In the Matter of the Complaint of Cindia Deng and Norman Liu

Filing 102

OMNIBUS ORDER RE CROSS-MOTIONS TO DISMISS, MOTION TO SET ASIDE DEFAULT AND LIFT INJUNCTION, AND MOTIONS TO STRIKE re 61 MOTION to Dismiss Claims in and Complaint of Victre Tse and Steven Shi Han Zeng filed by Cindia Deng, Norman Liu, 80 MOTION to Strike 72 Declaration in Opposition, 74 Declaration in Opposition, 73 Declaration in Opposition, and Objection Thereto filed by Cindia Deng, Norman Liu, 63 MOTION to Set Aside Default and Lift Injuncti on filed by Stephen Shi Han Zeng, Victor Tse, 70 MOTION to Dismiss NOTICE OF MOTION AND MOTION TO DISMISS COUNTER-CLAIM AGAINST JIN D. GUAN (PURSUANT TO F.R.C.P. 12b(6)); AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF fi led by Jin Di Guan, 76 MOTION to Strike 74 Declaration in Opposition, 73 Declaration in Opposition, and Objections To Same filed by Cindia Deng, Norman Liu. Signed by Judge William Alsup on April 3, 2014. (whalc4, COURT STAFF) (Filed on 4/3/2014)

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1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 9 United States District Court For the Northern District of California 10 11 12 13 14 In the Matter of the Complaint of Cindia Deng, as Administrator of the ESTATE OF CARL DENG, and NORMAN LIU, an individual, as owners of the Fishing Vessel, a 24-Foot Sea Swirl Striper, Model Number 2301, Serial Number GSSNF009F203, Official Number CF 9242 PX, California Department of Motor Vehicles Registration N897884 for Exoneration from or Limitation of Liability. / No. C 13-02659 WHA; C 13-05071 WHA JIN D. GUAN, individually and as personal representative of the Estate of Decedent and Wife of Ping Yau Tsang, and as Mother of Jay Len Tsang, a Minor, OMNIBUS ORDER RE CROSSMOTIONS TO DISMISS, MOTION TO SET ASIDE DEFAULT AND LIFT INJUNCTION, AND MOTIONS TO STRIKE 15 Respondents and Counter-claimants, 16 v. 17 18 19 20 CINDIA DENG, as Administrator of the Estate of Carl Deng and Norman Liu, an individual, as owners of the Fishing Vessel, a 24-Foot Sea Swirl Striper, Model Number 2301, Serial Number GSSNF009F203, Official Number CF 9242 PX, California Department of Motor Vehicles Registration N897884, Plaintiffs and Counter-defendants. 21 / 22 VICTOR TSE and STEVEN SHI HAN ZENG, 23 Plaintiffs, 24 v. 25 26 27 CINDIA DENG, as Administrator of the Estate of Carl Deng, Deceased, Defendant. / 28 1 2 INTRODUCTION In this admiralty action, the parties have filed three motions to dismiss, a motion to set 3 aside default and lift an injunction, and two evidentiary motions to strike. For the reasons stated 4 below, Victor Tse and Steven Zeng’s motion to dismiss the complaint in limitation for lack of 5 subject-matter jurisdiction is DENIED. Victor Tse and Steven Zeng’s motion to dismiss for 6 failure to state a claim is DENIED. Victor Tse and Steven Zeng’s motion to set aside entry of 7 default and to lift the injunction is GRANTED. Cindia Deng and Norman Liu’s motion to dismiss 8 is DENIED. Jin D. Guan’s motion to dismiss is GRANTED. Cindia Deng and Norman Liu’s 9 motions to strike are DENIED. United States District Court For the Northern District of California 10 STATEMENT DISASTER AT SEA AND SUBSEQUENT LETTERS. 11 1. 12 Carl Deng and Norman Liu were owners of a Sea Swirl Striper fishing vessel. On 13 September 30, 2012, Carl Deng, Victor Tse, Steven Zeng, and Ping Yau Tsang traveled to Half 14 Moon Bay for a fishing trip. At sea, the vessel capsized and Carl Deng (an owner) and Ping Yau 15 Tsang (a passenger) died. Victor Tse (another passenger) suffered a “skull fracture, a fracture of 16 vertebra, and a shoulder injury” (Tse Decl. ¶ 13). Steven Zeng (another passenger) suffered 17 hypothermia and a “severe shoulder dislocation.” He was evacuated by helicopter to Stanford 18 Hospital and “subsequently had shoulder surgery” (Tse Decl. ¶ 13, Zeng Decl. ¶ 13). In brief, in 19 the disaster two individuals (an owner and a passenger) died and two individuals (two 20 passengers) were injured. 21 Following the disaster, Allstate Insurance Company initiated contact with passengers 22 Victor Tse and Steven Zeng (Tse Decl. ¶ 6, Zeng Decl. ¶ 6). Owners Carl Deng and Norman Liu 23 had a boat-owner insurance policy with Allstate (Schultz Decl. Exh. A). Victor Tse, Steven 24 Zeng, and the estate of Ping Yau Tsang received letters from Allstate, dated November 1, 2012, 25 which stated: 27 INSURED: CARL DENG DATE OF LOSS: September 30, 2012 CLAIM NUMBER: 026132619 NKT 28 Re: Claim Acknowledgment 26 2 1 Dear [Victor Tse / Steven Zeng], 2 I’m writing to let you know that I will be the Allstate Insurance Company adjuster handling your claim, which we have listed above. 