Barnes v. Sea Hawaii Rafting, LLC et al

Filing 899

ORDER Denying Plaintiff's Motion to Compel Transfer of Commercial Use Permit, Writ of Replevin and for Injunctive Relief (ECF No. 852) - Signed by JUDGE ALAN C. KAY on 12/14/2021.For the above-stated reasons, the Court DENIES Plaintiff Barnes's Motion to Compel Transfer of Commercial Use Permit, Writ of Replevin and for Injunctive Relief, ECF No. 852, because it lacks jurisdiction. (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 DENYING PLAINTIFF’S MOTION TO COMPEL TRANSFER OF
COMMERCIAL USE PERMIT, WRIT OF REPLEVIN AND FOR INJUNCTIVE
RELIEF (ECF NO. 852)
Before the Court is Plaintiff Chad Barry Barnes’s
Motion to Compel Transfer of Commercial Use Permit, Writ of
Replevin and for Injunctive Relief, ECF No. 852 (the “Motion”)
in which Plaintiff Barnes seeks transfer of the commercial use
permit (the “permit”) from Defendant Aloha Ocean Excursions
(“AOE”) back to Defendant Sea Hawaii Rafting (“SHR”), as well as
an injunction preventing Defendant Kris Henry and Defendant AOE
from further using the permit.

For the reasons set forth below,

the Court DENIES Plaintiff Barnes’s Motion.

Specifically, the

Court holds that Plaintiff Barnes’s appeal (ECF No. 847) of this
Court’s Order Granting in Part and Denying in Part Barnes’s
Motion for Sanctions (ECF No. 846) divests the Court of
jurisdiction from ruling on the Motion.
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BACKGROUND
For purposes of this Order, the Court will not recount
this case’s lengthy procedural history.

The Court only

discusses those facts and events of specific relevance to the
issues that this Order addresses.
I.

Factual Background
a. Filing of Lawsuit, Subsequent Bankruptcies, & Judgment
Plaintiff Barnes is a seaman who was injured in 2012

when the boat on which he was working, the M/V Tehani, exploded.
Seeking the maritime remedy of maintenance and cure, among other
relief, Plaintiff Barnes sued the vessel Tehani in rem and
Defendant SHR (the owner of the vessel) and Defendant Henry (the
sole owner and manager of Defendant SHR) in personam.
Shortly after the lawsuit was filed, Defendant Henry
and Defendant SHR both filed for bankruptcy.

See In re Kristin

Kimo Henry, Case No. 14-01475 (Bankr. D. Haw.); In re Sea Hawaii
Rafting, LLC, Case No. 14-01520 (Bankr. D. Haw.); see also Pl.’s
Concise Statement of Facts (“CSF”), ECF No. 704, ¶¶ 6-7; Defs.’
CSF, ECF No. 754, ¶¶ 6-7 (admitting).

The bankruptcies

complicated this otherwise common maritime case and led to years
of litigation while the bankruptcy court and the Ninth Circuit
clarified several novel legal questions at the intersection of
bankruptcy and admiralty law.

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The bankruptcy court in 2018 ultimately allowed
Plaintiff Barnes to pursue his in rem claims against the vessel
as well as his in personam claims against Defendant SHR, but not
against Defendant Henry.

The Court conducted a three-day bench

trial to determine the amount of maintenance and cure, and
awarded Plaintiff Barnes a judgment in the amount of $279,406.12,
plus attorneys’ fees of $206,281.00 and costs of $27,124.44,
jointly and severally against Defendant SHR in personam and the
vessel Tehani in rem.

See ECF Nos. 446, 447, 517.

b. Collection Efforts & Transfer of Permit
Plaintiff Barnes has been largely unsuccessful in
collecting on his judgment.

His collection efforts have been

hindered and/or delayed by the bankruptcies and other procedural
complications and numerous appeals, as well as by Defendant
SHR’s insolvency.

Plaintiff Barnes has also been unable to

pursue what was virtually the only asset of Defendant SHR (aside
from the vessel Tehani): namely, the permit, which is a valuable
commercial use boating permit.

