Crew Ventures, LLC

Background

The petitioners commenced this federal action seeking exoneration from, or limitation of, liability for Adam Phillips’s personal-injury claims pending in New York State Supreme Court. Phillips allegedly visited the Grand Banks Restaurant on July 29, 2023, and was injured when an unsecured umbrella struck him. The petitioners alleged that they lacked privity or knowledge of the incident.

The petitioners own and operate the Sherman Zwicker, described as a 142-foot timber-constructed Grand Banks auxiliary fishing schooner. The vessel is currently docked at Battery Park in Manhattan and is used as a restaurant. It has also made voyages from its homeport to Brooklyn, Connecticut, and Maine, and travels to Connecticut each winter for repairs and rebuilding. At the time of the accident, its propeller and rudder had been removed for repairs, but it retained its original auxiliary propulsion engine. An appraisal valued the vessel at $200,000 as of the accident date.

The petitioners asked the Court to approve an ad interim stipulation for value, which is temporary security standing in place of the vessel during a limitation proceeding; enjoin proceedings against the petitioners and/or the Sherman Zwicker outside this action; and direct notice to claimants. They offered a $200,000 stipulation and a Letter of Undertaking from Continental Insurance Company providing for six percent annual interest. Phillips opposed the motion but did not dispute the sufficiency of the proposed security or the vessel’s valuation.

Admiralty Jurisdiction and Vessel Status

Phillips argued that the Court lacked maritime jurisdiction because the Sherman Zwicker was no longer a “vessel.” The Court applied the statutory definition of a vessel as a watercraft or other artificial structure used, or capable of being used, as transportation on water. Under the Supreme Court’s standard, the question is whether a reasonable observer, considering the structure’s physical characteristics and activities, would view it as designed to a practical degree for carrying people or things over water.

The Court concluded that the Sherman Zwicker remained a vessel. It was not permanently or semi-permanently moored, had not been permanently converted for a non-transportation purpose, retained its auxiliary engine, and was periodically moved, including by towing. The Court stated that the lack of self-propulsion at the time of the accident was not decisive. It therefore held that the Sherman Zwicker was a vessel for purposes of maritime jurisdiction.

Security, Injunction, and Notice

The Vessel Owners Limitation of Liability Act allows a vessel owner, in certain circumstances, to limit liability for an injury to the value of the vessel when the injury occurred without the owner’s privity or knowledge. The applicable procedural rules require the owner to provide security equal to the value of its interest in the vessel, along with security for costs and, when elected, six percent annual interest.

The Court found that the petitioners timely filed their complaint, alleged lack of privity or knowledge, and offered security supported by an appraisal and the Letter of Undertaking. It therefore approved the ad interim stipulation for value totaling $200,000 plus six percent annual interest. The Court also enjoined proceedings against the petitioners related to Phillips’s claims subject to limitation in this action and directed issuance of notice to claimants under the applicable supplemental maritime rules.

Disposition

The Court granted the petitioners’ motion requesting approval of the ad interim stipulation for value, an injunction against related proceedings, and notice to claimants. The opinion resolved the vessel-status and interim-procedure issues; it did not determine the merits of Phillips’s personal-injury claims or the petitioners’ ultimate liability.