Federal Insurance Company v. SpeedBoat Racing Ltd.

Filing 61

OMNIBUS RULING (see attached) approving the 43 Joint Stipulation of Discontinuance filed by Federal and Speedboat; denying 44 Speedboat's Motion to Dismiss; granting 46 Rambler's Motion to Amend or Correct its ans wer and counterclaims, including leave to add Alexander E. Jackson as a party; denying as moot 52 Speedboat's Motion to Stay Discovery; and denying without prejudice 57 Rambler's Motion to Compel Discovery. Rambler must f ile and serve its proposed "Second Amended Answer and Counterclaims" on or before August 26, 2016, and effect proper service in accordance with the Federal and Local Rules of Civil Procedure. Speedboat must respond to Rambler's discovery requests on or before August 26, 2016, failing which Rambler may renew its motion to compel. The parties are directed to file a joint status report with the Court, proposing revised dates for the remaining case deadlines, on or before September 16, 2016. Signed by Judge Charles S. Haight, Jr. on August 9, 2016. (Dorais, L.)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

FEDERAL INSURANCE COMPANY,
Plaintiff,
v.

Civil Action No.
3:12-cv-1480 (CSH)

SPEEDBOAT RACING LTD.,
Defendant/Third Party Plaintiff,
v.

AUGUST 9, 2016

RAMBLER 100 LLC
Third Party Defendant .

OMNIBUS RULING ON PENDING MOTIONS
HAIGHT, Senior District Judge:

"If the highest aim of a captain were to preserve his ship, he would keep it in port forever."
This aphorism is attributed to St. Thomas Aquinas,1 whose resume did not include ocean yacht
racing.
The ship involved in this action, an ocean racing yacht, did not remain in port. Rather, in
August 2011, while participating in a race off the coast of Ireland, the yacht capsized in heavy seas
and suffered severe damage. This litigation is about who should pay for that damage. The parties

1

"Nuggets of Wisdom of St. Thomas Aquinas," http://primacyofreason.blogspot.com/2011/
01/nuggets-of-wisdom-of-st-thomas-aquinas.html (published January 27, 2011) (site accessed Aug.
8, 2016); see also Thomas F. Jaras, In the Trough, at 209 (2013); http://www.quoteauthors.com/
thomas-aquinas-quotes/ (accessed Aug. 8, 2016).
1

are yacht's insurer, her owner, and her operator at the time of the casualty. The suit began as an
action on a policy of marine insurance, within the admiralty and maritime jurisdiction of this Court.
A number of motions are pending. This Ruling resolves them all.
I.
A.

BACKGROUND

Factual History
The former plaintiff, Federal Insurance Company ("Federal" or "Plaintiff"), commenced the

action against its insured, Speedboat Racing Ltd. ("Speedboat"), by filing a "Complaint in
Admiralty" [Doc. 1] , alleging that Federal has no duty to pay Speedboat for damages that occurred
to the mast, sails and spars of Speedboat's racing yacht known as Rambler 100 ( the "Yacht") on
August 15, 2011.2 In its Complaint, Federal asserted that the Court possessed both "diversity of
citizenship" subject matter jurisdiction under 28 U.S.C. § 1332 and admiralty jurisdiction pursuant
to 28 U.S.C. § 1333.3 See Doc. 1, at 2 (¶¶ 4-5).
"Rambler 100," the Yacht referred to in Federal's complaint, was formerly named
"Speedboat," and was owned by the corporate party also called Speedboat. The Yacht was insured
under a "Masterpiece Yacht insurance policy" issued by Federal (Policy No. 0037009323) (the

2

According to Speedboat, the Yacht is "a highly sophisticated racing sloop, 30 meters long"
which was designed by Juan Kouyoumdjian of Juan Yacht Design and built by T.P. Cookson
Boatbuilders Ltd." Doc. 20 (Speedboat's "Amended Third Party Complaint"), at 3 (¶ 8). The Yacht
includes in its design features "a canting keel approximately 14 feet long, weighing 30,360 pounds
with a 18.7 foot bulb at the bottom." Id. The keel is "managed by a drive unit and hydraulic release
valves, which act as shock absorbers to reduce the shock loads on the keel under the conditions
expected when the Yacht is racing in heavy ocean seas." Id.
3

The Court notes that it is well settled that marine insurance contracts are within the
admiralty jurisdiction. New England Mut. Marine Ins. Co. v. Dunham, 78 U.S. (11 Wall.) 1, 4-6,
20 L.Ed. 90 (1870). See also Fireman's Fund Ins. Co. v. Great Am. Ins. Co., 10 F. Supp. 3d 460,
475 (S.D.N.Y. 2014), appeal dismissed (Mar. 1, 2016), aff'd, 822 F.3d 620 (2d Cir. 2016).
2

