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In re Nagler

United States District Court, E.D. New York

March 23, 2017

In re JEFFREY NAGLER, as owner of the Fishing Vessel Midnight Star, O.N. 279584, and BULLET SERVICES LLC, as owner of the Fishing Vessel Lady Midnight, O.N. 524895, for exoneration from or limitation of liability.

          MEMORANDUM & ORDER

          MARGO K. BRODIE, United States District Judge.

         Petitioners Jeffrey Nagler, as owner of the fishing vessel Midnight Star, and Bullet Services LLC, as owner of the fishing vessel Lady Midnight, brought the above-captioned Petition[1] on March 19, 2015, for exoneration or limitation of liability pursuant to the Limitation of Liability Act (the “Limitation Act”), 46 U.S.C. § 30501 et seq. (Pet., Docket Entry No. 1.) This matter arises from injuries that Respondent Michael Cerillo sustained after falling into an uncovered hatch aboard the Midnight Star. Prior to this action, on November 10, 2014, Cerillo commenced an action in New York State Supreme Court, Kings County, alleging negligence by the crew and owner of the Midnight Star.[2] On March 25, 2015, after filing this Petition to seek exoneration or limitation of liability in connection with Cerillo's injury, Petitioners removed Cerillo's state negligence action to the Eastern District of New York, asserting that the district court has original admiralty and maritime jurisdiction over the matter. (See Notice of Removal, Cerillo v. Nagler, No. 15-CV-1557, Docket Entry No. 1.)

         Petitioners now move for summary judgment on the Petition pursuant to Rule 56(a) of the Federal Rules of Civil Procedure, arguing that “nothing in the [record] suggests that there was any negligence on the part of the [Midnight Star] or her crew” that caused Cerillo's injury. (Pet'rs Mot. for Summ. J. (“Pet'rs Mot.”), Docket Entry No. 26; Pet'rs Mem. in Supp. of Pet'rs Mot. (“Pet'rs Mem.”) 7, Docket Entry No. 26-3.) Cerillo cross-moves to dismiss the Petition under Rule 12(b)(6) or, in the alternative, for summary judgment pursuant to Rule 56(a) of the Federal Rules of Civil Procedure.[3] (Resp. Cross-Mot. and Opp'n to Pet'rs Mot. (“Resp. Cross- Mot.”), Docket Entry No. 24; Resp. Mem. in Supp. of Resp. Cross-Mot. (“Resp. Mem.”), Docket Entry No. 24-1.) Cerillo argues that Petitioners have pleaded no set of facts in the Petition under which they would be entitled to a limitation of liability. (Resp. Mem. 8.) For the reasons discussed below, Petitioners' motion for summary judgment is denied in part and granted in part, and Cerillo's cross-motion for summary judgment is granted. In addition, the Court remands the underlying personal injury action, Cerillo v. Nagler, No. 15-CV-1557, to New York State Supreme Court, Kings County.

         I. Background

         The following facts are undisputed except where otherwise noted. The Midnight Star and the Lady Midnight are fishing vessels for hire certified by the United States Coast Guard to carry fewer than 100 passengers at a time on the coastal waters of the United States. (Pet'rs Statement of Material Facts Pursuant to Local R. 56.1 (“Pet'rs 56.1”) ¶¶ 2, 4, Docket Entry No. 26-2.) The vessels take passengers from Pier 1 in Sheepshead Bay, Brooklyn, to a fishing area located several miles offshore. (Id. ¶ 5.) Nagler is the sole owner of the Midnight Star. (Id. ¶ 1.) Bullet Services LLC, a New York-based company, is the owner of Lady Midnight.[4] (Id. ¶ 3.) Nagler operates both the Midnight Star and the Lady Midnight, as well as a third fishing vessel within the Bullet Services LLC fleet. (Resp. Statement of Material Facts Pursuant to Local R. 56.1 (“Resp. 56.1”) ¶ 5, Docket Entry No. 24-2.)

