B & C SEAFOOD LLC
Filing
97
MEMORANDUM OPINION AND ORDER Denying claimants 65 Motion for an Order Increasing Security for the F/V Toots II. Signed by Magistrate Judge Joel Schneider on 12/11/2019. (rss, )
[Doc. No. 65]
THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
IN THE MATTER OF THE COMPLAINT
OF B&C SEAFOOD, LLC,
AS OWNER OF THE F/V TOOTS II,
A 52’ STEEL-HULLED FISHING
VESSEL, FOR EXONERATION FROM,
OR LIMITATION OF LIABILITY.
Civil No. 18-1560 (RBK/JS)
MEMORANDUM OPINION AND ORDER
This matter is before the Court on the “Motion for an Order
Increasing Security for the F/V Toots II” (“motion”) [Doc. No.
65] filed by Sargasso Sea Inc. and Fairfield Maxwell Services,
Ltd, as owners and operators of the M/V Oleander,
(collectively
“Claimants”). The Court received the opposition filed by B&C
Seafood LLC (“Petitioner”) [Doc. No. 75] and claimants’ reply
[Doc. No. 80]. The Court also received petitioner’s sur-reply
brief [Doc. No. 81] and the parties’ letters addressing the
admissibility of the sur-reply brief [Doc. Nos. 82, 83, 84]. The
Court recently held oral argument. For the reasons to be set
forth in this Memorandum Opinion and Order, claimants’ motion is
DENIED.
Background
This action arises out of a collision that occurred on or
about October 6, 2017 between the F/V TOOTS II (“Toots II”) and
the M/V OLEANDER (“Oleander”) while the Toots II was fishing in
waters off the coast of New Jersey. See Compl. [Doc. No. 1]. The
collision occurred when the bow of the Toots II struck the rear
starboard side of the Oleander. See Dep. Tr. of Jesse Sullivan,
154-55. Petitioner purchased the Toots II and the fishing permit
in question on September 5, 2011 for $950,000.00.1 Mot. at 2.
After the collision, the Toots II was taken to Yanks Marine
Shipyard in New Jersey. Opp’n at 4. Petitioner, through North
Star Insurance Services LLC (“NSIS”), gave notice of claim to
underwriters, and the marine surveying firm of Martin Ottaway
Van Hemmen & Dolan (“MOVHD”) was appointed to represent the
underwriters’ interest. Id. MOVHD’s Kyle Antonini attended two
surveys: one on October 10, 2017 and another on October 12,
2017. Id. On October 30, 2017, Mr. Antonini sent an email to
NSIS’s Casey Sylvaria and approved $188,330 for repair costs on
the Toots II. Id. Further surveys were conducted on November 16
and 17 and MOVHD issued a November 18, 2017 “Second Supplemental
The permit attached to the Toots II at the time of the
collision contained fifteen permitted fisheries. These include
two limited access permits: (1) Lobster permit valued at
$20,000; and (2) Scallop permit valued at approximately
$1,370,000. See Mot. at 2 n 2 and 4.
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Advice” where Mr. Antonini reported further damages to the Toots
II and concluded that the fair and reasonable cost of repairs
total $450,259.10.2 Id. at 5. The pre-casualty value of the Toots
II was approximately $300,000. Opp’n at 3. Because the cost of
the repairs exceeded the value of the vessel, petitioner
abandoned the vessel to its underwriters who then sold it for
$40,000 scrap value. Id. Two months after the collision, B & C
Seafood sold the Toots II’s fishing permit for $1,475,000.00 to
a third party. Mot. at 3. Claimants allege, upon information and
belief, that petitioner earned $20,717.85 on the voyage from
fishing scallops. Id. As such, petitioner moved, and the Court
granted, its motion to accept security for a value of the Toots
II of $60,967.85.3 See Doc. No. 5.
Petitioner commenced this action on February 5, 2018. See
Compl. at 1. In the complaint, petitioner seeks exoneration or
Limitation of Liability pursuant to 46 U.S.C. §§ 30505 and 30511
(“The Limitation Act” or “the Act”). In their answers to the
complaint, claimants allege, among other things, that the
security posted is inadequate, and the Court should order
appropriate security to be filed. See Doc. Nos. 8, 13, 14, 15,
Claimants argue the surveys conducted on November 16 and 17 are
ex parte vessel surveys that should not be considered in
determining the value of the Toots II after the collision.