3 4 5 6 7 8 9 United States District Court For the Northern District of California 10 Please feel free to call me if you have any questions or concerns or if you learn of any additional information pertinent to your claim. If I’m not available when you call, please leave a message, including a telephone number where we may reach you, and I will return your call at the first opportunity. We have a dedicated team of claim professionals that can assist you during the claim process. Just so you are aware, one or more Allstate Insurance Company representatives may contact you about different aspects of your claim. However, you can call me at any time if you become concerned about the progress of your claim. Sincerely, KAREN TAKEUCHI 11 (Tse Decl. ¶¶ 14–16, Exh. A, Zeng Decl. ¶¶ 14–16, Exh. A). Dated the same day, Victor Tse and 12 Steven Zeng received the following letter: 13 14 15 INSURED: CARL DENG DATE OF LOSS: September 30, 2012 CLAIM NUMBER: 026132619 NKT LOCATION OF LOSS: Pigeon Point, Pescadero, CA CLAIMANT(S): [Victor Tse / Steven Zeng] 16 Re: Your Claim Status 17 Dear [Victor Tse / Steven Zeng], 18 We are writing to update you on the status of the claim listed above. 19 Currently: 20 • Our investigation of the loss is continuing. • Our medical and or wage investigation is continuing. 21 22 23 We will continue to update you on the status of the claim until it is resolved . . . . 24 (Tse Decl. Exh. B, Zeng Decl. Exh. B). In a letter from Allstate to Steven Zeng, dated 25 November 13, 2012, Allstate wrote: 26 27 INSURED: CARL DENG DATE OF LOS: September 30, 2012 CLAIM NUMBER: 026132619 NDS 28 Dear Steven Zeng, 3 1 I am sorry to hear of your recent injury, and I wish you a speedy recovery. Please rest assured that I will do my best to handle your claim as quickly as possible. 2 3 I would like to confirm that under the terms of the Watercraft Medical Payments provision of the Boatowners Policy with Allstate Insurance Company, in (sic) benefits are available to you for services or medical products actually provided to you as a direct result of injuries received in this accident. All treatment, services and/or products must be rendered within three years after the date of this accident. 4 5 6 7 So that I may give you the best results possible, the enclosed Medical/Employer Authorization(s) should be fully completed and returned to Allstate Insurance Company in the envelope provided . . . . 8 9 (Svistun Decl. Exh. A). Victor Tse received a largely similar letter from Allstate, dated United States District Court For the Northern District of California 10 December 12, 2012. Another letter, dated December 3, 2012, was sent to Steven Zeng asking 11 again for his Medical/Wage Authorization form (id. Exh. B). 12 On or around December 15, 2012, Victor Tse sent his response to the Medical/Wage 13 Authorization form (Tse Decl. ¶ 3, Exh. A). 14 On December 17, 2012, Steven Zeng, via his wife Fanny Zeng, received $355 as 15 reimbursement for co-payments (Dkt. No. 95, Zeng Decl. ¶ 3, Exh. A). 16 In a letter from Allstate to Victor Tse, dated December 31, 2012, Allstate stated in 17 relevant part: 18 We are in receipt of bills . . . totaling $805.00, however, the amount remaining under the $1,000 medical payments coverage for this loss is $643.10. We are sending payment to you in the amount $643.10 . . . and are continuing our investigation of the liability of your injuries. 19 20 21 (Tse Decl. Exh. E). From December to February, Tse and Zeng received more letters from 22 Allstate. 23 On January 24, 2013, Victor Tse and Steven Zeng were interviewed by Allstate (Tse 24 Decl. ¶ 25, Zeng Decl. ¶ 25). They then received letters, dated April 22, 2013. In an about-face, 25 those letters stated: 26 27 INSURED: CARL DENG DATE OF LOSS: September 30, 2012 CLAIM NUMBER: 021032619 NEL 28 Dear [Victor Tse / Steven Zeng], 4 1 This letter is in regards to your boating accident of (sic) the coast of Pigeon Point, Pescadero, California on September 30, 2012. 2 Unfortunately, we are not accepting liability for this accident. Therefore, we are denying the liability claim. As you are aware, we interviewed you and the other survivor and it is clear our insured was not negligent for the accident. The guest medical payments coverage has been offered and is $1000.00 . . . . 3 4 5 Sincerely, ERIC LOUIE 6 7 (Tse Decl. Exh. I, Zeng Decl. Exh. I) (emphasis added). 8 2. 9 In June 2013 — approximately eight months after the disaster, seven months after the IN RE THE MATTER OF THE COMPLAINT OF CINDIA DENG. United States District Court For the Northern District of California 10 first letter from Allstate (dated November 1, 2012), and more than a month after the denial-of- 11 liability letter from Allstate (dated April 22, 2013) — plaintiffs in limitation Cindia Deng and 12 Norman Liu filed a “complaint for exoneration from or limitation of liability.” In re the Matter 13 of the Complaint of Cindia Deng, No. 3:13-cv-02659-WHA (N.D. Cal. June 10, 2013). The 14 complaint alleged that: 15 16 17 18 Zeng and Tse have not yet filed suit against Plaintiffs, but . . . may assert claims and/or bring suit for alleged injury or other damages arising from the aforementioned capsizing. * * * 19 Not more than six months have elapsed between Plaintiffs’ receipt of notice of any claim or suit arising from the aforementioned capsizing and the filing of this action for exoneration or limitation. 