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RSDC Holdings, LLC v. M.G. Mayer Yacht Services, Inc.

United States District Court, E.D. Louisiana

February 1, 2019

RSDC HOLDINGS, LLC
v.
M.G. MAYER YACHT SERVICES, INC., ET AL.

         SECTION M (5)

          FINDINGS OF FACT AND CONCLUSIONS OF LAW

          BARRY W. ASHE UNITED STATES DISTRICT JUDGE.

         This matter involves disputes concerning unpaid vessel repairs. Defendant M.G. Mayer Yacht Services, Inc. (“Mayer Yacht”) filed two liens on the vessel, which plaintiff RSDC Holdings, LLC (“RSDC”) sought to have removed by filing the complaint initiating this maritime action.[1] Mayer Yacht denied that RSDC was entitled to have the liens removed and sued RSDC in counterclaim and Donald Calloway (“Calloway”) by third-party complaint seeking to recover the unpaid amounts for the vessel repairs.[2] RSDC and Calloway denied any liability.[3]

         The matter was tried before the Court, sitting without a jury, over one day. Having considered the evidence admitted at trial and the argument of counsel, the Court announces its Findings of Fact and Conclusions of Law pursuant to Rule 52 of the Federal Rules of Civil Procedure. To the extent a finding of fact constitutes a conclusion of law, the Court adopts it as such. To the extent that a conclusion of law constitutes a finding of fact, the Court adopts it as such.

         FINDINGS OF FACT

         I. Jurisdiction

         1. This Court has jurisdiction over the claims in the complaint under the admiralty and maritime laws of the United States, 28 U.S.C. § 1333, and Rule 9(h) of the Federal Rules of Civil Procedure.

         2. This Court has jurisdiction over the claims in the counterclaim and third-party complaint under the admiralty and maritime law of the United States, 28 U.S.C. § 1333, and Rule 9(h) of the Federal Rules of Civil Procedure. In addition, any claims which do not fall within this Court's admiralty and maritime subject-matter jurisdiction are within the Court's supplemental jurisdiction under 28 US.C. § 1367.

         II. The Complaint, Answer, Counterclaim and Third-Party Complaint

         3. On April 22, 2016, RSDC filed a complaint against Mayer Yacht seeking a declaratory judgment that the Tuna Taxi is not subject to two liens Mayer Yacht filed with the U.S. Coast Guard's National Vessel Documentation Center.[4] RSDC also sought an award of costs and attorney's fees under 46 U.S.C. § 31343, including, specifically, any costs RSDC incurred for surety bonds serving as substitute security for the lien claims asserted by Mayer Yacht.[5]

         4. On August 26, 2016, Mayer Yacht filed its answer, generally denying the allegations of the complaint and specifically denying that RSDC is entitled to have the liens removed. In addition, Mayer Yacht filed a counterclaim seeking to recover from RSDC the unpaid amount of the vessel repairs.[6] On February 2, 2017, RSDC answered the counterclaim denying that it owed anything for the alleged vessel repairs.[7]

         5. On September 7, 2017, Mayer Yacht filed an amended counterclaim against RSDC and a third-party complaint against Calloway in personam and the Tuna Taxi in rem seeking to recover for the vessel repairs.[8] Mayer Yacht asserted claims for suit on open account under Louisiana law, breach of contract, quantum meruit, and detrimental reliance, seeking to recover the amount of the repairs (as invoiced), interest and late charges, attorney's fees, and collection costs and expenses.[9]

         6. On January 8, 2018, RSDC and Calloway answered the counterclaim and third-party complaint denying that they owed any amount for the alleged vessel repairs.[10]

         III. Summary Judgment

         7. On July 26, 2018, RSDC and Calloway filed a motion for summary judgment, seeking dismissal of all of Mayer Yacht's claims. They first urged that Mayer Yacht's contract claims have the character of open-account claims and were prescribed because Mayer Yacht filed suit more than three years after the last invoice.[11] In addition, RSDC and Calloway urged that Mayer Yacht's contract claims fail because Mayer Yacht lacked contractual privity with RSDC or Calloway.[12] RSDC and Calloway also urged that Mayer Yacht's alternative claims for equitable relief should be dismissed because they were mere “gap fillers”[13] - that is, available only if no other claims had been asserted. Mayer Yacht responded that its claims were not prescribed because they sound in contract, which has a prescriptive period of ten years rather than the three years applicable to open-account claims; that Sanderson, Calloway's business associate, acted as agent, with either actual or apparent authority, to bind Calloway as principal in connection with the vessel repairs; and that Sanderson, acting on behalf of the owner, is presumed to have authority to procure necessaries under the Federal Maritime Lien Act.[14] In their reply, RSDC and Calloway argued that Sanderson lacked actual authority to order repairs beyond the bridge reassembly;[15] that an apparent agency theory fails because Mayer Yacht never believed it contracted with the principals (whether RSDC or Calloway); and that the Federal Maritime Lien Act is inapplicable to Mayer Yacht's in personam claims for damages.[16] In particular, to support their request that Mayer Yacht's contract claims be dismissed, RSDC and Calloway pointed both to the invoices as being addressed solely to Sanderson, and to Michael Mayer's deposition testimony that Mayer Yacht did not contract directly with either RSDC or Calloway.[17]

