Barnes v. Sea Hawaii Rafting, LLC et al
Filing
446
AMENDED FINDINGS OF FACT AND CONCLUSIONS OF LAW. "Pursuant to Federal Rule of Civil Procedure 59(e), an amended judgment shall enter in favor of Plaintiff Chad Barry Barnes and against Defendants in the amount of $279,406.12" ; Signed by JUDGE ALAN C. KAY on 10/5/2018. (afc)Amending Findings of Fact and Conclusions of Law, ECF 424 . COURTS CERTIFICATE of Service - Non-Registered CM/ECF Participants will be served on October 9, 2018 by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF). Docket text entry modified on 10/5/2018 to add reference to the Findings of Fact filed 9/6/2018 as ECF 424 . (afc)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
)
)
)
Plaintiff,
)
)
vs.
)
)
SEA HAWAII RAFTING, LLC;
)
KRIS HENRY; ALOHA OCEAN
)
EXCURSIONS, LLC; JOHN
)
DOES 1-20; MARY DOES
)
1-20; DOE CORPOPRATIONS
)
1-20; DOE PARTNERSHIPS
)
1-20; DOE ASSOCIATES
)
1-20; DOE GOVERNMENTAL
)
AGENCIES 1-20; AND OTHER
)
ENTITES 1-20, in personam;
)
AND M/V TEHANI, HA 1629-CP,
)
AND HER ENGINES, EQUIPMENT,
)
TACKLE, FARES, STORES,
)
PERMITS, FURNISHINGS, CARGO
)
AND FREIGHT; DOE VESSELS 1-20,)
in rem.
)
)
Defendants.
)
)
CHAD BARRY BARNES,
Civ. No. 13-00002 ACK-RLP
AMENDED FINDINGS OF FACT AND
CONCLUSIONS OF LAW
AMENDED FINDINGS OF FACT AND CONCLUSIONS OF LAW 1
This matter arises under admiralty law.
Plaintiff Chad
Barry Barnes was injured on July 3, 2012, by an explosion while
working as a seaman aboard in rem defendant M/V Tehani.
Exhibits (“Ex.”) 2 1, 27.
The Tehani is a 25-foot rigid-hull
1
See Order dated October 5, 2018, ECF No. 445.
Because Defendants failed to submit any exhibits at the nonjury trial, all citations to exhibits herein are to Plaintiff
Barnes’s exhibits admitted into evidence.
2
1
inflatable boat powered by twin outboard engines, Ex. 23, which
in personam defendant Sea Hawaii Rafting, LLC (“SHR”) owned at
the time of the accident, 3 Henry Tsti. Tr. 27:5‒9.
In Barnes v. Sea Hawaii Rafting, LLC, the Ninth
Circuit issued a writ of mandamus directing this Court to award
Barnes maintenance at the rate of $34 per day, subject to a
potential upward increase after trial.
Cir. 2018).
889 F.3d 517, 543 (9th
Further, the Ninth Circuit encouraged this Court to
sever the issue of maintenance and cure and expeditiously set it
for trial.
Id. at n.21.
On May 2, 2018, the Court entered a
minute order setting an expedited trial on Plaintiff Barnes’s
claims for maintenance and cure to commence on June 12, 2018.
ECF No. 314.
However, the parties requested a continuance of
that date, ECF Nos. 317, 319, so the Court entered a minute
order rescheduling the non-jury trial to commence on Tuesday,
July 31, 2018.
ECF No. 322.
On July 31, 2018, Barnes’s claim for maintenance and
cure came on for a three-day trial without a jury.
3
The issues
Kris K. Henry was the sole owner and manager of SHR. Henry is
not a defendant for purposes of this trial because he filed for
Chapter 13 bankruptcy protection in 2014, see In re Kristin Kimo
Henry, Case No. 14-01475, and the bankruptcy court recently
declined Barnes’s request for leave to assert in personam,
unsecured claims against Henry or his bankruptcy estate, see In
re Sea Hawaii Rafting, LLC, Case No. 14-01520, Dkt. 300 at pp.
13-14. That matter is currently on appeal before another
district judge in this district. See id. at Dkts. 301, 302.
2
for determination were: (1) the daily rate of maintenance—at
least $34 per day—to which Barnes is entitled; (2) the amount of
cure, if any, to which Barnes is entitled; (3) whether Barnes
has reached maximum medical cure; (4) whether SHR’s denial of
maintenance and cure was willful and wanton, justifying an award
of attorneys’ fees and punitive damages to Barnes; and (5) the
appropriate rate of pre-judgment interest, if any, applicable to
any judgment in favor of Barnes.
The Court, having carefully considered the testimony
of the witnesses, the exhibits in the record, and pursuant to
Rule 52(a) of the Federal Rules of Civil Procedure, makes the
following Findings of Fact and Conclusions of Law.
To the
extent that a Finding of Fact constitutes a Conclusion of Law,
the Court adopts it as such.
And to the extent that a
conclusion of Law constitutes a Finding of Fact, the Court also
adopts that assumption.
I.
FINDINGS OF FACT
A.
The Parties
1.
At all times material, plaintiff Chad Barry Barnes was
a resident of the District of Hawaii. Barnes was a seaman
serving on the M/V Tehani on July, 3, 2012.
Barnes Tsti. Tr.
24:4‒11; Order Granting in Part and Denying in Part Plaintiff’s
Motion for Summary Judgment as to Unseaworthiness, Negligence
Per Se, and Jones Act Negligence, and Dismissing Defendant M/V
3
Tehani for Lack of Jurisdiction at p. 19, ECF No. 197.
2.
At all times material, in personam defendant Sea
Hawaii Rafting, LLC (“SHR”) was a Hawaii limited liability
corporation with its principle place of business in Hawaii. 4
SHR
was Barnes’s employer at the time of the July 3, 2012 accident,
and Kris Henry was the owner and sole member of SHR.
Tsti. Tr. 17:20‒21, 27:5‒9.
Henry
On May 21, 2018, the bankruptcy
court in In re Sea Hawaii Rafting, LLC, Case No. 14-01520,
granted Barnes relief from the automatic bankruptcy stay to
proceed on his in personam claims against SHR.
Id. Dkt. 300 at
pp. 12-13.
3.
At all times material, in rem defendant the M/V Tehani
4
The Court allowed Henry to represent SHR in this case because
of the following unique circumstances: (1) Henry is the sole
member of SHR; (2) SHR has filed for bankruptcy; (3) SHR’s
attorneys in this case were allowed to withdraw because SHR was
no longer able to pay for their services; (4) while the Court
urged SHR to find another attorney, SHR was unable to do so even
after being given extensions for that purpose; (5) this case has
a long life of six years, and contrary to established law,
Barnes has not received required payments for maintenance and
cure, even though as an injured seaman, he was entitled to
prompt payment for maintenance and cure; and (6) the Ninth
Circuit has urged this Court to proceed expeditiously in
determining the amount of maintenance and cure to which Barnes
is entitled. “The general rule, widely recognized in federal
and state courts, is that a corporation can appear only through
an attorney.” Taylor v. Knapp, 871 F.2d 803, 806 (9th Cir.
1989) (citations omitted). However, as a Ninth Circuit court
has reasoned: “Allowing a sole shareholder to represent the
interests of a close corporation amounts to no more than
allowing the real beneficial owner of the corporation to
represent his own interests.” Id.
4
and her appurtenances (together with SHR, “Defendants”), was
located in the District of Hawaii.
The M/V Tehani was and is a
commercial vessel duly registered and/or documented by and with
the State of Hawaii, Division of Boating and Ocean Recreation.
E.g., Ex. 4 at pp. 3.
B.
The July 3, 2012 Accident
4.
On July 3, 2012, Henry called Barnes into work for SHR
because another deck hand was unable to work as scheduled.
Barnes Tsti. Tr. 24:4‒11.
5.
The two men arrived at the Honokohau Small Boat Harbor
in Kailua-Kona, Hawaii, and began to prepare the M/V Tehani for
SHR’s evening snorkeling trip.
Ex. 29; Henry Tsti. Tr. 30:20‒
25, 31:1‒13.
6.
After the initial preparations were complete, Henry
started to trailer the Tehani into the water.
Ex. 27 at p. 3;
Ex. 29 at p. 1.
7.
As the vessel was being lowered into the water, Barnes
began to start its engines.
Ex. 27 at p. 3; Ex. 29 at p. 1.
When Barnes started the second engine, there was an explosion
from under the floorboards which caused parts of the vessel to
be thrown into the air, striking Barnes on the back of the head
and injuring him.
8.
Ex. 27 at p. 3; Ex. 29 at p. 1.
The explosion and fire appear to have been caused by
fuel that had leaked out of the fuel tank through a missing bolt
5
in the fuel tank sender gauge; the fuel leaked into the Tehani’s
bilge and ignited when Barnes started the engine.
18.
