Complaint of Paradise Holdings, Inc.

• Decision Date: 25 July 1986
• Docket Number: Nos. 85-1648,85-1889,s. 85-1648
• Citation: 795 F.2d 756
• Parties: , 55 USLW 2100 In the Matter of The Complaint of PARADISE HOLDINGS, INC., a Hawaii corporation, as owner of, and Paradise Cruise, Limited, a Hawaii corporation, as lessee and charterer of the P/V PEARL KAI, Official Number 527 873, for exoneration from or limitation of liability. Terry Lee K. STONE, Individually; As Special Administratrix of the Estate of Paul Henry Stone; and As Guardian Ad Litem for Paul Henry Stone, Jr., a minor, and Jeremy Noah Kamealohaokuulei Stone, a minor, Claimants-Appellants, v. PARADISE HOLDINGS, INC. and Paradise Cruise, Limited, Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 756

795 F.2d 756

1987 A.M.C. 104, 55 USLW 2100

In the Matter of The Complaint of PARADISE HOLDINGS, INC., a

Hawaii corporation, as owner of, and Paradise Cruise,

Limited, a Hawaii corporation, as lessee and charterer of

the P/V PEARL KAI, Official Number 527 873, for exoneration

from or limitation of liability.

Terry Lee K. STONE, Individually; As Special Administratrix

of the Estate of Paul Henry Stone; and As Guardian Ad Litem

for Paul Henry Stone, Jr., a minor, and Jeremy Noah

Kamealohaokuulei Stone, a minor, Claimants-Appellants, v. PARADISE HOLDINGS, INC. and Paradise Cruise, Limited, Appellees.

Nos. 85-1648, 85-1889.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 27, 1986.

Decided July 25, 1986.

George W. Playdon, Jr., Robert K. Merce, Honolulu, Hawaii, for claimants-appellants.

Robert G. Frame, Leonard Alcantara, Alcantara & Frame, Honolulu, Hawaii, for appellees.

Appeal from the United States District Court for the District of Hawaii.

Before FERGUSON, CANBY and HALL, Circuit Judges.

CANBY, Circuit Judge:

On June 19, 1984, Paul Stone was killed while bodysurfing in a recreational area known as Point Panic, near Kewalo Basin in Honolulu. Boating is prohibited in Point Panic, and navigation is at best treacherous due to shallow water and large reefs. By contrast, the adjacent Kewalo Basin Channel is dredged and is an established shipping lane.

According to the allegations, at about noon on June 19, the P/V Pearl Kai, owned by Paradise, ¹ entered the Channel on return from a Pearl Harbor cruise. The surf was high, and several hundred passengers were aboard. After its port engine failed, the ship was apparently turned broadside by a large incoming wave. In order to regain control of the vessel, the captain reversed the ship's starboard engine, backing the vessel into a group of bodysurfers swimming in the Point Panic area. Several passengers and swimmers were injured, and Stone was killed. As a result of the incident, claims totalling more than $28 million were filed against the ship's owners and crew.

Stone's survivors filed an action in Hawaii Circuit Court against Paradise and the Pearl Kai's captain. Paradise then filed an action in federal court, under the Shipowners Limitation of Liability Act of 1851, 46 U.S.C. Sec. 181-95 ("the Act"), seeking limited protection from the claims. ² Jurisdiction was based on 28 U.S.C. Sec. 1333. Paradise was granted an injunction staying prosecution of the state court action pending outcome of the federal proceeding.

On July 31, 1984, claimants moved to dismiss the limitation action for lack of admiralty jurisdiction. In addition, because their state action named the ship's captain as a defendant, they moved to dissolve the stay as violating 46 U.S.C. Sec. 187. ³ 619 F.Supp. 21. Both motions were denied, and claimants appealed. The jurisdiction question was certified for interlocutory appeal under 28 U.S.C. Sec. 1292(b); the other issue is appealable under 28 U.S.C. Sec. 1292(a)(1). We affirm.

DISCUSSION

I. Admiralty Jurisdiction

A district court's decision that it has subject matter jurisdiction is reviewed de novo. Carpenters Southern California Administrative Corp. v. Majestic Housing, 743 F.2d 1341, 1343 (9th Cir. 1984). We conclude that the district court had jurisdiction.

To invoke the federal admiralty jurisdiction in tort cases, the tort must occur on navigable waters and bear a "significant relationship to traditional maritime activity." Foremost Insurance Co. v. Richardson, 457 U.S. 668, 672-75, 102 S.Ct. 2654, 2656-58, 73 L.Ed.2d 300 (1982); Executive Jet Aviation, Inc. v. City of Cleveland, 409 U.S. 249, 268, 93 S.Ct. 493, 504, 34 L.Ed.2d 454 (1972).

A. Navigable Waters

Because of shallow water, reefs and state regulations prohibiting boating in the area, claimants argue that the waters of Point Panic are not navigable for purposes of admiralty jurisdiction. We disagree.

The waters in question are clearly subject to the ebb and flow of the tides. Throughout the nation's history, tidal waters have been held to be within the definition of "navigable waters." Indeed, until 1851 admiralty jurisdiction was limited to waters "within the ebb and flow of the tide." The Steamboat Thomas Jefferson, 23 U.S. (10 Wheat.) 428, 428, 6 L.Ed. 358 (1825).

