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Date: 03-07-2016

Case Style: Mainstay Fisheries, Inc., et al. v. Northern Waterfront Associates, L.P., et al. v. Kane and Kane, Inc., et al.

Case Number: 09-0382

Judge: Walter R. Stone


Plaintiff's Attorney: John D. Deacon

Defendant's Attorney: Bob Quigley, Ken Hill, Robert Edward Collins, Ken Tremblay

Description: The following facts are undisputed by the parties. Plaintiff Mainstay Fisheries, Inc.
(Mainstay) is a Rhode Island corporation, which at all times material hereto, had a principal
place of business in Portsmouth, Rhode Island. Plaintiff Richard F. Mudd, Sr. is a resident of
Tiverton, Rhode Island and was the sole shareholder and officer of Mainstay. He was the
Captain of the F/V KISMET, a 65-foot single-crew offshore wooden lobster boat. The F/V
KISMET was built in 1981, and it was owned and operated by Mainstay. Throughout its service,
it was operating as an offshore lobster/gill net fishing vessel for Mainstay. The vessel was
surveyed in 2006 by Richard Learned of Learned Associates Inc. and given an appraised value of
Defendant/Third-Party Plaintiff Northern Waterfront Associates, L.P. is a Delaware
Limited Partnership, with a principal place of business in Pennsylvania. Pertinently, it was the
owner of the Weyerhaeuser Pier (the Pier) in Portsmouth, Rhode Island at all relevant times.
Defendant/Third-Party Defendant John Shelton (Mr. Shelton) is a resident of Tiverton, Rhode
Island and the President of Defendant/Third-Party Defendant Sheltow I, Inc. (Sheltow). Sheltow
consisted of a tug boat, HOPE, and a barge, which were used for tasks like taking fresh water out
to vessels. Sheltow was doing business out of the Pier until it could locate a more permanent
base of operations.
Sheltow had purchased a crane and other equipment from Defendant Mt. Hope Marine
Contractors, Inc. On July 3, 2007, Mr. Shelton was on the Pier working on the crane. On that
day, there was a great deal of activity happening on the Pier; there were adolescents in the area
preparing a bonfire,2 there were individuals walking on the beach, including Sarah Edelstein
(Ms. Edelstein), and there were laborers working, including Mr. Shelton and Mike Kelly (Mr.
Kelly). According to Mr. Shelton, both he and Mr. Kelly worked on the Pier until approximately
4:00 pm. At that time, Mr. Shelton left for a meeting in Tiverton, Rhode Island.
Sometime later that evening, the Pier caught on fire. Michael Viera and Ms. Edelstein—
two eye witnesses—were talking when Mr. Viera observed smoke on the Pier, in the vicinity of
the pump and crane. Ms. Edelstein proceeded to take pictures, fully documenting the fire from
its onset. At some point, the F/V KISMET, which was docked on the Pier, caught on fire and
drifted out into the waters surrounding the Pier. The F/V KISMET became a total loss from the
damages sustained in the fire.
As a result, on July 24, 2009, Plaintiffs filed a Complaint alleging negligence on the part
of various defendants in Newport County Superior Court. Defendants were brought into the case
by way of an Amended Third-Party Complaint filed on August 5, 2011. In addition to the value
of the vessel itself, Plaintiffs claim additional damages for a life raft, an Emergency Position
Indicator Radio Beacon, bait, fuel onboard the vessel, coils of line, steel weights, balls, hi-flyers,
slip gun (collectively, the Equipment), fork truck, prepaid dockage, and a deductible paid to
Reagan Construction to remove the vessel’s wreck. In addition, Plaintiffs seek damages for
offshore lobster traps that were lost after the fire in the amount of $116,640 and loss of business
in the amount of $156,000, based on a business valuation expert report. Although Defendants
concede that the value of the vessel is recoverable if they are found to be liable, they assert that
these other damages are not.
2 A permit had been obtained for the fire in the vicinity of the Pier.

