Matter of Adventure Bound Sports, Inc.

• Decision Date: 15 November 1993
• Docket Number: No. CV 489-274.,CV 489-274.
• Citation: 837 F. Supp. 1244
• Parties: In the Matter of the ADVENTURE BOUND SPORTS, INC. and Andre Smith d/b/a Adventure Bound Sports for Exoneration from or Limitation of Liability.
• Court: U.S. District Court — Southern District of Georgia

837 F. Supp. 1244

In the Matter of the ADVENTURE BOUND SPORTS, INC. and Andre Smith d/b/a Adventure Bound Sports for Exoneration from or Limitation of Liability.

No. CV 489-274.

United States District Court, S.D. Georgia, Savannah Division.

November 15, 1993.

COPYRIGHT MATERIAL OMITTED

Barnard Portman, Savannah, GA, Matthew W. Monroe, Boca Raton, FL, for petitioners.

Edwin D. Robb, Jr., Savannah, GA, for claimant Laufman.

Jeffrey W. Laskey, Savannah, GA, for claimant Wentzel.

Robert S. Glenn, Jr., Savannah, GA, Frank R. Seigel, Atlanta, GA, for claimant Maclean.

Lawrence B. Lee, Asst. U.S. Atty., Savannah, GA, for movant.

ORDER AND MEMORANDUM

NANGLE, District Judge.

On June 4, 1989, Paul Wentzel and Warren Seeds were killed while on a recreational deep sea scuba diving trip organized and operated by Adventure Bound Sports, Inc. As a result, petitioners Adventure Bound Sports, Inc. ("Adventure Bound") and Andre Smith d/b/a Adventure Bound Sports ("Smith") filed this Petition for Exoneration from or Limitation of Liability pursuant to 46 U.S.C.A.App. §§ 183-189 (1958) (the "Limitation Act"). Adventure Bound represented that it was the owner of the M/B SEA HORSE, and Smith represented that he was the owner pro hac vice of the SEA HORSE as charterer. The Court issued a monition to all potential claimants ordering them to answer the complaint for exoneration or limitation.

In response to the monition, Barbara Laufman, individually and as natural guardian of Souletta Seeds Laufman, Warren Seeds' daughter, answered the Complaint and filed a claim against the Petitioners for $750,000 in compensation and damages for Seeds' death under the Death on the High Seas Act, 46 U.S.C.A.App. §§ 761-768 (1975) ("DOHSA").¹ Patricia D. Wentzel, individually and as the administratrix of the estate of Walter Paul Wentzel, Jr., answered the Complaint and filed a DOHSA claim against the Petitioners for $1,500,000.00 for Wentzel's death.

The Court bifurcated this case on the issues of liability and damages with the consent of the parties. Accordingly, the Court held a bench trial limited to the issues of exoneration from or limitation of the liability of Adventure Bound and Smith under the Limitation Act. After hearing the evidence, examining the exhibits, pleadings, stipulations,² and proposed findings of fact and conclusions of law of the parties, and viewing the SEA HORSE, this Court makes its Findings of Fact and Conclusions of Law as to the right of Adventure Bound and Smith to exoneration from or limitation of liability pursuant to 46 U.S.C.A.App. § 183 et seq.

FINDINGS OF FACT

On June 4, 1989, Paul Wentzel, Warren Seeds, and three other divers, Richard Sheppard, Charles Lapp, and Diane Ryan, left Savannah, Georgia aboard the SEA HORSE. Captain Robert Meador, who holds a Coast Guard license, was operating the boat and Michael Majer, the certified divemaster for the trip, was on board. The divers planned a drift dive at Snapper Banks, twenty-six miles from the Savannah lighthouse. Shortly before the SEA HORSE arrived at this destination, Meador informed Majer that he planned to dive that day, leaving Majer to operate the SEA HORSE during Meador's preparation for and diving. Majer did not have a Coast Guard license to operate the SEA HORSE with paying passengers on board.

Upon arriving at the dive site, Meador used standard navigational techniques to determine the position for the dive, and Majer threw a lead-weighted buoy into the water to mark the spot. Meador did not anchor the boat, and he left the engines idling, as was appropriate for a drift dive. Meador then left the helm of the boat to don his gear for the dive.

While Meador was putting on his scuba gear, the boat drifted out of position in relation to the buoy. Majer repositioned the boat so that the buoy would be closer to the dive platform. After Meador gave the command signal, the first dive party—Lapp, Wentzel, Seeds, and Meador—entered the water.

Approximately one minute after the divers entered the water, the remaining passengers heard an unusual "whining" noise coming from the area near the starboard engine. The engines of the boat were idling, and Majer thought that the gear shift was in neutral. Upon investigating, Majer heard the sound of something striking the hull of the vessel, and he shut off the engines. Moments later, a damaged scuba tank and Wentzel's face mask surfaced along the starboard side of the vessel. Majer immediately dove into the water to investigate and found Seeds' body wedged between the starboard shaft and the hull. Majer recovered Seeds' body. He and the other passengers administered CPR and attempted to contact the Coast Guard. Meador and Lapp surfaced a few minutes later, and swam to the boat.

