Barnes v. Sea Haw. Rafting, LLC

Decision Date28 March 2018
Docket NumberNo. 16-15023,16-15023
Parties Chad Barry BARNES, Plaintiff–Appellant, v. SEA HAWAII RAFTING, LLC; Kris Henry; 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; Other Entities 1–20, In Personam; M/V Tehani; Kristin Kimo Henry, Debtor in U.S. Bankruptcy Court, District of Hawaii—Chapter 13 Bankruptcy Case # 14-01475 (re: doc no. 142) also known as Kris Henry; Dane S. Field, Trustee of the bankruptcy estate of Sea Hawaii Rafting, LLC, Defendants–Appellees.
CourtU.S. Court of Appeals — Ninth Circuit

889 F.3d 517

Chad Barry BARNES, Plaintiff–Appellant,
v.
SEA HAWAII RAFTING, LLC; Kris Henry; 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; Other Entities 1–20, In Personam; M/V Tehani; Kristin Kimo Henry, Debtor in U.S. Bankruptcy Court, District of Hawaii—Chapter 13 Bankruptcy Case # 14-01475 (re: doc no. 142) also known as Kris Henry; Dane S. Field, Trustee of the bankruptcy estate of Sea Hawaii Rafting, LLC, Defendants–Appellees.

No. 16-15023

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 16, 2017, Honolulu, Hawaii
Filed March 28, 2018
Amended April 19, 2018


Jay Lawrence Friedheim (argued), Admiralty Advocates, Honolulu, Hawaii; John C. Gibson, Honolulu, Hawaii; for Plaintiff–Appellant.

Simon Klevansky (argued), Alika L. Piper, and Nicole D. Stucki, Klevansky Piper LLP, Honolulu, Hawaii, for Defendants–Appellees Dane S. Field, Sea Hawaii Rafting LLC, and M/V Tehani.

Lisa M. Volquardsen, Kailua–Kona, Hawaii, for Defendant–Appellee Kris Henry.

Before: Raymond C. Fisher, Richard A. Paez, and Jacqueline H. Nguyen, Circuit Judges.

ORDER AND AMENDED OPINION

The Opinion filed on March 28, 2018, is amended as follows:

1. On page 9, line 11, of the slip opinion, the word < Honolulu> is replaced with < his locality> and, at the end of the sentence, a footnote with the following text is added:

< Barnes originally presented the district court with evidence of reasonable costs in Honolulu but subsequently clarified that Kailua–Kona was the relevant locality.>

The remaining footnotes are renumbered accordingly.

2. On page 40, line 8, of the slip opinion, the word < Honolulu> is replaced with < his locality> enclosed in regular brackets.

No new petitions for rehearing or rehearing en banc will be accepted.

OPINION

NGUYEN, Circuit Judge:

Chad Barnes is a seaman who was injured when the boat on which he was working, the M/V Tehani, exploded. During his recovery, Barnes received some monetary assistance from either Sea Hawaii Rafting, LLC ("SHR"), which owned the Tehani, or Kris Henry, SHR's owner and manager, but those payments soon stopped. Seeking the ancient maritime remedy of maintenance and cure,1 among other relief, Barnes sued the Tehani in rem and SHR and Henry in personam to enforce his seaman's lien against the vessel. Although admiralty courts normally

889 F.3d 524

handle such matters expeditiously, that did not happen here for two reasons.

First, the district court rejected Barnes's pretrial requests to enforce SHR's obligation to pay maintenance and cure. The court concluded that Barnes was entitled to maintenance and cure and had demonstrated his actual maintenance expenses. Nonetheless, despite undisputed evidence that Barnes was entitled to at least some of his actual expenses, the district court declined to award Barnes any maintenance until trial.

Second, when SHR declared bankruptcy after fifteen months of litigation and shortly before trial, the district court stayed Barnes's action. The district court concluded that the Tehani was an asset of the debtor's estate and that the automatic bankruptcy stay barred proceedings to enforce Barnes's maritime lien against the vessel. The bankruptcy court partially lifted the bankruptcy stay to allow the district court to evaluate Barnes's claims against SHR but expressly prohibited the district court from issuing any ruling that would affect the maritime lien's status.