Consequently, on January 29, 2015, Defendants filed the instant Motion for Partial
Summary Judgment. In their Motion, Defendants assert that Plaintiffs are not entitled to the other
assorted damages in the Complaint, aside from the actual value of the vessel. Relying on federal
admiralty law, Defendants insist that Plaintiffs’ recovery is limited to the value of the vessel and
expressly seek to exclude the damages for the Equipment and loss of business income.
Therefore, the Defendants seek a ruling by this Court that Plaintiffs’ claims for damages beyond
the fair market value of the vessel—including fuel, bait and other items, loss of business income,
and loss of offshore lobster traps—are not recoverable.
In response, Plaintiffs insist that this case is governed by state law not federal maritime
law as Defendants propose. More specifically, Plaintiffs argue that because the Defendants’
asserted acts of negligence took place on the Pier—and because piers are treated as extended
parts of the land—state law applies. Moreover, they claim that even if maritime law is
applicable they can still recover for lost profits and the other miscellaneous damages.
For the purpose of the present Motion, the parties have agreed that the following facts are
also not in dispute: each of the Defendants is presumed to be liable to Plaintiffs on the claims
asserted for the purposes of assessing damages; the tortious conduct of all defendants occurred
entirely on the Pier; Defendants’ tortious actions and omissions proximately caused the complete
destruction of all the items of tangible and intangible property for which Plaintiffs claim
damages in the present case and the cessation of Mainstay’s business operations; and that
Plaintiffs lacked the financial capability to replace the tangible property destroyed by the fire, so
as to be able to continue operation of Mainstay‘s business.

Standard of Review
As an initial matter, this Court acknowledges that summary judgment “is a harsh remedy
and must be applied cautiously.” Mallette v. Children’s Friend and Serv., 661 A.2d 67, 69 (R.I.
1995); see also McPhillips v. Zayre Corp., 582 A.2d 747, 749 (R.I. 1990). In passing upon a
summary judgment motion, “it is the province of the trial justice to determine, by an examination
of the pleadings, depositions, answers to interrogatories, admissions on file, and the affidavits of
the parties, whether these documents present a genuine issue of material fact, ‘and, if not,
whether the moving party is entitled to judgment under the applicable law.’” Volino v. Gen.
Dynamics, 539 A.2d 531, 532–33 (R.I. 1988) (quoting Ludwig v. Kowal, 419 A.2d 297, 301
(R.I. 1980)). The trial justice views the evidence in a light most favorable to the party against
whom the motion is made, drawing from that evidence all reasonable inferences in support of the
nonmoving party’s claim but without resolving any factual disputes. Holliston Mills, Inc. v.
Citizens Trust Co., 604 A.2d 331, 334 (R.I. 1992).
However, the party opposing a summary judgment motion “cannot rely solely on mere
allegations or on the denials contained in the pleadings to defeat the motion.” Hydro-Mfg. Inc.
v. Kayser-Roth Corp., 640 A.2d 950, 954 (R.I. 1994). “Rather, the nonmoving party must
affirmatively assert facts that raise a genuine issue to be resolved.” Id.; see also Super. R. Civ. P.
56(e). A party opposing a motion for summary judgment must show to the satisfaction of the
court that there is a substantial material factual issue in dispute and must state in definite terms
the basis of the defense, as well as evidential facts, and may not simply rely upon asserted
conclusions. See Gen. Accident Ins. Co. of Am. v. Cuddy, 658 A.2d 13, 17 (R.I. 1995); Avco
Corp. v. Aetna Cas. & Sur. Co., 679 A.2d 323, 327 (R.I. 1996).

