The Kalakala, once a renowned ferry on Puget Sound, returned to Seattle in 1998 through the efforts of sculptor Peter Bevis, who had rescued the vessel from Kodiak, Alaska, where it had been grounded for use as a seafood cannery. After the ferry's return, the non-profit foundation Bevis created incurred more debts than financial support, which played a part in the board's ousting of Bevis on December 25, 2002. The foundation declared bankruptcy on March 14, 2003.
At the auction, bidding went back and forth between two potential buyers. The vessel was initially won by Charles Medlin, a California entrepreneur, who had attempted to buy the Kalakala in 2002 for $2 million, At that time, he was turned down by the non-profit's board of directors. His winning bid at the auction came in at $140,000.
James K. Murphy Co. requested a $25,000 deposit on the day of the sale, with a September 16 deadline for final payment. On September 17, the auction house claimed they hadn't received the money and declared Medlin in default, even after extending his deadline by a few hours. They then offered the boat to the second-highest bidder, a group of local investors who came in at $135,000. Medlin vowed to fight this decision, claiming that he was waiting to receive clear title of the vessel before finalizing the sales agreement.
Medlin had announced plans to restore and transform the ferry into a Museum of Motion on the San Francisco waterfront at a cost of $35 million. The local investors also planned to restore the Kalakala as a museum, but intended to keep the boat on Puget Sound. When contacted by the auction house, they balked at having to pay the $135,000 bid, and only offered $60,000 -- the amount they bid at the auction before Medlin stepped in.
The auction house disqualified them and then offered the boat to Steve Rodriques, the third-highest bidder. Medlin requested a second chance to pay his original $140,000 bid, but a bankruptcy court ruled on October 9, 2003, that the sale be approved to Rodrigues, who offered $136,560. Rodrigues announced that he hoped to restore the vessel and its engine, so that the Kalakala could once again tour Puget Sound.
Because the Kalakala had been evicted from Lake Union, he got the ferry moved to Neah Bay. That arrangement lasted until the Makah tribe sued to have the ferry removed. The U.S. Coast Guard and the State Department of Natural Resources also ordered Kalakala out. In September 2004, Rodrigues had the derelict towed to a new berth on the Hylebos Waterway in Tacoma.