Ensign Yachts, Inc v. Arrigoni et al
ORDER denying 224 Plaintiff/Third Party Defendant's Motion for Summary Judgment; denying 228 Plaintiff's Motion for Summary Judgment. See the attached Memorandum of Decision. Signed by Judge Vanessa L. Bryant on 8/3/11. (Engel, J.)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
ENSIGN YACHTS, INC,
JON ARRIGONI ET AL.,
CIVIL ACTION NO.
August 3, 2011
MEMORANDUM OF DECISION DENYING PLAINTIFF AND THIRD PARTY
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AGAINST DEFENDANTS JON
ARRIGONI AND LLOYDS OF LONDON [Doc. #224] AND DENYING
PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AGAINST DEFENDANT
JON ARRIGONI [Doc. #228]
Before the Court are motions for summary judgment filed by the plaintiff /
counter claim defendant Ensign Yachts, Inc. (“Ensign”) and third-party defendant
James Ross (“Ross”), president of Ensign. In the first motion, Ensign and Ross
seek summary judgment with respect to the fraud claims asserted against them by
counter claimant / third party plaintiff Lloyds of London (“Lloyds”) and defendant /
counter claimant / cross claimant Jon Arrigoni (“Arrigoni”). [Doc. #224]. In the
second motion, Ensign seeks summary judgment on its claim against Arrigoni
pursuant to the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. §
14706. For the reasons stated hereafter, both motions are DENIED.
I. FACTUAL BACKGROUND
The following facts relevant to the instant motions are undisputed unless
otherwise noted. This matter involves the overland transport of a 2008 Model Year
55' Cigarette Super Yacht (the “Yacht”). The Yacht was designed and
manufactured as part of a joint venture between Ensign and Skip Braver
(“Braver”) of Cigarette Racing, LLC (“Cigarette”).1 Ensign’s Local Rule 56(a)(1)
Statement of Undisputed Facts [Doc. #229] (hereinafter “Pl. Rule 56(a)(1)
Statement”) ¶ 3. The Yacht was constructed in Turkey and thereafter was
imported into the United States in mid-2007 via the port of Miami, Florida, and
federally documented with the United States Coast Guard on June 14, 2007. Id. ¶
5. Ensign claims that the cost of constructing the Yacht and transporting and
importing it into the United States was $1 million. Id. ¶ 4. After the Yacht was
imported, it was navigated by water from Miami to Stamford, Connecticut so that it
could be marketed and sold. Id. ¶ 6.
Ensign claims that, in late 2007, it entered into a brokerage agreement with
XTreme Games Watersports (“XTreme”), a company in the French West Indies, to
attempt to sell the Yacht on Ensign’s behalf. Id. ¶ 8. Ensign further claims that
XTreme identified Masterski Pilou Agency (“Masterski”) as a buyer, and that a
contract to purchase the Yacht for the price of $1.2 million was entered into by the
parties. Id. ¶ 9. Ensign submits as evidence a purchase agreement dated
December 15, 2007 bearing the purported signature of Philippe Brun (“Brun”),
principal of Masterski. Yacht Purchase Agreement [Doc. #65], Exh. 2. According
to Ensign, Brun emailed XTreme’s principal Fabrice Fontanez (“Fontanez”) on
November 27, 2007 indicating that Masterski and its investors were interested in
Braver and Cigarette quit the joint venture in November 2007 because of
a dispute with Ross regarding the distributor used to produce the Yacht. Ross
Depo. [Doc. #253-1] at 158-59. Braver had wanted the Yacht constructed with a
distributor in Italy, rather than the company used in Istanbul, Turkey. Id. As a
result of Braver’s withdrawal from the venture, no additional Yachts of the same
model were produced. Id.
