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In re Complaint B&C Seafood LLC

United States District Court, D. New Jersey, Camden Vicinage

December 11, 2019

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.

          MEMORANDUM OPINION AND ORDER

          JOEL SCHNEIDER, UNITED STATES MAGISTRATE JUDGE

         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 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, 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 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 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 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 ...

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