3 Petitioner reached this number by adding the $40,000 scrap
value and the $20,717.85 in fishing profits from the day of the
collision.
2
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16, 17, 18, 19, 20, 25, 26. Claimants allege the fair market
value of the Toots II after the collision was between $100,000
and $125,000. See Decl. of Michael L. Collyer ¶ 6. Claimants
further allege the fair market value of the Toots II for
purposes of the Limitation Act should include the fair market
value of the fishing permits assigned to the Toots II at the
time of the incident, valued at $1,370,000.00. Id. at ¶ 12.
Claimants argue the fair market value of the Toots II for
purposes of the Act should be $1,495,000.00 while petitioner
argues the vessel had a value of $60,967.85. Mot. at 1.
Alternatively, if the fishing permit is not included in the
valuation, claimants argue the fair market value of the Toots II
should be $125,000. Id. at 5. Last, petitioner filed a sur-reply
brief [Doc. No. 81] without leave of court and claimants argue
the Court should decline to consider the arguments presented
therein.4 See Doc. Nos. 82, 83, 84.
Discussion
The Limitation of Liability Act protects the right of
vessel owners to limit their liability to the value of the
vessel, provided that the events or circumstances giving rise to
the damage occurred without the vessel owner's privity or
In the interest of justice, the Court will consider all briefs
filed by the parties.
4
4
knowledge. Under the Act, the owner of a vessel may limit its
liability to the value of the vessel and any pending freight. 46
U.S.C. § 30505(a). The Act was designed to encourage investment
and protect vessel owners from unlimited exposure to
liability. Lewis v. Lewis & Clark Marine, Inc., 531 U.S. 438
(2001). A vessel’s value for the purpose of determining the
amount of a limitation fund is assessed at the end of the voyage
during which the casualty occurred. Cody v. Phil’s Towing Co.,
247 F.Supp.2d 688, 693-94 (W.D.Pa. 2002) (citing In Re American
Milling Co., 125 F.Supp.2d 981, 984-85 (E.D.Mo. 2002)).
In determining the value of the vessel for purposes of the
Act, the Supreme Court has stated:
the custom has been to include all that belongs to the
ship, and may be presumed to be the property of the
owner, not merely the hull, together with the boats,
tackle,
apparel,
and
furniture,
but
all
the
appurtenances comprising whatever is on board for the
object of the voyage, belonging to the owner, whether
such object be warfare, the conveyance of passengers,
goods, or the fisheries.
The Main v. Williams, 152 U.S. 122, 131 (1894). The court in The
Main also defined “pending freight” as the “earnings of the
voyage.” Id. Additionally, Benedict's admiralty treatise notes
that “[a]ppurtenances, e.g., the traveling derrick of a scow or
the outfit of a whaler, essential to the service on which the
vessel was engaged at the time of the happening of the accident,
are a part of the value to be surrendered or appraised.” In re
5
Waterman S.S. Corp., 794 F.Supp. 601, 605-06 (E.D.La. 1992)
(citing 3 BENEDICT
ON
ADMIRALTY, § 63, p. 7-22 (7th ed. 1983)). The
treatise also notes that the value of the ship's stores must be
included in the appraisal, but not the value of spare parts kept
on shore. Id. The Supreme Court has also stated the ultimate
measure of the value of a vessel for purposes of the Act is the
fair market value of the vessel. Cody, 247 F.Supp.2d at 693-94
(citing Standard Oil of New Jersey v. Southern Pacific Co., 268
U.S. 146, 155 (1925)).
Claimants argue petitioner’s fishing permits should be
included in the “value of the vessel” for purposes of the Act.
Specifically, claimants argue the fair market value of the Toots
II is $1.495 million dollars because the fishing permits are an
appurtenance of the vessel. Mot. at 1. Claimants rely on case
law that states that fishing permits are an appurtenance to a
vessel for purposes of maritime liens. See Gowen, Inc. v. F/V
Quality One, 244 F.3d 64 (1st Cir. 2001); see also Fuller Marine
Services, 2015 U.S. Dist. LEXIS 128938 (D.Me. Sept. 24, 2015);
PNC Bank Del. V. F/V Miss Laura, 381 F.3d 183 (3d Cir. 2004).
Petitioner, on the other hand, argues that fishing permits
should not be included in assessing the value of the vessel,
therefore, its liability should be limited to $60,967.85 (scrap
value of $40,000 plus $20,967.85 for value of the scallop catch
aboard the Toots II at the time of the collision). See Pet’r’s
6
Opp’n at 5 [Doc. No. 75]. The Court agrees with petitioner and
finds that case law interpreting the Limitation of Liability Act
as well as case law assessing the value of a vessel does not
support the assertion that a fishing permit should be included
as an appurtenance of a vessel for purposes of the Act.
