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Saltzman v. Whisper Yacht, Ltd.

United States District Court, D. Rhode Island

December 19, 2019

ROBERT B. SALTZMAN, Plaintiff,
v.
WHISPER YACHT, LTD.; WHISPER YACHT USA, LLC; CHURCHILL YACHT PARTNERS, LLC; and S/Y WHISPER (Official # 71042) its engines, sails, spars, rigging, apparel, contents, bunkers, electronics, tenders and appurtenances, in rem, Defendants. ROBERT B. SALTZMAN, Plaintiff,
v.
SIMON DAVISON, Defendant.

          REPORT AND RECOMMENDATION

          PATRICIA A. SULLIVAN, United States Magistrate Judge.

         Based on an on-board accident during which his arms were seriously injured after being sucked in by the furling of the head sail, Plaintiff Robert B. Saltzman claims that he was a seaman crewing on the vessel and initiated this admiralty action[1] against the sailing yacht and three entities. He sued in rem S/Y Whisper, the vessel on which he was working when the accident happened. As the vessel owner and his employer, he named Defendants Whisper Yacht, Ltd. (“Whisper Ltd.”), Whisper Yacht (USA), LLC (“Whisper USA”), and Churchill Yacht Partners, LLC (“CYP”). His Verified Complaint advances five causes of action: Count I, unseaworthiness; Count II, negligence under the Jones Act, 46 U.S.C. § 30104, et seq., for failure to provide a reasonably safe place to work; Count III, maintenance and cure; Count IV, wages; and Count V, negligence under general maritime law, which Plaintiff alleges “[a]s an alternative Count.” ECF No. 1 (“Complaint” or “Compl.”).

         Instead of an answer, two motions to dismiss or in the alternative for summary judgment were filed as the responsive pleading.

         First, all Defendants joined a motion to dismiss or in the alternative for partial summary judgment based on their contention that the Complaint and/or the undisputed facts establish that Plaintiff was not a seaman at the time of the accident. ECF No. 18. Based on a factual proffer, they argued that all Jones Act claims (Counts I, II, III and IV) fail as a matter of law. This first motion was met with a barrage of contrary facts proffered by Plaintiff. In their reply, Defendants acknowledged that more discovery would be required on Plaintiff's seaman status. My recommendation that the first motion be denied is pending.[2] ECF No. 37.

         The second motion is addressed in this report and recommendation. It is brought by Defendants Whisper USA and CYP only. Grounded in Fed.R.Civ.P. 12(b)(1), 12(b)(6) and 56, the motion challenges Plaintiff's allegation (pled on information and belief) that not just Whisper Ltd., but also Whisper USA and CYP “managed, supervised, crewed and/or operated” and “were responsible for owning . . . and/or maintaining” S/Y Whisper and “employed” him. Compl. ¶¶ 16-17. The moving Defendants argue that neither of them owns the S/Y Whisper and neither was Plaintiff's employer at the time of the accident, which are essential elements of Plaintiff's claims. Both point to the third entity, Defendant Whisper Ltd., which admits - indeed, asserts - that it is the sole owner of S/Y Whisper and that it was Plaintiff's employer. ECF No. 30 ¶¶ 11, 16 (Whisper Ltd. Answer); ECF No. 39 at 14. Whisper USA and CYP argue that, because they are neither the vessel owner nor Plaintiff's employer, as to them, Count I fails because it must be directed at the vessel owner; Counts II and III are flawed because they require an employee-employer relationship between the plaintiff and defendant; Count IV is deficient since it must be alleged against the vessel owner or the seaman's employer; and Count V is a nonstarter because the lack of an employment connection means that they did not owe Plaintiff a duty of care under general maritime law. In response, Plaintiff does not rely just on his pleading (which is verified); in addition, he has marshalled an array of pre-discovery facts that he contends are sufficient to establish that the factually disputed interconnected web of business arrangements among Whisper USA, CYP and Whisper Ltd. precludes a determination as a matter of law of ownership or employer status at this early stage.

         The motion has been referred to me for report and recommendation. 28 U.S.C. § 636(b)(1)(B).

         I. BACKGROUND[3]

         The S/Y Whisper is a 116-foot privately owned recreational sailing yacht. PSUF ¶ 1. At the time of the accident in issue in this case, it was docked at a marina in Newport, Rhode Island. Compl. ¶ 50. During the pertinent period, according to its Certificate of Ownership, S/Y Whisper was registered under the Marshall Islands Flag and was owned by Whisper Ltd., a Cayman Island entity. DSUF ¶ 2; Compl. Ex. A. Whisper Ltd. is a wholly owned subsidiary of Whisper USA, which is a limited liability company organized under the laws of Minnesota. DSUF ¶¶ 3-4. Invoices for maintenance work on S/Y Whisper were paid by Whisper USA; Defendants contend this was done as a pass-through to Whisper Ltd. based on convenience and timing. DSDF ¶¶ 14, 57.

         CYP is also a Minnesota limited liability company. DSUF ¶ 5. It is engaged in the business of luxury yacht charter management and S/Y Whisper is one of the yachts that its clients may charter. DSDF ¶ 10. All three entities (Whisper Ltd., Whisper USA and CYP) have the same address in Minneapolis, Minnesota. PSUF ¶ 56. The domain name “whisperyacht.com” is registered by an entity named “Churchill Industries” at the same address. Fulweiler Decl. Ex. C. The Lloyd's Register lists the same telephone number and mail address information for S/Y Whisper as for all three entities. Id. ¶¶ 8 & Ex. G. CYP's website states: “[w]hen you contact Churchill Yacht Partners about managing your charter yacht, you will be talking to experienced yacht management professionals that specialize in managing and marketing a carefully selected fleet of the finest charter yachts and crews in the marketplace.” Id. Ex. I (emphasis supplied); see DSDF ¶¶ 11-12 (authenticity of Fulweiler Decl. Ex. I not disputed).

