In the Matter of the Complaint of Oceansound Investments

District Court, S.D. California·Decided December 8, 2023·No. 3:23-cv-01745·Unknown

Opinion

IN RE THE COMPLAINT OF Case No.: 23-CV-1745 TWR (BLM) OCEANSOUND INVESTMENTS; and ROBERT NAGATA, individual as ORDER (1) ACCEPTING owners or managers of 1989 65’ Donzi PLAINTIFFS-IN-LIMITATION’S “Legacy” Model Z-65 Tournament AMENDED AD INTERIM Sportfish Convertible Motoryacht, H.I.N. STIPULATION AND LETTER OF YDRI0009J889, UNDERTAKING; (2) GRANTING IN PART AND DENYING IN PART Plaintiffs-in-Limitation. PLAINTIFFS-IN-LIMITATION’S APPLICATION FOR INJUNCTION; AND (3) ORDERING DIRECTING ISSUANCE OF NOTICE OF COMPLAINT FOR EXONERATION FROM OR LIMITATION OF LIABILITY TO ISSUE (ECF Nos. 1, 6) Presently before the Court is the admiralty Complaint for Exoneration from or Limitation of Liability by Plaintiffs-in-Limitation Oceansound Investments and Robert Nagata as the owners or managers of a 1989, 65’ Donzi “Legacy” Model Z-65 Motoryacht, H.I.N. YDRI000J889 (the “Vessel”), (ECF No. 1, “Compl.”), the Amended Ad Interim Stipulation for Security in Compliance with October 20, 2023, Order to Provide Additional Documentation and Security for Costs (ECF No. 6, “Amended Ad Interim Stip.”), and the letter of undertaking attached thereto (id., “Letter from Chubb”). This action arises from a boating accident that allegedly occurred aboard Plaintiffs-in-Limitation’s Vessel on August 10, 2022, resulting in a crew member, Robert Swift, breaking his left leg (the “Incident”). (See Compl. ¶¶ 6–8.) Mr. Swift subsequently filed a personal injury lawsuit against Plaintiffs-in-Limitation in the Superior Court of California, County of San Diego. (See id. ¶ 9.) Among other things, Plaintiffs-in-Limitation ask the Court to issue an Order (1) directing the issuance of a monition to all persons asserting claims against Plaintiffs- in-Limitation with respect to the Incident to file claims with the Clerk of Court; (2) directing publication of a notice of the monition in newspapers; and (3) enjoining the prosecution of all claims, except this action, against Plaintiffs-in-Limitation arising from the Incident. (See Compl. Prayer ¶ C.) The Court previously considered the documentation Plaintiffs-in-Limitation submitted in support of their requests, found it deficient in several respects, and ordered Plaintiffs-in-Limitation to provide additional documentation. (ECF No. 5.) Plaintiffs-in-Limitation now have supplied the requested information and cured the deficiencies in their initial submission. (See Amended Ad Interim Stip.) The Court, having considered the Complaint, supporting documentation, and applicable law, (1) accepts Plaintiffs-in-Limitation’s Amended Ad Interim Stipulation as sufficient security; (2) enjoins all proceedings against Plaintiffs-in-Limitation arising out of the Incident giving rise to this limitation action; and (3) directs Plaintiffs-in-Limitation to publish notice as set forth below. A. Statement of Facts1 This action arises from an accident that occurred aboard Plaintiffs-in-Limitation’s vessel on August 10, 2022. (Compl. ¶¶ 6–7.). Plaintiff-in-Limitation Oceansound