The Coast Guard arrived approximately one hour later, and transported Seeds to the hospital, where he was pronounced dead on arrival. Later that afternoon, Majer conducted an underwater search and recovered Wentzel's body.

I. Decedents

Walter Paul Wentzel and Warren Seeds were servicemen in the United States military. Wentzel was born on March 21, 1960, and died on June 4, 1989. Seeds was born on September 28, 1954, and died on June 4, 1989. Based upon the men's military records and upon witnesses' testimony, the Court finds that both men were good soldiers who proceeded cautiously in dangerous situations.

The abilities of Seeds and Wentzel were sufficient to enable them to safely dive under the conditions at the Snapper Banks dive site. Both men had diving instruction and experience. Wentzel had been certified by the Professional Association of Diving Instructors ("PADI")³ as an open water diver,⁴ and had completed a significant portion of the PADI advanced diver training course. Seeds likewise had received a PADI certificate as an open water diver. On June 4, 1989, Wentzel and Seeds were in good health and were physically and mentally capable of performing the planned scuba dive.⁵ Neither man had previously participated in a dive trip organized by Adventure Bound.

II. Petitioners

A. Andre Smith; Andre Smith d/b/a Adventure Bound Sports

Andre Smith is an experienced and competent boat operator who, as a PADI-certified instructor, routinely trained divemasters at Adventure Bound, a scuba dive shop. Smith, doing business as Adventure Bound Sports, purchased the vessel FISH `N' FOOL on April 25, 1983 and renamed it the SEA HORSE. Smith determined the policy and procedures to be used by the divemaster, captain and crew when paying passengers were aboard the SEA HORSE.

The evidence clearly indicates that Smith operated Adventure Bound as a sole proprietorship. Smith testified under oath on March 30, 1990, in a deposition for a different case, that Adventure Bound was a sole proprietorship and that he borrowed money under the name "Andre Smith doing business as Adventure Bound Sports." On April 4, 1987, Smith borrowed $33,673,52 from First Union Bank to repair the SEA HORSE and consolidate business debts. First Union Bank issued the loan to "Andre Smith, d/b/a Adventure Bound Sports," rather than to a corporate entity, and Smith signed the loan documents in this manner. Smith signed a collateral note and security agreement, dated April 4, 1987, in a space designated for "Individual Borrower, Proprietorship, Partnership," rather than in a space designated for "Corporate Borrower." Furthermore, a credit application submitted by Smith to Dacor Diving Supplies on July 23, 1989, depicts Smith as the owner of Adventure Bound, a sole proprietorship, and on August 27, 1991, Dacor received a judgment against Andre Smith, d/b/a Adventure Bound Sports, for payment for diving supplies.

Smith paid all taxes for Adventure Bound, and filed all of Adventure Bound's tax returns as part of his personal income tax return. In addition, Smith used Adventure Bound funds to pay his personal bills, as follows: $16,960.57 in January 1989, $6,024.91 in February 1989, and $4,679.14 in March 1989. Smith also paid his April 1989 personal bills with Adventure Bound funds.

B. Adventure Bound Sports, Inc.

Smith filed Articles of Incorporation for Adventure Bound Sports, Inc. on October 1, 1979, at the office of the Georgia Secretary of State. The Articles named Smith as the sole stockholder and chief executive officer of Adventure Bound Sports, Inc. The Secretary of State administratively dissolved Adventure Bound Sports, Inc. on March 3, 1988. After September 1989, the dive shop closed and Smith did not conduct any further business either under the name "Andre Smith d/b/a Adventure Bound Sports," or under the name "Adventure Bound Sports, Inc."

On November 15, 1989, Adventure Bound Sports, Inc. applied to the Secretary of State for reinstatement as a domestic corporation; the office of the Secretary of State reinstated Adventure Bound Sports, Inc. on November 20, 1989. The Court finds that Adventure Bound Sports, Inc. applied for reinstatement in order to file the instant petition for exoneration or limitation from liability, which it filed on December 5, 1989, pursuant to section 185 of the Limitation Act.

III. Divers and Crew

Majer was the divemaster on the Snapper Banks trip. He received divemaster training in the military, and was certified by the YMCA. Smith converted Majer's YMCA certificate to a PADI certificate and further trained Majer in performing the various divemaster functions on Adventure Bound trips. As part of Majer's divemaster training, Majer accompanied Smith on diving trips where the licensed captain dived. In doing so, Smith tacitly approved and authorized Majer to pilot the vessel and allow the captain to dive when paying passengers were aboard the ship.⁶

Meador, the captain of the SEA HORSE on the date of the accident, was a licensed captain competent to handle the vessel. Majer, the divemaster, also had extensive experience operating vessels; he did not, however, possess a Coast Guard license to operate the SEA HORSE with...