In re Ufo Chuting of Hawaii, Inc., 01CV00087.

• Decision Date: 21 December 2001
• Docket Number: No. 01CV00087.,01CV00087.
• Court: U.S. District Court — District of Hawaii
• Parties: In the Matter of THE COMPLAINT OF UFO CHUTING OF HAWAII, INC., dba UFO Parasail, a Hawaii Corporation, regarding the vessel UFS, Official Number 1065472-Complaint for Exoneration from or limitation of liability, and All Related Matters.

233 F.Supp.2d 1254

In the Matter of THE COMPLAINT OF UFO CHUTING OF HAWAII, INC., dba UFO Parasail, a Hawaii Corporation, regarding the vessel UFS, Official Number 1065472-Complaint for Exoneration from or limitation of liability, and All Related Matters.

No. 01CV00087.

United States District Court, D. Hawai`i.

December 21, 2001.

Dennis Niles, Paul Johnson Park & Niles, Honolulu, HI, for UFO chuting of Hawaii, Inc.

William M. McKeon, Paul John Park & Niles, Wailuku, HI, for UFO Parasail,

Peter T. Cahill, Cahill & O'Neill, Wailuku, HI, for Jane Bartlett.

Paul K. Hoshino, Honolulu, HI, for Phoenix Rope & Cordage Co., Gladding Braided Products.

Timothy P. McNulty, Kihei, HI, for Mark Bailey.

ORDER DENYING MOTION TO DISMISS

MOLLWAY, District Judge.

I. INTRODUCTION.

In November 1998, Mark Bailey ("Bailey") and Jane Bartlett ("Bartlett") went parasailing. Unfortunately for them, the rope that attached them to the boat snapped, causing Bailey and Bartlett to fall into the water (the "Accident"). They were shortly thereafter picked up by the boat and then went back up for another parasailing ride that same day. See "Incident Report" attached to the Declaration of Greg Vanderlaan (Nov. 28, 2001).

Bailey and Bartlett hired separate attorneys, both of whom wrote to UFO Chuting of Hawaii, Inc. ("UFO"), the company that owned the boat used during Bailey and Bartlett's parasailing activity. The letters sent by the attorneys notified UFO of the Accident and stated that Bailey and Bartlett had suffered injuries as a result. Bailey and Bartlett subsequently filed suit in state court.

UFO, in this action and in its answer to the state court complaint, asserts a right to have its liability for the Accident limited pursuant to federal law. Bailey and Bartlett have moved to dismiss this action on the ground that it is untimely. They argue that UFO failed to seek to limit its liability within six months of receiving the attorneys' letters, which Bailey and Bartlett say provided UFO with written notice of their claims. The court finds that the letters Bailey and Bartlett rely on did not provide notice sufficient to start the running of the six-month limitation period. The motion is therefore denied.

II. BACKGROUND FACTS.

Bailey's attorney wrote two nearly identical letters to UFO in December 1998. See Exs. 1 and 2. Both letters stated that "Mark has suffered several injuries, including back injuries, from the fall. Please forward this letter immediately to each of your respective insurance carriers." Id.

On March 30, 1999, Bartlett's attorney wrote to UFO. See Ex. 3. That letter stated that the law firm had been retained to bring a claim against UFO for injuries received by Bartlett in the Accident. Id. It went on to say that Bartlett "continues to suffer from the injuries she received in this incident and is incurring substantial medical expenses." Id. It then asked UFO to notify its insurance carrier immediately. Id.

On June 7, 1999, Bartlett's attorney wrote to UFO's insurance company, Paradigm Insurance Company, informing it that his "client's injuries are continuing to cause significant pain and discomfort, and substantial medical expense." See Ex. 4. The insurance company responded by requesting "information related to the nature of ... [the] claim, including any and all medical records and bills." See Ex. 5. There is insufficient evidence in the record to establish that the insurance company was acting as UFO's agent. There is also no evidence in the record indicating that Bartlett provided the insurance company with the requested information regarding her injuries.

On or about October 6, 2000, Bailey and Bartlett filed a state court action arising out of the Accident. On January 31, 2001, within six months of the filing of the complaint, but more than six months after the letters were sent to UFO and its insurance company, UFO filed this action for exoneration from or limitation of liability. Concurrently, UFO filed an ad interim stipulation for value that indicated that the boat and its cargo at the time of the accident was worth $25,208.¹

III. STANDARD OF REVIEW.

A motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1) may either attack the allegations of the complaint as insufficient to confer subject matter jurisdiction on the court, or may attack the existence of subject matter jurisdiction in fact.² Thornhill Publ'g Co., Inc. v. General Tel. & Elecs. Corp., 594 F.2d 730, 733 (9th Cir.1979). When the motion to dismiss attacks the allegations of the complaint as insufficient to confer subject matter jurisdiction, all allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party. Federation of African Amer. Contractors v. City of Oakland, 96 F.3d 1204, 1207 (9th Cir.1996). When the motion to dismiss is a factual attack on subject matter jurisdiction, however, no presumptive truthfulness attaches to the plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the existence of subject matter jurisdiction in fact. Thornhill, 594 F.2d at 733. The present motion is a factual attack on this court's subject matter jurisdiction. Accordingly, this court may accept and evaluate evidence to determine whether jurisdiction exists.