Ex. 27 at p.
A United States Coast Guard investigation concluded that
the accident may have been avoided if Henry had installed a
required flammable vapor detector and mechanical exhaust system.
Id.
9.
Following the explosion, Barnes was transferred by
ambulance to Kona Community Hospital.
Id. at pp. 3, 13; Ex. 29
at p. 1; Henry Tsti. Tr. 42:9‒12.
10.
At Kona Community Hospital, Barnes received numerous
staples to reattach parts of his scalp.
Ex. 49 at p. 2; Henry
Tsti. Tr. 24:6‒8; Reumann Trial Tr: 35:9-37‒1.
released from the hospital later that day.
Barnes was
Ex. 27 at pp. 3, 13.
C.
Barnes’s Post-Accident Medical Treatment
11.
Following the July 3, 2012 accident, Barnes began to
receive treatment for his physical and psychological injuries at
the West Hawaii Community Health Center (“WHCHC”).
E.g., Ex. 50
at pp. 1, 98
12.
From August 2012 through the time of trial, WHCHC
psychiatrist Dr. Victoria Hanes, M.D. treated Barnes for various
psychological disorders, including: (1) Major Depressive
Disorder, Severe; (2) Cognitive Disorder Not Otherwise
Specified; and (3) Psychological Factors Affecting
Hypothyroidism, Diabetes Mellitus Type II, High Cholesterol, and
6
Tinnitus.
Ex. 50 at p. 1, 98; see generally Hanes Tsti. Tr. 47-
77.
13.
Dr. Hanes reported that Barnes’s primary symptoms are
chronic depressed mood, thoughts of self harm, and cognitive
disorganization.
Ex. 50 at pp. 1, 98; see generally Hanes Tsti.
Tr. 47-77.
14.
Barnes continues to schedule appointments with Dr.
Hanes to receive treatment for his various psychological
disorders and symptoms resulting from the July 3, 2012 accident.
Id. at 76:21-77:3.
15.
In addition, after seeing various primary care
providers since the July 3, 2012 accident, Ex. 50 at pp. 1, 98,
Barnes has received treatment from Dr. Heather Miner, M.D. since
September 4, 2013, Ex. 50 at p. 71; Miner Tsti. Tr. 49:6‒18.
16.
Dr. Miner observed that Barnes has several chronic
issues that are difficult to manage, including diabetes,
hypothyroidism, headaches, memory and cognition issues,
difficulty sleeping, Tinnitus. 5
Miner Tsti. Tr. 51:23‒25, 52:2‒
5
The Court notes that there is conflicting evidence regarding
whether Barnes was diagnosed with diabetes and hypothyroidism
before or after the June 3, 2012 accident. Dr. Marko Reumann’s
notes from Barnes’s first visit on August 17, 2012, list under
“Past medical history”: “Depression, hypothyroid, DM II [Type II
Diabetes], HTN [hypertension], Hyperlipidemia.” Ex. 50 at p.
39. When questioned whether the listing of diabetes and
hypothyroidism under “Past medical history” means that Barnes
had these conditions before the July 3, 2012 accident, Dr.
(Continued . . . .)
7
5, 55:10‒12, 57:5‒19, 59:1‒3.
17.
Dr. Miner most recently treated Barnes on July 12,
2018, and felt that he was making progress.
Id. at 69:7‒16.
Overall, Dr. Miner has observed that Barnes’ condition
fluctuates, but that he is in the most stable condition he has
been in since she began treating him.
18.
Barnes has another appointment scheduled with Dr.
Miner on October 17, 2018.
19.
Id. at 70:22‒25.
Miner Tsti. Tr. 70:15‒17.
From August 2012 through around February 2016,
Barnes’s also received treatment from Dr. Marko Reumann, M.D.
E.g., Ex. 49 at p. 39; Reumann Tsti. Tr. 30:16‒20, 71:13‒16.
Dr. Reumann testified as an expert in the field of general
neurology at trial, and stated that during the course of his
treatment of Barnes, Barnes suffered from severe headaches, neck
pain, and Tinnitus.
20.
Reumann Tsti. Tr. 31:18-32:7.
Dr. Reumann originally believed that Barnes’s symptoms
(Continued . . . .)
Reumann explained that he likely incorrectly listed those
diagnoses under that heading because WHCHC had earlier diagnosed
them during Barnes’s first post-accident visit. Reumann Tsti.
Tr. 44:23-45:23. Dr. Reumann admitted, however, that if he was
simply referring to WHCHC’s post-accident diagnoses, he “should
not have listed th[ose conditions] in th[at] way . . . .” Id.
at 45:18‒23. Additionally, Dr. Hanes testified that WHCHC’s
records from April 1, 2011 mention that Barnes was diagnosed
with diabetes by that date at the latest. Hanes Tsti. Tr. 52:7‒
21. However, Dr. Hanes testified that there is no indication
that Barnes was being treated for diabetes prior to July 17,
2012. E.g., Hanes Tsti. Tr. 84:5‒7.
8
Id. at 33:8‒25; Ex. 49
were due to a post-concussive syndrome.
at p. 2.
When Barnes’s symptoms persisted, however, it became
clear to Dr. Reumann that Barnes was experiencing chronic posttraumatic headache disorder, sensorineural hearing loss with
Tinnitus, and chronic insomnia and mood disorder with mild
cognitive impairment.
21.
Ex. 49 at p. 2.
Barnes’s post-traumatic headaches were found to be
medically intractable, and Dr. Reumann performed ten occipital
nerve blocks to provide Barnes with temporary pain relief.
Reumann Tsti. Tr. 53:2‒14; Ex 49 at p. 2.
Accordingly, Dr.
Reumann now believes it likely that Barnes sustained a
microscopic microstructural lesion to several parts of his brain
in the July 3, 2012 accident.
Reumann Tsti. Tr. 39:9‒18; Ex. 49
at p. 2.
22.
Dr. Reumann further opined that Barnes would benefit
from future treatment and would regress if unable to continue
his course of treatment.
p.p. 3-4.
Reumann Tsti. Tr. 74:5‒18; Ex. 49 at
When asked whether Barnes had reached maximum medical
cure, Dr. Reumann stated that Barnes had not.
75:18‒25.
Dr. Reumann also stated that Barnes needs continued
treatment and could continue to improve.
23.
Reumann Tsti. Tr.
Id.
Beyond the testimony of Henry and Barnes, SHR did not
submit any evidence or call any other witnesses at trial,
including with regard to Barnes’s past or current medical
9
conditions.
D.
Barnes’s Post-Accident Living Arrangements
24.
At the time of the July 3, 2012 accident, Barnes was
living in a two-bedroom, two-bathroom condominium, which cost
him $1,200.00 per month for rent and approximately $200.00 per
month for utilities.
Barnes Tsti. Tr. 19:25-21:22.
later lost that condominium unit.
25.
Barnes
Id. at 21:7‒16.
Within days of Barnes’s discharge from the hospital
following the July 3, 2012 accident, he began to stay with a man
named David Pane.
20:21-22:5.
Barnes Tsti. Tr. 30: 3‒12; Henry Tsti. Tr.
Henry or SHR provided Pane with one $600.00 check
on Barnes’s behalf to cover rent.
Barnes Tsti. Tr. 30: 3‒12;
Henry Tsti. Tr. 20:21-22:5.
26.
After leaving Mr. Pane’s residence, Barnes relocated
between many different rooms, apartments, and other living
arrangements.
Barnes Tsti. Tr. 35:19-36:10.
Barnes’s average
rent at these various locations was around $500.00-$700.00 per
month.
27.
Barnes Tsti. Tr. 36:1‒10.
Among these various places that Barnes stayed for a
period of time was the “ohana” house that Mr. William T.
Hughes’s daughter owned.
Hughes Tsti. Tr. 73:10‒14.
Mr. Hughes
and his family also began to transport Barnes to and from his
medical appointments, for meals and groceries, and for
prescriptions.
E.g., id. at 73:19-76:19, 80:8-82:10.
10
28.
During this time, Barnes could not pay or reimburse
Mr. Hughes or his family, but Barnes promised Hughes that he
would do so in the event he ever prevailed in this action or
found himself in a better financial situation.
E.g., id. at
85:23-86:15; Barnes Tsti. Tr. 29:6‒19.
29.
Barnes also spent short periods of time with his
mother on the United States mainland. E.g., Barnes Tsti. Tr.
36:14-37:1.
Further, Barnes’s mother helped to support him
while he was financially struggling.
30.
Id. at 14:20-15:5.
Barnes currently rents at a location that costs him
approximately $700.00 per month—$500.00 per month for rent and
around $200.00 per month for utilities.
Barnes Tsti. Tr. 17:7-
18:7.
E.
Barnes’s Post-Accident Food Costs
31.
Barnes submitted evidence that his food costs average
up to $45.00 per day.
Ex 16 at p. 1.