In ruling on Defendants’ Motion, the Court must undertake a two-step analysis. First, the
Court must address the threshold issue of whether maritime or state law is applicable to the
Plaintiffs’ claims. If the Court determines that state law is controlling, then the Defendants’
arguments as to damages would be without merit, but if maritime law is applicable, the
Plaintiffs’ damages must be analyzed under the so-called “total loss” doctrine, relied upon by
Defendants. The Court will address each issue in seriatim below.
Applicable Law
The United States Supreme Court has enumerated a two-part test to determine whether a
claim is cognizable in admiralty: (1) the injury must occur on or over navigable waters; and (2)
the activities giving rise to the casualty must have a “maritime nexus,” insofar that there was a
significant relationship to traditional maritime activity. See Foremost Ins. Co. v. Richardson,
457 U.S. 668, 673–74 (1982); Exec. Jet Aviation, Inc. v. City of Cleveland, Ohio, 409 U.S. 249,
268 (1972). As it relates to federal maritime law, docks, piers, and wharves are not navigable
waters, but rather they are held to be “extensions of land.” Victory Carriers, Inc. v. Law, 404
U.S. 202, 206–07 (1971). Nonetheless, with regard to a docked vessel, “the storage and
maintenance of a vessel at a marina on navigable waters is substantially related to ‘traditional
maritime activity’ . . . .” Sisson v. Ruby, 497 U.S. 358, 367 (1990).
Traditional Locality Requirement
“[F]or purposes of admiralty jurisdiction, . . . the tort occurs where the negligence ‘takes
effect,’ not where the negligent act occurred.” Butler v. Am. Trawler Co., 887 F.2d 20, 21 (1st

Cir. 1989) (citing Exec. Jet Aviation, Inc., 409 U.S. at 268); see also Sisson, 497 U.S. at 362–63
(maritime law applied where fire commenced on a docked vessel and spread to other docked
vessels and the owners of the other docked vessels brought suit). That the negligent act took
place on land is of no relevance to the application of maritime law. See Sperry Rand Corp. v.
Radio Corp. of Am., 618 F.2d 319, 321 (5th Cir. 1980) (“[A]ll of the pertinent cases before and
since Executive Jet have held that, so long as the place of the injury to a vessel occurs upon
navigable waters, the fact that the negligent act may have occurred on shore is of no relevance.”
(footnote omitted)).
Here, although the Defendants’ alleged negligence occurred on land, Plaintiffs sustained
injuries to the vessel while it was docked on navigable waters. Where the negligence that gives
rise to the injury occurs on land but the injury itself is a maritime casualty, maritime law applies.
See Butler, 887 F.2d at 21. It follows then that the Court must apply maritime law to the facts of
the present case in determining what damages will potentially be available to the Plaintiffs.
In Sperry Rand Corp., the United States Court of Appeals for the Fifth Circuit provided a
particularly illustrative example of this general principle. 618 F.2d at 321. There, a ship was
damaged as it traveled through navigable waters, allegedly due to a defect in the ship’s
navigational equipment. Id. at 320. The manufacturer of the equipment brought suit in federal
district court against the manufacturers of various component parts used in the equipment,
claiming admiralty jurisdiction. Id. The district court dismissed the case for lack of admiralty
jurisdiction, but, on appeal, the United States Court of Appeals for the Fifth Circuit found that
the fact that the injury occurred on navigable waters, and while engaged in traditional maritime
activity, was sufficient to confer admiralty jurisdiction on the district court. See id. at 321–22.