purchasing the Yacht. Ensign and Ross’ Local Rule 56(a)(1) Statement of
Undisputed Facts [Doc. #225] (hereinafter “Pl./Third Party Def. 56(a)(1) Statement)
¶ 11. Ensign claims that negotiations concerning price took place immediately
thereafter. Id. ¶ 12. In anticipation of a sale, Ross created a template of the
purchase agreement on December 7, 2007. Id. ¶ 13. Ensign claims that, on
December 12, 2007, Brun sent an email to Fontanez stating, “Try to contact your
friends as soon as possible because they [Masterski’s investors] are in agreement
to the purchase of the 55' Cigarette.” Id. ¶ 14. This email as well as others
between Brun and Fontanez were originally written in French; Ensign submits
uncertified English-language translations prepared by a translator familiar with
French “street slang” and verified by Fontanez. Id. ¶¶ 11, 14, 16. After receiving
notification from Fontanez that Masterski had agreed to purchase the Yacht on
December 12, 2007, Ross sent Masterski a copy of the purchase agreement for
signature, along with specifications for the Yacht, an invoice, and bank wiring
instructions. Id. ¶ 15. On December 15, 2007, because Ensign had not received
back an executed purchase agreement from Masterski, Ross sent a copy of the
purchase agreement to Fontanez so that he could arrange for its execution by
Masterski. Id. ¶ 17. Fontanez testified that he in turn transmitted the purchase
agreement to Masterski for execution, that he received an executed copy bearing
Brun’s signature back within one week, and that he then sent the executed
agreement to Ross. Id. ¶¶ 18-20.
Lloyds and Arrigoni dispute that Ensign had a contract to sell the Yacht to
Masterski, and claim that the purchase agreement submitted by Ensign which
contains Brun’s signature is a forgery. In support of this contention, they cite the
deposition testimony of Brun, principal of Masterski. Brun testified that he never
signed, received, or even saw a contract to purchase the Yacht from Ensign, and
that he never told either Ross or Fontanez that he was going to purchase the
Yacht. Brun Depo. [Doc. #253-3] at 41-42. Brun further testified that although he
was interested in purchasing the Yacht and wanted to begin negotiations with
Ensign, he first needed to obtain a Certificate of European Compliance for the
Yacht, which is required in order to register a vessel in the French West Indies. Id.
at 35, 43. Brun testified that he emailed Ross directly on December 12, 2007 and
requested him to provide a Certificate of European Compliance. Id. at 43. He also
spoke to Ross the following day and explained that he needed written proof that
the Yacht conformed with European, not just American, safety and other security
requirements. Id. at 49. However, Brun never received the Certificate of European
Compliance, and had no further communications with Ross. Id. at 50.
In addition, Lloyds and Arrigoni contest Fontanez’s translation of the
December 12, 2007 email. According to a certified translation obtained by Lloyds,
the email actually says that Brun and his investors are “eager to buy” or “hot to
buy” the vessel, not that they are “in agreement” to do so. Lloyds’ Exh. J [Doc.
#263-10]; Arrigoni Exh. A [Doc. #240]. Lloyds and Arrigoni also note that a
“computer log” that Ensign has submitted which displays the dates that
documents from Ross’s computer were “created” and “last modified” shows that
Ross did not create the purchase agreement until December 15, 2007,
contradicting Ross’s contention that he drafted the agreement on December 7,
2007 and emailed it to Masterski on December 12, 2007. See Computer Log [Doc.
#201], Exh. A. In addition, Lloyds and Arrigoni point out that in the December 12,
2007 email itself, Ross states that he is attaching three documents - a commercial
invoice, specifications for the Yacht, and wire transfer information - but makes no
mention whatsoever of the purchase agreement. See [Doc. #201], Exh. B. Finally,
Ross himself testified during his deposition that he created the purchase
agreement on December 15, 2007 and that prior to that date he had not sent an
agreement for execution by Masterski. Ross Depo. [Doc. #263-4] at 101-02.
In early December 2007, Ross first contacted Arrigoni regarding possible
transport of the Yacht from Stamford to Miami. Pl. Rule 56(a)(1) Statement ¶ 10.