Because the places that
he lived post-July 3, 2012 accident often lacked kitchens, he
was forced to have most of his meals at restaurants.
32.
Id.
Barnes also submitted evidence that, if he were able
to buy groceries to prepare every meal in his own kitchen, he
would require at least $25.00 per day comprising $5.00 per day
for breakfast, $8.00 per day for lunch, and $12.00 per day for
dinner.
33.
Id. at pp. 12-13.
Mr. Hughes estimated that an average breakfast and
11
lunch in Kailua-Kona, Hawaii would cost between approximately
$10.00 and $12.00, while lunch would cost around $12.00.
Hughes
Tsti. Tr. 82:3‒10.
34.
For his part, Henry testified that he believes three
meals per day would cost up to $37.00 per day. Henry Tsti. Tr.
28:23-30:1.
F.
Legal Proceedings and Defendants’ Post-Accident
Conduct
35.
As stated above, Henry or SHR provided David Pane with
one $600.00 check on Barnes’s behalf to cover rent following the
July 3, 2012 accident.
Barnes Tsti. Tr. 30: 3‒12; Henry Tsti.
Tr. 20:21-22:5.
36.
On January 1, 2013, Barnes filed a Verified Complaint
against SHR, Henry, and a number of Doe defendants, in personam,
and M/V TEHANI, HA-1629 CP, and her engines, equipment, tackle,
stores, furnishings, cargo and freight, in rem.
ECF No. 1.
The
Complaint alleged the following counts: (1) negligence under the
Jones Act, 46 U.S.C. § 688 (Count I); (2) unseaworthiness (Count
II); (3) maintenance, cure, and wages under general maritime law
(Count III); (4) compensation and recovery for negligence
pursuant to the Longshore and Harbor Workers’ Compensation Act,
33 U.S.C. § 901 et seq. (Count IV); (5) negligence under 28
U.S.C. § 905(a) (Count V); (6) negligence under 28 U.S.C. §
905(b) (Count VI); (7) individual liability of Henry and the Doe
12
Defendants for the negligence of SHR, pursuant to a theory of
“piercing the veil of limited liability” (Count VII); (8)
intentional and/or negligent infliction of emotional distress
(Count VIII); (9) attorneys’ fees (Count IX); and (10) punitive
damages (Count X).
37.
Id.
On August 20, 2013, Barnes filed a Motion for Summary
Judgment for Payment of Maintenance and Cure.
7.
ECF No. 25; Ex.
In opposition, Defendants stated that they attempted to
investigate Barnes’s maintenance and cure claims but were
thwarted by Barnes’s failure to cooperate fully with their
discovery requests.
38.
ECF No. 34; Ex. 8.
On November 15, 2013, the Court issued its Order
Granting in Part and Denying in Part Plaintiff’s Motion for
Summary Judgment for Payment of Maintenance and Cure.
44.
ECF No.
The November 15, 2013 Order granted the motion as to
Barnes’s entitlement to maintenance and cure, but denied the
motion as to the amount of such claims.
Id.
The cure claim was
denied because the amount Plaintiff Barnes sought was not
clearly established.
Id.
The maintenance claim was denied
because of inadequate evidence as to the reasonable amount of
daily maintenance in the Kailua-Kona community, as required by
the Fifth Circuit in Hall v. Noble Drilling (U.S.) Inc., 242
F.3d 582 (5th Cir. 2001).
However, the Ninth Circuit
subsequently in Barnes adopted as a matter of first impression
13
the burden-shifting framework for determining a community’s
reasonable rate of maintenance as set forth in Incandela v.
American Dredging Company, 659 F.2d 11, 14 (2d Cir. 1981).
See
889 F.3d at 541-42.
39.
Also in November 2013, Defendants, pursuant to the
Court’s proposed stipulation, notified the Court that they were
willing to stipulate to and pay $30 per day in maintenance to
Barnes without prejudice to either side’s right to seek a
further higher or lower final determination as to a reasonable
daily rate of maintenance; however, Barnes declined this win-win
Court-proposed stipulation.
See Order Denying Plaintiff’s Third
Motion for Summary Judgment for Payment of Maintenance at p. 3
n.2, 12, ECF No. 120; Order Denying Plaintiff’s Motion for
Reconsideration at pp. 4-5, ECF No. 51.
40.
On January 27, 2014, Barnes filed a second Motion for
Summary Judgment for Payment of Maintenance.
ECF No. 58.
The
Court denied the motion on April 15, 2014, concluding that
issues of fact precluded a determination as a matter of law on
the issue of the appropriate rate of maintenance.
41.
ECF No. 77.
On March 7, 2014, and April 1, 2014, Barnes received
two payments of $962.83 each from SHR.
Ex. 32 at pp. 3-4; see
also Order Denying Plaintiff’s Third Motion for Summary Judgment
for Payment of Maintenance at p. 9 n.7, ECF No. 120.
42.
On May 21, 2014, Barnes filed his First Amended
14
Complaint.
ECF No. 91.
In the First Amended Complaint, Barnes
brought the following claims: (1) negligence under the Jones
Act, 46 U.S.C. § 688, against the in personam Defendants (Count
I); (2) unseaworthiness as against the M/V TEHANI, in rem, and
the in personam Defendants (Count II); (3) maintenance, cure,
and wages under general maritime law (Count III); (4)
compensation and recovery for negligence pursuant to the
Longshore and Harbor Workers’ Compensation Act, 33 U.S.C. § 905,
against the in personam and in rem Defendants (Counts IV-VI);
(5) individual liability of Henry and the Doe Defendants for the
negligence of SHR, pursuant to a theory of “piercing the veil of
limited liability” (Count VII); (6) intentional and/or negligent
infliction of emotional distress as against all Defendants
(Count VIII); and Jones Act negligence per se (Count XII).
43.
Id.
On May 30, 2014, Barnes filed his Third Motion for
Summary Judgment for Payment of Maintenance.
ECF No. 94.
In
addition, on July 1, 2014, Barnes filed a Motion for Summary
Judgment for Payment of Cure.
ECF No. 103.
The Court issued
orders denying both motions on September 2, 2014.
ECF Nos. 120,
121.
44.
Separately, on July 7, 2014, Barnes filed a Motion for
Summary Judgment as to Unseaworthiness, Negligence Per Se, and
Jones Act Negligence.
45.
ECF No. 108.
On November 3, 2014, Henry filed for Chapter 13
15
bankruptcy protection.
01475, Dkt. 1.
In re Kristin Kimo Henry, Case No. 14-
On November 12, 2014, SHR filed for Chapter 7
bankruptcy protection.
In re Sea Hawaii Rafting, LLC, Case No.
14-01520, Dkt. 1.
46.
On December 22, 2015, following delays caused by the
above bankruptcy proceedings, the Court issued an Order Granting
in Part and Denying in Part Plaintiff’s Motion for Summary
Judgment as to Unseaworthiness, Negligence Per Se, and Jones Act
Negligence, and Dismissing Defendant M/V Tehani for Lack of
Jurisdiction.
47.
ECF No. 197.
After entry of the December 22, 2015 Order, Barnes
filed a Motion for Leave to File Interlocutory Appeal.
199.
ECF No.
On December 30, 2015, the Court denied as moot Barnes’s
Motion for Leave to File Interlocutory Appeal, finding that
Barnes need not seek this Court’s permission prior to filing an
appeal under 28 U.S.C. 1292(a)(3).
48.
ECF No. 203.
On March 28, 2018 the Ninth Circuit reversed in part
and remanded the December 22, 2015 Order.
543.
Barnes, 889 F.3d at
The Ninth Circuit also issued a writ of mandamus directing
the Court to award Barnes maintenance at the rate of $34 per
day, subject to a potential upward increase after trial.
543.
Id. at
Further, the Ninth Circuit encouraged the Court to sever
the issues of maintenance and cure and expeditiously set these
issues for trial.
Id. at n.21.
16
49.
The Ninth Circuit’s Mandate issued on April 27, 2018,
and the Court entered a minute order on May 2, 2018 scheduling a
non-jury trial on Barnes’s claims for maintenance and cure to
commence on June 12, 2018.
ECF No. 314.
After the parties
requested a continuance of the non-jury trial, the Court
rescheduled it to commence on July 31, 2018.
50.
ECF No. 322.
On June 29, 2018, the Court issued a Directive to the
United States Bankruptcy Court for the District of Hawaii,
directing the bankruptcy court transfer to this Court the
$10,000.00 in rental income which the bankruptcy court received
for use of the M/V Tehani.
ECF No. 337.
The Court stated that
the $10,000.00 in rental income would be available to Plaintiff
Barnes, id., and Barnes has since received those funds, ECF No.
373 at p. 2.
51.
