COMPLAINT OF PARADISE HOLDINGS, INC.

• Decision Date: 26 December 1984
• Docket Number: No. CV 84-0783 PAR.,CV 84-0783 PAR.
• Court: U.S. District Court — Central District of California
• Parties: 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.

619 F. Supp. 21

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.

No. CV 84-0783 PAR.

United States District Court, C.D. California.

December 26, 1984.

David Schutter, Schutter, Cayetano & Playdon, Honolulu, Hawaii, for claimant Terry Stone.

Robert Frame, Alcantara & Frame, Honolulu, Hawaii, for limitation plaintiffs, Paradise Holdings, Inc. and Paradise Cruise, Ltd.

MEMORANDUM OF DECISION AND ORDER

RYMER, District Judge.

This case arises from the death of Paul H. Stone who was killed while body surfing near the Kewalo Basin in Honolulu. According to the complaint filed in Hawaii state court by Stone's widow and minor children, the captain of the Pearl Kai, a commercial cruise ship, piloted the craft in high surf conditions in the vicinity of a number of body surfers. Returning from a Pearl Harbor cruise, the ship was turned broadside to an incoming wave. In order to gain control of the vessel, the captain allegedly reversed the engine, backing the ship into a group of body surfers. The propeller struck Stone repeatedly, killing him instantly.

The state court action names Paradise Holdings Corp., Paradise Cruise Ltd. and the Pearl Kai's captain, Edward Bruhn, as defendants. It alleges negligence, gross negligence, assault and battery and infliction of emotional distress and seeks $23 million in compensatory and punitive damages.

Pursuant to the Limitation of Liability Act, 46 U.S.C. §§ 183 et seq. ("the Limitation Act"), Paradise Holdings Corp. and Paradise Cruise Ltd. filed a Complaint for Exoneration from and Limitation of Liability in federal district court in Hawaii. The complaint, based on the admiralty jurisdiction of the federal courts, requested a stay of all state court proceedings against Paradise Holding Corp. and Paradise Cruise, Ltd. and the issuance of a restraining order and notice to claimants directing them to file their claims in the federal court proceeding. District Judge Harold M. Fong ordered the stay and issued the restraining order and notice. Under the Limitation Act, the liability of the ship's owner for injury or damage cannot exceed the value of the vessel. 46 U.S.C. § 183. In this case, the Pearl Kai is estimated to be worth $625,000, an amount which would also be applied to remedy injuries allegedly sustained by other body surfers and the ship's passengers. In addition to the claimants' action, over $1.2 million in claims have been filed by others as a result of the accident.

Decedent's survivors hereinafter referred to as claimant move to dismiss the complaint for limitation of liability on the ground that the death of a body surfer is not within the admiralty jurisdiction of this Court. Alternatively, claimant seeks to modify the restraining order to allow the state court action to proceed against the ship's captain, on the ground that they have an absolute statutory right to do so under 46 U.S.C. § 187. These issues are considered in turn.

I. Admiralty Jurisdiction.

Federal admiralty jurisdiction over maritime torts is provided by 28 U.S.C. § 1333 which states:

"The district courts shall have original jurisdiction, exclusive of the courts of the States, of: (1) Any civil case of admiralty or maritime jurisdiction, saving to suitor in all cases all other remedies to which they are otherwise entitled."

Congress has specifically extended admiralty jurisdiction to cases arising from injuries suffered on navigable waters. In the Extension of Admiralty Jurisdiction Act, Congress provided:

"The admiralty and maritime jurisdiction of the United States shall extend to and include all cases of damage or injury, to person or property, caused by a vessel on navigable water, notwithstanding that such damage or injury be done or consummated on land."

46 U.S.C. § 740.

Prior to the Supreme Court's decision in Executive Jet Aviation, Inc. v. City of Cleveland, 409 U.S. 249, 93 S.Ct. 493, 34 L.Ed.2d 454 (1972), admiralty jurisdiction would have almost certainly covered this suit. Before Executive Jet, admiralty jurisdiction over tort cases traditionally depended on the locality of the wrong. If the wrong took place in navigable waters, admiralty jurisdiction was properly invoked. If the wrong occurred on land or in non-navigable waters, admiralty jurisdiction was lacking. Although there existed authority to the contrary, the general rule was that any tort occurring on the high seas or navigable waters was cognizable in admiralty jurisdiction. See 1 Benedict, Admiralty, § 2.