Arrigoni is a federally registered motor carrier specializing in the overland
transport of marine vessels. Id. ¶ 2. Ensign claims that the reason Ross contacted
Arrigoni at this time was to meet Ensign’s obligation under the purchase
agreement to deliver the Yacht to Masterski in the French West Indies by midJanuary 2008. Id. ¶ 10. Ensign further claims that Ross advised Arrigoni that he
had a contract to sell the Yacht that required immediate delivery to Florida. Id. ¶
11. Arrigoni testified, however, that Ross never told him whether or not the Yacht
had been sold and did not indicate the reason he was moving the Yacht to Florida.
Arrigoni Depo. [Doc. #253-4] at 25. Thereafter, Arrigoni and Ensign entered an
agreement whereby Arrigoni agreed to transport the Yacht to Miami for the price
of $11,500. Pl. 56(a)(1) Statement ¶ 13. On December 7, 2007, Arrigoni issued an
invoice for the transport to Cigarette, and Cigarette sent him a down payment of
$4,000. Id. ¶ 19. The balance was to be paid upon Arrigoni’s successful delivery
of the Yacht to Florida. Id. ¶ 19.
Arrigoni requested that Ensign move the Yacht to New Jersey for pick-up so
that he would not have to obtain oversize permits for the State of Connecticut and
could avoid transporting the Yacht through the New York metropolitan area. Id. ¶
15. Pursuant to Arrigoni’s request, Ross and Robert Gardella navigated the Yacht,
by water, to Liberty Landing Marina in Jersey City, New Jersey. Id. ¶ 16. On
December 12, 2007, Arrigoni accepted the Yacht at Liberty Landing Marina in good
order and condition and loaded it onto his trailer for transport. Id. ¶¶ 17-18. The
original plan was to deliver the Yacht to Coconut Grove Marina in Miami. Arrigoni
Depo. [Doc. #253-4] at 53. However, while in transit Arrigoni learned that he would
be unable to deliver the Yacht to Coconut Grove Marina because of its height,
weight, and width. Id. Therefore, he arranged an alternate delivery point at Bill
Fish Marina in Fort Lauderdale, Florida. Id.
On December 14, 2007, the Yacht was damaged during transport by Arrigoni
when it became partially dislodged from his trailer and came into contact with the
road surface. Arrigoni Depo. [Doc. #235] at 165-66. Ensign claims that Arrigoni
thereafter called and advised that he had delivered the Yacht to Bill Fish Marina
rather than the agreed upon location of Coconut Grove Marina, and that Arrigoni
asked if he could go to the Cigarette facility in Miami to obtain the outstanding
balance due to him for the transport before he left Florida. Pl. 56(a)(1) Statement ¶
21. According to Ensign, it learned for the first time that the Yacht had been
damaged when it was contacted by Bill Fish Marina. Id. ¶ 22. Arrigoni testified,
however, that he notified a Cigarette representative with whom he was dealing at
the time that he would be unable to deliver the Yacht to Coconut Grove Marina and
obtained his approval to deliver it to Bill Fish Marina instead. Arrigoni Depo. [Doc.
#253-4] at 52-58. Arrigoni further testified that he informed his contact at Cigarette
that the Yacht had sustained damaged to its propellor shaft on the date of delivery.
After the Yacht was damaged, Ensign contacted Lloyds, Arrigoni’s cargo
insurer, in an attempt to obtain the proceeds necessary to repair the Yacht. Pl.
56(a)(1) Statement ¶ 28. Lloyds assigned a surveyor who surveyed the Yacht in
Florida in its damaged condition. Id. ¶ 30. A lengthy claims process ensued,
during which Ensign dealt directly with The Penobscot Group, Inc., the local
affiliate of Lloyds. Lloyds ultimately denied coverage in July 2008.
Ensign claims that, in order to avoid losing its sale of the Yacht to
Masterski, immediately after learning of the damage it contacted Norseman
Shipbuilding Corporation (“Norseman”) to perform the necessary repairs. Id. ¶ 32.
According to Ensign, Masterski nevertheless cancelled its contract to purchase
the Yacht when Ensign could not provide an estimated date of delivery. Id. ¶ 34.