On July 8, 2018, Barnes filed a Second Amended
Complaint, which he later verified, against SHR, Henry, Aloha
Ocean Excursions, LLC (“AOE”) 6 and a number of Doe defendants, in
personam, and the M/V TEHANI, HA-1629 CP, and her engines,
6
AOE was joined as a party defendant since the M/V Tehani was
sold to AOE by the bankruptcy court. However, the Ninth Circuit
held in Barnes that the bankruptcy court did not have
jurisdiction over the vessel and that Barnes has a maritime lien
on the vessel. E.g., 889 F.3d at 533 (“The bankruptcy court
lacked jurisdiction to adjudicate Barnes’s maritime lien because
the admiralty court had already obtained jurisdiction over the
Tehani.”). The sale of the vessel by the bankruptcy court has
been appealed and is under pending litigation. See In re Sea
Hawaii Rafting, LLC, Case No. 14-01520, Dkts. 331, 343.
17
equipment, tackle, fares, stores, permits, furnishings, cargo
and freight, and several “Doe Vessel” defendants, in rem.
ECF
Nos. 349, 355.
52.
On July 10, 2018, Plaintiff Barnes filed an “Errata
Second Amended Complaint,” which mirrors the Second Amended
Complaint but remedies some of the Second Amended Complaint’s
spelling, grammatical, and typographical errors.
ECF No. 356.
On July 17, 2018, Plaintiff Barnes filed a Verification of
Errata Second Amended Complaint.
53.
ECF No. 363.
In the Errata Second Amended Complaint, Barnes alleges
the following counts: (1) negligence under the Jones Act, 46
U.S.C. § 688, against the in personam Defendants (Count I); (2)
unseaworthiness as against the M/V TEHANI, in rem, and the in
personam Defendants (Count II); (3) maintenance and cure under
general maritime law (Count III); (4) individual liability of
Henry and the Doe Defendants for the negligence of SHR and AOE,
pursuant to a theory of “piercing the veil of limited liability”
(Count IV); (5) intentional infliction of emotional distress as
against all Defendants (Count V); (6) an accounting of Henry,
SHR, AOE, and the M/V Tehani (Count VI); (7) attorneys’ fees
against all defendants (Count VII); (8) punitive damages against
the in personam defendants (Count VIII); and (9)
Jones Act
negligence per se against SHR and Henry (Count IX).
356.
18
ECF No.
54.
At the time of trial, Barnes has never received
maintenance or cure payments from Defendants beyond the: (a)
$600.00 check SHR or Henry paid to David Pane to cover Barnes’s
rent, Barnes Tsti. Tr. 30: 3‒12; Henry Tsti. Tr. 20:21-22:5; (b)
two payments of $962.83 each from SHR or Henry, Ex. 32 at pp. 34; see also Order Denying Plaintiff’s Third Motion for Summary
Judgment for Payment of Maintenance at p. 9 n.7, ECF No. 120;
and (c) $10,000.00 rental proceeds from use of the M/V Tehani,
which this Court obtained from the bankruptcy court and sent to
Plaintiff Barnes, and which was available to prepay for the
arrest of the vessel, ECF No. 373.
II.
CONCLUSIONS OF LAW
A.
General Maritime Law
1.
This Court has jurisdiction over this matter pursuant
to 28 U.S.C. § 1333, which provides original jurisdiction over
admiralty or maritime claims.
Venue is proper because the
defendants are subject to personal and in rem jurisdiction of
this Court.
2.
The matters before the Court are: (a) the daily rate
of maintenance—at least $34 per day—to which Barnes is entitled;
(b) the amount of cure, if any, to which Barnes is entitled; (c)
whether Barnes has reached maximum medical cure; (d) whether
SHR’s denial of maintenance and cure was willful and wanton,
justifying an award of attorneys’ fees and punitive damages to
19
Barnes; (e) the appropriate rate of pre-judgment interest, if
any, applicable to any judgment in favor of Barnes; and (f) any
award of post-judgment interest.
3.
“Policy considerations have led to the adoption of a
somewhat paternalistic attitude toward seamen.”
Perry v. Morgan
Guaranty Trust Co., 528 F.2d 1378, 1379 (5th Cir. 1976); see
also Miles v. Apex Marine Corp., 498 U.S. 19, 36 (1990)
(“admiralty courts have always shown a special solicitude for
the welfare of seamen and their families”).
4.
“Under principles of general maritime law, seamen are
entitled to maintenance and cure from their employer for
injuries incurred in the service of the ship[.]”
Aguilera v.
Alaska Juris F/V, O.N.569276, 535 F.3d 1007, 1009 (9th Cir.
2008) (alteration in original) (citation and internal quotation
marks omitted). “‘Maintenance . . . is designed to provide a
seaman with food and lodging when he becomes sick or injured in
the ship’s service; and it extends during the period when he is
incapacitated to do a seaman’s work and continues until he
reaches maximum medical recovery.’”
Id. (quoting Vaughan v.
Atkinson, 369 U.S. 527, 531 (1962)).
B.
Maintenance
5.
A seaman seeking maintenance “is entitled to the
reasonable cost of food and lodging, provided he has incurred
20
the expense.” 7
Hall v. Noble Drilling (U.S.) Inc., 242 F.3d 582,
587 (5th Cir. 2001).
The Ninth Circuit determined that Barnes
is entitled to daily maintenance at the rate of $34.00, subject
to an upward increase at trial.
6.
Barnes, 889 F.3d at 543.
In seeking to prove entitlement to a daily maintenance
rate higher than $34.00, Barnes must “present evidence to the
court that is sufficient to provide an evidentiary basis for the
court to estimate his actual costs.”
Hall, 242 F.3d at 590.
The Ninth Circuit in Barnes interpreted Hall as stating that the
seaman’s actual expenses are presumptively reasonable.
at 540.
889 F.3d
The seaman’s evidentiary burden “is ‘feather light,’
and a court may award reasonable expenses, even if the precise
amount of actual expenses is not conclusively proved.”
Id. at
588 (quoting Yelverton v. Mobile Labs., Inc., 782 F.2d 555, 558
(5th Cir. 1986).
7.
Indeed, a plaintiff’s own testimony as to the cost of
room and board in the community where he is living is sufficient
to support an award.
Yelverton, 782 F.2d at 558; see also Morel
v. Sabine Towing & Transp. Co., Inc., 669 F.2d 345, 347-48 (5th
7
The Hall court explained: “While ‘food’ is self-explanatory,
lodging requires definition. ‘Lodging’ includes expenses
‘necessary to the provision of habitable housing,’ such as heat,
electricity, home insurance, and real estate taxes. . . . Other
expenses, such as telephone service, clothing, toiletries, and
travel, are not part of maintenance.” 242 F.3d at 587 n.17.
21
Cir. 1982) (noting that, while a plaintiff’s own testimony is
not “the most probative evidence one might conceive,” the
district court did not err in admitting and considering it,
given the Supreme Court’s emphasis that doctrines of maintenance
and cure are to be construed liberally and in favor of the
seaman).
8.
Barnes’s current lodging expenses amount to around
$700.00 per month.
Barnes Tsti. Tr. 17:7-18:7.
This $700.00
amount comprises $500.00 per month for rent and approximately
$200 per month for utilities.
Id.
Accordingly, Barnes actual
lodging expenses are approximately $23 per day. 8
9.
The Court notes that at the time of the July 3, 2012
accident, Barnes’s reasonable lodging expenses also amounted to
approximately $700.00 per month.
Barnes Tsti. Tr. 19:25-21:22.
At that time, Barnes was paying around $1400.00 total for a twobedroom, two-bathroom condominium—the $1400.00 amount comprised
$1200.00 per month in rent and approximately $200.00 per month
in utilities. 9
Id.
Dividing the cost for Barnes’s two-bedroom
8
This amount of daily lodging expenses is calculated by
multiplying Barnes’s $700.00 per month in lodging expenses by 12
months and dividing the product by 365 days (($700 x 12)/365).
9
The time during which Plaintiff Barnes lived with Mr. Hughes’
daughter, his mother, and others despite having no ability to
pay is properly included as part of Barnes maintenance award.
“[A] seaman living with his family is entitled to maintenance if
he shows that he paid his family for room and board or that he
had promised that he would and was obliged to do so.” Barnes v.
(Continued . . . .)
22
and two-bath unit in half shows that Barnes’s reasonable lodging
expenses amounted to approximately $700.00 per month.
10.
Barnes has also submitted evidence that his food costs
average as much as approximately $45.00 per day.
Ex. 16 at pp.
1, 14.
11.
From Barnes’s evidence and testimony at trial,
therefore, the Court finds that Barnes has adequately
established that his actual expenses are $23.00 per day for
lodging and $45.00 per day for food.
Said differently, the
Court finds that Barnes has established actual expenses of
$68.00 per day.
12.
When a “seaman makes out a prima facie case on the
maintenance rate question [by] prov[ing] the actual living
expenditures which he found it necessary to incur during his”
recovery, “the burden shift[s] to the defendant to demonstrate
(Continued . . . .)