20 (Compl. ¶¶ 25, 30). In other words, Cindia Deng and Norman Liu sought to limit their liability 21 arising from the disaster at sea. 22 23 24 25 26 27 Upon application, a July 2013 order of injunction and monition provided for notice of the complaint. The order stated: That pursuant to Rule F(4) of the Supplemental Admiralty Rules, notice shall issue out of and under the seal of this Court in the form attached hereto entitled “Notice of Complaint for Exoneration From or Limitation of Liability,” to all persons asserting claims with respect to which the complaint seeks exoneration or limitation, admonishing them to file their respective claims, if at all, with the Clerk of the Court and to serve on the attorneys for the Plaintiffs a copy thereof on or before July 26, 2013; 28 5 1 2 3 4 5 That such notice shall be published in The Recorder, a newspaper published in the San Francisco Bay Area, once a week for four consecutive weeks prior to August 9, 2013; and, That Plaintiffs shall, not (sic) later than the day of second publication, also mail a copy of the notice to every person known to have made any claim against the Sea Swirl or the Plaintiffs arising out of the collision, voyage or trip on or out of which the claims sought to be limited arose. (Dkt. No. 13) (emphasis added). The notice was printed in THE RECORDER on July 8, July 15, 7 July 22, and July 29 — a local weekly, read mainly by lawyers (Dkt. No. 29-5). Rule F(4) of the 8 Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions 9 (“Supplemental Admiralty Rule”) provides for notice to be published in a newspaper “once a 10 United States District Court For the Northern District of California 6 week for four successive weeks prior to the date fixed for the filing of the claims” and for the 11 plaintiff to mail a copy of the notice “to every person known to have made any claim against the 12 vessel or the plaintiff arising out of the voyage or trip on which the claims sought to be limited 13 arose.” The July 2013 notice by the Clerk stated: 14 15 16 17 18 19 20 NOTICE is hereby given . . . that Plaintiffs Cindia Deng, as Administrator of the Trust and Estate of Carl Deng, and Norman Liu, an individual, owners of a fishing vessel . . . Sea Swirl, have filed a complaint . . . claiming the right to exoneration from or limitation of liability for all claims against them for injury or other damage resulting from the capsizing of the Sea Swirl in the Pacific Ocean which occurred on or about September 30, 2012. All persons having such claims and wishing to contest Plaintiffs’ complaint must file such claims, if at all, as provided by Rule F of the Supplemental Admiralty Rules, with the Clerk of this Court . . . and serve copies of them on or mail to the Plaintiff’s attorneys . . . on or before July 26, 2013, or be defaulted. A personal appearance is not required. 21 (Dkt. No. 14) (emphasis in original). In June and July, the complaint in limitation, notice, and 22 July 2013 order, among other documents, were mailed to “all known potential claimants” 23 (Dkt. Nos. 29, 29-4, Schultz Decl. ¶¶ 3, 6). Steven Zeng and Victor Tse learned about the action 24 in June 2013 (Dkt. Nos. 92, 99, Tse Decl. ¶ 8, Zeng Decl. ¶ 7). 25 In August 2013, Jin D. Guan (the widow of the decedent, Ping Yau Tsang), as a 26 representative of the estate of Ping Yau Tsang and the mother of Jay Len Tsang (a minor), filed 27 an answer and counterclaim. (The parties stipulated to extend Jin Guan’s time to answer 28 (Dkt. Nos. 15, 18).) 6 1 At the September 2013 hearing, Cindia Deng and Norman Liu requested entry of default 2 against all potential claimants who had not appeared. The request was granted. The September 3 2013 order stated that default was entered against “all persons claiming damages for any and all 4 losses or damages of any nature whatsoever resulting from the September 30, 2012 incident 5 involving the SEA SWIRL, who have not filed their claims herein” (Dkt. Nos. 28, 31). Default 6 judgment has not yet been entered. 7 3. 8 In October 2013 — approximately six months after the Allstate letter, dated April 22, 9 VICTOR TSE AND STEVEN ZENG. 2013, and three months after the July 26, 2013, deadline — Victor Tse and Steven Zeng filed a United States District Court For the Northern District of California 10 “complaint for damages for maritime personal injury.” Tse, et al. v. Deng, No. 11 3:13-cv-05071-WHA (N.D. Cal. Oct. 30, 2013). The actions were then related and subsequently 12 consolidated in February 2014. 13 In November 2013, Jin D. Guan, Cindia Deng, and Norman Liu appeared for a discovery 14 hearing regarding claim-file documents from Allstate. In the main, pursuant to the subpoena, 15 Allstate was to produce written documents and correspondence from the date of the disaster to 16 December 10, 2012 (Dkt. No. 46). After two mediation sessions with Matthew P. Vafidis (an 17 attorney at Holland & Knight) in December and February, the parties were unable to settle their 18 dispute. 19 The first amended case management scheduling order states that fact discovery closes on 20 August 28, the last date to file dispositive motions is October 2, and a bench trial will begin 21 December 8, 2014 (Dkt. No. 59). 22 Currently, there are several pending motions: (1) Cindia Deng and Norman Liu’s motion 23 to dismiss all claims by Victor Tse and Steven Zeng; (2) Victor Tse and Steven Zeng’s motion to 24 set aside default, lift injunction, and dismiss all claims by Cindia Deng and Norman Liu; and (3) 25 Jin D. Guan’s motion to dismiss the negligence and property damage counterclaims by Cindia 26 Deng and Norman Liu. Cindia Deng and Norman Liu have also filed two separate evidentiary 27 motions to strike. 