UFO has the burden of proving that jurisdiction does in fact exist. Thornhill, 594 F.2d at 733. Conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss. Rosenbaum v. Syntex Corp., 95 F.3d 922, 926 (9th Cir.1996).

IV. ANALYSIS.

The Limitation of Liability Act of 1851, 46 U.S.C.App. §§ 181-96 (amended 1936), was an effort by Congress to provide American shipowners with benefits equal to those of foreign competitors. Vatican Shrimp Co. v. Solis, 820 F.2d 674, 677 (5th Cir.1987). Under the act, a vessel owner can restrict its liability arising from any occurrence for which the vessel is liable to the value of the vessel and its then pending freight. Id. There are two ways to restrict liability. The first involves filing a petition for limitation of liability in a federal district court pursuant to 46 U.S.C.App. § 185, as UFO has done here.³ The second involves asserting limitation of liability as an affirmative defense pursuant to 46 U.S.C.App. § 183, as UFO has apparently done in the tort action filed in state court.⁴ See Grindle v. Fun Charters, Inc., 962 F.Supp. 1284, 1286 (D.Haw.1996).

The first manner of restricting liability involves certain procedural requirements. One of these requirements is that the owner of a vessel petition this court to limit its liability with respect to a written claim withApp.in six months of receiving that claim.⁵ 46 U.S.C.App. § 185; Rule F(1), Supplemental Rules for Certain Admiralty and Maritime Claims. The six-month limitation period is designed to preclude undue delay and expenses. Jung Hyun Sook v. Great Pac. Shipping Co., 632 F.2d 100, 102 (9th Cir.1980).

The requirements are not clear regarding what must be sent to owners of vessels to start the running of the six-month period. See Doxsee Sea Clam Co. v. Brown, 13 F.3d 550, 554 (2d Cir.1994). At a minimum, "a notice which begins the six-month statute of limitations must be a notice of a claim subject to limitation." Jung Hyun Sook, 632 F.2d at 102. Otherwise, an unnecessary burden would be placed on the owners and the courts by forcing the filing of an action to limit liability and the posting of security whenever any injury occurs, no matter how trivial. Id. at 103.

The Second Circuit has explained that notice "will be sufficient if it informs the vessel owner of an actual or potential claim which may exceed the value of the vessel, and is subject to limitation." Doxsee, 13 F.3d at 554 (internal citations omitted). Accord In re McCarthy Bros. Co./Clark Bridge, 83 F.3d 821, 829 (7th Cir.1996) ("a letter sent to a shipowner by a claimant is sufficient to trigger the six-month period if (1) it informs the shipowner of an actual or potential claim (2) which may exceed the value of the vessel (3) and is subject to limitation") (citing Doxsee, 13 F.3d at 554). The Second Circuit has stated that this six-month period gives owners of vessels time to investigate whether the amount of the claim or other claims likely to be the subject of litigation arising out of the same occurrence may exceed the value of the ship. In re Morania Barge No. 190, Inc., 690 F.2d 32, 33-34 (2d Cir.1982). "If such an excess appears reasonably possible, [the owner] will be barred from taking advantage of the right to limit [the owner's] liability unless [the owner] files his petition within the six-month period." Id. at 34. Accord In re: Tom-Mac, Inc., 76 F.3d 678, 683 (5th Cir.1996) ("written notice of a claim sufficient to begin the interval is one which reveals a `reasonable possibility' that the claim made is one subject to limitation") (citing Morania, 690 F.2d at 34).

Bailey and Bartlett argue that their letters qualify as claims that trigger the six-month limitations period. The court disagrees, as the letters are insufficient to put UFO on notice that Bailey and Bartlett were potentially making a claim against UFO for more than $25,208, the value of the boat and its then pending cargo.

The letters from Bailey's attorney are clearly insufficient to provide UFO with notice that Bailey was making a claim that exceeded the value of the vessel as they merely stated that Bailey "has suffered several injuries, including back injuries." See Exs. 1 and 2. There is no description in the letters as to the severity of Bailey's injuries, the amount of treatment Bailey had undergone for those injuries, or the pain and suffering Bailey underwent as a result. Nor does the letter clearly inform UFO that Bailey is making a claim against it. At most, the letter asks that UFO forward the letter to its insurance carrier. Id.

Although...