         8. On August 7, 2018, Mayer Yacht filed its cross-motion for summary judgment, seeking (1) dismissal of RSDC's suit to have the Tuna Taxi declared free of liens and (2) judgment in Mayer Yacht's favor on the issues of liability and damages asserted in its third-party complaint against Calloway (the same claims RSDC and Calloway sought to have dismissed by their own motion for summary judgment).[18] The parties largely repeated the arguments summarized above in connection with RSDC and Calloway's motion for summary judgment. In its reply, Mayer Yacht argued that even if Sanderson lacked actual or apparent authority, Calloway is nonetheless bound because he ratified Sanderson's conduct.[19] Mayer Yacht also noted it had dismissed its open-account claim, because it had come to believe that the true nature of its cause of action involved the breach of a maritime contract.[20]

         9. On November 26, 2018, the Court issued its Order & Reasons denying each side's motion for summary judgment.[21] Though there was no express contract between Mayer Yacht and Calloway, the parties essentially agreed on summary judgment that Calloway authorized Sanderson to order the Tuna Taxi 's bridge reassembly.[22] But the Court observed that, if Sanderson ordered further repairs, Mayer Yacht did not point to undisputed evidence establishing that Sanderson acted with actual or apparent authority to do so.[23] Similarly, the Court determined that the question of ratification was also disputed and could not be resolved on summary judgment.[24] Further, the parties disputed the nature and extent of the repairs that gave rise to the liens Mayer Yacht filed. Given these disputed material facts, the Court denied summary judgment in favor of Mayer Yacht on its motion.[25]

         10. The Court also denied RSDC and Calloway's motion for summary judgment as to Mayer Yacht's claims for breach of contract and detrimental reliance. The Court determined that factual disputes existed on the issues of contractual privity and agency. In addition, this Court concluded that the doctrine of laches did not bar Mayer Yacht's claim for breach of a maritime contract.[26] Because the parties had not presented evidence on Mayer Yacht's claim for detrimental reliance, the Court concluded that neither side was entitled to summary judgment on it.[27] Finally, the Court granted summary judgment dismissing Mayer Yacht's claim for quantum meruit because it had asserted another theory for recovery.[28]

         IV. Facts Established by Evidence Presented at Trial

         11. This maritime action arises out of two liens on the Tuna Taxi filed by Mayer Yacht for allegedly unpaid vessel repairs.[29]

         12. On or about December 31, 1997, Ron Steinberg (“Steinberg”) purchased the Tuna Taxi, a 48-foot ocean sport fishing vessel.[30]

         13. On or about May 23, 2012, Steinberg filed for bankruptcy in the United States Bankruptcy Court for the Central District of California. Schedule B of the bankruptcy filings listed the Tuna Taxi as an asset of the debtor with an estimated value of $200, 000.[31]

         14. At some time prior to October 2012, First NBC Bank (“FNBC”) acquired the promissory note and mortgage executed by Steinberg in favor of debis Financial Services, in connection with his purchase of the Tuna Taxi.[32]

         15. On or about October 29, 2012, Calloway paid $65, 000 to FNBC to acquire the Tuna Taxi as part of an extra-judicial foreclosure - a sale confirmed by an internal bank memorandum.[33]Despite this change in ownership, no effort was made by Calloway to change the registered name of the owner, which remained Ron Steinberg until sometime in 2016, after this case was filed in which RSDC claimed to be the vessel owner.[34]

         16. Mayer Yacht contends that, as of October of 2012, Calloway believed himself to be owner of the Tuna Taxi, having testified as much. RSDC and Calloway dispute this, claiming that the act of transfer, endorsement, assignment, and subrogation of the note between Calloway and FNBC dated August 14, 2014, mark the first moment of Calloway's ownership.[35] However, the Court notes that these documents purport to memorialize a transfer of ownership to RSDC, not to Calloway. Calloway's testimony revealed that, after October of 2012, he acted in every respect to the Tuna Taxi as its owner, having made the $65, 000 payment for the vessel by personal check, taking physical possession of the vessel, transporting it cross country, and placing it in the custody of an agent and two different shipyards for purposes of repair and berthing.[36] To the extent that discrete facets of Calloway's testimony can be read as contradicting the fact of his ownership of the Tuna Taxi as of October 2012, the Court finds such testimony not to be credible and, instead, credits the other portions of Calloway's testimony reflecting conduct consistent with his status as owner of the vessel.[37] Thus, the Court finds that, at all times material to the vessel repairs performed by Mayer Yacht (that is, between November 2012 and July 2013), Calloway, not RSDC, was the owner of the Tuna Taxi, even though RSDC is the current owner of the vessel.

