By John Merriam
Several years ago on these pages the question was asked: “When Setting Rates of Maintenance for Seamen with a House and Family, Should the Entire Mortgage Payment be Taken into Account?” (Trial News, April 2014). The article discussed a Whatcom County Superior Court case in which the injured seaman sought an increase in daily maintenance sufficient to cover his mortgage, as well as utilities and his share of his family’s food expense. Both sides in the dispute relied on the Fifth Circuit case of Hall v. Noble Drilling, 242 F.3d 582, 2001 A.M.C. 1099 (5th Cir. 2001).
This juxtaposition of the ancient right of maintenance, protecting the “poor and friendless” seaman, with cases of modern seamen with families and mortgages is at the heart of this case.
Id. at 586. The vessel owner in the Whatcom County, Washington case argued that Hall stood for the proposition that maintenance rates should be determined by the amount of money an injured seaman living alone needed for basic necessities in the Bellingham area. The injured seaman, who lived in close-by Lynden, Wash., countered with language from Hall:
A seaman who pays for the rent or mortgage of a home he shares with his family actually spends out-of-pocket the entire amount. He cannot pay less without losing his home.
Id. at 588 (emphasis added). The Whatcom County trial judge punted and ruled that it was a jury question whether or not the injured seaman’s mortgage expense was “reasonable.” In comments from the bench during oral argument, however, she made it quite clear that she agreed with the plaintiff’s interpretation of Hall v. Noble Drilling. The issue for the jury, the judge observed, was to decide whether the seaman’s pre-injury standard of living was “reasonable” when setting a rate of maintenance. In other words – she didn’t actually say this but the gist of her comments was clear – it wasn’t “reasonable” for the injured seaman to live in the Taj Mahal, but neither was he required to give up his middle-class house in Lynden and move to a one-bedroom apartment where he could live more cheaply. See Trial News, supra.
The test in this area for determining the “reasonableness” of maintenance rates changed four years after the above article was published. Barnes v. Sea Hawaii Rafting, 889 F.3d 517, 2018 A.M.C. 939 (9th Cir. 2018).
When, as here, a seaman establishes his entitlement to maintenance and provides some evidence of his actual living expenses, the burden shifts to the vessel’s owner to provide evidence that the seaman’s actual costs were unreasonable.
Id. at 524. The Ninth Circuit specifically relied on the reasoning of Hall v. Noble Drilling, supra, in announcing this standard for the shifting burden of proof. 2018 A.M.C. at 944. The yardstick for the vessel owner to sustain that burden was to show that the seaman’s actual expenses exceeded “the reasonable amount for such costs in the locality…” Id. There was no mention in the Barnes decision about whether a “reasonable amount” was to be determined by looking at rents or mortgages in the locality. In fact, Chad Barnes, the plaintiff in that case, could afford neither and was sleeping on friends’ couches. 2018 A.M.C. at 943. At the time the appeal was decided he was homeless. Id. at 961. The Barnes court cited with approval a federal trial court decision in this federal district that used the same burden-shifting test. Sabow v. American Seafoods, 188 F. Supp. 2d 1036, 2016 A.M.C. 2291 (W.D. Wash. 2016). But the case sheds no light on the question posed here because the injured seaman in that case paid rent rather than a mortgage. Id.
About the time that Barnes was decided, an injured seaman living in the Lake Tahoe, California area, but working in Alaska, filed a Jones Act case in federal court here in the Western District of Washington. The seaman was being paid $56/day in maintenance but sought $103/day with a motion for partial summary judgment. The amount sought was based mainly on his $2,300 monthly mortgage payment for a small (1,180 square feet) house he shared with his wife, where he’d lived for over 25 years. Wilcox v. Hamilton Construction, 2019 A.M.C. 1867, 2019 U.S. Dist. LEXIS 101910 (W.D. Wash. 2019). Wilcox supported his motion with a declaration from a realtor that $2,300/month for a mortgage in the Lake Tahoe area was extremely reasonable.
The vessel owner opposed the motion with a full-court press likely costing thousands of dollars. The defendant hired an economist to do an expert analysis of living costs near Lake Tahoe and submitted 19 exhibits, including declarations from six insurance adjusters swearing they’d never paid anywhere near $103/day in maintenance. Defendant submitted proof that a single seaman living alone in the Lake Tahoe area need pay no more than $56/day for rent, food, and utilities, and there should be a $56/day “cap on maintenance.” Anything higher would be “unreasonable,” defendant asserted, citing a Ninth Circuit jury instruction, formulated before the Barnes decision, supra:
The rate of maintenance includes the cost of obtaining room and board on land. In determining this amount, you may consider the actual costs incurred by the Plaintiff, but shall not award an amount in excess of that of a seaman living alone in the plaintiff’s locality.