In Cody, for example, plaintiff commenced an action under
the Jones Act, 46 U.S.C. § 688 et seq., and General Admiralty
and Maritime Laws of the United States, after his left foot was
crushed between two barges. Cody, 247 F.Supp.2d at 689.
Defendants filed motions pursuing a limitation of liability
defense and the court was tasked with determining the value of
defendant’s vessel pursuant to the Limitation of Liability Act.
Id. at 690. The court concluded it did not have enough facts to
determine the value of the vessel; however, it provided a
detailed explanation of what the court would consider in
assessing the value. Id. at 694. The court stated:
[The fair market value of a vessel] may be established
by evidence of either the actual sale of the vessel or
sales of comparable vessels at the approximate time and
within the relevant market. Only if no market exists for
the vessel or contemporary sales of like vessels are
unavailable may other forms of evidence be used to set
the fair market value. In all events the court is to
ascertain the vessel's value by determining the "sum
which, considering all the circumstances, probably could
have been obtained for [the vessel] on the date of the
[casualty]; that is, the sum that in all probability
would result from fair negotiations between an owner
willing to sell and a purchaser desiring to buy."
Standard Oil, 268 U.S. at 155-56. Making this assessment
is not governed by a talismanic formula, but instead is
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to be based upon "a reasonable judgment having its basis
in a proper consideration of all relevant facts."
Id. at 694. Since petitioner’s permits do not have to be sold
with the vessel, Cody supports the notion that fishing permits
are not appurtenances for purposes of valuing a vessel.
In In re Waterman S.S. Corp., a fire erupted in the engine
room of the S/S Stonewall Jackson, killing six of the ship’s
crew. The claimants brought a motion to increase the limitation
fund to include the value of stores, bunkers, cash, and other
appurtenances on board at the time of the incident. In re
Waterman S.S. Corp., 794 F.Supp. 601, 602. The court relied on
the Supreme Court’s holding in The Main and held that the value
of the appurtenances on board at the time of the incident
should be added to the value of the limitation fund. Id. at
606. The court agreed with the Supreme Court’s holding in The
Main that the limitation fund should include “all the
appurtenances comprising whatever is on board for the object of
the vessel.” Id. at 605 (citing The Main) (emphasis added). In
The Buffalo, a longshoreman was put to work on a vessel in an
emergency situation and had his arm crushed by a moving wheel.
The Buffalo, 154 F. 815, 816 (2d Cir. 1907). The issue for the
Second Circuit Court of Appeals was whether a hoist that was on
the vessel when the accident occurred should be included in
assessing the value of the vessel for purposes of the
8
Limitation of Liability Act. Id. The court relied on the
Supreme Court’s decision in The Main and held that the hoist
should be included in the value of the vessel since the
decision in The Main intended to “cover what the owners have at
risk on the vessel for the object of the adventure.” Id. at
819. These cases evidence that physical objects are
appurtenances, not permits or licenses.
The issue of whether a fishing permit is an “appurtenance”
for purposes of the Limitation of Liability Act is a novel one.
However, after reviewing the pertinent case law, the Court
finds that fishing permits should not be considered in
assessing the “value of a vessel” for purposes of the Act. In
applying the court’s reasoning in Cody, the Court finds that
the Toots II’s fair market value after the collision was
$40,000 as it was the price a willing buyer in the market was
willing to pay for the vessel after the collision. Further, the
Court must add the $20,987.85 consisting of the profit earned
during the voyage as pending freight.
Unlike the value of stores, bunkers, cash, and other
appurtenances on board at the time of the incident in In re
Waterman S.S. Corp., the fishing permits used by the petitioner
are intangible objects that were not “on board” the vessel at
the time of the collision. Further, as Benedict’s admiralty
treatise notes, the value of the ship's stores must be
9
included in the appraisal, but not the value of spare parts
kept on shore. In re Waterman S.S. Corp, 794 F.Supp. at 605. In
The Buffalo held that the hoist should be included as an
appurtenance for purposes of the Act because it was on board
the vessel at the time of the collision. These cases
demonstrate there is a distinction between physical objects on
board a vessel and objects not on board a vessel for purposes
of determining what is an appurtenance under the Act. Fishing
permits are intangible objects not on board a vessel,
therefore, holding that fishing permits should be included as
an appurtenance for purposes of the Act would be inconsistent
with relevant case law.