28 7 1 2 A March 21 order provided the parties an additional opportunity to complete the record in advance of the hearing on April 3. This order follows full briefing and oral argument. 3 ANALYSIS 4 1. LIMITATION ON LIABILITY. 5 Our court of appeals has noted the “misshapen from the start” and “arthritic with age” 6 nature of the Limitation of Shipowners’ Liability Act, 46 U.S.C. 30501, et seq., originally 7 enacted in 1851 (formerly 46 U.S.C. 181, et seq.). Esta Later Charters, Inc. v. Ignacio, 875 F.2d 8 234, 237 (9th Cir. 1989). To this end, this order briefly summarizes the limitation of liability 9 procedure. When faced with liability, a vessel owner may file a complaint in limitation. Title 46 United States District Court For the Northern District of California 10 of the United States Code Section 30505(a) states, in relevant part, that “the liability of the 11 owner of a vessel for any claim, debt, or liability described in subsection (b) shall not exceed the 12 value of the vessel and pending freight.” The following claims are subject to limitation: 13 14 15 16 Unless otherwise excluded by law, claims, debts, and liabilities subject to limitation under subsection (a) are those arising from any embezzlement, loss, or destruction of any property, goods, or merchandise shipped or put on board the vessel, any loss, damage, or injury by collision, or any act, matter, or thing, loss, damage, or forfeiture, done, occasioned, or incurred, without the privity or knowledge of the owner. 17 46 U.S.C. 30505(b) (emphasis added). After the vessel owner deposits with a district court an 18 amount representing the value of the vessel and its freight, assessed after the damage or loss has 19 taken place (“limitation fund”), the district court may direct all potential claimants to file their 20 claims with the court by a specified time (“monition period”) or risk default. This “concursus” 21 of claims compels all actions arising out of the loss at sea to be disposed of in a single 22 proceeding (with the exception of foreign tribunals). At trial, there is a two-step analysis. First, 23 the claimants must prove that the destruction or loss was caused by the negligence or 24 unseaworthiness of the vessel. N. Fishing & Trading Co., Inc. v. Grabowski, 477 F.2d 1267, 25 1272 (9th Cir. 1973). Second, the burden shifts to the vessel owner to demonstrate no privity or 26 knowledge of those acts of negligence or conditions of unseaworthiness. If the vessel owner is 27 found liable and limitation is granted, then the district court distributes the limitation fund. In re 28 Muer, 146 F.3d 410, 414 (6th Cir. 1998). 8 1 2. VICTOR TSE AND STEVEN ZENG’S MOTION TO DISMISS THE COMPLAINT IN LIMITATION FOR LACK OF SUBJECT-MATTER JURISDICTION. 2 Section 30511 of Title 46 of the United States Code states (emphasis added): 3 4 5 The owner of a vessel may bring a civil action in a district court of the United States for limitation of liability under this chapter. The action must be brought within 6 months after a claimant gives the owner written notice of a claim. 6 See also Supplemental Rules for Admiralty or Maritime Actions and Asset Forfeiture Actions 7 (“Supplemental Admiralty Rule”) Rule F(1). 8 9 The complaint in limitation was filed on June 10, 2013. If a claimant had given the owners written notice of a claim before December 10, 2012, the complaint in limitation would United States District Court For the Northern District of California 10 have been untimely (Br. 6–7, Opp. 5). No written notice of a claim by a claimant was given 11 prior to December 10, 2012. Therefore, the complaint in limitation was timely. 12 In arguing invalidity of the complaint in limitation and subsequent bar order, the 13 defaulting claimants have tried mightily to concoct evidence of a written claim before December 14 10, 2012. A March 21 order provided the parties an additional opportunity to complete the 15 record in this regard. The vessel owners, however, stated that they “did not receive any written 16 notice that any person or entity was making a claim arising out of the September 30, 2012, 17 boating accident during the time period from September 30, 2012, through December 10, 2012” 18 (Dkt. Nos. 89, 90, Deng Decl. ¶ 2, Liu Decl. ¶ 2). 19 20 21 22 23 24 From the claimants’ side, Steven Zeng stated: I sent no written correspondence to Cindia Deng or Norman Liu concerning my claim arising from the boating incident on September 30, 2012. I sent no written correspondence to Allstate Insurance Company concerning my claim arising from the boating incident on September 30, 2012 between that date and June 10, 2013, however I am informed and believe based on my conversations with my wife Fan[n]y Man Yee Li Zeng, that she completed and sent documents and correspondence to Allstate on my behalf. 