         On September 15, 2014, Cerillo, a seventy-year-old resident of Staten Island, boarded the Midnight Star with his two sons and his grandson, all fare-paying passengers. (Pet'rs 56.1 ¶ 7; Resp. 56.1 ¶¶ 1-2.) Cerillo and his two sons were regular customers who had gone fishing with Nagler approximately twice per week during each summer season, May to October, for the previous five years. (Pet'rs 56.1 ¶ 16; Resp. 56.1 ¶ 6.) On September 15, 2014, the Midnight Star departed from Pier 1 at approximately 8:00 AM to fish for fluke at the “Tin Can fishing grounds.” (Pet'rs 56.1 ¶ 6.) Nagler was the captain of the Midnight Star that day. (Resp. 56.1 ¶ 4.) The parties agree that, in addition to Nagler, there were two mates aboard the Midnight Star on the day of Cerillo's accident. (See Dep. of Michael Steven Cerillo (“Cerillo Jr. Dep.”) 19:8-20, Docket Entry No. 26-11; Dep. of Jeffrey Nagler (“Nagler Dep.”) 24:10-12, 24:24-25, 66:2-8, Docket Entry No. 24-7.) One of these mates, Kyle White, seems to have been a relative veteran with Petitioners' vessels, while the other, Curtis Pervis, was new to Petitioners' vessels.[5](Nagler Dep. 24:10-12; 24:24-25; Cerillo Jr. Dep. 19:21-25.)

         At approximately 12:30 or 1:00 PM, Cerillo attempted to use the restroom on board the vessel but found no toilet paper. (Resp. 56.1 ¶ 7.) He then walked into the cabin of the Midnight Star and toward the galley area to find toilet paper, aware from his prior trips on the vessel that toilet paper was stored in the galley. (Id. ¶ 8.) It was dark in the cabin of the Midnight Star and the exterior windows leading to the cabin were tinted. (Id. ¶ 15.) As he walked behind the galley counter to find the toilet paper, Cerillo fell into an opening in the floor created by an open hatch door that was approximately three feet wide by four feet long. (Id. ¶ 8; Pet'rs 56.1 ¶ 10.) Cerillo had not observed that the hatch cover was open. (Pet'rs 56.1 ¶ 11; Resp. 56.1 ¶ 15.) The hatch cover had been opened to allow the boat's generator to cool while it was not in use. (Pet'rs 56.1 ¶ 15.) According to Cerillo, the hatch cover was either opened by Nagler himself or at his express direction. (Resp. Counter-Statement of Material Facts Pursuant to Local R. 56.1 (“Resp. Counter-56.1”) ¶ 15, Docket Entry No. 24-3.) After the incident, Cerillo's son told Nagler that his father had been injured “pretty badly” and that he would like to return to the dock to seek medical attention.[6] (Id. ¶ 18.) Nagler continued to fish and returned to the dock at the scheduled time, (id.), between 3:00 and 4:00 PM, (Pet'rs 56.1 ¶ 6).

         As a result of the fall, Cerillo sustained several injuries. His left femur was fractured, which required him to undergo surgery to implant a titanium rod in his left leg. (Resp. 56.1 ¶ 17.) Cerillo was hospitalized for fifty-four days, spent several months in a rehabilitation facility and still experiences pain from the incident. (Id.)

         The hatch in the galley was approximately twelve square feet in area and contained a generator that operated the toilets, lights and everything electric on the vessel. (Nagler Dep. 41- 43.) The hatch cover could be lifted and hinged to the side by pulling a sunken handle. (Id. at 42:10-21.) The generator hole was deep enough that a person accessing it would have to climb down a ladder, after which he or she could walk around the generator room, about fourteen feet of space, and access other parts of the vessel's engine. (Id. at 45:11-46:12.)