         As relevant to this case, Geico Marine Insurance (“Geico”) is the insurance company whose policy covers S/Y Whisper; it assumed responsibility for the maintenance and cure obligations owed to Plaintiff.[4] PSUF ¶¶ 48-49. The “policyholder” and “named insured” listed on the Geico policy are both Whisper Ltd. and Whisper USA. Fulweiler Decl. Ex. A; see PSUF ¶ 16. CYP is an additional insured. DSDF ¶ 13. Geico also lists an individual (John Fauth) as the “beneficial owner” of S/Y Whisper; according to a Florida Secretary of State filing, Fauth is the manager of CYP. Fulweiler Decl. Exs. A, H; see DSDF ¶ 17 (admits Fauth is “partial beneficial owner” of S/Y Whisper). While Plaintiff's monthly stipend for maintenance and cure came from Geico, some of the emails regarding the payments were copied to an employee of CYP. PSUF ¶ 49; Fulweiler Decl. Ex. J. The Captain of S/Y Whisper at the time of the accident was Simon Davison. PSUF ¶ 19. Captain Davison hired Plaintiff and paid him in cash from the vessel's account for his services. DSUP ¶ 25. The source of the cash in the vessel account is not specified. Plaintiff avers that he was hired by and was serving S/Y Whisper and its interests. Saltzman Decl. ¶ 42. Therefore, as he states under oath, he was effectively employed not only by Whisper Ltd., but also (or in the alternative) by CYP and/or Whisper USA. Compl. ¶ 28; PSUF ¶¶ 12, 14.

         Apart from Whisper USA's status as the parent of Whisper Ltd., this undeveloped pre-discovery record does not reveal the precise relationships among CYP and the two Whisper entities. In particular, there is no information regarding who or what entity chooses the navigation routes or voyages for S/Y Whisper or who or what entity provides orders and instructions to its Captain.

         In reliance on these potentially admissible facts and the inferences that they permit, Plaintiff contends that there is enough to give rise to a factual dispute regarding whether Whisper USA and/or CYP had responsibility for ownership, operation, management, crewing, equipping, manning and/or maintenance of the S/Y Whisper, in addition to or in lieu of the undisputed responsibility of Whisper Ltd. Similarly, he argues that the facts and inferences are also sufficient to permit a fact-finder to conclude that any one of the three (Whisper USA, CYP or Whisper Ltd.) paid Plaintiff's wages and had sufficient control as to be his Jones Act employer.

         As for the moving Defendants, on the issue of ownership, they rely on conclusory averments in affidavits submitted by Captain Davison and Mr. Ben Osborn, the Controller and Operations Manager of CYP and Controller of Whisper USA. ECF No. 21-2 (Davison Aff.); ECF No. 21-1 (“Osborn Aff.”). These affidavits assert that Whisper USA and CYP have no ownership interest in S/Y Whisper. Davison Aff. ¶ 3; Osborn Aff. ¶ 9. They aver that Whisper Ltd. is the sole owner. DSUF ¶¶ 2, 8; Davison Aff. ¶ 3; Osborn Aff. ¶¶ 8-9. According to Mr. Osborn, neither Whisper USA nor CYP provide “vessel management services” to S/Y Whisper. Id. ¶ 12. They have not maintained “possession, command or navigation” of the vessel. Osborn Aff. ¶ 10. On the issue of employment, Captain Davison avers that he managed the employees aboard the S/Y Whisper and he paid workers such as Plaintiff in cash. Davison Aff. ¶¶ 6, 10; DSUF ¶ 13. The Osborn affidavit asserts that CYP has never submitted payments to Plaintiff and neither Whisper USA nor CYP provided instructions to or exerted control over Plaintiff's work on S/Y Whisper. Osborn Aff. ¶¶ 7, 16, 17. Mr. Osborn avers that Plaintiff has never been an employee of either Whisper USA or CYP. Id. ¶ 14.

         Plaintiff points to potentially material discrepancies in the Davison/Osborn affidavits. That is, potentially admissible evidence he has proffered establish facts that call into question the accuracy of some of their conclusory averments. For example, Mr. Osborn averred that Whisper Ltd. pays for its own maintenance. Id. ¶ 13. However, triggered by Plaintiff's proffer of an affidavit from a marine electrician (Fulweiler Decl. Ex. E), who averred that he was instructed to send his invoices for work on S/Y Whisper to Whisper USA and to what appears to be an affiliate of CYP and who was paid directly by Whisper USA, Mr. Osborn clarified that Whisper USA actually pays for the vessel's maintenance because of “convenience and timing, ” with reimbursement by Whisper Ltd. ECF No. 27-2 ¶ 7 (“Osborn Aff. II”). Similarly, Captain Davison averred that Plaintiff was a temporary day worker, Davison Aff. ¶¶ 8, 14, 43, but had to supplement his affidavit with a clarification in an attempt to explain away Plaintiff's proffer of a letter signed by Captain ...


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