Andover Co., 900 F.2d 630, 641 (3d Cir. 1990); McCormick
Shipping Corp. v. Duvalier, 311 F.2d 933, 934 (5th Cir. 1963)
(affirming maintenance award when “there was an expressed
intention of the appellee to make payment and an expectation of
her cousin to receive it”); see also Hall, 242 F.3d at 588
(“[W]hen the seaman has made ‘an expressed intention’ to pay . .
. even if the obligation is not legally enforceable, the seaman
may recover maintenance.” (quoting McCormick Shipping Corp., 311
F.2d at 934)); Posey v. Bouchard Transp. Co., No. CIV.A.04-1751,
2005 WL 2050279, at *2 (E.D. La. July 29, 2005) (same). Barnes
stated his intention to repay these individuals if he were ever
able to prevail in this action or otherwise become more
financially independent. Hughes Tsti. Tr. 85:23-86:15; Barnes
Tsti. Tr. 14:20-15:5, 29:6‒19.
23
that [the seaman’]s actual expenditures were excessive, in light
of any realistic alternatives for room and board available to
him in [the locality].”
Incandela v. Am. Dredging Co., 659 F.2d
11, 14 (2d Cir. 1981); see also Barnes, 889 F.3d at 541-42
(quoting Incandela and, as a matter of first impression,
“expressly adopt[ing]” its burden-shifting framework).
13.
Defendants have entirely failed to carry their burden
to demonstrate that Barnes’s actual expenses were excessive or
unreasonable.
Defendants put on a limited case at trial,
calling only Henry and Barnes to testify, introducing no
exhibits, but extensively cross-examining Barnes’s witnesses.
In addition, Mr. Henry testified that he believes: (a) lodging
in Kailua-Kona, Hawaii would cost Barnes up to $700 per month
(or $23.00 per day), Henry Tsti. Tr. 27:25-28:20; and (b) three
meals would cost up to $37.00 per day, Id. at 28:23-30:1. 10
Thus, according to Mr. Henry’s testimony, Barnes is entitled to
up to at least $60.00 per day.
Such testimony does not
establish that Barnes’ actual expenses were excessive.
14.
Where a seaman provides evidence of actual expenses
and the defendant has not shown that the seaman’s actual
10
The Court notes that Mr. Henry’s testimony regarding estimated
food costs is generally consistent with Mr. Hughes’s estimate
that an average breakfast and lunch in Kailua-Kona, Hawaii would
cost between approximately $10.00 and $12.00, while lunch would
cost around $12.00. Hughes Tsti. Tr. 82:3‒10.
24
expenditures were excessive, “the court must determine the
maintenance award” by “compar[ing] the seaman’s actual expenses
to reasonable expenses,” and awarding the lower amount unless
“the plaintiff’s actual expenses were inadequate to provide him
with reasonable food and lodging.”
Hall, 242 F.3d at 590.
The
seaman “need not present evidence of the reasonable rate” of
maintenance in his district; rather, “a court may take judicial
notice of the prevailing rate in the district.”
15.
Id.
The Court’s research indicates that the most recent
cases regarding the reasonable rate of daily maintenance for a
seaman in the state of Hawaii (let alone in the locality of
Kailua-Kona, Hawaii) appear to be more than ten-years old.
E.g., Nelson v. Research Corp. of Univ. of Haw., 805 F. Supp.
837, 853 (D. Haw. 1992) (holding that maintenance rate of $24
per day was reasonable).
In addition, a district court in the
District of Hawaii noted in 2008 that the American Maritime
Officers union’s 2004 collective bargaining agreement set a
maintenance rate of $12 per day.
See Best v. Pasha Haw. Transp.
Lines, L.L.C., No. 06-00634 DAE-KSC, 2008 WL 1968334, at *1 (D.
Haw. May 6, 2008).
Given the age and distinguishable facts of
these cases, the Court finds them unpersuasive in determining
the prevailing rate of daily maintenance in this district.
16.
However, Dr. Jack Suyderhoud, Ph.D., plaintiff’s
expert witness in the field of economics, testified regarding
25
the reasonable rate of daily maintenance for a seaman living in
the locality of Kailua-Kona, Hawaii.
Dr. Suyderhoud also
provided a report concluding that a rate of “around $70” per day
“may be a reasonable estimate of the daily cost [of maintenance]
in Kailua-Kona.”
Ex. 48 at p. 8.
To make this determination,
Dr. Suyderhoud employed three alternative methods for estimating
the reasonable rate of daily maintenance in Kailua-Kona in 2015dollar values.
Ex. 48.
While the Court has concerns regarding
some of Dr. Suyderhoud’s methodology, the Court finds his
Exhibit 3 especially helpful.
17.
See Ex. 48 at p. 10.
The Court finds that Dr. Suyderhoud’s Exhibit 3 is
very helpful in establishing the reasonable rate of daily
maintenance for the Kailua-Kona community.
Ex. 48 at p. 10.
Exhibit 3 includes a number of categories of expenses, some of
which are not appropriate considerations in a determination of
the reasonable daily rate of maintenance; however, Exhibit 3
does include expenses for food and housing, which amount to
$87.70 per day for the year 2015.
Accordingly, the Court finds
that the standard reasonable rate of daily maintenance in
Kailua-Kona is at least $87.70, even without adding inflation
costs from and after the year 2015.
The Court notes that under
Incandela, the burden of proof as to a community’s reasonable
rate of maintenance is shifted to Defendants, 659 F.2d at 14;
and the Court finds that Defendants have failed to establish
26
such reasonable rate.
18.
As stated above, where a seaman provides evidence of
actual expenses, “the court must determine the maintenance
award” by “compar[ing] the seaman’s actual expenses to
reasonable expenses,” and awarding the lower amount unless “the
plaintiff’s actual expenses were inadequate to provide him with
reasonable food and lodging.”
19.
Hall, 242 F.3d at 590.
Barnes has presented evidence that his actual expenses
are $68.00 per day ($23.00 per day for lodging and $45.00 per
day for food).
The Court has considered expert witness evidence
that the reasonable rate of daily maintenance in Barnes’s
locality is over $87.70.
Comparing these two maintenance rates,
the Court finds that Barnes is entitled to maintenance at the
rate of $68.00 per day from the date of his injury to the
current date.
20.
Further, the Court finds that maintenance at the rate
of $68.00 per day is adequate to provide Barnes with “reasonable
food and lodging.”
21.
Id.
Accordingly, Barnes is entitled to maintenance at the
rate of $68.00 per day from the date of his injury, July 3,
2012, until he reaches maximum medical cure.
C.
Cure and Maximum Medical Cure
22.
Cure is generally understood to require the provision
of medical treatment and similarly extends until maximum medical
27
recovery has been reached as a result of “continued and
necessary medical treatment.”
Luksich, 140 F.2d 812, 814 (9th
Cir. 1944).
23.
Treatment need not be intended to return a seaman to
work in order to be considered “curative.”
A seaman suffering
from permanent and incurable conditions is entitled to
maintenance and cure until the point his “condition has
stabilized and further progress ended short of a full recovery.”
In re RJF Int’l Corp., 354 F.3d 104, 106 (1st Cir. 2004)
(holding that where a seaman suffered a serious brain injury
which reduced his mental capacity to that of an 18–24 month old,
treatment which had the potential to provide cognitive
improvement and help the seaman cope with muscle spasticity and
contraction was “curative”); Permanente S. S. Corp. v. Martinez,
369 F.2d 297, 298 (9th Cir. 1966) (stating that maximum cure is
reached when “the seaman is well or his condition is found to be
incurable”).
24.
A seaman must establish the amount of cure to which he
is entitled.
E.g., Buenbrazo v. Ocean Ala., LLC, No. C06-1347C,
2007 WL 7724765, at *4 (W.D. Wash. Feb. 28, 2007) (stating that
a seaman has a “duty to show at trial . . . the amount of
maintenance and cure to which [he] is entitled”).
25.
Here, Barnes has provided evidence that the State of
Hawaii—through its Department of Human Services Med-QUEST
28
Division—holds a lien against Barnes in the amount of $21,697.76
as a result of necessary medical treatment provided to Barnes.
Ex. 41.
At trial, Barnes’s counsel stated that the full amount
of the State of Hawaii’s lien is the extent of what Barnes is
seeking for cure.
26.
August 1, 2018 PM Tsti. Tr. 89:19-90:8.
Defendants introduced no evidence at trial to
undermine or rebut Barnes’s evidence as to this amount of
curable damages, and the Court thus finds that Barnes is
entitled to $21,697.76 in curable damages.
27.
Moreover, Defendants “bear[] the burden of proving by
a preponderance of the evidence that [the seaman] has reached
maximum cure” in relation to his injuries.
Debbie Flo, Inc. v.