         On the morning of a sail, Nagler or whichever mate arrived at the dock first on any given day would open the hatch cover and enter the hatch to turn on the electricity and check the oil. (Id. at 42:22-25, 43:13-44:10.) According to Nagler's deposition testimony, on the day of Cerillo's accident, Nagler was the first to arrive and had opened the hatch to check the oil and the water that cooled the generator. (Id. at 44:11-15.) The hatch was opened mid-trip to cool the generator because it had been running for hours that morning. (Id. at 70:5-12.) Because the generator did not often overheat, there was not often a reason to open the hatch in the middle of the day. (Id. at 71:8-16.) Nagler did not recall whether he had opened the hatch himself that afternoon but typically, he “would notify the crew to do it.” (Id. at 71:2-3.) A mate would only open the hatch at Nagler's direction. (Id. at 72:3-6.)

         The parties dispute the nature and use of the galley area in the cabin. Petitioners claim that the area behind the galley counter is used by the crew only, to store fishing rods, sinkers, tackle, coffee, soft drinks, and other items that fare-paying passengers may purchase. (Pet'rs 56.1 ¶ 12.) At his deposition, Cerillo testified that passengers used the galley to store their own food and drinks in a refrigerator and to retrieve hooks, fishing rods, sinkers and toilet paper. (Resp. 56.1 ¶ 10; Resp. Counter-56.1 ¶¶ 12-13.) According to Cerillo, the galley area is “simply the forward[-]most area of the cabin behind a partial counter.” (Resp. 56.1 ¶ 9.) Photographs annexed to Petitioners' papers reflect a counter that stretches halfway across the entrance to the galley area. (Pet'rs Photographs, annexed as Ex. 8 to Decl. of Matthew M. Gorden (“Gorden Decl.”) at 7, Docket Entry No. 26-4.) The photographs also reflect a rope blocking the open area next to the counter and a paper plate placed over the rope. (Id.) On the back wall of the galley, near the ceiling, is a dark red sign that reads, “Employees Only” and on the next line, “Keep Out.” (Id. at 8.) Petitioners state that fare-paying passengers were not permitted to enter the area behind the galley counter. (Pet'rs 56.1 ¶ 13.) Cerillo disputes that passengers were told the galley was off-limits. (Resp. Counter-56.1 ¶ 13.) In fact, Cerillo asserts that, “[i]n over 100 trips on Jeffrey Nagler's fishing boats, neither [Cerillo] nor his son . . . ever saw the string and paper plate device that appears in the photograph, ” and the string and paper plate were not present on the date of the incident. (Id.; Resp. 56.1 ¶ 11.)

         II. Discussion

         a. Standard of review

         Summary judgment is proper in a maritime limitation-of-liability proceeding only when, construing the evidence in the light most favorable to the non-movant, “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Davis v. Shah, 821 F.3d 231, 243 (2d Cir. 2016); see also Cortes v. M.T.A. N.Y.C. Transit, 802 F.3d 226, 230 (2d Cir. 2015); Tolbert v. Smith, 790 F.3d 427, 434 (2d Cir. 2015); Zann Kwan v. Andalex Grp. LLC, 737 F.3d 834, 843 (2d Cir. 2013). The role of the court “is not to resolve disputed questions of fact but only to determine whether, as to any material issue, a genuine factual dispute exists.” Rogoz v. City of Hartford, 796 F.3d 236, 245 (2d Cir. 2015) (first quoting Kaytor v. Elec. Boat Corp., 609 F.3d 537, 545 (2d Cir. 2010); and then citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50 (1986)). A genuine issue of fact exists when there is sufficient “evidence on which the jury could reasonably find for the plaintiff.” Anderson, 477 U.S. at 252. The “mere existence of a scintilla of evidence” is not sufficient to defeat summary judgment. Id. The court's function is to decide “whether, after resolving all ambiguities and drawing all inferences in favor of the nonmoving party, a rational juror could find in favor of that party.” Pinto v. Allstate Ins. Co., 221 F.3d 394, 398 (2d Cir. 2000).