         17. Following the payment Calloway made to FNBC in October of 2012, Calloway and Sanderson traveled to Laguna Beach, California, where they met Steinberg and were given the keys to the vessel.[38] At a bare minimum, then, as of October 2012, Calloway was the agreed buyer of the Tuna Taxi in possession of the vessel.

         18. Calloway had learned of the availability of the Tuna Taxi through Sanderson. Calloway was introduced to Sanderson by Calloway's acquaintance, the warden of a jail where Sanderson had been imprisoned.[39]

         19. Once in California, Calloway and Sanderson arranged for the Tuna Taxi to be hauled out of the water, placed on a truck, and shipped to Mayer Yacht's yard in New Orleans, Louisiana.[40]

         20. At no time prior to taking possession of the vessel or having it shipped to New Orleans did Calloway arrange for an inspection or survey of the vessel or take the opportunity to examine the vessel's mechanic who was present when he first boarded the vessel in California.[41]

         21. In order for the vessel to be transported from California to New Orleans, its bridge had to be removed from the main body of the vessel.[42] At a minimum, then, upon arriving in New Orleans, the bridge would need to be reattached.

         22. Upon the vessel's arrival at Mayer Yacht's yard in New Orleans, Calloway instructed Sanderson to communicate with the yard's owner, Michael Mayer, regarding the work to be done on the Tuna Taxi.[43]

         23. Calloway acknowledged that he intended and expected Sanderson to communicate with Mayer Yacht concerning all matters relating to repairs of the vessel, serving as Calloway's agent for this purpose (“he was the person I was working with. … I told him to please deal with him because I'm not.”).[44]

         24. At no time did Calloway communicate with any representative of Mayer Yacht about repairs to be made to the Tuna Taxi.[45]

         25. At all times material, Mayer Yacht communicated only with Sanderson regarding repairs to be performed on the Tuna Taxi.[46]

         26. On or about November 16, 2012, Mayer Yacht entered into a contract (in the form of a work order) for repairs to the Tuna Taxi. Sanderson signed the contract with Mayer Yacht.[47]The Court expressly finds that the contract was entered into by Sanderson as the agent for Calloway as vessel owner. After all, as Calloway himself acknowledged, Sanderson had no ownership interest in the vessel and was engaged by Calloway to deal on his behalf with Mayer Yacht concerning the vessel.[48]

         27. While Calloway testified that he never intended Sanderson to have Mayer Yacht perform any repair work because of Mayer's purported unreliable reputation in the business community, Calloway also admitted that he submitted payment for the bridge repair and intended Sanderson to communicate with Mayer Yacht about the vessel repairs.[49] Moreover, Calloway took no action to divert the vessel's delivery away from Mayer Yacht's yard upon its arrival in New Orleans or to countermand any communication Sanderson made to Mayer Yacht about the repairs to be made to the Tuna Taxi. Instead, Calloway testified that he desired Sanderson to act as intermediary between him and Mayer Yacht in connection with the vessel repairs, and Calloway provided funds to Sanderson to pay Mayer Yacht for its work.[50]

         28. Sanderson directed Mayer to complete repairs to the Tuna Taxi pursuant to the work order dated November 16, 2012, which provides, in part, that “invoices unpaid thirty (30) days from presentation thereof, shall be subject to a finance charge of 18% annum” and that “any costs incurred in collecting this account, including attorneys' fees shall be charged against the vessel and/or owner, and the owners and/or vessel agree to pay such costs of collection, including attorneys fees.”[51]

         29. Although acknowledging that he expected Mayer Yacht to require Sanderson to sign a contract before it started work on the Tuna Taxi, Calloway testified that he made no inquiry of Sanderson about the contract and did not request to review any contract that Sanderson may have executed for work done on his behalf on his vessel.[52]

         30. The parties dispute the extent of repairs that Sanderson requested and that Mayer Yacht ultimately performed. While Calloway contends that the only repair Sanderson authorized or Mayer Yacht performed was that of the bridge reassembly, Mayer Yacht claims that Sanderson authorized and it performed all of the work reflected on the invoices through July of 2013.