25 (Dkt. No. 92, Zeng Decl. ¶¶ 2, 3) (emphasis added). Other than the communications with 26 Allstate, he had “no other communications with Cindia Deng or Norman Liu concerning his 27 claim arising from the boating incident” (id. ¶ 5). His wife could only state that to the “best of 28 [her] recollection” she sent receipts and bills to Allstate “during the month of November, 2012” 9 1 (Dkt. No. 95, Fanny Zeng Decl. ¶ 2). Allstate responds that, upon reviewing its file, from 2 September 2012 through December 10, 2012, “Allstate did not receive written notice that any 3 individual stated any intention to assert third party claims” (as opposed to claims from the vessel 4 owners) (Dkt. No. 88, Takeuchi Decl. ¶ 5). 5 Victor Tse’s response was much the same. He sent his medical and employer 6 information to Allstate on or around December 17, 2012, and said he first mailed co-payment 7 receipts in or around November 2012 (Dkt. No. 99, Tse Decl. ¶ 3). Allstate received the receipts 8 on November 19, 2012, and they totaled “a couple of hundred of dollars, which is less than the 9 amount of coverage provided by the Allstate policy issued to Mr. Deng” (Dkt. No. 88, Takeuchi United States District Court For the Northern District of California 10 Decl. ¶ 15, Exh. I). As explained below, none of these correspondences rose to the level of 11 giving written notice of a claim by a claimant because they did not reveal a reasonable 12 possibility that the claim is one subject to limitation. 13 The defaulted claimants resort to reliance on letters from Allstate to Victor Tse, Steven 14 Zeng, and the estate of Ping Yau Tsang, dated November 1. That is, Allstate itself sent out the 15 letters described above and those letters, it is said, started the six-month period running. But the 16 statute of limitations required that the “claimant” give written notice. 46 U.S.C. 30511. Allstate 17 was not the claimant. To hold otherwise would erase the “claimant” language in Section 30511. 18 In any event, the Allstate letters did not reveal a reasonable possibility that the claim 19 would exceed the value of the vessel. Therefore, the Allstate letters did not satisfy the 20 “reasonable possibility” test imposed by four circuits (but not yet addressed by our court of 21 appeals). See, e.g., In re Eckstein Marine Serv. L.L.C., 672 F.3d 310, 317 (5th Cir. 2012), cert. 22 dismissed, 133 S. Ct. 96 (2012); Paradise Divers, Inc. v. Upmal, 402 F.3d 1087, 1091 (11th Cir. 23 2005); Complaint of McCarthy Bros. Co./Clark Bridge, 83 F.3d 821, 829 (7th Cir. 1996); 24 Complaint of Morania Barge No. 190, Inc., 690 F.2d 32, 33 (2d Cir. 1982). This is merely an 25 alternative ground. The main point is the statutory “claimant” requirement. 26 27 Accordingly, the motion to dismiss the complaint in limitation based on lack of subjectmatter jurisdiction by virtue of correspondence from Allstate is DENIED. 28 10 1 3. VICTOR TSE AND STEVEN ZENG’S MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF CAN BE GRANTED. 2 Having failed to invalidate the complaint in limitation, Victor Tse and Steven Zeng next 3 seek to “set aside the default and lift the injunction as to Deng because she cannot state a claim 4 for relief under the Limitation of Liability Act.” They say that because Carl Deng, the late 5 husband of Cindia Deng, was the owner and operator, he is “statutorily precluded from invoking 6 the remedies afford by the Act as to his own negligence.” Not so. 7 In a limitation action, the district court is charged with a two-step inquiry: (1) 8 determining whether there was negligence or unseaworthiness, and (2) the owner’s knowledge or 9 privity. If neither is shown, then the vessel owner is entitled to a limitation of liability. See N. United States District Court For the Northern District of California 10 Fishing & Trading Co., 477 F.2d at 1272. 11 12 13 14 15 16 17 Under the Limitation Act, a ship owner is entitled to exoneration if he, his vessel, and crew are found to be completely free of fault. Even if not completely free of fault, the ship owner is entitled to limitation of liability if the ship owner had no knowledge or privity to the ship’s negligence or unseaworthiness. The burden of proving negligence lies on the person claiming to be injured, but once negligence is established, the vessel’s owner must prove lack of knowledge or privity to the negligence. In re Cleveland Tankers, Inc., 67 F.3d 1200, 1203 (6th Cir. 1995). At this stage of litigation, the claimants have not made a conclusive showing of 18 negligence. Instead, they urge that their alleging of facts that would support a finding of 19 knowledge or privity (the second step in the inquiry) requires dismissal of the complaint in 20 limitation. Because Carl Deng was both the owner and operator of the vessel, they argue, he, 21 therefore, must have had knowledge or privity as to any negligence that might have occurred. 22 This order disagrees. These are matters of fact to be decided at trial. 