"Policy") to the corporate Speedboat, as assured, for up to $5,000,000 in damages to the Yacht. Id.,
at 2 (¶ 7).4 The policy term was October 14, 2010 through October 14, 2011. Id. The Yacht was
leased by Speedboat to a different entity, Rambler 100 LLC ("Rambler"), pursuant to a "Share
Issuance and Shareholder Agreement" (the "Agreement") (dated October 14, 2010), which provided,
inter alia, that Rambler would have exclusive use of the Yacht in the 2011 Atlantic Ocean Racing
Series and would be responsible to pay "all operating expenses, repair and maintenance costs for the
Yacht and its Equipment, including minor maintenance or major equipment failure, incurred during
the Term and after redelivery."5 See Doc. 10-3 (Exhibit C, "Lease Agreement, dated October 14,
2010"), at 5 (§ 4.1(a)).6
Pursuant to its terms, the Agreement was to be "governed by and construed in accordance
with the laws of the State of Connecticut." Id., at 10 (§ 5.4). The Agreement provided Rambler
with an ownership interest in Speedboat ("one (1) redeemable share of a nominal par value of U.S.
$1.00"), id., at 2 (Preamble), and exclusive use of the Yacht from October 14, 2010 to March 15,

4

See also Doc. 1-1 (Ex. A), entitled "Masterpiece" (Policy No. 0037009323). The Court
notes from the policy that Federal is a member of the "Chubb Group of Insurance companies doing
business in the United States." Id., at 2.
5

Speedboat, Rambler, and an individual named Alexander E. Jackson, Speedboat's
"Director," entered into the "Share Issuance and Shareholder Agreement" (the "Agreement") on
October 14, 2010. The Court notes that Speedboat refers to the Agreement throughout its pleadings
as the "Lease Agreement," stating that it "provides for, among other things, Rambler's lease of the
Yacht and other related assets of Speedboat." See, e.g., Doc. 10, at 2 (¶ 2) and at 3 (¶ 8); Doc. 20,
at 2 (¶ 2) and at 3 (¶ 7).
6

The Court notes that the Agreement also appears as an Exhibit to other pleadings in this
action, including Doc. 50-1.
3

2012, for the purpose of racing the Yacht in a series of sailing races, id., at 4 (§ 4.1 (a)).7 Under the
Agreement, Speedboat’s captain, Chris Higgins, and a member of its former crew, Bill Erkelens,
were to be retained as members of Rambler's crew. Id., at 5 (§ 4.1(b)). In addition, Jackson and
"one guest from a list provided by [Jackson] to Rambler" were to be allowed to accompany the
vessel on all races and included as "uncompensated members of [Rambler's] crew at their request."
Id., at 8 (§ 4.1(n)(1)).
On August 15, 2011, Rambler raced the Yacht in the 2011 Rolex FastNet Race off the coast
of Ireland. Doc. 20 (Speedboat's "Amended Third-Party Complaint"), at 5 (¶ 21). But, as all sailors
know, "[t]he sea hath no king but God alone."8 So it was that during the course of that race, "[f]acing
23-25 knot headwinds in heavy seas, the Yacht's canting keel snapped off just below the hull exit,
whereupon the Yacht capsized, resulting in millions of dollars of damage to the Yacht."9 Id. As a
result, Speedboat claimed payment from Federal for damages to the Yacht's "sails, mast, spars and

7

The Agreement stated that Speedboat "intends to issue Rambler, one (1) redeemable share
of a nominal or par value of U.S. $ 1.00 (the 'New Share') redeemable by [Speedboat]" upon the
terms set forth in the Agreement. Doc. 10-3, at 2 (Preamble). In return, Rambler agreed to pay
Speedboat One Dollar ($1.00) (the "Purchase Price") for the New Share. Id., at 2 (§ 1.2). Speedboat
would thereafter "issue the New Share to Rambler as fully paid and non-assessable, make the
necessary entries in [Speedboat's] Register of Members reflecting Rambler as the registered holder
of the New Share and issue a share certificate representing the New Share in the name of Rambler."
Id., at 3 (§ 1.4(c)). The Agreement further specified that Speedboat "is and will remain the record
owner of the Yacht." Id., at 9 (§ 4.2(b)).
8

Dante Gabriel Rossetti, "The White Ship" (1881).

9

Rambler described the part of the Yacht that "broke off" during the 2011 Rolex Fastnet
Race as the "keel fin." Doc. 48, at 4. From the pleadings, the parties do not appear to dispute the
facts regarding the nature of the damage to the Yacht.
4

rigging in the amount of $3,130,000.00."10 Doc. 1, at 3 (¶ 15).
B.

Procedural History
In its Complaint, Federal requested declaratory judgment pursuant to 28 U.S.C. § 2201 that

it has no duty to pay Speedboat for the damages at issue to the "spars and sails" of the Yacht which
occurred on the occasion of the 2011 Rolex Fastnet Race.11 Federal asserted that those damages
were explicitly excluded from coverage under the terms of the Policy. In particular, Federal quoted
the exclusion provision in the Policy, as follows:
"Spars and Sails." We do not cover any loss to spars running or standing rigging, sail,
spinnakers or gennakers that occurs while your yacht is being raced.
Doc. 1, at 1 (¶ 1).
With respect to the damages claimed by Speedboat, Federal asserted that they occurred
"[d]uring a race" when "the keel failed and the Yacht immediately heeled over," causing the mast
and sails to break off and suffer damage. Id. Consequently, Federal sought "a declaratory judgment
claiming that it has no duty to pay the damages for the mast and sails because they were damaged

