Barnes v. Sea Hawaii Rafting, LLC et al

Filing 658

ORDER REINSTATING PLAINTIFF CHAD BARRY BARNES'S MOTION FOR SUMMARY JUDGMENT AND TO PIERCE THE CORPORATE VEIL OF DEFENDANT SEA HAWAII RAFTING, LLC - Signed by JUDGE ALAN C. KAY on 3/2/2020. (jni, )COURTS CERTIFICATE of Service - Non-Registered CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAI`I
)
CHAD BARRY BARNES,
)
)
Plaintiff,
)
)
v.
)
)
SEA HAWAI`I RAFTING, LLC;
)
KRIS HENRY; ALOHA OCEAN
)
EXCURSIONS, LLC; JOHN
)
DOES 1-20; MARY DOES
)
1-20; DOE CORPORATIONS
)
1-20; DOE PARTNERSHIPS
)
1-20; DOE ASSOCIATES
)
1-20; DOE GOVERNMENTAL
)
AGENCIES 1-20; AND OTHER
)
ENTITIES 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.
)
)

Civ. No. 13-00002 ACK-WRP

ORDER REINSTATING PLAINTIFF CHAD BARRY BARNES’S MOTION FOR
SUMMARY JUDGMENT AND TO PIERCE THE CORPORATE VEIL OF DEFENDANT
SEA HAWAII RAFTING, LLC
The Court today issued an order stating that it will
impose enhanced sanctions on Defendant AOE and Defendant Henry
for their noncompliance with this Court’s prior directives to
cause DOBOR reissue the commercial use permit from Defendant AOE
back to Defendant SHR.

In light of two recently-issued appellate

rulings by Judge Watson in connection with Defendant SHR’s
Chapter 7 bankruptcy proceedings, the purpose of this separate
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Order is to reinstate Plaintiff Barnes’s prior motion for summary
judgment, ECF No. 157, and corresponding memorandum, ECF No. 164,
filed back in 2015.

In that summary judgment motion and

corresponding brief, Plaintiff Barnes sought to attempt to pierce
the corporate veil of Defendant SHR and thereby to hold Defendant
Henry personally liable for maintenance and cure.
Several years ago, on July 1, 2015, Plaintiff Barnes
filed his fourth renewed Motion for Summary Judgment to Set
Maintenance Rate.

ECF No. 157.

Two weeks later, the Court

issued a minute order advising that it could not proceed with any
pending motions until the bankruptcy stay in place against
Defendant SHR was lifted.

ECF No. 158.

The Court advised that,

once the stay was lifted, the motions would automatically be
reinstated.

Id.

Plaintiff Barnes then filed a “Memorandum in

Response to Judge Alan C. Kay’s Order Filed July 17, 2015
(Document No. 158),” in which he argued, inter alia, that “SHR
and Henry are in fact, and under the law, the same person,
pursuant to the doctrine of ‘piercing the corporate veil.’”

ECF

No. 164 at 9-10.
Although the bankruptcy stay against Defendant SHR was
eventually lifted, several years of pending appeals and other
hurdles prevented the motion from being reinstated.

Recently, in

two decisions ruling on appeals of orders issued in Defendant
SHR’s bankruptcy proceedings, Judge Watson clarified that
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Plaintiff Barnes could pursue his maintenance and cure claim
against Defendant Henry—notwithstanding the stay and discharge of
Defendant Henry in his personal bankruptcy—if Plaintiff Barnes
successfully pierces Defendant SHR’s corporate veil.

See Barnes

v. Henry, Consolidated Case No. 1:19-cv-00210 (Doc. No. 12) (D.
Haw. Jan. 13, 2020); Barnes v. Henry, Consolidated Case No. 1:19cv-00211 (Doc. No. 12) (D. Haw. Jan. 13, 2020); see also In re
Sea Hawaii Rafting, LLC, Bankr. No. 14-01520 (D. Haw. Bankr.).
Specifically, if Barnes pierces the corporate veil, the legal
effect would be that he then would have a maritime lien against
Defendant Henry (standing in the shoes of Defendant SHR).

As

Judge Watson explained, the automatic stay and discharge
injunction against Defendant Henry would not prohibit Barnes from
prosecuting the in rem maritime lien claim against Henry if
Barnes succeeds in piercing Defendant SHR’s corporate veil.
Judge Watson also clarified that the recovery of the maritime
lien against Defendant Henry would be limited to the value of the
vessel Tehani, and not anything above and beyond that amount.
Accordingly, consistent with the above, the Court
hereby reinstates Plaintiff Barnes’s motion for summary judgment,
ECF No. 157.

Because several years have passed since the motion

was first filed, and because Judge Watson’s rulings in the
bankruptcy appeals provide further legal context for the scope of
any recovery in the event the corporate veil is pierced,
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Plaintiff Barnes is directed to file an opening brief in support
of his motion.
If Plaintiff Barnes successfully pierces the corporate
veil of Defendant SHR such that he may attempt to enforce his
maritime lien against Defendant Henry up to the value of the
vessel, the Court will rely on its determination of that value
based on the appraisal process being held in connection with the
imposition of enhanced sanctions.

As separately discussed in the

order imposing enhanced sanctions, an independent appraiser will
assess (1) the value of the vessel alone and (2) the value of the
vessel, including the enhanced value of the vessel operating with
the commercial use permit.

Each party may also file an

independent appraisal by a certified appraiser, and the Court
will also consider Defendant AOE’s earlier appraisal, as outlined
in the order imposing sanctions.
In the event Plaintiff Barnes is successful in piercing
Defendant SHR’s veil, the Court would then determine the value of
the vessel without the commercial-use permit, after a hearing.
That valuation would establish the limitation on Plaintiff
Barnes’s recovery of his maritime lien against Defendant Henry
(standing in the shoes of Defendant SHR).

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IT IS SO ORDERED.
DATED:

Honolulu, Hawai`i, March 2, 2020.

________________________________
Alan C. Kay
Sr. United States District Judge
Barnes v. Sea Hawaii Rafting, LLC, Kris Henry, M/V Tehani, et al., Civ. No.
13-00002 ACK-RLP, Order Reinstating Plaintiff Chad Barry Barnes’s Motion for
Summary Judgment and to Peirce the Corporate Veil of Defendant Sea Hawaii
Rafting, LLC.

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