Similarly, in Butler, the United States Court of Appeals for the First Circuit held that the
primary concern in establishing the applicable law was where the tortious conduct “takes effect.”
887 F.2d at 21. The plaintiff in that case claimed that because her injuries occurred while going
from the wharf, technically land, to the ship state law should govern. Id. The court did not
agree. The First Circuit held that “[w]hether or not the wharf itself counts as part of the land, the
injury occurred on the ship. And, for purposes of admiralty jurisdiction, . . . the tort occurs
where the negligence ‘takes effect,’ not where the negligent act occurred.” Id. (emphasis
supplied) (internal citations omitted).
In the present case, it is undisputed that the alleged negligence of the Defendants took
place entirely on land. This alone, however, does not answer the question of whether state or
maritime law applies. As the court made clear in Sperry Rand Corp., a negligent act that occurs
wholly on land can still give rise to admiralty jurisdiction. 618 F.2d at 321; see also Butler, 887
F.2d at 21. Just as the land-based negligence of the defendants in that case gave rise to admiralty
jurisdiction, so too does the land-based negligence of the Defendants in the present case dictate
the application of maritime law. Here, the result of Defendants’ negligence took effect entirely
on navigable waters where it caused the destruction of the F/V KISMET, thereby satisfying the
initial prong of the jurisdictional test.3
Maritime Nexus
In addition to occurring on navigable waters, there must be “a significant relationship
[between the activity giving rise to the incident and] traditional maritime activity,” and the
3 The Defendants concede that there is one item that was on the dock and, therefore, governed by state law. That item, the forklift, is exempt from the Court’s ruling on the application of maritime law. Indeed, Defendants concede that Plaintiffs can recover separately for this item upon satisfying their burden of proof.

activity must implicate the protection of maritime commerce. Foremost Ins. Co., 457 U.S. at
674. In making a determination of whether those factors have been met, the Court must look to
the “general conduct from which the incident arose.” Sisson, 497 U.S. at 364. Therefore, in a
case involving a fire at a dock, the Court need not determine the cause of the fire because “the
relevant activity was the storage and maintenance of a vessel at a marina on navigable waters.”
Id. at 365. Just as the nature of the relationship is viewed in terms of the “general conduct,” so
too does the Court look to the “general features of the type of incident involved to determine
whether such an incident is likely to disrupt commercial activity.” Id. at 363.
Both of these aspects of the jurisdictional analysis require the Court to view the facts
surrounding the tort in generality. Interestingly, the United States Supreme Court encountered
an extremely similar factual situation in Sisson. In that case, a ship caught fire while it was
docked which in turn caused damage to other vessels in the area. Id. at 360. The Court
determined that, under those circumstances, both aspects of the jurisdictional test were satisfied.
The court noted that “a fire on a vessel docked at a marina on navigable waters[] plainly
satisf[ies] the requirement of potential disruption to commercial maritime activity.” Id. at 363
(emphasis supplied). The general circumstances surrounding the F/V KISMET’s sinking are
indistinguishable from those in Sisson; the F/V KISMET was docked at the Pier—storage at a
pier is a traditional maritime activity—and the fire had the potential to disrupt commercial
maritime activity. See id. Accordingly, the maritime nexus aspect of the jurisdictional test is
satisfied. As both prongs of the jurisdictional analysis have been met, the Court finds that
federal maritime law is applicable to Plaintiffs’ claims.

The Rhode Island Supreme Court has held that “in an admiralty action in state court,
issues which would be considered ‘substantive’ are governed by federal maritime law.” King v.
Huntress, Inc., 94 A.3d 467, 499 (R.I. 2014). Generally, issues relating to the measure of
damages are substantive. See id. at 500 (citing Chesapeake & Ohio Ry. Co. v. Kelly, 241 U.S.
485, 491 (1916); Robinson v. Pocahontas, Inc., 477 F.2d 1048, 1052 (1st Cir. 1973)).
Under federal maritime law, the general rule limits damages in cases where the vessel is a
total loss to the fair market value of such vessel, plus interest and net freight. As the United
States Supreme Court has stated:
“It is fundamental in the law of damages that the injured party is entitled to compensation for the loss sustained. Where property is destroyed by wrongful act, the owner is entitled to its money equivalent, and thereby to be put in as good position pecuniarily as if his property had not been destroyed. In case of total loss of a vessel, the measure of damages is its market value, if it has a market value, at the time of destruction.” Standard Oil Co. of New Jersey v. S. Pac. Co., 268 U.S. 146, 155 (1925). Only if the item is not inherently part of the vessel can it be separately recovered. See
F.C. Wheat Maritime Corp. v. U.S., 663 F.3d 714, 725 (4th Cir. 2011) (noting that, to recover for
items separately, litigant argued the items “[we]re not inherently part of the vessel”); see also
Rev-Lyn Contracting Co. v. Patriot Marine, LLC, 760 F. Supp. 2d 162, 165 n.1 (D. Mass. 2010)
(allowing separate recovery for a crane because it was not a “fixture” of the vessel but rather a
sea-land vehicle that could be operated separately). Furthermore, pursuant to general maritime
law, where a vessel is a total loss, damages for “[l]oss of use [or lost profits] is not allowable.”
A & S Transp. Co. v. Tug Fajardo, 688 F.2d 1, 2 (1st Cir. 1982) (citing The Umbria, 166 U.S.