10

Given the public setting of the race and the danger to the lives of the crew, the capsize was
reported as a newsworthy event. See, e.g., http://gcaptain.com/rambler-capsizes-losing-keel/. "[O]n
a motion to dismiss, a court may consider ... 'matters of which judicial notice may be taken.'"
Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002)(quoting Brass v. American Film
Techs., Inc., 987 F.2d 142, 150 (2d Cir.1993)). News articles may be judicially noticed for the fact
of their publication, as opposed to the truth of their contents. See, e.g., In re Merrill Lynch Tyco
Research Sec. Litig., No. 03-CV-4080(MP), 2004 WL 305809, at *4 n.3 (S.D.N.Y. Feb. 18, 2004).
11

28 U.S.C. § 2201 provides, in pertinent part:

(a) In a case of actual controversy within its jurisdiction, . . . any court of the United
States, upon the filing of an appropriate pleading, may declare the rights and other
legal relations of any interested party seeking such declaration, whether or not further
relief is or could be sought. Any such declaration shall have the force and effect of
a final judgment or decree and shall be reviewable as such.
5

while the Yacht was being raced[,] which loss is excluded under the [P]olicy." Id.
Speedboat answered the Complaint [Doc. 8] and filed a Third-Party Complaint [Doc. 10]
against Rambler, alleging that Rambler had breached the Agreement. In its third-party complaint,
Speedboat specified that "[t]his Court has diversity jurisdiction over this action pursuant to 28 U.S.C.
§ 1332 because Speedboat and Rambler are citizens of different States and the amount in controversy
exceeds $75,000, exclusive of interest and costs." Doc. 10, at 2 (¶ 6). Speedboat also asserted that
the Court "has jurisdiction of this action pursuant to 28 U.S.C. § 1367 because the claims asserted
in this Third-Party Complaint are within the Court's supplemental jurisdiction, as the claims in this
Third-Party Complaint are so related to the claims in the Complaint previously filed by the Plaintiff
[Federal] that they form part of the same case of controversy."12 Id. at 3 (¶ 7).

12

With respect to diversity, in the Third Party Complaint [Doc. 10], Speedboat alleged that
it is "an entity formed under the laws of the Cayman Islands with its registered office c/o Campbell
Corporate Services Limited, 4th Floor, Scotia Centre, P.O. Box 268, George Town, Grand Cayman,
Cayman Islands." Doc. 10, at 2 (¶ 3). Speedboat described Rambler as "an entity formed under the
laws of Delaware with an address at 2711 Centerville Road, New Castle, Delaware 19808;" id.,
(¶ 4); and the Agreement similarly described Rambler as a "Delaware limited liability company" with
the same Centerville Road address in Wilmington, Delaware, Doc. 10-3, at 2. See also Doc. 46
(Rambler's proposed "Second Amended Counterclaims"), at 21 (¶¶ 1-2) (describing Rambler as
limited liability company formed in Delaware with offices in New Castle). Finally, Speedboat
described Federal as "a corporation incorporated under the laws of Indiana, with its principal place
of business in Warren, New Jersey." Doc. 10, at 2 (¶ 5); see also Doc. 1, at 2 (¶ 2).
The Court notes that Speedboat's respective descriptions of Speedboat and Rambler as "an
entity" in the Third Party Complaint were insufficient to establish their citizenship. If they are
limited liability companies, "the citizenship for diversity purposes of a limited liability company .
. . is the citizenship of each of its members." Wise v. Wachovia Securities, LLC, 450 F.3d 265, 267
(7th Cir. 2006)(emphasis added), cert. denied, 549 U.S. 1047 (2006). Specifically, the "citizenship
of a limited liability company is not the state in which it is organized or has its principal place of
business, but rather, each of the states in which it has members." Lewis v. Allied Bronze LLC, No.
07 Civ. 1621(BMC), 2007 WL 1299251, at *1-2 (E.D.N.Y. May 2, 2007) (citing Handelsman v.
Bedford Vill. Assoc. Ltd. P'ship, 213 F.3d 48, [51-52] (2d Cir. 2000) and remanding removed action
for lack of diversity jurisdiction).
And if any party or member of a limited liability company is a corporation, for diversity
purposes, "a corporation shall be deemed to be a citizen of every State and foreign state by which
6