See ECF Nos. 608 & 657.

At the

time of the accident, lawsuit, and bankruptcy filings, the
permit had been assigned to the vessel Tehani and in Defendant
SHR’s name.

Id.; see also ECF No. 528.

In 2017, Defendant Henry wrote a letter to the harbor
master at Honokohau Harbor—where the vessel Tehani was located—
requesting that the Division of Boating and Ocean Recreation
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(“DOBOR”) reissue the permit from Defendant SHR to Defendant AOE.
ECF No. 585.

Defendant AOE is another single-member LLC formed

by Defendant Henry less than one year after he and Defendant SHR
filed bankruptcy.

Id.; see also Ex. B to Decl. of Jay Friedheim

(“Friedheim Decl.”), ECF No. 703-4; Pl.’s CSF ¶¶ 9-10; Defs.’ CSF
¶¶ 9-10 (admitting).

Defendant Henry’s letter represented that

the transfer would only reflect a “change in name,” ECF No. 5271, when in fact Defendant SHR and Defendant AOE were entirely
separate legal entities, ECF No. 585.

Based on Defendant Henry’s

misrepresentation in that letter, DOBOR reissued the permit from
Defendant SHR to Defendant AOE, where it remains today.

ECF Nos.

585, 608, & 657; see also Ex. C to Friedheim Decl., ECF No. 7035.
c. The First Sanctions Order
The permit transfer ultimately led the Court to impose
sanctions on Defendant Henry and Defendant AOE.

See ECF Nos. 608

(imposing “initial” sanctions) & 657 (imposing “enhanced”
sanctions).

After holding hearings and considering evidence, the

Court made findings that Defendant Henry’s request for reissuance
of the permit from Defendant SHR to Defendant AOE was a
“misrepresentation” in that the “name change” was in fact a
transfer between two separate and distinct legal entities.
No. 608 at 10-11.

ECF

The Court had previously ruled that the permit

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was not appurtenant to the vessel Tehani. 1/

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ECF No. 528 at 1.

The Court found that the vessel and the permit were virtually the
only assets held by Defendant SHR against which Plaintiff Barnes
might have enforced his maritime lien and judgment.
608 at 8.

See ECF No.

The Court determined that the transfer of the permit

to a different LLC prevented the operation of the vessel out of
Honokohau Harbor and thus significantly diminished the value of
the vessel, thereby severely and negatively impacting Plaintiff
Barnes’s ability to recover his damages.

The Court found that

Defendant Henry’s transfer of the permit from Defendant SHR to
Defendant AOE was deliberate, reckless, and tantamount to bad
faith.

See id.
Based on those findings, the Court imposed the initial

sanctions in the amount of $25,000, designed to partially
compensate Plaintiff Barnes for the resulting loss. 2/
17.

Id. at 16-

The Court also directed Defendant Henry and Defendant AOE to

take steps to have the permit reissued to Defendant SHR or else
the sanctions would be substantially enhanced.

Id. at 17.

d. Enhanced Sanctions Order
When Defendants failed to comply with the Court’s
directive in the initial sanctions order to take meaningful steps
1/
The Ninth Circuit has affirmed that the commercial use permit was
not an appurtenance of the Tehani. See Barnes v. Sea Hawaii Rafting, LLC,
No. 18-17154, 2021 WL 4306896, at *2 (9th Cir. Sept. 22, 2021).
2/
The initial sanctions have been paid in full by Defendant Henry and
Defendant AOE.

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to have the permit reissued to Defendant SHR, the Court held
several hearings and imposed “enhanced” sanctions.
(“the Enhanced Sanctions Order”).

ECF No. 657

The Court held that Defendants

had acted “recklessly, wrongfully, and with an improper purpose,”
and that their “conduct ‘was tantamount to bad faith and
therefore sanctionable’ pursuant to the Court’s inherent power.”
Id. at 28 (quoting B.K.B. v. Maui Police Dept., 276 F.3d 1091,
1108 (9th Cir. 2002)).
Based on those findings, the Court assessed enhanced
sanctions to compensate Plaintiff Barnes for the loss of the
value of the permit, as well as for related attorney’s fees and
costs.

