceedings against the shipowner arising out of the incident. Complaint of Dammers & Vanderheide & Scheepvaart Maats Christina B.V., 836 F.2d 750, 754 (2nd Cir.1988); Fed.R.Civ.P. Supplemental Rule F. The district court then typically determines, in a proceeding known as a concursus, issues such as liability, the privity and knowledge of the shipowner, and if necessary, the distribution of the limitation fund. Id. One purpose of the concursus proceeding is to ease the handling of multiple claims arising from the incident. Complaint of Paradise Holdings, Inc., 795 F.2d 756, 761 (9th Cir.1986). This avoids “inconsistent results and repetitive litigation.” Id.

In re Complaint of San Francisco Bar Pilots, No. C05–02975 MJJ, 2006 WL 16879, at *1 (N.D.Cal. Jan. 3, 2006).

The Limitation Act states, in pertinent part:

(a) In General. The owner of a vessel may bring a civil action in a district court of United States for limitation of liability under this chapter.

(b) Creation of Fund. When the action is brought, the owner (at the owner's option) shall—(1) deposit with the Court, for the benefit of claimants—

(A) an amount equal to the value of the owner's interest in the vessel and pending freight, or approved security; and

(B) an amount or approved security, that the court may fix from time to time as necessary to carry out this chapter;

(c) Cessation of Other Actions. When an action has been brought under this section and the owner has complied with subsection (b), all the claims and proceedings against the owner related to the matter in question shall cease.

46 U.S.C. § 30511.

Supplemental Admiralty...