As discussed previously, Lloyds and Arrigoni dispute that Ensign ever had a
contract to sell the Yacht to Masterski, and claim that the purchase agreement
produced by Ensign in this litigation is a forgery.
Norseman completed its initial repairs on March 3, 2008 and billed Ensign
for its services. Id. ¶ 35. Ensign did not have the funds to pay Norseman,
however, and Norseman commenced an admiralty action in the United States
District Court for the Southern District of Florida in which it had the Yacht arrested
to secure its maritime lien that arose as a result of its repairs. Id. ¶ 36. Finally, in
the summer of 2008, Ensign was able to find a private lender to loan it the funds to
pay Norseman, and the Yacht was released from its arrest by the district court on
August 8, 2008. Id. ¶¶ 38-39. Final repairs on the Yacht were then completed, and
Ensign placed the Yacht on the market for sale. Id. ¶ 44.
On October 14, 2008, Ensign entered into a contract with Enpro
International, Inc., through broker Monaco Bay, Inc., to sell the Yacht for the sum
of $750,000. Id. ¶ 42. The closing took place on December 2, 2008.
Ensign calculates its damages under the Carmack Amendment using two
different measures. First, under its “diminution in value” measure, Ensign
calculates damages based upon the fair market value of the Yacht had Arrigoni
delivered it undamaged and the value of the Yacht upon delivery in its damaged
condition. See Damages Analysis [Doc. #232]. Ensign claims that fair market
value of the Yacht in its original condition was $1.25 million, and that its
damaged/salved value was $450,000, resulting in total damages of $800,000, plus
interest. Id. Ensign’s sole support for the market value and salved value figures is
the affidavit of Ross.2 Ross Affidavit [Doc. #59] ¶¶ 51, 55. Ross does not explain
Ensign also submitted the affidavit of Ronald A. Bethel (“Bethel”) in
support of its diminution in market value measure of damages. [Doc. #233].
However, on June 25, 2011, the Court ordered Bethel’s affidavit stricken from the
record because it had been submitted in violation of a previous order prohibiting
Ensign from substituting a new expert witness for Ross. [Doc. #308]. Therefore,
in his affidavit what factors he used to arrive at his assessment of the fair market
value of the Yacht. Arrigoni contests Ross’s valuation of the Yacht. Arrigoni
contends that the Yacht was the first of its kind and the only one ever built.
Arrigoni’s Local Rule 56(a)(3) Statement [Doc. #253] ¶ 14. Arrigoni further
contends that the Yacht was extensively marketed for many months yet not a
single purchase offer for the Yacht was ever received. Id. Therefore, according to
Arrigoni, Ross has no basis for his assertion that the market value of the Yacht
was $1.25 million.
Second, under its “loss of sale/lost profits” measure, Ensign calculates
damages based upon the purported lost sale to Masterski along with the cost of
repairs, storage, surveying, detailing, obtaining a public adjuster, borrowing
money to recover the Yacht from arrest, and related expenses. See Damages
Analysis [Doc. #232]. Based upon this measure, Ensign claims damages in the
total amount of $659,063.71, plus interest. Id. Arrigoni disputes the largest
element of Ensign’s damages calculation under this theory, i.e., loss of sale
damages in the amount of $450,000. As noted above, Arrigoni contends that
Ensign never had a contract to sell the Yacht to Masterski, and claims that the
purchase agreement produced by Ensign in this litigation in support of its loss of
sale damages is a forgery.
II. RELEVANT PROCEDURAL BACKGROUND
Ensign initiated suit against Arrigoni, Lloyds, and the Saperstein Agency,
the Court will not consider Bethel’s affidavit in deciding this motion.