However, the unanimous decision in Executive Jet held that, at least with respect to aviation torts, the locality of the wrong in itself was not sufficient to invoke admiralty jurisdiction. Id. at 261, 93 S.Ct. at 501. Executive Jet involved the crash of a jet aircraft on takeoff into the navigable waters of Lake Erie. The Court reviewed the criticism of the locality rule to admiralty jurisdiction and noted the "absurd" results that the locality rule would yield when applied mechanically. For example, the Court observed that "if a swimmer at a public beach is injured by another swimmer or by a submerged object on the bottom, ... a literal application of the locality test invokes not only the jurisdiction of the federal courts, but the full panoply of the substantive admiralty law as well." Id. at 255, 93 S.Ct. at 498. The Court held that with respect to claims arising from airplane accidents, the alleged wrong must occur in navigable waters and "bear a significant relationship to traditional maritime activity." Id. at 267, 93 S.Ct. at 504.

While Executive Jet was limited on its facts to aviation accidents, in Foremost Ins. Co. v. Richardson, 457 U.S. 668, 102 S.Ct. 2654, 73 L.Ed.2d 300 (1982), the Court considered whether admiralty jurisdiction could be properly asserted in an action to recover for a death resulting from the collision on a navigable river of two boats used exclusively for recreational use. The Court extended the holding of Executive Jet to torts in a maritime context, concluding that "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. at 2658. The Court also held, despite a sharp dissent, that "there is no requirement that `the maritime activity be an exclusively commercial one.'" Id. at 2658.

In applying the Foremost test here, the parties initially dispute whether the wrong complained of occurred in navigable waters. Claimant contends that the body surfing area known as Point Panic, where Stone's death is alleged to have occurred, is not in navigable waters because it is a recreational area and not "an artery of commerce." Point Panic is immediately adjacent to the channel leading into the Kewalo Basin and is reserved by the State of Hawaii as a site primarily for swimming and body surfing. See Hawaii Admin. Rules § 19-85-14. The Kewalo Basin is used as a harbor by private pleasure boats as well as commercial cruise ships. A dredged channel approximately 210 feet in width leads from the Pacific Ocean through the coral reefs to the Basin. (Gray Decl., ¶ 4.) The channel is marked by navigational aids maintained by the United States Coast Guard. (Richards Decl., ¶ 5.) According to claimant's state court complaint, the Pearl Kai was swept broadside by a large wave while entering the Kewalo Basin channel. Its captain then backed the vessel into the body surfing area where the accident occurred.

A. Navigability of the Point Panic Area.

For purposes of admiralty jurisdiction, navigable waters include those which are "used or susceptible of being used as an artery of commerce." The Propeller Genesee Chief v. Fitzhugh, 12 How. 443, 13 L.Ed. 1058 (1852); Kaiser Aetna v. United States, 444 U.S. 164, 172 n. 7, 100 S.Ct. 383, 389 n. 7, 62 L.Ed.2d 332 (1979); Adams v. Montana Power Co., 528 F.2d 437 (9th Cir.1975) citing The Daniel Ball, 77 U.S. (10 Wall.) 557, 19 L.Ed. 999 (1871). In this country's early history and perhaps owing to the British heritage of our jurisprudence, admiralty jurisdiction was determined by whether the waters were subject to the ebb and flow of the tides. See e.g. The Steamboat Thomas Jefferson, 23 U.S. (10 Wheat.) 428, 6 L.Ed. 358 (1825). Although The Propellor Genesee Chief and The Daniel Ball have been read to overrule the ebb-and-flow test, there is some question whether that test is truly extinct today. In United States v. Stoeco Homes, Inc., the Third Circuit held that in tidal water, the test for admiralty jurisdiction remains the ebb and flow of the tide. 498 F.2d 597, 610 (3d Cir.1974). See also Otto v. Alper, 489 F.Supp. 953, 954 n. * (D.Del. 1980) ("In tidal waters no showing of actual or potential navigability is required.")

However, under either definition the allegedly tortious conduct occurred in navigable waters. Clearly, the waters in question, in the Pacific Ocean approximately 70 yards from the shoreline, are subject to the ebb and flow of the tides. In addition, the area's proximity to the channel and ocean-going traffic makes it susceptible to commercial use, particularly during high surf conditions.

Claimant relies on Adams v. Montana Power Co., supra, for the proposition that waters which are used, as a practical matter, for recreational purposes cannot support admiralty jurisdiction. In Adams, the court considered whether a portion of the Missouri River wholly within Montana and dammed at both ends was navigable water for purposes of admiralty jurisdiction. The trial court found that the section of the river in question was used only by non-commercial fishermen, water skiers and pleasure boaters. Adams, supra at 439. Of paramount importance to the Ninth...