Barnes v. Sea Hawaii Rafting, LLC et al

Filing 819

ORDER REGARDING PAYMENT OF ENHANCED SANCTIONS, re ECF 794 , ECF 810 - Signed by JUDGE ALAN C. KAY on 12/28/2020.In sum, the Court makes the following rulings in deciding Defendants pending motions, ECF Nos. 794 & 810:1. Defenda nt AOE and Defendant Henry's request for an installment plan to pay off the $40,000 enhanced sanction for the value of the commercial-use permit, ECF No. 794, is GRANTED IN PART. Defendants have already paid the initial $10,000 payment , and Defendants shall, by this Courts Order, jointly and severally pay monthly installments of $500, to be paid by the end of the third week of each month and to commence in January 2021; then, commencing on November 1, 2021, such installments shall be increased to $1,000 per month, to be paid by the end of the third week of each month, but with the remaining balance of the $40,000 in enhanced permit sanctions to be paid in full, by no later than October 31, 2022. The Co urt cautions that a failure to timely make such installment payments may result in the Court declaring the entire balance accelerated and immediately due. Defendants have the option to pay the balance in full at any time without penalty.2. De fendant AOE and Defendant Henry's request that they be allowed to pay the $8,638.64 in custodial cost sanctions in the same installment plan, ECF No. 810, is DENIED. Defendants are ORDERED to pay that amount within 10 days of the issuance of this Order.3. The Court makes no determination on a payment plan for the attorney's fees owed in connection with the enhanced sanctions because that matter is under review by Magistrate Judge Porter.IT IS SO ORDERED.COURT'S CERTIFICATE of Service - Non-Registered CM/ECF Participants have been served by First Class Mail on 12/29/2020 to the addresses of record listed on the Notice of Electronic Filing (NEF).(jni)

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAI`I
CHAD BARRY BARNES,
Plaintiff,
v.
SEA HAWAI`I RAFTING, LLC;
et al.
Defendants.

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Civ. No. 13-00002 ACK-WRP

ORDER REGARDING PAYMENT OF ENHANCED SANCTIONS
On November 11, 2020, Defendant Kris Henry and
Defendant Aloha Ocean Excursions LLC (“AOE”) (together referred
to as “Defendants”) filed a Motion seeking to pay the $40,000 in
Court-ordered enhanced sanctions regarding the wrongful
commercial-use permit transfer (the “permit sanctions”) under an
installment plan because they are purportedly unable to pay the
full sanctioned amount at one time due to their financial
condition resulting from the COVID-19 pandemic and current
economic and tourism downturn.
776.

ECF No. 794; see also ECF No.

This Order addresses that Motion, as well as Defendants’

additional request to include in the installment plan the
custodial costs and attorney’s fees awarded as further enhanced
sanctions (respectively, the “custodial cost sanctions” and the
“attorney’s fee sanctions”).

ECF No. 810.

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BACKGROUND
In the original Motion, Defendants asked the Court to
allow them to pay the $40,000 portion of the enhanced sanctions
imposed by ECF No. 776, accounting for the loss to Plaintiff
Barnes for the value of the commercial-use permit (the permit
sanctions), in an installment plan over time.
3.

ECF No. 794 at 2-

They represent that they have faced substantial economic

challenges in light of the COVID-19 pandemic and resulting
economic downturn.

Id.

Defendants propose that they pay

“$10,000 up front with monthly payments of $500 until the
sanction is paid off, with the option to pay the full balance at
any time without penalty if economic circumstances improve.”
Id.
The day after the Motion was filed, the Court advised
the parties that it intends to decide the Motion without a
hearing and directed Plaintiff Barnes to file a response.
No. 796.

ECF

Plaintiff Barnes filed a response to the Motion on

November 16, in which he objected to any installment plan or
delayed payment.

ECF No. 798.

The Court then directed

Defendants to make the up-front $10,000 payment by November 23
and advised that it would then consider whether or not an
installment plan pertaining to the balance of the $40,000 in
enhanced permit sanctions would be appropriate under the
circumstances.

ECF No. 800.
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To make a responsible determination about a possible
payment plan, the Court directed Defendants to submit certain
financial information for the Court to review in camera.

Id.

Specifically, the Court required Defendants to submit (1)
current financial statements of Defendant AOE and Defendant
Henry, (2) the past 6 months of records of gross receipts
provided to the Department of Land and Natural Resources
(“DLNR”) pertaining to Defendant AOE’s earnings in connection
with the monthly permit fees paid to DLNR, and (3) a monthly
income and expense statement of Defendant AOE’s gross receipts
and total expenses for each of the past 6 months.

Id.

Defendants submitted documents to the Court in response.

Upon

review, the Court directed Defendants to provide supplemental
information pertaining to the financial statements of Defendant
Henry and Defendant AOE.

ECF No. 807.

The Court received those

documents on December 9.

Following a request by Plaintiff

Barnes, ECF No. 811, the Court then directed Defendants to
submit for in camera review their 2019 federal tax returns, as
well as Defendant AOE’s State of Hawai`i 2019 year-ending semiannual general excise tax return and its 2020 mid-year semiannual general excise tax return.

ECF No. 814.

The Court

received the requested tax returns on December 21.
Meanwhile, on December 7, Defendants filed a request
to include the payment of the custodial cost sanctions in any
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installment plan the Court may approve.

ECF No. 810.

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Those

custodial costs were determined by Magistrate Judge Porter to
total $8,638.64, accounting for the costs paid by Plaintiff
Barnes between August 29, 2019, and August 13, 2020.

See id.;

see also ECF No. 799 (Judge Porter’s Order Regarding Custodial
Costs).

Plaintiff Barnes filed an opposition to that request

objecting to any delay in payment because he states that he is
struggling financially and because Defendant Henry has avoided
payment for maintenance and cure.