Speedboat thereafter filed an "Amended Third-Party Complaint" [Doc. 20] pursuant to
Federal Civil Rule 15(a)(1)(B), as a "matter of course."13 In that pleading, Speedboat asserted that
if "Plaintiff [was] held to be not responsible to pay Speedboat on its claim for damages to said 'spars
and sails,' this Court should enter a judgment that Rambler is liable to and must pay Speedboat for
such damages pursuant to the terms of the Share Issuance and Shareholder Agreement." Doc. 20, at
2 (¶ 2). Also, in this amended pleading, Speedboat based the Court's jurisdiction solely upon
supplemental jurisdiction, no longer citing diversity of citizenship between Speedboat and Rambler.
Id., at 2-3 (¶ 6). Speedboat simply alleged that "the claims in this Third-Party Complaint are so
related to the claims in the Complaint previously filed by the Plaintiff [Federal] that they form part
of the same case or controversy." Id.
Rambler filed counterclaims against Speedboat for breaches of the Agreement and for failing
to disclose to Rambler that the keel fin was dangerously defective. In its pleading, Rambler, like
Speedboat, pled that the Court has supplemental jurisdiction over its claims under 28 U.S.C. § 1367.
See Doc. 29 (Rambler's Answer to Amended Third Party Complaint), at 15 (¶ 3). As pled by
Speedboat and Rambler, all claims between them ultimately became "based only on the Court's
section 1367 supplemental jurisdiction" without citing an underlying jurisdictional basis.14 See Doc.
it has been incorporated and of the State or foreign state where it has its principal place of business."
28 U.S.C. § 1332(c)(1). If Speedboat and Rambler are actually corporations, Speedboat failed to
provide their principal places of business.
13

Speedboat filed its Amended Third-Party Complaint [Doc. 20] on January 4, 2013, which
was within twenty-one (21) days after Rambler filed its responsive pleading ("Answer") [Doc. 17]
to Speedboat's original Third-Party Complaint, on December 14, 2012. See Fed. R. Civ. P.
15(a)(1)(B) ("A party may amend its pleading once as a matter of course . . . if the pleading is one
to which a responsive pleading is required, 21 days after service of a responsive pleading . . . .").
14

As set forth supra, n.12, Speedboat failed to identify itself as a corporation or a limited
liability company. In the Amended Third-Party Complaint, Speedboat once again identified itself
7

45 (Speedboat's brief), at 5.
Thereafter, the Court referred the action to Magistrate Judge Joan G. Margolis for a
settlement conference in January of 2013. That conference occurred in March of 2013 and was
followed by a second conference in May of 2013. The entire case did not settle. However, on June
7, 2013, Federal and Speedboat filed a "Stipulation of Discontinuance," which stated that "plaintiff's
action against the defendant Speedboat Racing Ltd[.] is hereby discontinued with prejudice and
without cost to either party." Doc. 43, at 1. Federal was terminated as Plaintiff in this action and,
as Speedboat asserts, "the only remaining, unsettled claims in this suit are the claims between
Speedboat and Rambler."15 Doc. 45, at 5.
The first motion the Court will resolve is Speedboat's motion to dismiss for lack of subject
matter jurisdiction. Speedboat argues that due to changed circumstances – the termination of
Federal as Plaintiff in this action –the Court lacks subject matter jurisdiction. Id. Specifically, "the

as "an entity" and further described itself as "formed under the laws of the Cayman Islands," but then
specified its "principal place of business [as located] at 33 Gilliam Lane, Riverside, Connecticut."
Doc. 20, at 2 (¶ 3). If Speedboat were a corporation, such allegations would make it a citizen of the
Cayman Islands and Connecticut. However, if Speedboat is actually a limited liability company, no
facts provide the identity and citizenship of each and all of its members, and there is thus no basis
to determine citizenship for diversity purposes.
15

Pursuant to Federal Civil Rule 41(a), the plaintiff may voluntarily "dismiss an action
without a court order by filing: . . . a stipulation of dismissal signed by all parties who have
appeared." Fed. R. Civ. P. 41(a)(1) (A) (ii). Otherwise, "an action may be dismissed at the plaintiff's
request only by court order, on terms that the court considers proper." Id. 41(a)(2). In light of the
fact that Rambler had appeared in the action, filed an answer and counterclaims, and did not sign the
dismissal of Federal's claims against Speedboat, the Court will approve said dismissal nunc pro tunc
to remove any question as to whether the Court deemed said dismissal proper in terminating Federal
from the action. Federal and Speedboat signed the stipulation of dismissal and Rambler filed no
objection. The case proceeded between Speedboat and Rambler without either party asserting that
it had been prejudiced by the dismissal of Federal's claims.
8

remaining parties in this case lack diversity of citizenship."16 Doc. 45, at 4. Speedboat thus urges
the Court to dismiss the remaining claims, focusing on the balance of the "traditional values of
judicial economy, convenience, fairness, and comity." Doc. 45, at 7 (citing Kolari v. New YorkPresbyterian Hosp., 455 F.3d 118, 122 (2d Cir. 2006)). Because the Court "has not expended
significant resources on the case or addressed any substantive dispositive motions, Speedboat
respectfully requests that the Court exercise its discretion, pursuant to 28 U.S.C. § 1367(c)(3),
to dismiss Speedboat's claims without prejudice and to dismiss the claims of the Third-[P]arty
Counterclaim Plaintiff, Rambler 100 LLC."17 Doc. 45, at 4.
Rambler "concedes that this Court has no diversity jurisdiction over this case," Doc. 48, at
5. However, Rambler objects to Speedboat's "Motion to Dismiss" and moves for leave to amend
its pleadings to "clarify that this Court has (a) admiralty jurisdiction pursuant to 28 U.S.C. § 1333
over all of Speedboat's claims and over six of Rambler's counterclaims because they concern a
maritime contract and (b) supplemental jurisdiction pursuant to 28 U.S.C. § 1367 over Rambler's two
additional counterclaims because they form part of the same case or controversy." Doc. 48, at 4. In
particular, Rambler asserts that the parties' pleadings demonstrate that the "Share Issuance and
Shareholder Agreement" is a maritime contract and that agreement's choice-of-law provision does