         b. The Limitation Act

         Under the Limitation Act, “the liability of the owner of a vessel for any claim, debt or liability . . . shall not exceed the value of the vessel and pending freight, ” provided that such liabilities “aris[e] from any . . . act, matter, or thing, loss, damage, or forfeiture, done . . . without the privity or knowledge of the owner.” 46 U.S.C. § 30505(a)-(b). Congress enacted the Limitation Act “to encourage ship-building and to induce capitalists to invest money in this branch of industry.” In re Petition of Germain, 824 F.3d 258, 263 (2d Cir. 2016). The Limitation Act “creates ‘a form of action peculiar to the admiralty and maritime context, ' allowing the owner of a vessel to file a petition in federal court seeking total exoneration or limitation of liability for ‘damages caused by the negligence of his captain or crew.'” Id. at 263- 64 (quoting Tandon v. Captain's Cove Marina of Bridgeport, Inc., 752 F.3d 239, 243-44 (2d Cir. 2014)); see also Fed. R. Civ. P. Suppl. Rule F (“Rule F”). Thus, “[i]nstead of being vicariously liable for the full extent of any [damages] caused by the negligence of the captain or crew employed to operate the ship, the owner's liability is limited to the value of the ship unless the owner himself had ‘privity or knowledge' of the negligent acts.” Otal Investments Ltd. v. M/V CLARY, 673 F.3d 108, 115 (2d Cir. 2012) (quoting In re City of New York, 522 F.3d 279, 283 (2d Cir. 2008)).

         To assert the right to limit liability, the owner of the vessel must bring a civil action in federal district court under the Limitation Act within six months of receiving written notice of a claim. 46 U.S.C. § 30511(a); Rule F(1). The limitation of liability petition must state the facts on which the right to limitation is asserted, as well as any facts the court would need to consider in determining the amount of limited liability. Rule F(2). Typically, “once the owner files a petition for limitation, all other claims and proceedings against the owner related to the matter in question shall cease.” Id. at 264 (alterations and internal quotation marks omitted) (quoting Tandon, 752 F.3d at 244); see also 46 U.S.C. § 30511(c). The court must then issue notice to all persons asserting claims that the owner seeks to limit, and those persons may file claims and challenge the owner's right to limitation or exoneration.[7] Rule F(4); Germain, 824 F.3d at 264.

         Sitting in admiralty, without a jury, the court must conduct a concursus proceeding, [8]during which the court determines whether there was negligence, whether the negligence was without the privity and knowledge of the owner and, if limitation is granted, how the limitation fund should be disbursed. In re Complaint of Dammers & Vanderheide & Scheepvaart Maats Christina B.V., 836 F.2d 750, 755 (2d Cir. 1988). Specifically, a court sitting in concursus undertakes a two-part analysis. “First, the court must determine what acts of negligence caused the accident. Second, the court must determine whether the ship owner had knowledge or privity of those same acts of negligence.” Otal, 673 F.3d at 115 (alterations and internal quotation marks omitted) (quoting In re Moran Towing Corp. (“Moran I”), 166 F.Supp.2d 773, 775 (E.D.N.Y. 2001)). The claimant “bears the initial burden of proving negligence, ” after which the burden shifts to the ship owner to “prove lack of knowledge or privity.” Id. (quoting Moran I, 166 F.Supp.2d at 775). “The court must determine whether the accident was caused by conduct that is actionable, for if there was no fault or negligence for the shipowner to be privy to or have knowledge of within the meaning of the statute, there is no liability to be limited, and the owner would then be entitled to exoneration.” In re Messina, 574 F.3d 119, 126 (2d Cir. 2009) (quoting The 84-H, 296 F. 427, 432 (2d Cir. 1923)). If the petition for limitation of liability is granted, “the owner can be liable on the covered claims only up to the total value of his vessel and its pending freight; that amount will then be distributed pro rata among the proven claims.” Germain, 824 F.3d at 264 (quoting Tandon, 752 F.3d at 244).

         Petitioners and Cerillo cross-move for summary judgment based on the other's inability to meet their burden of proof in the two-step analysis. That is, Petitioners argue that Cerillo has not met his burden of proving negligence, and Cerillo argues that Petitioners cannot meet their burden of proving lack of privity or knowledge. The Court discusses each prong of the analysis below.

         i. Negligence - ...


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