         31. Calloway testified that the boat was in good mechanical and cosmetic condition before it was transported from California to New Orleans; that the work Mayer Yacht claims to have performed was not performed; and that none of the work alleged to have been performed needed to be performed.[53] In particular, Calloway testified repeatedly that Mayer Yacht did not replace granite and flooring on the vessel, which Michael Mayer confirmed in his own testimony but explained that Mayer Yacht never was engaged to do so, has not invoiced for such work, and does not seek recovery for such work.[54] The Court does not find Calloway's testimony on the extent of the authorized work to be credible, largely because he did not address the specific details of Mayer Yacht's invoices and because the details concerning cosmetic work he did address are contradicted by other, more credible testimonial and documentary evidence.

         32. Similarly, boat mechanic Joe Granzin d/b/a Onsite Marine Services testified that he was very familiar with the condition of the Tuna Taxi and that the work alleged to be performed by Mayer Yacht was not performed.[55] He bases these conclusions on the fact that he was engaged in 2016 to perform certain other work on the Tuna Taxi.[56] However, Granzin has no personal knowledge concerning the work that was or was not performed by Mayer Yacht in the 2012-2013 timeframe, except as might have been evident from the condition of the vessel he observed in 2016 at the time of his own work. Mayer testified that the work Granzin performed was different from that done by Mayer Yacht.[57] On this point, the Court specifically credits Mayer's testimony over that of Granzin. For example, Granzin said he changed the main batteries; performed electrical and caulking work; performed routine engine maintenance like changing fuel filters, engine oil, and coolant; and made repairs to a bilge pump, a solenoid switch, and a generator.[58] Except for work on the vessel's onboard computer system, which was also addressed at length by Mayer Yacht, the tasks performed by Granzin are different from those done by Mayer Yacht, which included, primarily, the bridge reassembly consisting of reattaching the hard top bridge components to the main body of the vessel, reshaping the fiberglass, identifying, matching, and reattaching wires for the electrical and electronic systems, and reattaching or reconnecting antenna, hydraulic engine controls, radar, and air conditioning components, as well as the seating configuration on the bridge; but also included, for example, sanding and painting the vessel's bottom and removing the tuna-specific fishing components.[59]

         33. Granzin also testified that the hourly rates of around $100 for yacht repairs charged by him and Mayer Yacht were about the same and were reasonable for this market.[60]

         34. A Mayer Yacht's yard manager during 2012-2013, Rene Gros, testified that he believed Sanderson was the vessel's owner at the time of Mayer Yacht's dealings with him, indicating that Sanderson acted as to third parties like Mayer Yacht as having the authority to make decisions with respect to the Tuna Taxi.[61]

         35. Accordingly, the Court expressly finds that from November 2012 to July 2013, Mayer Yacht performed work on the Tuna Taxi at the request of Sanderson as the vessel owner's representative, [62] and that Mayer Yacht sent invoices for this work to Sanderson as the vessel owner's representative.[63]

         36. The following invoices were submitted by Mayer Yacht to Sanderson as the vessel owner's representative:

a. Invoice No. 4874, dated December 2, 2012, in the amount of $1, 500.00.[64] A payment was made by Sanderson on behalf of Calloway on February 1, 2013, in the amount of $1, 023.13, leaving a balance due of $476.87;[65]
b. Invoice No. 4895, dated December 14, 2012, in the amount of $14, 600.00;[66]
c. Invoice No. 4928, dated December 30, 2013, in the amount of $380.00;[67]
d. Invoice No. 4938, dated January 6, 2013, in the amount of $4, 205.55;[68]
e. Invoice No. 4960, dated January 13, 2013, in the amount of $4, 669.05;[69]
f. Invoice No. 5066, dated January 20, 2013, in the amount of $4, 641.26;[70]
g. Invoice No. 5079, dated January 25, 2013, in the amount of $332.50;[71]h. Invoice No. 5088, dated January 27, 2013, in the amount of $4, 528.21;[72]i. Invoice No. 5078, dated January 28, 2013, in the amount of $95.00;[73]
j. Invoice No. 5081, dated January 29, 2013, in the amount of $665.00;[74]
k. Invoice No. 5091, dated January 30, 2013, in the amount of $760.00;[75]
l. Invoice No. 5104, dated February 3, 2013, in the amount of $2, 038.51;[76]
m. Invoice No. 5095, dated February 4, 2013, in the amount of $47.50;[77]
n. Invoice No. 5108, dated February 5, 2013, in the amount of $712.50;[78]
o. Invoice No. 5119, dated February 6, 2013, in the amount of $47.50;[79]
p. Invoice No. 5152, dated February 7, 2012, in the amount of ...

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