23 Claimants cite several decisions to support their position that where an owner is actually 24 in control of, or operating, a vessel at the time of the accident, that owner is precluded from 25 limiting his liability. The loss in In re Complaint of Ingolia, 723 F. Supp. 512 (C.D. Cal. 1989) 26 (Judge Stephen Wilson), arose out of an accident where a motorboat struck a wave while the 27 owner was operating the boat. The district court found that the Fifth Circuit decision in Fecht v. 28 Makowski, 406 F.2d 721 (5th Cir. 1969), was “directly on point” and, like Fecht, held that “[i]f 11 1 there was negligence in the operation of the motorboat, only [the operator] could have been 2 guilty of it.” Id. at 515. The district court in Petition of Follett, 172 F. Supp. 304, 305 (D. Tex. 3 1958) (Judge Ben Connally), reached the same conclusion when the owner and operator of a 4 motorboat collided with another speedboat. The court based its decision on the fact that “[n]o 5 other party was alleged to have been with them, either as pilot or passenger.” Ibid. 6 On the other hand, the district court in In re Arntz, 380 F. Supp. 2d 1156, 1159 (C.D. Cal. 7 2005) (Judge James Selna), held that an owner and operator of a vessel that left a scuba diver at 8 sea for several hours was not precluded from limiting his liability as a matter of law. The district 9 court noted that “[w]hile it may be difficult given the circumstances of this case, [the owner] is United States District Court For the Northern District of California 10 entitled to an opportunity to present facts to demonstrate that his conduct was in all respects 11 prudent.” Id. at 1160. This order sides with Judge James Selna and will allow the facts to be 12 developed before leaping to a categorical conclusion. 13 In this connection, please note that the Fifth Circuit decision Fecht and its progeny — 14 have been heavily criticized by other circuits. Muer v. Karbel, 146 F.3d 410 (6th Cir. 1998); 15 Petition of M/V Sunshine, II, 808 F.2d 762, 765 (11th Cir. 1987) (quoting Gilmore and Black, 16 The Law of Admiralty, Sections 10–23 & n.93). 17 Although our court of appeals has yet to comment on Fecht, two circuits have and have 18 rejected Fecht. This order will allow the vessel owner (or his representative) to proceed to 19 summary judgment and/or trial to try to establish he acted without negligence and without privity 20 or knowledge of negligence by others. The motion to dismiss the complaint in limitation is 21 DENIED. 22 4. 23 On March 3, Cindia Deng and Norman Liu filed a five-page motion to strike the MOTIONS TO STRIKE. 24 declarations of Victor Tse and Steven Zeng because (1) Victor Tse and Steven Zeng “do not read 25 or speak English fluently, and therefore, they cannot be considered to have personal knowledge 26 of the detailed English statements made in their declarations,” (2) the declarations refer to 27 statements outside the complaint, and (3) the declarations contain hearsay and lack foundation 28 (Dkt. No. 76). On March 7, Cindia Deng and Norman Liu filed a five-page motion to strike the 12 1 declaration of John Hughes (counsel for Victor Tse and Steven Zeng) and to strike the second set 2 of declarations of Victor Tse and Steven Zeng because of the above-stated reasons and for “legal 3 conclusion and arguments” in the declaration (Dkt. No. 80). Victor Tse and Steven Zeng filed 4 responses (Dkt. Nos. 83, 84, 86). 5 6 7 First, the request to strike any paragraphs not relied upon in this order is DENIED AS MOOT. Second, Local Rule 7-3 states, “[a]ny evidentiary and procedural objections to the motion 8 must be contained within the brief or memorandum.” The failure to comply with our district’s 9 local rules is reason enough to deny the motion to strike. United States District Court For the Northern District of California 10 5. VICTOR TSE AND STEVEN ZENG’S MOTION TO SET ASIDE ENTRY OF DEFAULT AND TO LIFT THE INJUNCTION. 11 Victor Tse and Steven Zeng move to set aside the entry of default pursuant to FRCP 12 55(c) which states: “[t]he court may set aside an entry of default for good cause.” Default 13 judgments are disfavored, and cases should be decided on their merits whenever reasonably 14 possible. Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985). Rule F(4) of 15 the Supplemental Admiralty Rules states “[f]or cause shown, the court may enlarge the time 16 within which claims may be filed.” The following factors are considered in deciding whether to 17 set aside entry of default: “(1) whether [the party seeking to set aside the default] engaged in 18 culpable conduct that led to the default; (2) whether [it] had [no] meritorious defense; or (3) 19 whether reopening the default judgment would prejudice the other party.” United States v. 20 Signed Pers. Check No. 730 of Yubran S. Mesle, 615 F.3d 1085, 1091 (9th Cir. 2010) (brackets 21 in original). 22 “Admiralty is administered with equitable liberality.” Texas Gulf Sulphur Co. v. Blue 23 Stack Towing Co., 313 F.2d 359, 362 (5th Cir. 1963). “[T]he granting or withholding of 24 permission to file claims after the expiration of the monition period is discretionary with the trial 25 court.” Meyer v. New England Fish Co. of Oregon, 136 F.2d 315, 316 (9th Cir. 1943). Our 26 claimants’ motion is essentially directed at permitting them to enter their claims, filed after the 27 July 26, 2013, deadline set in the notice. In determining whether to permit late claims, it is 28 important to consider “(1) whether the proceeding is pending and undetermined, (2) whether 13 1 granting the motion will adversely affect the rights of the parties, and (3) the claimant’s reasons 2 for filing late.” Golnoy Barge Co. v. M/T SHINOUSSA, 980 F.2d 349, 351 (5th Cir. 1993). 