Enhanced Sanctions Order at 31-35.

The Court was careful

to fashion an award of enhanced sanctions directly designed to
compensate for Plaintiff Barnes’s actual loss arising from
Defendant AOE’s and Defendant Henry’s wrongful conduct; namely,
the loss of the permit.

Id. at 32.

The parties agreed that

asking DOBOR to reissue the permit at that point could risk the
permit being voided altogether.

Id. at n.15. 3/

The Court ordered an independent appraisal of both the
value of the vessel and the permit, considered extensive briefing
from parties, and gave Plaintiff Barnes permission to conduct
limited discovery as to Defendants’ use and profit gains

3/

permit.

Plaintiff Barnes asserts he never agreed to a permanent loss of the

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resulting from their ownership of the permit.

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Both

Id. at 33. 4/

parties agreed to the independent appraiser appointed by the
Court and were given the opportunity to engage their own
appraisers to provide their own valuations for the Court’s
consideration.

Neither party submitted its own appraisal.

See

ECF No. 846.
To accomplish the valuation, the Court appointed Mr.
Robert Oakley of All Island Marine Survey to conduct an
independent appraisal of the value of the permit.
Sanctions Order at 32.

Enhanced

Mr. Oakley was asked to first conduct an

appraisal of the M/V Tehani, and then to conduct an appraisal of
the M/V Tehani together with the value of operating with the
permit.

Id. at 33.

Ultimately, the enhanced sanctions were

calculated based on the difference between the two valuations in
order to isolate the value of the loss of the permit alone.

See

id.; ECF No. 737 (Appraisal Report of Court-appointed Appraiser
Robert Oakley).
In the Enhanced Sanctions Order, the Court stated that
the purpose of the sanctions is to compensate Plaintiff Barnes
for the loss of the permit.

ECF No. 657 at 29.

4/
Plaintiff Barnes asserts he could not pursue discovery because of
Defendant Henry’s bankruptcy; however, even if correct, this would not appear
to preclude discovery of Defendant AOE’s operations and profits (and
discovery of Defendant SHR’s assets was not precluded by Defendant Henry’s
bankruptcy).

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The Court did not indicate that imposition of the
enhanced sanctions would be compensation for temporary use of the
permit by Defendant AOE for some unspecified period of time, or
limited in any way.

The appraisal was clearly not a measurement

of loss of use of the permit for some unknown number of years,
but a measurement of loss of the permit itself.
The Court also allowed the parties to submit briefing
on the sufficiency of that valuation.

See ECF No. 740.

---

Plaintiff Barnes submitted a brief stating simply, “We think the
sanctions should not be tied to the appraisal value, and we think
the $40,000.00 is a little low under these circumstances.”
No. 745 at 2.
ECF No. 846.

ECF

He did not expand on his own proposed calculation.
Defendant AOE and Defendant Henry filed an

objection requesting that, before sanctions are imposed, Mr.
Oakley provide more information about how he appraised the
permit.

ECF No. 744.

The Court relayed the request to Mr.

Oakley, who indicated that he could provide the information for
additional payment.

ECF Nos. 746 & 749.

At the hearing held on

September 30, 2020, counsel for Defendants AOE and Henry
indicated that they no longer sought supplemental information
from Mr. Oakley.

ECF No. 776.

On October 16, 2020, the Court issued an order finding
the proper value of the loss of the permit to be $40,000.00, and

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imposed enhanced sanctions in that amount.

ECF No. 776.

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Neither

party ultimately objected to the finding nor filed an appeal.
On May 28, 2021, Plaintiff Barnes sought further
sanctions against Defendants AOE and Henry for the delinquent
outstanding payments of the enhanced sanctions under the Court’s
allowed installment plan.

ECF No. 836.