404, 17 S.Ct. 610, 41 L.Ed. 1053 (1897)). However, a narrow exception exists for the benefits of
a voyage in fieri, or under way. See The Umbria, 166 U.S. at 421–422 (citing The Amiable
Nancy, 16 U.S. 546, 560, 4 L.Ed. 456 (1818)).
Damages for Miscellaneous Items
In the matter at hand, it is undisputed that the vessel was a total loss, but Plaintiffs
attempt to further recover damages for the miscellaneous Equipment lost as a result of the F/V
KISMET’s sinking, in addition to offshore lobster traps in the amount of $116,640 and loss of
business in the amount of $156,000. As it relates to the Equipment which Plaintiffs seek to
recover for separately, those items were inherently a part of the vessel, and their value should be
calculated as they relate to the market value of the F/V KISMET at the time of its loss. Without
the aforementioned Equipment, the vessel would have been either impracticable to use for its
intended purpose—as a fishing vessel—or lacking with regard to safety equipment. In addition,
the prepaid dockage—valued at $1400—is not recoverable because it is a consequential damage.
See In re Hlywiak, 613 F. Supp. 2d 647, 652 (D.N.J. 2009) (noting that items “such as annual
licenses, docking fees, maintenance, and publicity—are not recoverable” because they “fall
under the general rule that consequential damages are not recoverable in total loss cases”).
Therefore, the Court finds those items are not recoverable separately pursuant to federal
maritime law.
However, the offshore lobster traps and the cost of removing the wreck may be recovered
in addition to the value of the F/V KISMET. Indeed, by virtue of the fact that the traps were not
on the ship and could still be operated with another vessel, they cannot be said to be an inherent
part of the ship. Applying maritime law in Fitzgerald v. Merryman, the United States District
Court for the District of Maine found that damages for lost lobster traps could be recovered

separately from the value of the ship. 865 F. Supp. 9, 12 (D. Me. 1994).4 However, that court
noted that plaintiff failed to show he would not have lost some traps anyway in the regular
course of business, and it adjusted damages accordingly. Id. Similarly, here, Plaintiffs can
recover the value of the traps that they would have retained but for the Defendants’ alleged
Also, courts have held that “[i]f the owner has acted reasonably, in the circumstances of
the wreck, he may recover from a tortfeasor his reasonable expenses for removal.” Tucker
Energy Servs., Ltd. v. Hydraquip Corp., No. H-05-1265, 2007 WL 2409571, at *1 (S.D. Tex.
Aug. 20, 2007) (citing In re Sincere Navigation Corp., 327 F. Supp. 1024, 1026 (E.D. La. 1971);
O’Brien Bros. v. The Helen B. Moran, 160 F.2d 502, 504 (2d Cir. 1947)). Therefore, if Plaintiffs
acted reasonably, they can recover for the costs associated with removing the F/V KISMET’s
wreck. The parties have not sufficiently briefed either the value of the traps and the causal
connection between the fire and their loss or whether the removal of the wreck was reasonable in
these circumstances, and as such, they are left to their burdens of proof on those respective
In sum, the Court finds that the Equipment’s value should be calculated as a part of the
vessel’s overall market value. This does not include the value of the lobster traps and the cost to
remove the wreck which may be recovered separately. To the extent that Plaintiffs can prove an
appreciation in the value of the F/V KISMET, based on the Equipment added to the vessel, those
damages can be recovered as they relate to the ship’s value but not separately. See Greer v. U.S.,
4 Interestingly, the court there did not expressly determine whether the boat was a total or partial loss in calculating damages. See id. However, this Court finds it particularly instructive that the District of Maine found that the plaintiff “was entitled to replace the boat.” Id. Such an award is consistent with a finding of a total loss or a constructive loss, and yet, the court still awarded separate damages for the lobster traps.