3 Here, Victor Tse and Steven Zeng were two of the four men on the capsized vessel. 4 Victor Tse suffered a “skull fracture, a fracture of vertebra, and a shoulder injury” (Dkt. No. 65, 5 Tse Decl. ¶ 13). Steven Zeng suffered hypothermia and a “severe shoulder dislocation.” He was 6 evacuated by helicopter to Stanford Hospital and “subsequently had shoulder surgery” (Dkt. No. 7 66, Zeng Decl. ¶ 13). They received a series of letters from Allstate, concluding with a letter in 8 April 22, 2013, which, reversed field, and stated: “we are not accepting liability for this 9 accident” (Zeng Decl. Exh. I). Notice of the complaint in limitation was provided. No one United States District Court For the Northern District of California 10 timely responded other than the wife of the other decedent, Jin D. Guan. Plaintiffs in limitation 11 quickly requested entry of default in September 2013 and the request was granted. 12 These claimants, Victor Tse and Steven Zeng, both have limited English fluency. Indeed, 13 the opposing side moves to strike their declarations for this reason. Unsurprisingly (and 14 indisputably), they did not timely file a claim by the July 2013 deadline (even though they were 15 served). In October 2013, when they obtained present counsel (after having prior counsel for a 16 short time in May and August 2013), they filed a complaint (Hughes Decl. ¶ 2). But by this 17 time, default had been entered. The limitation action, however, had been underway a mere four 18 months. 19 This order finds that the entry of default as to Victor Tse and Steven Zeng should be set 20 aside. These claimants — two of the four men on the vessel — were precisely the type of 21 claimants intended to be covered by this complaint in limitation. We must not forget that the 22 complaint in limitation expressly called out Victor Tse and Steven Zeng. We must also 23 remember that Allstate sent a series of letters that would reasonably have lulled recipients to 24 expect that Allstate would make good on any losses, only to reverse field in April 2013 and deny 25 all coverage. Recipients of such letters, expecting that medical expenses would be covered by 26 Allstate, would have naturally believed there was no need to incur the expense and effort to find 27 and retain an attorney. This sheds some insight on Victor Tse and Steven Zeng’s delayed 28 reaction to the complaint in limitation. Given the infancy of this action, the limited English 14 1 fluency of Victor Tse and Steven Zeng (asserted by plaintiffs in limitation themselves), and 2 claimants’ eventual filing of a complaint in October 2013 soon after counsel were retained, it is 3 fair to lift the default for Victor Tse and Steven Zeng. 4 There has been no showing of bad faith, intentional refusal to answer the complaint in 5 limitation, or mischievous attempt to manipulate the legal process supporting a finding of 6 culpable conduct that led to the default. None of the typical reasons for denying a motion to lift 7 a default are present here. Moreover, no prejudice would result to plaintiffs in limitation. There 8 is still much time remaining in discovery (which closes in August) and trial is set for December 9 2014. Furthermore, no default judgment has been entered. United States District Court For the Northern District of California 10 Accordingly, the motion to set aside entry of default as to Victor Tse and Steven Zeng is 11 GRANTED. Victor Tse and Steven Zeng also move to lift the injunction which “enjoin[ed] the 12 further prosecution of any action or proceeding against the plaintiff or the plaintiff’s property 13 with respect to any claim subject to limitation in the action.” Supplemental Admiralty Rule F(3). 14 The motion to lift the injunction as to Victor Tse and Steven Zeng is GRANTED. To be clear, 15 this relief is limited to Victor Tse and Steven Zeng. 16 6. CINDIA DENG AND NORMAN LIU’S MOTION TO DISMISS THE COMPLAINT BY VICTOR TSE AND STEVEN ZENG. 17 Next, Cindia Deng and Norman Liu, the ship owners, move to dismiss the consolidated 18 claims from Victor Tse and Steven Zeng’s “complaint for damages for maritime personal 19 injury.” Tse, et al. v. Deng, No. 3:13-cv-05071-WHA (N.D. Cal. Oct. 30, 2013). Cindia Deng 20 and Norman Liu argue that the claims should be dismissed (1) for lack of subject-matter 21 jurisdiction, (2) pursuant to FRCP 12(b)(6), and (3) under the “first-filed rule” (Dkt. No. 61). 22 First, Cindia Deng and Norman Liu argue that this Court lacks subject-matter jurisdiction 23 over Victor Tse and Steven Zeng’s personal injury claims pursuant to the Limitation of 24 Shipowners’ Liability Act and the July 26 order barring claims not asserted in that action. 