Ultimately, the district court dismissed Barnes's claims against the Tehani. The court reasoned that it lacked in rem jurisdiction because, even though Barnes verified his original complaint, he failed to verify the amended complaint. Then, while Barnes's appeal was pending, the bankruptcy trustee—with the bankruptcy court's approval—sold the Tehani purportedly free and clear of Barnes's maritime lien. The trustee subsequently moved to dismiss this appeal as moot.

We conclude that the district court erred by denying Barnes's maintenance requests in full, staying the action, and dismissing the Tehani. The district court obtained jurisdiction over the vessel Tehani when Barnes filed a verified complaint and the defendants appeared generally and litigated without contesting in rem jurisdiction. The district court did not lose in rem jurisdiction while the Tehani remained in its constructive custody. And the court's control over the vessel, once obtained, was exclusive. SHR's later-filed bankruptcy petition did not divest the district court of in rem jurisdiction. Moreover, the automatic bankruptcy stay did not affect Barnes's maritime lien against the Tehani, and the bankruptcy court had no authority to dispose of the lien through the application of bankruptcy law.

When, as here, a seaman establishes his entitlement to maintenance and provides some evidence of his actual living expenses, the burden shifts to the vessel's owner to produce evidence that the seaman's actual costs were unreasonable. Whether or not the vessel's owner provides such evidence, the seaman is entitled to a maintenance award in the amount of his actual costs up to the reasonable rate in his locality. Over three years after concluding that Barnes was entitled to maintenance and had sufficiently proven his actual costs, the district court has yet to award him any maintenance.

Accordingly, we deny the trustee's motion to dismiss, reverse the district court's dismissal of the Tehani, and issue a writ of mandamus to the district court to award Barnes maintenance for his undisputed actual and reasonable expenses—$34 per day—subject to a potential increase after trial.

I.

A. Factual Background

Barnes worked for SHR for six years as a captain and crew member of the Tehani, a 25–foot rigid hull inflatable boat powered by twin outboard engines. Barnes took passengers from Honokohau Harbor on sightseeing and snorkeling trips along the

889 F.3d 525

Kona coast. Henry paid Barnes under the table with personal checks made out to "cash."

On July 3, 2012, Henry and Barnes were launching the Tehani for a night snorkeling trip. Henry was in his truck, towing the Tehani on an attached trailer, and Barnes was onboard the boat. Henry backed the trailer down the launch ramp until the vessel was in the water. When Barnes started the starboard engine, the Tehani exploded. The hatch struck Barnes on his back and head, propelling him into the ocean.

A Coast Guard investigation found that the explosion was caused by a fuel tank with a missing screw in the fuel tank sender. Fuel leaked into the bilge, where vapors accumulated and ignited when Barnes started the engine. The investigator concluded that the incident might have been avoided if Henry had installed the required flammable vapor detector and mechanical exhaust system. See 46 C.F.R. §§ 182.460, 182.480. The boat, which was insured, was subsequently repaired and returned to service.

Barnes was less fortunate. SHR lacked insurance to cover his medical expenses for physical, psychological, and neurological treatment. Barnes required approximately 12 staples to reattach parts of his scalp. Due to his head injuries, he can no longer drive a car or swim. He cannot afford rent and has been living on friends' couches. He receives approximately $300 per month in disability income from the State of Hawaii.2

B. Litigation in the District and Bankruptcy Courts

On January 1, 2013, Barnes filed a verified complaint in admiralty against Henry, SHR, and the Tehani, claiming unseaworthiness, various theories of negligence, and intentional infliction of emotional distress. Barnes sought maintenance and cure, damages, and attorney's fees. The three defendants answered the complaint. Despite denying Barnes's allegation that the Tehani was subject to the district court's in rem jurisdiction, they did not move to dismiss the Tehani on that basis but instead proceeded to litigate the dispute.

Barnes moved for "summary judgment for payment of maintenance and cure," requesting that the district court order defendants to pay his "reasonable, actual costs of food and lodging" and medical costs since the date of his injury until he reached "maximum medical cure." The district court granted Barnes's motion in part. Noting that defendants did not dispute that Barnes was injured in the service of the Tehani, the district court ruled that Barnes was entitled to maintenance and cure and had not yet reached maximum cure. Applying the standard for determining a maintenance rate from Hall v. Noble Drilling (U.S.) Inc. , 242 F.3d 582 (5th Cir. 2001), the district court concluded that Barnes had shown his actual food and lodging costs but not the reasonable amount for such costs in his locality or his actual medical expenses.3 The court therefore declined to award either maintenance or cure.

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