Shuman, 2014 AMC 840 (D.N.J. 2014) (“It is the vessel owner’s
burden to prove that MMI, or maximum cure, has been attained by
the injured seaman.”) (citing Smith v. Delaware Bay Launch
Serv., Inc., 972 F. Supp. 836, 848 (D. Del. 1997)); Haney v.
Miller’s Launch, Inc., 773 F. Supp. 2d 280, 290 (E.D.N.Y. 2010)
(stating that the employer has the burden of showing the seaman
has reached maximum cure); Hedges v. Foss Mar. Co., No. 3:10-CV05046 RBL, 2015 WL 3451347, at *5 (W.D. Wash. May 29, 2015)
(collecting cases); Zermeno v. N. Pac. Fishing, Inc., No. C161540RSL, 2017 WL 4843484, at *2 (W.D. Wash. Oct. 26, 2017)
(“[I]t is the shipowner’s burden to prove by a preponderance of
the evidence that plaintiff reached maximum cure . . . .”).
29
28.
If any doubt exists as to whether a seaman is entitled
to coverage, whether particular medical treatment is necessary,
or whether maximum cure has been reached, courts generally
resolve disputes in favor of the seaman.
E.g., Moore v. The
Sally J., 27 F. Supp. 2d. 1255, 1262 (W.D. Wash. 1998) (citing
Vella v. Ford Motor Company, 421 U.S. 1 (1975)).
29.
Defendants put on a limited case at trial, calling
only Henry and Barnes to testify, introducing no exhibits, but
extensively cross-examining Barnes’s witnesses. Accordingly,
Defendants wholly failed to carry their burden to establish that
Barnes has reached maximum medical cure.
30.
The testimony of Barnes’s expert medical witness and
treating physicians support this conclusion.
Barnes’s general
neurology expert witness, Dr. Reumann, opined that Barnes has
not yet reached maximum medical cure.
18; 75:18‒25; Ex. 49 at p.p. 3-4.
Reumann Tsti. Tr. 74:5‒
Barnes’s treating physicians
also reported that Barnes continues to schedule appointments
with them and seeks treatment for his accident-related
conditions.
E.g., Hanes Tsti. Tr. 76:21-77:3; Miner Tsti. Tr.
70:15‒17.
31.
Based on Barnes evidence, and considering the
extremely limited case that Defendants put on, the Court finds
that Barnes has not yet reached maximum medical cure.
30
D.
Attorneys’ Fees and Punitive Damages
32.
Attorneys’ fees and punitive damages are available
under general maritime law for the willful and wanton disregard
of the maintenance and cure obligation.
See Atlantic Sounding
Co., Inc. v. Townsend, 557 U.S. 404, 424 (2009); Vaughan, 369
U.S. at 530; see also Castaneda v. Bradley, No. 16-CV-00746-JD,
2016 WL 6778650, at *3 (N.D. Cal. Nov. 16, 2016).
33.
The Ninth Circuit has further explained that
attorneys’ fees incurred in order to secure a maintenance and
cure award may be recovered where the failure to provide
maintenance and cure is “arbitrary, recalcitrant or
unreasonable.”
Kopczynski v. The Jacqueline, 742 F.2d 555, 559
(9th Cir. 1984); see also Helffrich v. Atlantis Submarines,
Inc., 210 F.3d 383 (9th Cir. 2000) (“Attorney’s fees are
properly awarded only ‘where the shipowner has been willful and
persistent in its failure to investigate a seaman’s claim for
maintenance and cure or to pay maintenance.’” (citation
omitted)); Vaughan, 369 U.S. at 530-31 (allowing attorneys’ fees
against shipowner who willfully and persistently failed to
investigate a claim for maintenance and cure).
34.
And courts have stated that “[a] shipowner becomes
liable for punitive damages when its refusal to pay maintenance
can be described as callous and recalcitrant, arbitrary and
capricious, or willful, callous, and persistent.”
31
Guevara v.
Mar. Overseas Corp., 34 F.3d 1279, 1282 (5th Cir. 1994).
35.
An employer, however, is “entitled to investigate a
claim for maintenance and cure before tendering any payments to
the seaman—without subjecting itself to liability for
compensatory or punitive damages.”
Boudreaux v. Transocean
Deepwater, Inc., 721 F.3d 723, 728 (5th Cir. 2013) (citing
Morales v. Garijak, Inc., 829 F.2d 1355, 1358 (5th Cir. 1987));
MNM Boats, Inc., v. Johnson, 248 F.3d 1139 (5th Cir. 2001);
McWilliams v. Texaco, Inc., 781 F.2d 514, 519-20 (5th Cir.
1986); Snyder v. L & M Botruc Rental, Inc., 924 F. Supp. 2d 728,
734 (E.D. La. 2013); Sullivan v. Tropical Tuna, Inc., 93 F.
Supp. 42, 45 (D. Mass. 1997).
36.
Generally, moreover, “the willful, wanton and callous
conduct required to ground an award of punitive damages requires
an element of bad faith.”
Ward v. EHW Constructors, No. C15-
5338 BHS, 2016 WL 7407226, at *5 (W.D. Wash. Dec. 22, 2016)
(citing Harper v. Zapata Off-Shore Co., 741 F.2d 87, 90 (5th
Cir. 1984)).
37.
“Examples of employer behavior that could merit
punitive damages have included (1) laxness in investigating a
claim; (2) termination of benefits in response to the seaman’s
retention of counsel or refusal of a settlement offer; [and] (3)
failure to reinstate benefits after diagnosis of an ailment
previously not determined medically.” Tullos v. Resource
32
Drilling, Inc., 750 F.2d 380, 388 (5th Cir. 1985); Johnson v.
Am. Interstate Ins. Co., No. CIV.A. 6:08CV1988, 2010 WL 3802451,
at *1 (W.D. La. Sept. 20, 2010).
38.
Defendants argued in 2013 that they attempted to
investigate Barnes’s maintenance and cure claims but were
thwarted by Barnes’s failure to cooperate fully with its
discovery requests.
Order Granting in Part and Denying in Part
Plaintiff’s Motion for Summary Judgment for Payment of
Maintenance and Cure at p. 17, ECF No. 44.
However, the Court
found in November 2013 that Barnes was entitled to an award of
maintenance and cure, even without establishing the amount of
such an award.
Id. at pp. 18, 21.
Defendants were thus on
notice at least five years ago of their obligation to pay Barnes
maintenance and cure.
39.
In addition, the Ninth Circuit concluded earlier this
year that Barnes was entitled to maintenance in the amount of at
least $34 per day from the date of the July 3, 2012 accident,
subject to a potential upward increase at trial.
F.3d at 542, 543.
Barnes, 889
Shortly after the Ninth Circuit issued its
mandate in this matter, this Court entered an Order Regarding
Maintenance which stated:
“Pursuant to the Ninth Circuit’s writ
of mandamus, Plaintiff Barnes is entitled to an award of
maintenance at the rate of $34 per day, subject to a potential
upward modification after trial.”
33
ECF No. 313 at p. 1.
Defendants have not paid Barnes any maintenance or cure since
the issuance of the Ninth Circuit’s decision or this Court’s
Order Regarding Maintenance.
40.
Indeed, aside from two payments of $962.83 each on
March 7, 2014, and April 1, 2014, Ex. 32 at pp. 3-4; see also
Order Denying Plaintiff’s Third Motion for Summary Judgment for
Payment of Maintenance at p. 9 n.7, ECF No. 120, and a single
payment of $600 for rent, Barnes Tsti. Tr. 30: 3‒12; Henry Tsti.
Tr. 20:21-22:5, Defendants have never paid Barnes maintenance or
cure since the July 3, 2012 accident.
The Court finds that
these isolated payments indicate that Defendants were aware of
their obligation to pay maintenance and cure years ago, but have
failed to make any additional payments during the more than six
years following the July 3, 2012 accident.
41.
The Court notes that there are considerations weighing
against awarding punitive damages and attorneys’ fees.
For
example, pursuant to the Court’s proposed stipulation,
Defendants notified the Court in November 2013 that they were
willing to stipulate to and pay $30 per day in maintenance to
Barnes without prejudice to either side’s right to seek a
further higher or lower final determination as to a reasonable
daily rate of maintenance; however, Barnes declined this win-win
Court-proposed stipulation.
See Order Denying Plaintiff’s Third
Motion for Summary Judgment for Payment of Maintenance at p. 3
34
n.2, 12, ECF No. 120; Order Denying Plaintiff’s Motion for
Reconsideration at pp. 4-5, ECF No. 51.
42.
However, as stated above Defendants made two payments
of $962.83 each for maintenance in 2014; yet notwithstanding
this acknowledged obligation, have failed to make any further
payments.
Accordingly, the Court finds that the amount of time
that has passed since Defendants unambiguously were obligated to
pay Barnes maintenance and cure—including after Barnes’s
rejection of the proposed stipulated amount of maintenance—
weighs in favor of awarding punitive damages and attorneys’
fees.