505 F.2d 90, 93 (5th Cir. 1974) (noting a court may not “exclude[] consideration of the fair value
of” improvements to the vessel in calculating its fair market value). To allow separate recovery
for all of the individualized items on the ship would render the clear limitation on damages to a
ship’s fair market value meaningless because plaintiffs could attempt to recover for each and
every item supposedly onboard a vessel at the time of its demise. See Standard Oil Co., 268 U.S.
at 155.
Lost Profits
The lost profits claimed by Plaintiffs are likewise subject to the general maritime rule that
lost profits are not recoverable where a vessel is a total loss. As the United States Supreme
Court stated, “‘[t]he probable or possible benefits of a voyage as yet in fieri can never afford a
safe rule by which to estimate damages in cases of a marine trespass.’” The Umbria, 166 U.S. at
422 (quoting The Amiable Nancy, 16 U.S. at 546). Here, the lost profits of the F/V KISMET’s
future voyages are too speculative to afford a proper basis for calculating damages. See id.
Indeed, there are too many variables present to be able to determine with any legal certainty the
potential lost profits of any future voyages of the F/V KISMET and, consequently, the business.5
See id. Plaintiff is subject to the general rule “that consequential damages are not recoverable in
total loss cases.” In re Hlywiak, 613 F. Supp. 2d at 652.
Plaintiffs cite to Barger v. Hanson, 426 F.2d 640 (9th Cir. 1970) for the proposition that
future profits, beyond the voyage in fieri, are generally recoverable. However, Barger has been
described as the “only deviation from th[e general] rule” that a total loss vessel’s damages are
measured by the ship’s value at the time of the loss. A & S Transp. Co., 688 F.2d at 3; see also
5 The F/V KISMET was Mainstay’s only ship, and the ship’s lost profits can be characterized as the business’s lost profits.

In re Complaint of Atl. Mariner, Inc. for Exoneration From or Limitation of Liab., 239 F. Supp.
2d 77, 79 (D. Me. 2002) (noting that “[t]he basis for the Ninth Circuit’s departure from the
general rule [in Barger] is not entirely clear”). Therefore, Plaintiffs’ reliance on Barger is
without merit and does not afford them a means to collect lost profits under federal maritime
Plaintiffs also argue that because the vessel was scheduled to leave on a fishing voyage
on the day of the fire they should be allowed to recover lost profits. However, the controlling
precedent in The Umbria is quite clear that “in cases of total loss the probable profits of a charter
not yet entered upon are always rejected.” 166 U.S. at 421 (emphasis supplied). In that case, the
ship—which was a total loss—had previously been contracted to perform a charter, but that was
not adequate to exempt it from the general rule that lost profits are not awarded for a ship that is
a total loss.6 The scenario described in The Umbria is directly analogous to Plaintiffs’ present
argument that the ship was going to leave on a fishing trip. As a result, Plaintiffs’ instant claim
for future profits must be denied.

Outcome: For the reasons set forth above, Defendants’ Motion for Partial Summary Judgment on the issue of damages is granted in part and denied in part. The Court finds that federal maritime law applies, except as to the fork lift. Additionally, the Court finds that the Plaintiffs can only recover separately for the lobster traps and costs associated with removing the F/V KISMET’s wreck. The individualized damages sought for other various items and lost profits are dismissed. Counsel shall confer and submit an order for entry that is in accordance with this Decision.

Plaintiff's Experts:

Defendant's Experts:


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