16

In its brief in support of the pending motion to dismiss, Speedboat specifies that "[b]oth
remaining parties in this action are citizens of Connecticut." Doc. 45, at 6. In particular, "Rambler
is a Delaware limited liability company" with "its principal place of business [located at] One
Financial Plaza, Hartford, CT" and "Speedboat is a Cayman Islands entity, with its principal place
of business in Connecticut." Id. As set forth supra, these allegations are insufficient for the Court
to assess citizenship of the parties, which appear to be limited liability companies, so that the
citizenship of each party's members would have to be established.
17

Pursuant to 28 U.S.C. § 1367(c)(3), "[t]he district courts may decline to exercise
supplemental jurisdiction over a claim . . . if – . . . the district court has dismissed all claims over
which it has original jurisdiction."
9

not defeat admiralty jurisdiction. In sum, Rambler concludes that the Court has admiralty subject
matter jurisdiction and may move forward with this action.
The Court will resolve Speedboat's "Motion to Dismiss" [Doc. 44] by determining whether
this Court's admiralty jurisdiction extends to the remaining disputes between the remaining parties,
Speedboat and Rambler. If the Court has subject matter jurisdiction on that basis, the Court will also
rule on Rambler's "Motion for Leave to Amend" [Doc. 46] its Answer and Counterclaims,
Speedboat's "Motion to Stay Discovery" [Doc. 52], and Rambler's "Motion to Compel Discovery"
[Doc. 57].
II. DISCUSSION
A.

Speedboat's Motion to Dismiss for Lack of Subject Matter Jurisdiction
1.

Subject Matter Jurisdiction

Federal district courts are courts of limited jurisdiction under Article III, Section 2 of the
United States Constitution. See, e.g., Chicot Cnty. Drainage Dist. v. Baxter State Bank, 308 U.S.
371, 376 (1940), reh'g denied, 309 U.S. 695 (1940). The question of subject matter jurisdiction is
fundamental so that a court must raise the issue sua sponte, of its own accord, when the issue is not
addressed by the parties. Mansfield, Coldwater & Lake Michigan Rwy. Co. v. Swan, 111 U.S. 379,
382 (1884). See also Joseph v. Leavitt, 465 F.3d 87, 89 (2d Cir. 2006) ("Although neither party has
suggested that we lack appellate jurisdiction, we have an independent obligation to consider the
presence or absence of subject matter jurisdiction sua sponte."), cert. denied, 549 U.S. 1282 (2007);
Univ. of South Alabama v. American Tobacco Co., 168 F.3d 405, 410 (11th Cir. 1999) ("a federal
court is obligated to inquire into subject matter jurisdiction sua sponte whenever it may be lacking").
If subject matter jurisdiction is lacking, the action must be dismissed. See Fed. R. Civ. P.

10

12(h)(3) ("If the court determines at any time that it lacks subject-matter jurisdiction, the court must
dismiss the action."). See also Manway Constr. Co. v. Housing Auth. of Hartford, 711 F.2d 501,
503 (2d Cir. 1983) ("It is common ground that in our federal system of limited jurisdiction any party
or the court sua sponte, at any stage of the proceedings, may raise the question of whether the court
has subject matter jurisdiction; and, if it does not, dismissal is mandatory.") (citations omitted).
In general, a federal district court may exercise subject matter jurisdiction over an action if
there is either: (1) "federal question" jurisdiction, applicable to "all civil actions arising under the
Constitution, laws, or treaties of the United States," 28 U.S.C. § 1331; or (2) there exists "diversity
of citizenship," complete diversity of citizenship between the plaintiff and all defendants and the
amount in controversy "exceeds the sum or value of $75,000, exclusive of interest and costs," 28
U.S.C. § 1332(a).18 See also Strawbridge v. Curtiss, 3 Cranch 267, 1806 WL 1213, at *1 (February
Term 1806); Da Silva v. Kinsho Int'l Corp., 229 F.3d 358, 363 (2d Cir.2000) (delineating two
categories of subject matter jurisdiction).
In the case at bar, there are no pending federal claims. Moreover, neither Speedboat nor
Rambler has presented sufficient facts to establish its citizenship for diversity purposes as either a
limited liability company or a corporation. See n.12, supra. Therefore, if diversity of citizenship
were asserted as the only potential basis for subject matter jurisdiction, the Court would be forced
to inquire further of the parties regarding their citizenship.19 However, the Court has an additional,

18

See also St. Paul Fire and Marine Ins. Co. v. Universal Builders Supply, 409 F.3d 73, 80
(2d Cir. 2005) ("Diversity is not complete if any plaintiff is a citizen of the same state as any
defendant.") (citing Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373-74 (1978)).
Also, with respect to timing of citizenship, "[i]n an action in which jurisdiction is premised
on diversity of citizenship, diversity must exist at the time the action is commenced," Universal
Licensing Corp. v. Lungo, 293 F.3d 579, 581 (2d Cir. 2002).
19

As set forth supra, neither Speedboat nor Rambler alleges that there is diversity.
11

alternative basis for subject matter jurisdiction: admiralty jurisdiction. As requested by Speedboat,
and in light of the parties' agreement that there is no diversity jurisdiction, the Court will address
admiralty jurisdiction before investigating the citizenship of the parties, if necessary.20
2.