The Court, while

granting a sanction of $1,000 against Defendant Henry and
Defendant AOE, reiterated in detail that the enhanced sanctions
based on the permit’s appraised value of $40,000 was for the loss
of the permit.

ECF No. 846 (again, the order which Plaintiff

Barnes has appealed).
II.

Procedural Background
Plaintiff Barnes filed the Motion to Compel Transfer of

Commercial Use Permit, Writ of Replevin and for Injunctive Relief
on July 9, 2021.

See ECF No. 852.

Defendant Henry and Defendant

AOE filed their Opposition on October 21, 2021.

ECF No. 887.

Plaintiff Barnes filed his Reply on November 3, 2021.
891.

ECF No.

A virtual hearing on the Motion was held on November 16,

2021.

DISCUSSION
As a threshold matter, the Court concludes that
Plaintiff Barnes’s appeal divests the Court of jurisdiction to
decide the Motion.

The same day the Court issued its Order
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Granting in Part and Denying in Part Plaintiff Barnes’s Motion
for Sanctions, ECF No. 846, Plaintiff Barnes filed a notice of
appeal of the order.

See ECF No. 847.

Plaintiff Barnes raises

the same fundamental issues in the Motion that were discussed in
the Court’s order (ECF No. 846), and raised in his appeal.
It is well-established that the filing of a notice of
appeal generally divests the trial court of jurisdiction.

In re

Silberkraus, 336 F.3d 864, 869 (9th Cir. 2003) (“The purpose of
this judicially-created doctrine is to avoid the potential
confusion and waste of resources from having the same issues
before two separate courts at the same time.”).

Accordingly, the

Court finds it does not have jurisdiction to rule on the Motion.
In his Motion, Plaintiff Barnes asks the Court to (1)
compel the transfer of the permit, (2) order an injunction
barring Defendants Henry and AOE from further using the permit,
and (3) return the permit to Plaintiff Barnes through replevin.
In order to be entitled to a preliminary injunction, a
plaintiff must establish the following elements: (1) likelihood
of success on the merits, (2) likelihood of irreparable harm in
the absence of preliminary relief, (3) that the balance of
equities tips in his or her favor, and (4) that an injunction is
in the public interest.

Winter v. Nat. Res. Def. Council, Inc.,

555 U.S. 7, 20, 129 S. Ct. 365, 374, 172 L. Ed. 2d 249 (2008).

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Likewise, the appeal divests the Court of jurisdiction
to rule on the Motion’s request for replevin of the permit; as
replevin requires the filing of a verified complaint showing:
among other elements, (1) that the plaintiff is entitled to the
immediate possession of the property claimed. . . .

See Haw.

---

Rev. Stat. § 654-1 (2013).
The Court earlier ruled that Plaintiff Barnes was
entitled to be compensated for the loss of the permit, and
Defendants Henry and AOE have paid him the appraised value of
his loss of the permit pursuant to the Court’s order filed
October 16, 2020, ECF No. 776.

Since Plaintiff Barnes has now

appealed his loss of the permit, the Court is divested of
jurisdiction to rule on the Motion, including all its requests
to: (1) compel the transfer of the permit, (2) order an
injunction barring Defendants Henry and AOE from further using
the permit, and (3) return the permit to Plaintiff Barnes
through replevin.

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CONCLUSION
For the above-stated reasons, the Court DENIES
Plaintiff Barnes’s Motion to Compel Transfer of Commercial Use
Permit, Writ of Replevin and for Injunctive Relief, ECF No. 852,
because it lacks jurisdiction.

IT IS SO ORDERED.
DATED:

Honolulu, Hawai`i, December 14, 2021.

________________________________
Alan C. Kay
Sr. United States District Judge
Barnes v. Sea Hawai`i Rafting, et al., Civ. No. 13-00002 ACK-RLP, Order
Denying Plaintiff’s Motion to Compel Transfer of Commercial Use Permit, Writ
of Replevin and for Injunctive Relief (ECF No. 852).

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