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Barnes v. Sea Hawaii Rafting, LLC

United States District Court, D. Hawaii

March 4, 2019

CHAD BARRY BARNES, Plaintiff,
v.
SEA HAWAI`I RAFTING, LLC; KRIS HENRY; ALOHA OCEAN EXCURSIONS, LLC; JOHN DOES 1-20; MARY DOES 1-20; DOE CORPORATIONS 1-20; DOE PARTNERSHIPS 1-20; DOE ASSOCIATES 1-20; DOE GOVERNMENTAL AGENCIES 1-20; AND OTHER ENTITIES 1-20, in personam; AND M/V TEHANI, HA 1629-CP, AND HER ENGINES, EQUIPMENT, TACKLE, FARES, STORES, PERMITS, FURNISHINGS, CARGO AND FREIGHT; DOE VESSELS 1-20, in rem. Defendants.

          ORDER

          Alan C. Kay, United States District Judge

         For the reasons set forth below, the Court finds that the commercial use permit under which the vessel M/V Tehani (the “Tehani”) is operated is not an appurtenance of the vessel. In addition, Plaintiff Chad Barry Barnes's (“Plaintiff Barnes”) “Motion for an Order Appointing Himself as Substitute Custodian and Providing for Custodia Legis Expenses After Arrest” is DENIED; and Defendant Aloha Ocean Excursions, LLC's (“Defendant AOE”) “Motion for an Order Staying Execution of Order Authorizing Arrest of the Vessel and Appurtenances, or in the Alternative, for an Order Releasing the Vessel and Appurtenances from Arrest, Pursuant to Supplemental Admiralty Rule E(5)” is GRANTED IN PART AND DENIED IN PART.

         BACKGROUND

         For purposes of this Order, the Court will not recount this case's lengthy procedural history beginning in 2013. The Court only discusses those facts and events of specific relevance to the issues that this Order addresses.

         On January 14, 2019, Plaintiff Barnes filed a “Motion for an Order Appointing Himself as Substitute Custodian and Providing for Custodia Legis Expenses After Arrest, ” (“Plaintiff Barnes's Motion”) together with various supporting documents. ECF No. 495. Defendant AOE filed its Memorandum in Opposition thereto on January 22, 2019. ECF No. 498. The Court held a hearing on Plaintiff Barnes's Motion on January 24, 2019 and took the matter under advisement.

         Before the Court issued a ruling on Plaintiff Barnes's Motion, Defendant AOE filed on January 31, 2019 a “Motion for an Order Staying Execution of Order Authorizing Arrest of the Vessel and Appurtenances, or in the Alternative, for an Order Releasing the Vessel and Appurtenances from Arrest, Pursuant to Supplemental Admiralty Rule E(5)” (“Defendant AOE's Motion”), together with an appraisal of the vessel Tehani in support of its Motion. Plaintiff Barnes filed his Memorandum in Opposition to Defendant AOE's Motion on February 13, 2019, ECF No. 519, and he filed an Errata thereto on February 14, 2019. ECF No. 520. The Court held a hearing on Defendant AOE's Motion on February 15, 2019. At the hearing, the Court heard oral argument regarding both Defendant AOE's Motion and Plaintiff Barnes's Motion.

         Defendant AOE seeks to file a special bond, pursuant to Supplemental Admiralty Rule E(5)(a), in order to prevent the arrest of the Tehani or to secure the vessel's release once it has been arrested. The parties are not in agreement with respect to the value of the bond that Defendant AOE wishes to file. In such situations, Supplemental Admiralty Rule E(5)(a) requires that the Court set the value of the bond at the lesser of twice the amount of the plaintiff's claims or the value of the vessel. The parties both agree that the commercial use permit under which the Tehani operates affects the value of the vessel; however, the parties disagree as to whether or not the permit is an appurtenance of the vessel to which Plaintiff Barnes's maritime lien attaches.

         At the hearing on February 15, 2019, where both Defendant AOE's Motion and Plaintiff Barnes's Motion were argued, the Court determined that it would have to rule on whether or not the commercial use permit is an appurtenance of the vessel in order to accurately fix a bond value pursuant to Supplemental Admiralty Rule E(5)(a). The Court held a subsequent hearing on February 28, 2019, at which William Wynhoff (“Mr. Wynhoff”), Deputy Attorney General and General Counsel for the Hawai`i Department of Land and Natural Resources (the “DLNR”) testified. Mr. Wynhoff's testimony concerned the transferability of commercial use permits under Hawai`i Administrative Rules (“HAR”) § 13-231-62. The Court also heard oral argument from the parties on the permit issue.

         DISCUSSION

         In this Order, the Court addresses the commercial use permit issue, Plaintiff Barnes's Motion, Defendant AOE's Motion, and various ancillary issues. In accordance with the Supplemental Admiralty Rules and the Court's equitable powers, and under the circumstances, the Court will move forward on two fronts—allowing Defendant AOE to file a bond, in an amount to be determined by the Court, in order to secure the release of the Tehani; and allowing Plaintiff Barnes to proceed with arresting the vessel during the interim period. Prior to addressing the motions before the Court and the arrest of the vessel, the Court will address the commercial use permit issue.

         I. Whether or Not the Commercial Use Permit Is an Appurtenance of the Vessel

          Plaintiff Barnes argues that the commercial use permit is like a fishing permit, and that because some courts have found that fishing permits are appurtenant to vessels, the Court should so find that the commercial use permit is appurtenant to the Tehani. Plaintiff Barnes also argues that the commercial use permit is an appurtenance because it is essential to the navigation, operation, and mission of the vessel. Defendant AOE argues that the commercial use permit is not appurtenant to the vessel because the permit is issued to Defendant AOE (and not to the vessel Tehani) and because such permits do not transfer with a vessel when the vessel is sold. For the reasons that follow, the Court finds that the commercial use permit under which the Tehani operates is not an appurtenance of the vessel.

         The Court, in its Order Finding that the M/V Tehani's Trailer Is an Appurtenance of the Vessel, described at great length the law concerning what constitutes an appurtenance of a vessel to which a maritime lien attaches. See ECF No. 484, pp. 8-11. In summary, the key issue in determining what constitutes an appurtenance is whether the property in question is “essential to the ship's navigation, operation, or mission.” Gowen, Inc. v. F/V Quality One, 244 F.3d 64, 67-68 (1st Cir. 2001). The Court also reiterates that the determination regarding what constitutes an appurtenance is a factual inquiry that is made on a case-by-case basis. Id. at 68 (citing Thomas J. Schoenbaum, Adm. and Mar. Law, § 9-1 (6th ed. 2018)).

         In Gowan, the First Circuit upheld the district court's order confirming the marshal sale of the F/V Quality One, which included the fishing permits as appurtenances. 244 F.3d at 66. The appellate court held that the vessel's fishing permits were appurtenances because treating fishing permits as subject to a maritime lien advances one of the objectives for which maritime liens are created—“to make readily available to a mobile borrower the secured credit that is often necessary to ensure that a vessel can obtain the basic supplies or services needed for its operation.” Id. at 68 (citing cases). Importantly, the fishing permits in ...


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