Admiralty Jurisdiction

Pursuant to 28 U.S.C. § 1333(1), Congress granted district courts "admiralty" jurisdiction
over "[a]ny civil case of admiralty or maritime jurisdiction." That jurisdiction encompasses "all
contracts . . . which relate to the navigation, business, or commerce of the sea." Atl. Mut. Ins. Co. v.
Balfour Maclaine Int'l Ltd., 968 F.2d 196, 199 (2d Cir. 1992) (internal quotation marks and citations
omitted), aff'd, 968 F.2d 196 (2d Cir. 1992); accord Garanti Finansal Kiralama A.S. v. Aqua Marine
& Trading, Inc., 697 F.3d 59, 65 (2d Cir. 2012) ( "[T]he delegation of cognizance of 'all civil cases
of admiralty and maritime jurisdiction' to the courts of the United States . . . extends over all
contracts, (wheresoever they may be made or executed, or whatsoever may be the form of the
stipulations,) which relate to the navigation, business or commerce of the sea.") (quoting DeLovio
v. Boit, 7 F.Cas. 418, 444 (C.C.D. Mass.1815) (No. 3,776) (Story, J.) (emphasis added)).
"Admiralty jurisdiction over contract claims is determined by reference to the nature and

20

The Court notes that both Speedboat and Rambler allegedly have their "principal places
of business" located in Connecticut. Speedboat's offices are located at "33 Gilliam Lane, Riverside,
Connecticut;" and Rambler has offices located at "One Financial Plaza, Hartford, Connecticut."
Doc. 20, at 2 (¶¶ 3-4). Moreover, Speedboat's principal, Alexander E. Jackson, who is a proposed
defendant to Rambler's amended counterclaims, allegedly resides at "33 Gilliam Lane, Riverside,
Connecticut." See Doc. 46, at 21 (¶ 3). Therefore, if Jackson's Connecticut address is, and was at
the commencement of the action, actually his domicile – "his true, fixed and permanent home and
place of habitation" – he is a citizen of Connecticut. See Martinez v. Bynum, 461 U.S. 321, 331
(1983). Although the Court cannot determine the citizenship of the parties without additional
information, it is certainly possible that, as Speedboat asserts, Speedboat, Jackson, and Rambler are
citizens of Connecticut. Doc. 45, at 6.
12

subject of the contract." Ziegler v. Rieff, 637 F. Supp. 675, 677 (S.D.N.Y. 1986).21 See also
Commercial Union Ins. Co. v. Blue Water Yacht Club Ass'n, 239 F. Supp. 2d 316, 319 (E.D.N.Y.
2003). "The crucial question is whether the relevant agreement has a 'maritime flavor.'" Ziegler, 637
F. Supp. at 677 (citation omitted).
As the United States Supreme Court has articulated, "[t]he only question is whether the
transaction relates to ships and vessels, masters and mariners, as agents of commerce.” Kossick v.
United Fruit Co., 365 U.S. 731, 736 (1961) (citation and quotation marks omitted).22 See also, e.g.,
Omaha Indem. Co. v. Whaleneck Harbor Marina, Inc., 610 F.Supp. at 154, 155-56 (E.D.N.Y. 1985)
(When a contract "relates to ships in their use as ships or to commerce or transportation in navigable
waters, there is admiralty jurisdiction.") (citation, internal quotation marks, and bracket omitted).
For example, it is well established that contracts relating to service or repair of a vessel are
maritime in nature. Ziegler, 637 F. Supp. at 677 (citation omitted). Moreover, contracts providing
for seasonal storage of a vessel are maritime contracts. Id. See also Selame Assoc., Inc. v. Holiday
Inns, Inc., 451 F.Supp. 412, 418 (D.Mass.1978) ("A contract to provide wharfage or storage is a
maritime contract and a breach of this contract is cognizable in admiralty.")(citations omitted)..
In addition, an admiralty court generally has jurisdiction over contracts to charter a boat or
vessel. Armour & Co. v. Ft. Morgan S.S. Co., 270 U.S. 253, 256 (1926) (a "charter party" is a
maritime contract and "hence enforceable in a court of admiralty"). See also Fednav, Ltd. v.