43.
In addition, Henry filed for Chapter 13 bankruptcy
protection on November 3, 2014, and SHR filed for SHR filed for
Chapter 7 bankruptcy protection on November 12, 2014.
See In re
Kristin Kimo Henry, Case No. 14-01475, Dkt. 1; In re Sea Hawaii
Rafting, LLC, Case No. 14-01520, Dkt. 1.
Henry testified that
he relied on the advice of his former counsel in seeking
bankruptcy protection for himself and SHR, and was unsure of how
bankruptcy proceedings affected “the maintenance and cure
through th[e] whole bankruptcy process . . .”
41:5‒22.
Henry Tsti. Tr.
Nevertheless, Henry testified that he was aware that
SHR was obligated to pay “some maintenance,” but again was
“uncertain of that when bankruptcy came into play.”
Tr. 27:17‒22.
35
Henry Tsti.
44.
Accordingly, the Court finds that Barnes is the
prevailing party.
The Court further finds by the preponderance
of the evidence that Defendants acted willfully and wantonly, as
well as unreasonably and with callous disregard, and that there
was an element of bad faith in failing to pay Barnes maintenance
and cure.
See Vaughan, 369 U.S. at 530-31 (allowing award of
attorneys’ fees where a shipowner willfully and persistently
failed to investigate a claim for maintenance and cure);
Kopczynski, 742 F.2d at 559 (allowing award of attorneys’ fees
incurred in order to secure a maintenance and cure award where
the failure to provide maintenance and cure was “arbitrary,
recalcitrant or unreasonable”); Helffrich, 210 F.3d at 1
(“Attorney’s fees are properly awarded only ‘where the shipowner
has been willful and persistent in its failure to investigate a
seaman’s claim for maintenance and cure or to pay
maintenance’”); Selhorst v. Alward Fisheries, LLC, No. 3:12-CV00133-TMB, 2013 WL 12119575, at *4 (D. Alaska July 25, 2013)
(“To obtain punitive damages, a plaintiff must demonstrate that
‘there are facts sufficient to allow a reasonable trier of fact
to find, by a preponderance of the evidence, that [defendant]
acted with gross negligence, manifest recklessness, callous
disregard, or criminal indifference of the Plaintiff's safety or
well-being.’” (quoting Kahumoku v. Titan Maritime, LLC, 486 F.
Supp. 2d 1144, 1153 (D. Haw. 2007)); Atlantic Sounding, 557 U.S.
36
at 424 (punitive damages have long been an accepted remedy under
general maritime law for the willful and wanton disregard of the
maintenance and cure obligation); Ward, 2016 WL 7407226 at *5
(“the willful, wanton and callous conduct required to ground an
award of punitive damages requires an element of bad faith”).
The Court thus concludes that Defendants are liable for punitive
damages and attorneys’ fees and costs.
45.
As to Barnes’s reasonable attorneys’ fees and costs,
Barnes shall file a motion before the magistrate judge to
determine the appropriate quantum within fourteen days of the
entry of this Order.
Barnes is directed to file a bill of costs
and a motion for attorneys’ fees and related non-taxable
expenses in strict compliance with Local Rules 54.2 and 54.3.
LR 54.2(d) provides that any objections must be filed within
seven days after a bill of costs is served, and LR 54.3(f)
provides that any opposing response must be filed within
fourteen days after service of the statement of consultation
regarding the motion for attorneys’ fees. LR 54.3(f) allows a
reply to be filed thereafter within fourteen days.
The
magistrate judge will then determine the appropriate amount of
attorneys’ fees and costs to which Barnes is entitled, and
thereafter any party may file an appeal in accordance with the
aforesaid Local Rules.
A separate judgment for attorneys’ fees
and costs will be entered, which will include the application of
37
the below-determined rate of pre-judgment interest.
46.
As to the amount of punitive damages for which
Defendants are liable, the Court finds it appropriate to award
an amount “necessary to ensure the next worker who falls ill
aboard one of Defendant’s vessels receives the treatment he
deserves, as a seaman and as a human being.”
Jefferson v.
Baywater Drilling, LLC, No. CIV.A. 14-1711, 2015 WL 365526, at
*6 (E.D. La. Jan. 27, 2015).
47.
Defendants must be made aware that injured seamen are
entitled to prompt payment of maintenance and cure.
E.g., The
Troop, 118 F. 769, 770-771, 773 (D. Wash. 1902) (concluding that
$4,000 was a reasonable punitive award because the captain’s
“failure to observe the dictates of humanity” and
obtain prompt medical care for an injured seaman constituted a
“monstrous wrong.”).
48.
Based on the evidence and testimony presented at
trial, the length of time Barnes has not received any payments
of maintenance or cure, the complicated factual and procedural
history of this case, and Defendants’ pro se status for a
considerable portion of these proceedings, the Court finds it
appropriate to award Barnes $10,000.00 in punitive damages.
E.
Pre-Judgment Interest
49.
The next issue is whether pre-judgment interest should
be awarded and at what rate.
It is “well-established that
38
compensatory damages in maritime cases normally include prejudgment interest.”
W. Pac. Fisheries, Inc. v. S.S. President
Grant, 730 F.2d 1280, 1288 (9th Cir. 1984).
The award of pre-
judgment interest is within the discretion of the district
court; however, the court must exercise this discretion with a
view to the fact that “pre-judgment interest is an element of
compensation, not a penalty.”
50.
Id.
Denial of pre-judgment interest is appropriate only
where “peculiar circumstances justify its denial.”
Dillingham
Shipyard v. Associated Insulation Co., 649 F.2d 1322, 1328 (9th
Cir. 1981).
Such circumstances include unwarranted delay by
counsel, where parties assert claims or defenses in bad faith,
or where parties stipulate to exclusion of pre-judgment interest
as part of the damages award.
Hill v. Majestic Blue Fisheries,
LLC, Civ. No. 11-00034, 2015 WL 3961421, at *6 (D. Guam Jun. 30,
2015) (citing Alkmeon Naviera, S.A. v. M/V Marina L., 633 F.2d
789, 798 (9th Cir. 1980)).
The Court finds that no such
peculiar circumstances exist in this case to warrant a denial of
pre-judgment interest.
51.
Federal law governs the rate of pre-judgment interest
awards in admiralty cases.
Columbia Brick Works, Inc. v. Royal
Ins. Co., 768 F.2d 1066, 1068 (9th Cir. 1985).
The applicable
rate of interest is prescribed by 28 U.S.C. § 1961(a), the
statutory rate for post-judgment interest in civil cases.
39
Id.
at 1071.
Interest is to be “calculated from the date of the
entry of the judgment, at a rate equal to the average 1-year
constant maturity Treasury yield, as published by the Board of
Governors of the Federal Reserve System, for the calendar week
preceding the date of the judgment.”
28 U.S.C. § 1961(a).
Interest is to be compounded annually.
52.
28 U.S.C. § 1961(b).
However, the district court is not bound by the
federal interest rate and has broad discretion to determine what
rate applies to an award of pre-judgment interest in admiralty
cases.
Columbia Brick Works, 768 F.2d at 1068.
If the district
court “finds, on substantial evidence, that the equities of a
particular case require a different rate,” the district court
may deviate from the federal statutory rate in order to fully
compensate the injured party.
1289.
W. Pac. Fisheries, 730 F.2d at
In exercising its discretion, the district court “may
choose the local rate of interest.”
Columbia Brick Works, 768
F.2d at 1071. 11
11
See, e.g., Hill, 2015 WL 3961421, at *6-7, aff’d, 692 Fed.
Appx. 871 (9th Cir. 2017) (awarding pre-judgment interest at a
rate of 6% as permitted by Guam law where the court found the
federal statutory rate of 0.25% was too low); MacLay v. M/V
Sahara, Civ. No. C12-512 RSM, 2013 WL 2897960, at *2 (W. D.
Wash. Jun. 12, 2013) (awarding plaintiff its requested prejudgment interest rate of 8.00% because the federal statutory
rate of 0.12% was too low to compensate a decedent’s family from
the time of the loss to payment of judgment); Moore v. The Sally
J., 27 F. Supp. 2d 1255, 1262 (W. D. Wash. 1998) (awarding
plaintiff the Washington statutory rate of 12%); cf. Columbia
(Continued . . . .)
40
53.
The applicable rate of interest in Hawaii for awards
of post-judgment interest is 10.00% per annum.
§ 478-3.
Haw. Rev. Stat.
Pre-judgment interest is allowed in Hawaii at the rate
set by the post-judgment interest statute.
Lucas v. Liggett &
Myers Tobacco Co., 461 P.2d 140, 144 (Haw. 1969) (granting prejudgment interest at the 10.00% interest rate involving a
judgment on the value of cigarettes stolen by a sales
representative).