Case law relating to maritime liens, the law claimants rely
upon, is not applicable in the current context. Claimants rely
mainly on Gowen and PNC Bank Del. for their assertion that the
Court should include fishing permits as an appurtenance for
purposes of the Limitation Act. See Mot. at 7; see also Gowen,
Inc, 244 F.3d at 67-70; PNC Bank Del., 381 F.3d at 186. The
Court finds Gowen and PNC Bank Del. are distinguishable from
the case at hand given that they refer to valuation for
purposes of maritime liens. Maritime liens were created to
promote commerce by allowing suppliers to freely extend credit
to ships but still be protected from shipowners escaping their
10
debts by sailing away without payment.5 The Limitation of
Liability Act, on the other hand, is intended to limit a vessel
owner’s liability by preventing exposure to unlimited
liability. The Court, therefore, finds that the cases claimants
rely on have a different goal in mind than the case at hand.
Therefore, even though courts have considered fishing permits
an appurtenance for purposes of maritime liens, the Court will
not expand the definition of appurtenances to include fishing
permits for purposes of the Limitation Act.
Further, it is not insignificant that the Limitation of
Liability Act was passed by Congress in 1851 yet there is no
case law that supports claimant’s assertion that fishing
permits should be included as an appurtenance in determining
the value of a vessel pursuant to the Act. This is an
indication claimants’ argument is off base. The Court rejects
claimants’ argument that their motion must be granted in order
to maintain “uniformity” within maritime law. Instead,
following claimants’ valuation would be inconsistent with the
purpose of the Act and the Supreme Court’s interpretation of
the Act. The language used by the Supreme Court in interpreting
See Raleigh P Watson, Understanding Maritime Liens, MARLIN (Mar.
27, 2018), https://www.marlinmag.com/maritime-liens/ (providing
general information relating to maritime liens); see also Gowen,
Inc., 244 F.3d at 67-68 (explaining why fishing permits should
be considered appurtenances for purposes of maritime liens).
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the Limitation of Liability Act reveals that the appurtenances
meant to be included to value a vessel are those that are
physically present on the vessel. The Supreme Court in The Main
specifically stated that the value of the vessel includes
appurtenances “on board at the time of the incident.” The Main,
152 U.S. at 131 (emphasis added). Even though a copy of the
fishing permit may have been on the vessel at the time of the
collision, the value of the permit rests with the intangible
right to fish which comes with it.
Claimants’ argument that the value of the Toots II should be
increased to $125,000 is rejected. Claimants base their
argument on the initial survey that was conducted by MOVHD’s
Mr. Antonini on the Toots II which found there was $188,330 in
damages. Claimants further argue the Court should not consider
the second survey where it was determined the damages exceeded
$400,000. The Court agrees with petitioner and the relevant
case law which states that the lack of a joint survey is not
fatal unless the party can demonstrate something specific which
makes the survey unreliable. See Steelmark (USA). Inc. v. M/V
Handy Explorer, 2002 WL 31640482, *3 (E.D.La. Nov. 20, 2002);
see also Delta Marine Drilling Co. v. M/V Baroid Ranger, 454
F.2d 128, 130 (5th Cir 1972). Further, claimants base their
argument on the Declaration of Michael Collyer which is
speculative as he never had the opportunity to survey the Toots
12
II himself. See Decl. of Michael L. Collyer [Doc. No. 65-8].
Therefore, nothing in the record leads the Court to conclude
the additional survey that was conducted is unreliable and
should not be considered.
Conclusion
In conclusion, the Court finds fishing permits should not
be considered appurtenances for purposes of the Limitation of
Liability Act. The Court also finds the fair market value of the
Toots II after the collision was $40,000, not $125,000. The
Court reaches this conclusion by considering the surveys
conducted by MOVHD after the collision as well as the scrap
value the vessel was sold for. Therefore, claimant’s motion to
increase the limitation fund from $60,967.85 to $1.495 million
is DENIED.
ORDER
Accordingly, and for the foregoing reasons, it is hereby
ORDERED this 11th day of December 2019, that claimants’ “Motion
for an Order Increasing Security for the F/V Toots II” [Doc. No.
65] is DENIED.
s/ Joel Schneider
JOEL SCHNEIDER
United States Magistrate Judge
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