21

Citing Ford Motor Co. v. Wallenius Lines, 476 F.Supp. 1362, 1365 (E.D.Va.1979) and
Schuster v. Baltimore Boat Sales, Inc., 471 F.Supp. 321, 322 (D.Md.1979)).
22

Traditionally, it has been noted by the United States Supreme Court that "[t]he boundaries
of admiralty jurisdiction over contracts – as opposed to torts or crimes – being conceptual rather than
spatial, have always been difficult to draw." Kossick v. United Fruit Co., 365 U.S. 731, 735 (1961).
"Precedent and usage" have been deemed "helpful" in making determinations on jurisdiction. Id.
13

Isoramar, S.A., 925 F.2d 599, 601 (2d Cir. 1991) ("It is well-established that a charter party
agreement is a maritime contract.") (citing, inter alia, Armour & Co., 270 U.S. at 259); Jack Neilson,
Inc. v. Tug Peggy, 428 F.2d 54, 55 (5th Cir. 1970), cert. denied, 401 US. 955 (1971) ("We hold that
the charter provisions of the contract are maritime in nature, are severable, and within the admiralty
jurisdiction of the district court."). See also, e.g., Compass Marine Corp. v. Calore Rigging Co.,
716 F. Supp. 176, 180 (E.D. Pa. 1989) (dispute arising out of charter agreement of vessel in service
is cognizable under the admiralty and maritime jurisdiction of the federal courts), aff'd sub nom.,
Appeal of Calore Rigging Corp., 891 F.2d 279 (3d Cir. 1989), and aff'd, 891 F.2d 280 (3d Cir.
1989); Natasha, Inc. v. Evita Marine Charters, Inc., 763 F.2d 468, 468 (1st Cir. 1985) (holding
"admiralty does have jurisdiction if the charter portion of the sale contract is readily 'separable' from
the rest of the contract.").
On the other hand, in general, "[i]t is well settled that, while a contract for the use or charter
of a vessel is maritime in nature, the contract for a sale of a vessel is non-maritime." Sea Trade Mar.
Corp. v. Coutsodontis, No. 09-CV-488 (BSJ) (HBP), 2012 WL 3594288, at *4 (S.D.N.Y. Aug. 16,
2012) (citing, inter alia, The Ada, 250 F. 194, 196 (2d Cir. 1918)). See also Aggelikos Prostatis
Corp. v. Shun Da Shipping Grp. Ltd., 646 F. Supp. 2d 330, 332 (S.D.N.Y. 2009) ("It is 'elementary
hornbook law that a contract for the sale of a vessel is not within the admiralty jurisdiction of the
district courts.'") (quoting Int'l Shipping Co., S.A. v. Hydra Offshore, Inc., 675 F.Supp. 146, 150
(S.D.N.Y.1987), aff'd, 875 F.2d 388 (2d Cir. 1989)); Kalafrana Shipping Ltd. v. Sea Gull Shipping
Co., 591 F. Supp. 2d 505, 507 (S.D.N.Y. 2008) ("It has long been the rule in the Second Circuit that
a contract for the sale of a vessel is not a maritime contract."). See also generally 12 Am. Jur. 2d
Admiralty § 60 ("A contract for the sale of a vessel is generally not within a federal court's admiralty

14

jurisdiction because such a contract is not maritime in nature.").
Nonetheless, if the maritime part of a contract is the primary objective of the contract and/or
separable from the nonmaritime part, then admiralty jurisdiction exists. See, e.g., Compagnie
Francaise De Navigation a Vapeur v Bonnasse, 19 F.2d 777, 779-80 (2d Cir. 1927) (Hand, J.) , cert.
denied, 275 US 551 (1927); Atl. Mut. Ins. Co., 775 F. Supp. at 104. See also Sirius Ins. Co. (UK)
v. Collins, 16 F.3d 34, 36 (2d Cir. 1994) ("The test [for determining a maritime contract] has . . .
been loosened considerably so that admiralty jurisdiction is held to cover also contracts whose
nonmaritime elements are 'incidental' to a primarily maritime purpose, as well as the separable
maritime portions of mixed contracts that are not primarily maritime, if these can be separately
litigated without prejudice.") (citations omitted); Tradhol Int'l, S.A. v. Colony Sugar Mills Ltd., No.
1:09-CV-00081 (RJH), 2009 WL 2381296, at *5 (S.D.N.Y. Aug. 4, 2009) ("The premise of the
severability doctrine is that a court may divide a contract into its component parts and pronounce
some but not all of them 'salty.'"), aff'd, 354 F. App'x 463 (2d Cir. 2009); Jack Neilson, Inc. v. Tug
Peggy, 428 F.2d 54, 60 (5th Cir. 1970) ("it has long been recognized that where the maritime
elements of a contract are susceptible to separate adjudication admiralty jurisdiction may be
exercised to that extent") (citation and internal quotation marks omitted), cert. denied, 401 U.S. 955
(1971) . See also generally 29 A.L.R. Fed. 325, II. § 6[a] (captioned "Mixed contracts") ("where
a contract contains both maritime and nonmaritime covenants, . . . admiralty may assume jurisdiction
of a claim based upon the maritime part of the contract").
Recently, courts have blurred the bright line between the sale of a vessel and certain maritime
provisions to find that "when determining whether a contract is a maritime contract, one should focus
on whether the principal objective of the contract is maritime commerce, rather than on whether the
non-maritime components are properly characterized as more than 'incidental' or 'merely incidental'
15