Claimants argue that the tidal waters test was abolished in The Propeller Genesee Chief v. Fitzhugh, 53 U.S. (12 How.) 443, 13 L.Ed. 1058 (1851). That case, however, never held that tidal waters were not "navigable waters" for admiralty-jurisdiction purposes. Instead, it held that admiralty jurisdiction extended beyond tidal waters to all navigable waters. See id. 53 U.S. at 454-58. The Third Circuit has held squarely that Propeller Genesee involved only an expansion of admiralty jurisdiction and implied no contraction. See United States v. Stoeco Homes, Inc., 498 F.2d 597, 610 (3d Cir. 1974), cert. denied, 420 U.S. 927, 95 S.Ct. 1124, 43 L.Ed.2d 397 (1975). We hold that in tidal waters, the ebb and flow of the tides remains the standard.

Claimants rely on cases that explore navigability on inland waterways, such as Adams v. Montana Power Co., 528 F.2d 437 (9th Cir. 1975). There, we held that federal courts had no jurisdiction over a tort claim for loss suffered when the discharge from Hauser Dam capsized a small pleasure craft, drowning one person. The accident occurred on a 25-mile stretch of the Missouri River dammed at both ends and situated entirely within the State of Montana. Only non-commercial fishermen, water skiers and pleasure boaters made use of the river. Id. at 439. We stated that "[a] waterway is navigable provided that it is used or susceptible of being used as an artery of commerce." Id. Because we concluded that none of the activities on the river constituted commerce, we held the action was not cognizable in admiralty. Id. ⁴ This ruling extends only to inland bodies of water and was not intended to alter the rule pertaining to tidal waters.

B. Traditional Maritime Activity

The second test for admiralty jurisdiction is whether the tort arose from traditional maritime activity. We have identified four factors as important in this determination: "(1) traditional concepts of the role of admiralty law; (2) the function and role of the parties; (3) the types of vehicles and instrumentalities involved; and (4) the causation and nature of the injuries suffered." Solano v. Beilby, 761 F.2d 1369, 1371 (9th Cir. 1985) (citing Owens-Illinois, Inc. v. United States Dist. Ct., 698 F.2d 967, 970 (9th Cir. 1983) (per curiam) ). ⁵ The principal focus of admiralty jurisdiction is " 'the protection of maritime commerce.' " Solano, 761 F.2d at 1371 (quoting Richardson, 457 U.S. at 674, 102 S.Ct. at 2658).

At the outset, the parties dispute the proper method for applying these factors. Claimants seize upon a sentence from Union Oil Co. v. Oppen, 501 F.2d 558, 561 (9th Cir. 1974), which states: "[T]he 'activity' whose relationship to traditional maritime activity was to be examined was that of the injured party, not that of the tortfeasor." Their reliance on this statement is misplaced.

First, the statement is not a holding. It is an approximate paraphrase of a holding in a related case, Oppen v. Aetna Insurance Co., 485 F.2d 252, 257 (9th Cir. 1973), and is included in Union Oil by way of background. The holding in Aetna was that the nature of the tortfeasors' activities is "not dispositive" of the traditional maritime activity issue. The Aetna court went on to hold that, because of the maritime nature of the plaintiffs' claim, the suit was cognizable in admiralty despite the arguably non-maritime activities of the defendant that gave rise to the claim. 485 F.2d at 257. Thus, under Aetna it is more accurate to say that the focus should not be solely on the defendant's activities when making the "maritime activity" determination.

More important, the Supreme Court in Richardson stated that the focus should be on the "wrong" underlying the claim rather than on either party. 457 U.S. at 674, 102 S.Ct. at 2658. The Court stated: "Because the 'wrong' here involves the negligent operation of a vessel on navigable waters, we believe that it has a sufficient nexus to traditional maritime activity to sustain admiralty jurisdiction in the District Court." Id.

Applying the Solano factors, we conclude that, as in Richardson, the wrong alleged here is the negligent operation of a vessel in navigable waters. Because one of the traditional goals of admiralty jurisdiction is to ensure adherence to uniform "Rules of the Road" in the operation of boats, see Richardson, 457 U.S. at 676-77, 102 S.Ct. at 2659; Executive Jet, 409 U.S. at 269-70, 93 S.Ct. at 504-05, the alleged wrong has a traditional "maritime flavor" sufficient to invoke this jurisdiction. See Owens-Illinois, 698 F.2d at 970. The function and role of the ship and its crew were clearly maritime. The type of vehicle involved was a ship. Finally, injury was caused by contact with the ship's propeller and resulted from allegedly negligent operation of the ship. That decedent was swimming does not vitiate the traditional maritime nature of Paradise's wrong. See Medina v. Perez, 733 F.2d 170 (1st Cir. 1984), cert. denied, --- U.S. ----, 105 S.Ct. 778, 83 L.Ed.2d 774 (1985). ⁶ We conclude that there existed here a sufficient relationship to traditional maritime activity to support admiralty jurisdiction.

II. Staying the State Court Proceedings

The decision to grant a stay or injunction is normally reviewed for abuse of discretion. SEC v. Carter Hawley Hale Stores, Inc., 760 F.2d 945, 947 (9th Cir. 1985). The threshold issue here is whether 46 U.S.C. Sec. 187 deprives a district court of power to stay state proceedings against a ship's master, officers, or crew pending disposition of a limitation proceeding brought by the owners. Because this question is one of statutory interpretation, de novo review is appropriate. See ...