1 In reciting the above facts taken from the operative Complaint, the Court is not making any Investments LLC (“Oceansound”) holds title to the Vessel, which is exempt from registration with the State of California because it is federally registered with the U.S. Coast Guard. (Id. ¶ 4.) Plaintiff-in-Limitation Robert Nagata is the manager of both Oceansound and the Vessel. (Id. ¶¶ 3–4.) The Incident occurred on or around 10:45 p.m. on August 10, 2022, when Robert Swift, a crew member and deckhand of the Vessel, fell from the top of the Vessel’s bulwark and broke his left leg. (Id. ¶¶ 6–7.) At the time of the Incident, the Vessel was on a voyage to Catalina Island. (Id. ¶ 7.) Mr. Swift initiated a lawsuit against Plaintiffs-in-Limitation in San Diego Superior Court for personal injuries, damages, and losses arising out of the Incident and served Plaintiffs-in-Limitation with notice of the lawsuit on March 20, 2023. (Id. ¶¶ 9, 13.) Plaintiffs-in-Limitation allege that the value of the Vessel at the end of the voyage on August 10, 2022, after the Incident, was $350,000. (Id. ¶ 11.) This amount also represents their interest in the Vessel and pending freight. (Id. ¶ 20.) B. Procedural History On September 20, 2023, or within six months of Mr. Swift’s written notice of the state court action, Plaintiffs-in-Limitation filed this action for exoneration from or limitation of liability pursuant to the Limitation of Liability Act (the “Limitation Act”), 46 U.S.C. § 30501, et seq. Plaintiffs-in-Limitation’s Complaint, among other things, asks the Court to (1) adjudge that Plaintiffs-in-Limitation are not liable; (2) limit liability, as requested, to the value of the Vessel at the conclusion of the voyage if Plaintiffs-in- Limitation are adjudged liable; (3) issue an order directing the issuance of a monition to all persons asserting claims against Plaintiffs-in-Limitation with respect to the Incident admonishing them to file their respective claims with the Clerk of Court; (4) issue an order directing the execution of the monition and publication of notice thereof in newspapers once a week for four consecutive weeks; and (5) enjoin further prosecution of any actions relating to the Vessel and the Incident. (Compl. ¶¶ 6–8.) Plaintiffs-in-Limitation have attached several documents to the Complaint, as relevant here: (1) Ad Interim Stipulation for Security, (ECF No. 1-2); (2) Notice of Complaint for Exoneration from or Limitation of Liability, (ECF No. 1-3); (3) Robert Nagata’s Declaration of Valuation, (ECF No. 1-4, “Nagata Decl.”); and (4) Proposed Order of Injunction and Monition (not docketed). On October 20, 2023, the Court rejected Plaintiffs-in-Limitation’s proffered Ad Interim Stipulation for Security because it failed to provide the requisite $500 security for costs, failed to identify either Plaintiff-in-Limitation as an insured on the marine policy, and appeared to permit Plaintiffs-in-Limitation to take actions that would void the stipulation. ECF No. 5 at 3–4; see also Fed. R. Civ. P., Supp. R. F(1); S.D. Cal. CivLR F.1. The Court directed Plaintiffs-in-Limitation to provide a letter of undertaking from the insurer that issued the marine policy if they intended to rely on an ad interim stipulation. (ECF No. 5 at 4.) In response to the Court’s October 20, 2023 Order, Plaintiffs-in-Limitation have provided the Amended Ad Interim Stipulation, to which they have attached a letter from the insurer. (ECF No. 6.) Federal courts have exclusive jurisdiction over admiralty and maritime claims. U.S. Const. art. III, § 2; 28 U.S.C. § 1333(1).2 The Limitation Act permits vessel owners to seek to “limit liability for damage or injury, occasioned without the owner’s privity or knowledge, to the value of the vessel or the owner’s interest in the vessel.” Lewis, 531 U.S. at 446 (citing the Limitation Act). The Limitation Act serves to “encourage investment in the ship-building industry by protecting owners from excessive liability for claims related to their vessels.” In re Pac. Maritime Freight, Inc., 316 F. Supp. 3d at 1217 2 The Judiciary Act of 1789 codified this grant of exclusive original jurisdiction but included a “saving to suitors” clause that the Supreme Court has construed as “preserv[ing] remedies and the concurrent jurisdiction of state courts over some admiralty and maritime claims.” Lewis v. Lewis & Clark Marine, Inc., 531 U.S. 438, 445–46 (2001); 28 U.S.C. § 1333(1). “Pursuant to the saving[] to suitors cl

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In the Matter of the Complaint of Oceansound Investments, (S.D. Cal. 2023).

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