Inc. (“Saperstein”)3 on February 4, 2009. On March 16, 2009, Ensign filed an
amended complaint as a matter of course. [Doc. #11]. In the amended complaint,
Ensign asserted causes of action against Arrigoni for breach of contract, violation
of the Carmack Amendment, breach of implied contract, negligence, breach of the
covenant of good faith and fair dealing, loss of sale, and violation of the
Connecticut Unfair Trade Practices Act (“CUTPA”), and against Lloyds for breach
of contract, bad faith, breach of the covenant of good faith and fair dealing, fraud,
and breach of the Connecticut Unfair Insurance Practices Act (“CUIPA”) and
CUTPA (a so-called “CUIPA through CUTPA” claim). Id. On March 11, 2010, the
Court dismissed all claims against Arrigoni other than the Carmack Amendment
claim on the basis of Carmack preemption. [Doc. #110]. The Court also dismissed
the fraud and loss of sale claims against Lloyds. Id.
On June 18, 2010, Lloyds filed its answer to Ensign’s amended complaint,
along with a counterclaim against Ensign for fraud. [Doc. #146]. Lloyds’s basis
for asserting the fraud claim was that the purported contract for sale of the Yacht
between Ensign and Masterski that Ensign relies upon to support a portion of its
damages is fraudulent. Id. On July 7, 2010, Lloyds filed a third party complaint
asserting a fraud claim against Ross based upon the same allegedly fraudulent
contract. [Doc. #158]. On July 9, 2010, Arrigoni filed his answer to Ensign’s
amended complaint, along with counterclaims against Ensign sounding in fraud
All claims against Saperstein were dismissed with prejudice pursuant to
stipulation of the parties on July 2, 2010. [Doc. #156].
as well as breach of contract and tortious interference. [Doc. #159]. On August
11, 2010, Arrigoni also filed a cross-claim for fraud against Ross. [Doc. #178].
Ensign filed the present motion for summary judgment on its Carmack
Amendment claim against Arrigoni on November 10, 2010. [Doc. #224]. On the
same day, Ensign and Ross filed their motion for summary judgment with respect
to the fraud claims asserted by Arrigoni and Lloyds. [Doc. #228]. Lloyds also filed
a motion for summary judgment as to all remaining claims asserted against it by
Ensign. [Doc. #210]. On July 15, 2011, the Court granted Lloyds’s motion and
thereby dismissed all of Ensign’s remaining claims against Lloyds. [Doc. #319].
Accordingly, Lloyds remains in this case only as a counter claimant against
Ensign and a third party plaintiff against Ross.
III. STANDARD OF REVIEW
Summary judgment should be granted “if the movant shows that there is no
genuine dispute as to any material fact and that the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). The Court “construe[s] the evidence in
the light most favorable to the non-moving party and . . . draw[s] all reasonable
inferences in its favor.” Huminski v. Corsones, 396 F.3d 53, 69-70 (2d Cir. 2004).
“[I]f there is any evidence in the record that could reasonably support a jury’s
verdict for the non-moving party, summary judgment must be denied.” Am. Home
Assurance Co. v. Hapag Lloyd Container Linie, GmbH, 446 F.3d 313, 315 (2d Cir.
2006) (internal quotation marks omitted). “The moving party bears the burden of
showing that he or she is entitled to summary judgment.” Huminski, 396 F.3d at
69. “[T]he burden on the moving party may be discharged by ‘showing’—that is
pointing out to the district court—that there is an absence of evidence to support
the nonmoving party’s case.” PepsiCo, Inc. v. Coca-Cola Co., 315 F.3d 101, 105
(2d Cir. 2002). “If the party moving for summary judgment demonstrates the
absence of any genuine issue as to all material facts, the nonmoving party must,
to defeat summary judgment, come forward with evidence that would be sufficient
to support a jury verdict in its favor.” Burt Rigid Box, Inc. v. Travelers Prop. Cas.
Corp., 302 F.3d 83, 91 (2d Cir. 2002).
A. Arrigoni and Lloyds’ fraud claims
Arrigoni and Lloyds assert fraud claims against Ensign and Ross based
upon the purchase agreement between Ensign and Masterski which Ensign
produced during the course of this litigation in support of its claim for lost sale
damages. Ensign and Ross move for summary judgment with respect to the fraud
claims, arguing that there is insufficient evidence in the record to prove that they
A party asserting a claim for fraud must prove the following four elements:
“(1) a false representation was made as a statement of fact; (2) the statement was
untrue and known to be so by its maker; (3) the statement was made with the
intent of inducing reliance thereon; and (4) the party relied on the statement to his
detriment.” Muller v. Muller, 43 Conn. App. 327, 337-38 (1996).