Ninth Circuit Model Jury Instruction 7.11 (2007). The vessel owner never claimed that Wilcox’s $2,300/month mortgage was unreasonable, and in fact submitted no evidence about mortgage rates whatsoever. The $56/day “cap” was calculated on rents in the area, not on other mortgages.
Wilcox’s Reply memorandum argued that defendant had submitted no evidence that a $2,300/month mortgage in the Lake Tahoe area was unreasonable. Why, Wilcox asked, should he have to give up his house due to injury – the result if maintenance were capped at $56/day?
The district court denied Wilcox’s motion to increase the rate of maintenance: Defendant has submitted evidence sufficient to show that the average cost of a seaman living alone in the Tahoe area is $56.00 per day. Therefore, Defendant has met its burden of showing that Plaintiff’s actual living expenses of $103.00 are unreasonable.
Wilcox, supra, 2019 A.M.C. 1867, 2019 U.S. Dist. LEXIS 101910 (Order of 6/18/19). Wilcox filed a motion for recon sideration or for clarification, pointing out that the court seemed to have ruled that his actual expenses were unreasonable as a matter of law. The court recognized the poor wording of its order and clarified:
Instead, the order should have said that Defendant has submitted sufficient evidence to create a genuine dispute about whether Plaintiff’s actual living expenses of $103.00 per day are unreasonable.
Wilcox, 2019 A.M.C. 1871, 2019 U.S. Dist. LEXIS 185311 (Minute Order of 7/2/19).
The Wilcox decision was cited and relied upon by a federal magistrate in Alaska. Ramirez v. Winter Blues et al., 2020 U.S. Dist. LEXIS 169426 (D. Alaska Magistrate’s Final Report & Recommendation of 8/18/20). The seaman in that case objected to the magistrate’s recommendation, arguing that it is usually less expensive to rent a house than it is to have a mortgage. But that does not mean that a mortgage amount is unreasonable, and mortgages should not be compared to rent. The district judge was not persuaded and adopted the magistrate’s Report and Recommendation. Ramirez, 2020 U.S. Dist. LEXIS 167529 (Order of 9/11/20).
Both the Ramirez and Wilcox cases settled and no appeal was taken to the Ninth Circuit.
When an injured seaman owns his or her home and when determining what living expenses are ‘reasonable,’ should the seaman’s mortgage be compared to rents in the locality or to other mortgages? All the courts and litigants involved in the cases cited above rely on Hall v. Noble Drilling, supra, 242 F.3d 582 (5th Cir. 2001). Let’s take a closer look at that case.
Hall involved two injured seamen, both of whom had families and paid a mortgage, not rent. In formulating a way to calculate the maintenance entitlement, the Fifth Circuit broke it down into two components: “the reasonable cost of food and lodging for a seaman living alone, and the actual expenses for food and lodging that the seaman had incurred.” 242 F.3d at 587; See, e.g., Ninth Circuit Jury Instruction, supra (“…shall not award an amount in excess of that of a seaman living alone…”) It is this ‘living alone’ phrase that all defendants and the Wilcox court, seized upon, making an assumption that living alone means living in an apartment. The Hall plaintiffs both paid mortgages. Referring to a hypothetical injured seaman living in a house with a mortgage, that court stated:
He cannot pay any less without losing his home. If a seaman would incur the lodging expenses of the home even if living alone, then the entire lodging expense represents the seaman’s actual expenses.
Hall, 242 F.3d at 589 (emphasis added). The test for whether a mortgage is ‘reasonable’ is determined by other mortgages. As a rule, larger houses generally have bigger mortgage payments. The Whatcom County trial judge, supra, recognized this as the proper test in her comments from the bench. As stated by the Fifth Circuit in Hall:
The concern…is that a seaman with a large house for his family should not be reimbursed for the cost of a home so far in excess of his individual needs. But the requirement that maintenance be limited to the reasonable expenses of a single seaman dispenses with this concern.
Id. at 589. Again, a seaman with or without a family is not entitled to maintenance to cover living in a McMansion, but neither does the seaman have to give up a middle-class house of moderate size to seek cheaper rent for an apartment.
“Living alone” does not necessarily mean that an injured seaman has to live in an apartment, with rent typically cheaper than a mortgage. Should a seaman lose his home as the result of injury simply because his mortgage is more than what the seaman would pay to rent an apartment? The test is whether the amount of that seaman’s mortgage is “reasonable” based upon the size of the house and mortgages for similar houses in the locality. Once the seaman shows how much is being paid for the mortgage, the vessel owner has the burden of proving that the seaman’s mortgage is unreasonable. Barnes, 889 F.3d 517 (9th Cir. 2018). Unreasonableness is not proven by comparing the mortgage to rents in the locality. By using rents as a yardstick, the district courts in Wilcox and Ramirez, supra, were wrong. This issue needs to be corrected by the Ninth Circuit before more courts follow these erroneous decisions.