ECF Nos. 811 & 813.

DISCUSSION
As discussed above, the Court must decide whether
Defendants should be allowed to pay the enhanced sanctions
imposed against them over time with an installment plan.
Defendants request that they be allowed to pay an up-front
payment of $10,000, followed by monthly installments of $500
until the $40,000 in permit sanctions are paid off, while
retaining the option to pay the remaining balance at any time if
their economic circumstances should improve.
3.

ECF No. 794 at 2-

They also request that the $8,638.64 in custodial cost

sanctions be included in the same installment plan.

ECF No.

810.
Pursuant to the minute order dated December 2, 2020,
Defendants have made the initial $10,000 payment.
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ECF No.

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807.

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The Court notes that payment of the remaining $30,000

balance of the permit sanctions would take five years if paid in
monthly installments of $500.

And that does not even include

the additional custodial cost and attorney’s fee sanctions.

The

Court further notes that Defendant Henry—as sole owner of
Defendant SHR and Defendant AOE, both LLCs—has pursued various
efforts—some of which the Court has sanctioned him for—to avoid
paying maintenance and cure to Plaintiff Barnes for over nine
years.

Still, Defendants’ Motion represents that, with the

COVID-19 pandemic and resulting economic downturn, Defendant AOE
is no longer operating and in fact had been losing money even
before the pandemic began earlier this year.
The Court has reviewed in camera the financial data
submitted by Defendants and finds that the adverse economic
conditions resulting from the COVID-19 pandemic warrant a
payment plan.
arrangement:

The Court thus will allow the following payment
Defendant AOE and Defendant Henry are directed to,

jointly and severally, pay monthly installments of $500, to be
paid by the end of the third week of each month and to commence
in January 2021; then, commencing on November 1, 2021, such
installments shall be increased to $1,000 per month, to be paid
by the end of the third week of each month, but with the
remaining balance of the $40,000 in enhanced permit sanctions to
be paid in full, by no later than October 31, 2022.
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With

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Hawai`i‘s tourism industry already increasing and with the
vaccines now being distributed, the Court concludes that
Defendant AOE should be operating more successfully within the
next several months and thus able to make the required payments.
The Court has considered Plaintiff Barnes’s destitute economic
condition as represented in his filings, e.g. ECF Nos. 811 &
813, and the need to provide for a viable payment plan in view
of the challenging financial circumstances of Defendants.
Defendants have also requested that the custodial cost
sanctions and attorney’s fee sanctions be included in any
approved installment plan.

As far as the custodial cost

sanctions, the Court DENIES Defendants’ request made in ECF No.
810.1/

Given Plaintiff Barnes’s destitute condition and that

this involves repayment to Plaintiff Barnes of the custodial
costs he incurred because of Defendant Henry’s wrongful actions,
the Court DENIES Defendants’ request and ORDERS Defendant Henry
and Defendant AOE to reimburse Plaintiff Barnes for the
custodial cost sanctions in the amount of $8,638.64 pursuant to
Magistrate Judge Porter’s Order, ECF No. 799.

Defendants are

1/
The Court notes that the custodial cost sanctions include both (1) a
requirement to pay the ongoing custodial costs for the insurance and storage
of the vessel Tehani, and (2) a requirement to reimburse Plaintiff Barnes for
the custodial costs that he paid to the U.S. Marshal between August 29, 2019,
and August 13, 2020, totaling $8,638.64. The former—that is, those ongoing
costs that are still accruing—must obviously be paid concurrently as owed.
Defendants’ request regarding the custodial cost sanctions appears to only
seek an installment plan with respect to the latter—that is, the $8,638.64 in
costs already paid by Plaintiff Barnes. See ECF No. 810. The Court
construes it as such.

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ordered to make full payment within 10 days of the issuance of
this Order.
Finally, with respect to the attorney’s fee sanctions,
that matter is still under review by Judge Porter.
806.

See ECF No.

Accordingly, the Court will not consider that request at

this time.

CONCLUSION
In sum, the Court makes the following rulings in
deciding Defendants pending motions, ECF Nos. 794 & 810:
1.

Defendant AOE and Defendant Henry’s request for

an installment plan to pay off the $40,000 enhanced sanction for
the value of the commercial-use permit, ECF No. 794, is GRANTED
IN PART.

Defendants have already paid the initial $10,000

payment, and Defendants shall, by this Court’s Order, jointly
and severally pay monthly installments of $500, to be paid by
the end of the third week of each month and to commence in
January 2021; then, commencing on November 1, 2021, such
installments shall be increased to $1,000 per month, to be paid
by the end of the third week of each month, but with the
remaining balance of the $40,000 in enhanced permit sanctions to
be paid in full, by no later than October 31, 2022.

The Court

cautions that a failure to timely make such installment payments
may result in the Court declaring the entire balance accelerated
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and immediately due.

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Defendants have the option to pay the

balance in full at any time without penalty.
2.

Defendant AOE and Defendant Henry’s request that

they be allowed to pay the $8,638.64 in custodial cost sanctions
in the same installment plan, ECF No. 810, is DENIED.
Defendants are ORDERED to pay that amount within 10 days of the
issuance of this Order.
3.

The Court makes no determination on a payment

plan for the attorney’s fees owed in connection with the
enhanced sanctions because that matter is under review by
Magistrate Judge Porter.

IT IS SO ORDERED.
DATED:

Honolulu, Hawai`i, December 28, 2021.

________________________________
Alan C. Kay
Sr. United States District Judge

Barnes v. Sea Hawaii Rafting, LLC, et al., Civ. No. 13-00002 ACK-RLP, Order
Regarding Payment of Enhanced Sanctions.

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