There are clearly genuine issues of material fact that preclude summary
judgment on Arrigoni and Lloyds’ fraud claims. The parties present conflicting
evidence regarding the existence of a contract between Ensign and Masterski for
sale of the Yacht. According to Ensign’s version of the events, Fontanez
discovered Masterski as a potential buyer for the Yacht and, following
correspondence between the parties, Masterski agreed to purchase the Yacht for
the sum of $1.2 million on December 12, 2007. Ensign claims that Ross then sent
a copy of the purchase agreement which he had previously drafted to Masterski
for execution. Having not received an executed copy back as expected, on
December 15, 2007, he transmitted another copy to Fontanez so that he could
arrange for its execution by Masterski. Fontanez testified that he sent the
purchase agreement to Masterski and received an executed copy bearing Brun’s
signature back within one week, which he in turn transmitted to Ross.
Lloyds and Arrigoni present countervailing evidence that Masterski never
actually agreed to purchase the Yacht. Brun testified that he never signed,
received, or even saw a contract to purchase the Yacht from Ensign, and that he
never told either Ross or Fontanez that he was going to purchase the Yacht. Brun
explained that he needed to obtain a Certificate of European Compliance verifying
that the Yacht could be registered in the French West Indies before commencing
negotiations with Ensign to purchase the Yacht. Based upon the conflicting
testimony of Ross and Fontanez on the one hand, and Brun on the other, there is a
genuine dispute regarding the authenticity of the purchase agreement submitted
by Ensign. If the trier of fact were to credit Lloyds and Arrigoni’s version of the
events and find the purchase agreement to be a forgery, this would certainly
qualify as a false representation.
In support of its claim that it had a valid contract with Masterski, Ensign
also points to the December 12, 2007 email from Brun to Fontanez, originally
written in French, in which Brun purportedly stated that Masterski and its
investors were “in agreement” to purchase the Yacht. However, Lloyds and
Arrigoni have called the validity of Ensign’s uncertified translation of this email
into doubt. According to certified translations submitted by Lloyds and Arrigoni,
the email in question actually says that Brun and his investors were “eager to
buy” or “hot to buy” the Yacht, not that they were “in agreement” to do so. Thus,
the true import of Brun’s words is in question.
Ensign argues, however, that even if the purchase agreement was forged,
Lloyds and Arrigoni cannot sustain their fraud claims because there is insufficient
evidence that Ensign and Ross had anything to do with the forgery. The Court
disagrees. There is sufficient evidence from which a trier of fact could find that
Ensign and Ross were responsible for creating the allegedly fraudulent purchase
agreement, and that they did so knowingly and with the intent to induce reliance
by Lloyds and Arrigoni. Although Ross maintains that Masterski agreed to
purchase the Yacht on December 12, 2007, Lloyds and Arrigoni have presented
evidence that Brun emailed Ross on that same date and requested that he provide
a Certificate of European Compliance. Brun also testified that he spoke directly to
Ross the following day and explained that he needed proof that the Yacht
conformed to European safety and security requirements so that it could be
registered in the French West Indies. Therefore, there is evidence that on both
December 12 and 13, 2007, Brun communicated to Ross directly his inability to
commit to purchase the Yacht until he obtained the necessary certificate.