25 Cindia Deng and Norman Liu contend that Victor Tse and Steven Zeng’s claims arising from the 26 disaster can no longer be considered because they were filed late. 27 28 15 1 For the reasons set forth above, the injunction against further prosecution of claims and 2 the entry of default as to Victor Tse and Steven Zeng are lifted. Accordingly, Cindia Deng and 3 Norman Liu’s subject-matter jurisdiction argument based on the July 26 order is moot. 4 Second, Cindia Deng and Norman Liu move to dismiss pursuant to FRCP 12(b)(6) 5 because Victor Tse and Steven Zeng’s claims were not filed within the time period specified by 6 the July 26 order. As stated above, FRCP 55(c) allows a district court to “set aside an entry of 7 default for good cause.” This has now been done. 8 Third, Cindia Deng and Norman Liu argue that Victor Tse and Steven Zeng’s personal 9 injury complaint should be dismissed because it violates the “first-filed rule.” The “first-filed United States District Court For the Northern District of California 10 rule” is a discretionary doctrine that permits district courts to decline judgment on an issue which 11 is properly before another court. “The comity doctrine permits a district court to decline 12 jurisdiction over a matter if a complaint has already been filed in another district.” Church of 13 Scientology of California v. U.S. Dep’t of Army, 611 F.2d 738, 749 (9th Cir. 1979). Here, no 14 such situation exists. Victor Tse and Steven Zeng’s claims have been related and consolidated 15 into this action and there is no pending action before another district court. Accordingly, Cindia 16 Deng and Norman Liu’s motion to dismiss is DENIED. 17 7. JIN D. GUAN’S MOTION TO DISMISS CINDIA DENG AND NORMAN LIU’S COUNTERCLAIM FOR FAILURE TO STATE A CLAIM. 18 Plaintiffs in limitation Cindia Deng and Norman Liu filed a counterclaim against Jin D. 19 Guan, the personal representative of the Estate of Tsang, for negligence and property damage 20 related to the disaster. Jin Guan moves to dismiss the counterclaim for failure to state a claim 21 and for being time-barred. This order only reaches the issue of failure to state a claim and finds 22 that dismissal is warranted because a passenger on a vessel owes no duty of care to an operator 23 or another passenger with respect to the operation of the vessel. 24 Jin Guan argues that the counterclaim does not plead one fact “that provides any basis of 25 any claim that Jin D. Guan or her deceased husband (Ping Yau Tsang) has any responsibility 26 and/or duty for this vessel capsizing.” Jin Guan argues that “as a clear matter of law, the control 27 and operation of the boat was placed in the hands of the owner and operator, Mr. Deng . . . and 28 cannot be in the hands of the passenger.” Jin Guan points to allegations in the complaint for 16 1 exoneration from or limitation of liability that Carl Deng owned and operated the Sea Swirl and 2 Tsang was a passenger (Compl. ¶¶ 5, 18, 19, 22, 23, 24). Jin Guan alleges that the June 2013 3 complaint “stated nothing therein that Mr. Tsang, in fact, caused anything (let alone was 4 negligent).” Finally, Jin Guan alleges that Cindia Deng and Norman Liu “answered the counter- 5 claim of Ms. Guan, filing no affirmative claim against Ms. Guan” (Br. 2, 3, 5). 6 counterclaim alleges that Ping Yau Tsang was engaged in a joint venture and that “Tsang, as a 7 voluntary, willing and enthusiastic participant in the fishing adventure, had an obligation to 8 ensure that it was conducted in a safe manner.” The counterclaim further alleges that “[b]y 9 failing to do so, Tsang caused or contributed to the overturning of the Sea Swirl, his own death, The United States District Court For the Northern District of California 10 the death of Deng, and the injuries, if any, to Tse and Zeng.” The counterclaim then lists the 11 allegedly negligent acts and/or omissions of Tsang, including failing to keep a proper lookout, 12 losing situational awareness, and failing to wear a life jacket at all times (Countercl. ¶¶ 3, 17, 13 18). 14 Pin Yau Tsang was a passenger on the vessel. A joint venture was not created because a 15 joint venture requires joint control and there is no allegation (nor could there be) that Pin Yau 16 Tsang had control of the vessel. A passenger on a vessel owes no duty of care with respect to the 17 operation of the vessel because the command of the vessel is up to the captain, master, or 18 owner/operator and all passengers are subject to their instruction. Only if one passenger has 19 taken upon himself a special duty and another passenger has relied thereon could there be a duty 20 of care from one passenger to another. No such allegation is made. Accordingly, the motion to 21 dismiss the counterclaim is GRANTED. Given that no viable scenario is suggested as an 22 alternative in the opposition, leave to amend will not be entertained. 23 CONCLUSION 24 For the reasons stated above, Victor Tse and Steven Zeng’s motion to dismiss the 25 complaint in limitation for lack of subject-matter jurisdiction is DENIED. Victor Tse and Steven 26 Zeng’s motion to dismiss for failure to state a claim is DENIED. Victor Tse and Steven Zeng’s 27 motion to set aside entry of default and to lift the injunction is GRANTED. Cindia Deng and 28 Norman Liu’s motion to dismiss is DENIED. Jin D. Guan’s motion to dismiss is GRANTED. 17 1 Cindia Deng and Norman Liu’s motions to strike are DENIED. Further motion practice is not 2 invited. Counsel should prepare for trial and only bring motions with a realistic probability of 3 success. 4 5 IT IS SO ORDERED. 6 7 Dated: April 3, 2014. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 8 9 United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18

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