The Hawaii Supreme Court has held that an
award of pre-judgment interest at a rate of 10.00% per annum is
appropriate under Hawaii Revised Statutes Section 478-2 which
governs interest generally.
Eastman v. McGowan, 946 P.2d 1317,
1324-25 (Haw. 1997).
54.
The Court finds there is substantial evidence that the
equities of this case demand deviation from the pre-judgment
interest rate set forth in 28 U.S.C. § 1961(a).
The weekly
average 1-year constant maturity Treasury yield according to the
Board of Governors of the Federal Reserve for the week preceding
the September 7, 2018 entry of judgment is 2.47%, 12 which the
Court finds significantly lower than the local Hawaii rate of
(Continued . . . .)
Brick Works, 768 F.2d at 1070-71 (awarding plaintiff the higher
federal rate of 12.801% where the local Oregon rate of 9.00%
would deny plaintiff full restitution).
12
Board of Governors of the Federal Reserve System (US), 1-Year
Treasury Constant Maturity Rate, retrieved from Data Download
Program; https://www.federalreserve.gov/datadownload/ (October
4, 2018).
41
10.00%.
Over six years have passed since the date of the
accident on July 3, 2012 and the entry of judgment on September
7, 2018, during which time Barnes received no maintenance
payments and was forced to live off the charity of family and
friends due to his injuries.
The Court finds that a pre-
judgment interest award at the federal rate of 2.47% is too
insignificant to fairly and adequately compensate Barnes for his
losses due to the substantial injuries and hardship that he
endured in the aftermath of and the years following the
accident.
55.
Although the Court has awarded Barnes attorneys’ fees
and punitive damages, as set forth above, attorneys’ fees and
punitive damages awards serve different functions than awards of
pre-judgment interest and the rate at which pre-judgment
interest is set.
Under general maritime law, attorneys’ fees
awards are available “only when the failure to provide
maintenance and cure was arbitrary, recalcitrant or
unreasonable.”
Kopczynski, 742 F.2d at 559.
Punitive damages
awards are intended to punish the willful and wanton disregard
of the maintenance and cure obligation, Atlantic Sounding, 557
U.S. at 424; and one Ninth Circuit district court, relying on a
Fifth Circuit case, has further required an element of bad
faith.
Ward, 2016 WL 7407226, at *5.
Conversely, pre-
judgment interest is ordinarily granted as part of compensatory
42
damages absent unusual circumstances.
F.2d at 1288.
W. Pac. Fisheries, 730
If applying the local rate of interest is
necessary in order to fully restitute and fairly compensate the
injured party, the district court may exercise its discretion
and deviate from the federal rate prescribed in 28 U.S.C. §
1961(a).
Columbia Brick Works, 768 F.2d at 1068.
In other
words, application of the local rate of interest is designed to
compensate the injured party throughout the period of the loss,
not to penalize the defendant’s unreasonable or willful
disregard of the maintenance and cure obligation.
56.
Notwithstanding Barnes’s awards of attorneys’ fees and
punitive damages, the Court finds that the equities of this case
demand an award of pre-judgment interest at the local Hawaii
rate of 10.00% per annum in order to fully and fairly compensate
Barnes.
This award of pre-judgment interest is not by its
nature a penalty; rather, the pre-judgment interest award is
designed to compensate Barnes for the period of time from the
accident to the date of the entry of the judgment where he was
homeless, unable to make a living due to his injuries, and
received no payments of maintenance and cure.
Such an award of
pre-judgment is necessary to accomplish the just restitution of
Barnes.
57.
The Court thus finds that pre-judgment interest at the
rate of 10.00% per annum is appropriate.
43
This rate of interest
shall apply from July 3, 2012, the date of the accident, until
the September 6, 2018, the date on which the Court’s prior
Findings of Fact and Conclusions of Law were filed, or 2,257
days.
F.
Post-Judgment Interest
58.
Interest is allowed on any money judgment in a civil
case recovered in a district court.
28 U.S.C. § 1961(a).
The
interest rate for post-judgment interest is governed by 28
U.S.C. § 1961(a), and interest is to be compounded annually
pursuant to 28 U.S.C. § 1961(b).
Courts sitting in admiralty
routinely award post-judgment interest. 13
As requested in
Barnes’s Second Amended Complaint, the Court finds it
appropriate to compensate Barnes for any delay in payment of the
judgment by awarding post-judgment interest.
The Court awards
Barnes post-judgment interest at the rate of 2.47% compounded
annually pursuant to 28 U.S.C. § 1961 from the original date of
the entry of the judgment, September 7, 2018, until Defendants
pay the award.
13
See, e.g., Hill, 2015 WL 3961421 at *1, 7 (D. Guam Jun. 30,
2015) (awarding pre-judgment interest at the local Guam rate of
6.00% and post-judgment interest at the rate set forth in 28
U.S.C. § 1961); MacLay, 2013 WL 2897960 at *2, 4 (awarding prejudgment interest at plaintiff’s requested rate of 8.00% per
annum, which was lower than the local Washington rate of 12%.00
per annum, and awarding post-judgment interest at the rate set
forth in 28 U.S.C. § 1961).
44
III. SUMMARY
On the basis of the foregoing Findings of Fact and
Conclusions of Law, the Court concludes that Plaintiff Chad
Barry Barnes is entitled to recover from Defendants (that is,
SHR and M/V Tehani and her appurtenances 14), jointly and
severally:
1.
Maintenance in the amount of $68.00 per day.
Over six
years—2,257 days—have passed since the July 3, 2012
accident as of September 6, 2018.
Accordingly,
Defendants SHR and the M/V Tehani are obligated to pay
Barnes $140,950.34 15 for past maintenance, and $68.00
per day until Barnes reaches maximum medical cure.
2.
Cure in the amount of $21,697.76.
3.
Punitive damages in the amount of $10,000.00.
14
The Court notes that whether certain items constitute
appurtenances to the Tehani are disputed and particularly
whether the commercial use permit utilized in connection with
the vessel is an appurtenance has been the subject of litigation
and currently is on appeal before another district judge in this
district. See In re Kristin Kimo Henry Case No. 14-01475.
Accordingly, this Court has made no ruling as to what
constitutes appurtenances to the Tehani.
15
The total amount of past maintenance due to Barnes is reduced
by $12,525.66, which is the sum of the: (1) $600.00 check SHR or
Henry paid to David Pane to cover Barnes’s rent, Barnes Tsti.
Tr. 30: 3‒12; Henry Tsti. Tr. 20:21-22:5; (b) two payments of
$962.83 each from SHR or Henry, Ex. 32 at pp. 3-4; see also
Order Denying Plaintiff’s Third Motion for Summary Judgment for
Payment of Maintenance at p. 9 n.7, ECF No. 120; and (c)
$10,000.00 rental proceeds Barnes received as maintenance, ECF
No. 373.
45
4.
Attorneys’ fees and costs in an amount to be
determined after Barnes files an appropriate motion
before the magistrate judge.
Barnes shall file a bill
of costs and a motion for attorneys’ fees and related
non-taxable expenses in strict compliance with Local
Rules 54.2 and 54.3 no more than fourteen days
following the entry of judgment.
Defendants may file
objections in accordance with Local Rules 54.2 and
54.3 to Barnes’ requests for attorneys’ fees and
costs.
The magistrate judge will then determine the
appropriate amount of attorneys’ fees and costs to
which Barnes is entitled, and thereafter any party may
file an appeal in accordance with the aforesaid Local
Rules. A separate judgment for attorneys’ fees and
costs will be entered with an identical pre-judgment
interest rate applied.
Before applying pre-judgment interest and without
including attorneys’ fees and costs, Barnes is entitled to a
total judgment in the amount of $172,648.10.
Pre-judgment
interest at the rate of 10.00% per year applies to this amount
from July 3, 2012, to September 6, 2018, for a total award of
46
pre-judgment interest in the amount of $106,758.02. 16
Barnes is
also awarded post-judgment interest on the $172,648.10 principal
amount of his judgment herein at the post-judgment interest rate
of 2.47% compounded annually pursuant to 28 U.S.C. § 1961.
Accordingly, pursuant to Federal Rule of Civil
Procedure 59(e), an amended judgment shall enter in favor of
Plaintiff Chad Barry Barnes and against Defendants in the amount
of $279,406.12.
IT IS SO ORDERED.
DATED:
Honolulu, Hawaii, October 5, 2018.
________________________________
Alan C. Kay
Sr. United States District Judge
Barnes v. Sea Hawaii Rafting, LLC et al., Civ. No. 13-00002 ACK-RLP, Amended
Findings of Fact and Conclusions of Law.
16
Interest is calculated as follows: $172,648.10 (principal
judgment amount) times 0.10 (rate) divided by 365 (days per
year) times 2,257 (number of days between the date of the injury
(July 3, 2012) and the date the Court’s prior Findings of Fact
and Conclusions of Law were filed (September 6, 2018)) equals
$106,758.02.
47
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