In addition, documentary evidence in the record contradicts Ensign’s
versions of the relevant events. Ensign claims that Ross created the purchase
agreement using his computer on December 7, and emailed it to Brun on
December 12, 2007. However, the “computer log” submitted by Ensign which
displays the dates that documents from Ross’s computer were “created” and “last
modified” clearly shows that Ross did not create the purchase agreement until
December 15, 2007. Therefore, Ross could not have emailed the purchase
agreement to Masterski on December 12, 2007, as he claims he did. Furthermore,
in the December 12, 2007 email itself, Ross states that he is sending three
attachments - a commercial invoice, specifications for the Yacht, and wire transfer
information. There is no mention, however, of the purchase agreement. Finally,
Ross himself testified during his deposition that he created the purchase
agreement on December 15, 2007 and that prior to that date he had not sent an
agreement for Masterski’s execution. The discrepancies between Ross’s current
assertions and the documentary evidence contained in the record gives rise to an
inference of fraudulent intent on the part of Ross himself that precludes the entry
of summary judgment in his and Ensign’s favor.
Finally, Ensign argues that Lloyds and Arrigoni did not rely upon the
purchase agreement in any manner. This is patently false. Lloyds and Arrigoni
have relied upon the purchase agreement to their detriment by, among other
things, expending the time and effort necessary to litigate this case. This includes
the legal fees and costs incurred in securing Brun’s deposition testimony and
preparing for and attending Fontanez’s deposition, the costs associated with
defending against Ensign’s claim for lost sale damages, and the continuing cost of
pursuing their fraud claims against Ensign and Ross. Furthermore, the Court
entered a prejudgment remedy against Arrigoni in the amount of $728,726.72
based upon the damages Ensign allegedly incurred due to his negligence, the
most substantial component of which was lost profits based upon Masterski’s
purported cancellation of the purchase agreement. [Doc. #97].
B. Ensign’s Carmack Amendment claim
Ensign’s sole remaining claim in this case is a Carmack Amendment claim
against Arrigoni for damages to the Yacht sustained while in Arrigoni’s custody
during transport. Ensign moves for summary judgment with respect to its
Carmack Amendment claim, arguing that it has established all of the elements of
this claim as a matter of law.
“The Carmack Amendment governs the liability of common carriers on bills
of lading. A bill of lading is a transportation contract between a shipper/consignor
(i.e., a seller of goods) and a carrier. The person named in the bill of lading as the
person ‘to whom or to whose order the bill promises delivery’ is the consignee.”
Paper Magic Group, Inc. v. J.B. Hunt Transp., Inc. 318 F.3d 458, 461 (3rd Cir. 2003)
(citations omitted). “To make a prima facie case under the Carmack Amendment,
a plaintiff must show 1) delivery to the carrier in good condition; 2) arrival in
damaged condition; and 3) the amount of damages caused by the loss.” Project
Hope v. M/V IBN SINA, 250 F.3d 67, 74 n.6 (2d Cir. 2001). “If the plaintiff
establishes the prima facie case, the burden shifts to the defendant to show both
that it was free from negligence and that the damage to the cargo was due to one
of the excepted causes relieving the carrier of liability.” REI Transp., Inc. v. C.H.
Robinson Worldwide, Inc., 519 F.3d 693, 699 (7th Cir. 2008). The “excepted
causes” are “acts of God, the public enemy, the act of the shipper himself, public
authority, or the inherent vice or nature of the goods.” Project Hope, 250 F.3d at
Arrigoni does not dispute that he received the Yacht in good condition or
that it arrived at its destination in damaged condition. Therefore, the first two
elements of the prima facie case are established. Arrigoni argues, however, that
there are genuine issues of material fact regarding the third element, the amount
of damages caused by the loss.4 Liability having been conceded, the only issue
remaining on the Carmack claim is damages.
Arrigoni also asserts a Carmack affirmative defense, arguing that the
damage was caused by the “inherent nature” of the Yacht. However, on June 27,
2011, the Court granted Ensign’s motion to strike Arrigoni’s inherent nature
defense on the bases that Arrigoni waived the defense by failing to timely plead it
in his answer, that the defense is inapplicable on the facts of this case, and that
Arrigoni spoliated evidence relevant to the defense by discarding the wooden
blocks and damaged cross-member used in transporting the Yacht. [Doc. #310].
Therefore, the inherent nature defense is no longer at issue in this case.
The Carmack Amendment imposes liability for “actual loss or injury to the
property[.]” 49 U.S.C. § 14706. The ordinary measure of damages under the
Carmack Amendment is the difference between the market value of goods at the
time of delivery and their market value had they arrived in good order at the time
they were meant to be delivered. Jessica Howard Ltd. v. Norfolk Southern
Railroad Co., 316 F.3d 165, 168-69 (2d Cir. 2003). However, “[t]he market discount
theory is not the exclusive measure of damages” under Carmack. Thyssen, Inc. v.
S/S Euronity, 21 F.3d 533, 540 (2d Cir. 1994). A different method may be applied “if
circumstances suggest a more appropriate alternative.” Jessica Howard, 316 F.3d
at 171; see also Great Atlantic & Pacific Tea Co. v. The Atchison, 333 F.2d 705, 70708 (1964) (“Since the market value rule is merely a method, it is not to be applied in
cases where it is demonstrated that another rule will better compute actual
damages.”). For instance, the Second Circuit has approved the award of repair or
replacement costs as an alternative measure of damages in the absence of an
open market from which a fair market value could be set. Project Hope, 250 F.3d
at 77. The Carmack Amendment also permits recovery of lost profits unless they
are speculative. Camar Corp. v. Preston Trucking Co., Inc., 221 F.3d 271, 277 (1st
Here, Ensign asserts that Arrigoni is liable under the Carmack Amendment
for an amount of damages equal to either (1) a “diminution in market value
method,” which it describes as the difference between the fair market value of the
Yacht, had it been delivered undamaged, and the Yacht’s damaged/salved value, in
the amount of $800,000, plus interest; or (2) a “lost sale/profits method,” which
includes replacement/repair damages and loss of profit damages, in the sum of
$659,063.71, plus interest.
The Court holds that there are questions of material fact under either of
Ensign’s damages theories. First, Ensign’s diminution in market value measure
relies solely upon the affidavit of Ross. In his affidavit, Ross summarily asserts
that the fair market value of the Yacht was $1.25 million, and that its
damaged/salved value was $450,000. However, Ross’s affidavit contains no
analysis whatsoever as to how he arrived at these valuation figures. In addition,
Ross’s valuation of the Yacht is contested by Arrigoni, who contends that Ross is
unqualified to provide an assessment of the market value of a Yacht for which
there was in fact no market. Arrigoni cites evidence that the Yacht was a one-of-akind luxury vessel which was extensively marketed for many months and on
which not a single purchase offer was ever received. Furthermore, Ross’s
credibility has been called into question based upon evidence in the record that
Ross may have intentionally misrepresented the existence of a purchase
agreement between Ensign and Masterski. Accordingly, there is a genuine factual
dispute for trial regarding the market value of the Yacht.
Second, Ensign’s repair/replacement costs plus “lost sale/profits” method
of calculating damages relies substantially on the contract that Ensign claims it
had entered to sell the Yacht to Masterski. The lost profits resulting from the
purported sale to Masterski accounts for $450,000 of the $659,063.71 in damages
claimed by Ensign under this method. However, as discussed above, there is
evidence in the record that the purchase agreement submitted by Ensign in
support of its lost sale damages is a forgery and that Ensign never in fact had a
contract with Masterski for sale of the Yacht. See supra Section IV.A. Therefore,
Ensign cannot establish its damages under the “lost sale/profits” method as a
matter of law. Whether or not Ensign had a contract with Masterski is a genuine
issue of material fact that must be determined at trial.
Based on the above reasoning, Ensign and Ross’ motion for summary
judgment against Arrogoni and Lloyds with respect to their fraud claims [Doc.
#224] is DENIED. Ensign’s motion for summary judgment on its Carmack
Amendment claim against Arrigoni [Doc. #228] is also DENIED. This case will
proceed to trial on Ensign’s Carmack Amendment claim against Arrigoni and
Arrigoni and Lloyds’ fraud claims in accordance with the Court’s June 30, 2010
Scheduling Order [Doc. #153].
IT IS SO ORDERED.
Vanessa L. Bryant
United States District Judge
Dated at Hartford, Connecticut: August 3, 2011.
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