to the contract." Kalafrana Shipping Ltd. v. Sea Gull Shipping Co. Ltd., 591 F. Supp. 2d 505, 509
(S.D.N.Y. 2008).23 As Justice O'Connor articulated on behalf of a unanimous Supreme Court in
Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 14 (2004), "the fundamental interest giving rise to maritime
jurisdiction is the protection of maritime commerce. . . . [and] [t]he conceptual approach vindicates
that interest by focusing the Court's inquiry on whether the principal objective of a contract is
maritime commerce." See also Sirius Ins. Co. (UK) v. Collins, 16 F.3d 34, 36 (2d Cir. 1994) ("the
court should consider 'whether an issue related to maritime interests has been raised,' 968 F.2d at
199, bearing in mind that the 'fundamental interest giving rise to maritime jurisdiction is the
protection of maritime commerce.'") (citing and quoting Atlantic Mutual Ins. Co. v. Balfour
Maclaine Int'l, Ltd., 968 F.2d 196, 200 (2d Cir. 1992)(some internal quotation marks omitted).
Under this "conceptual" or "principal objective" approach, endorsed by the Second Circuit,
"if the maritime elements of a contract are the principal or primary objective of the contract," there
is admiralty jurisdiction. F.H. Bertling Holding KG v. Ranhill Engineers & Constructors Sdn. Bhd.,
591 F. Supp. 2d 377, 383 (S.D.N.Y. 2008) (citing, inter alia, Folksamerica Reinsurance Co. v.
Clean Water of New York, Inc., 413 F.3d 307, 314-15 (2d Cir. 2005)). Alternatively, employing the
"severability" exception, if "the claim [at issue] arises from a breach of maritime obligations that
are severable from the non-maritime obligations of the contract," there is "federal maritime
jurisdiction." F.H. Bertling Holding KG, 591 F.Supp. 2d at 383 (citation omitted).
Implementing the conceptual approach to determine whether there is admiralty jurisdiction,
the Court must focus its inquiry on whether the nature of the contract or transaction includes
maritime elements: whether provisions relate to the navigation, business or commerce of the sea.
23

Discussing and citing Folksamerica Reinsurance Co. v. Clean Water of New York, Inc.,
413 F.3d 307, 309 (2d Cir. 2005) and Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 14 (2004).
16

If the Court finds that the primary objective of the contract is maritime in nature, there is admiralty
jurisdiction. Otherwise, under the severability test, if certain components of the contract are
maritime, while others are not, the Court must determine whether the maritime provisions are
separable from the non-maritime ones. If the maritime provisions are separable, there is admiralty
jurisdiction over the claims arising under them.
3.

Interpretation of the Agreement: Co-Ownership and/or Lease

"The rules for the construction and interpretation of maritime contracts are essentially the
same as those delineated in the non-maritime caselaw."

Sea Hunters, LP v. S.S. PORT

NICHOLSON, No. 2:08-CV-272 (GZS), 2015 WL 1206487, at *10 (D. Me. Mar. 17, 2015). The
Court thus turns to the terms of the Agreement to determine their intended meaning.
The basic principles of contract interpretation under Connecticut law, which governs, are well
established: "(1) [t]he intention of the parties is controlling and must be gathered from the language
of the [contract] in the light of the circumstances surrounding the parties at the execution of the
instrument; (2) the language must be given its ordinary meaning unless a technical or special
meaning is clearly intended; [and] (3) the [contract] must be construed as a whole and in such
manner as to give effect to every provision, if reasonably possible."• Sartor v. Town of Manchester,
312 F. Supp. 2d 238, 242-43 (D. Conn. 2004) (quoting Peter-Michael, Inc. v. Sea Shell Assoc., 244
Conn. 269, 275 (1998)). The parties' "intention is to be determined from the language used, the
circumstances, the motives of the parties and the purposes which they sought to accomplish." Sartor,
312 F.Supp.2d at 243 (citing Peter-Michael, 244 Conn. at 276). Where the language of a contract
is clear and unambiguous, the court's determination of contractual intent becomes a question of law
for the court. See, e.g., Tallmadge Bros., Inc. v. Iroquois Gas Transmission Sys., L.P., 252 Conn.

17

479, 495 (2000) ("the interpretation and construction of a written contract present only questions of
law, within the province of the court . . . so long as the contract is unambiguous and the intent of the
parties can be determined from the agreement's face") (quoting 11 S.Williston, Contracts, at 77-83
(§ 30:6) (4th ed. 1999)).
"Contract language is unambiguous when it has a definite and precise meaning, unattended
by danger of misconception in the purport of the [contract] itself, and concerning which there is no
reasonable basis for a difference of opinion."• Brunoli v. Brunoli & Sons, 993 F.Supp. 66, 73
(D.Conn.1997) (quoting Care Travel Co. v. Pan Am. World Airways, 944 F.2d 983, 988 (2d Cir.
1991)). Moreover, "the mere fact that the parties advance different interpretations of the language
in question does not necessitate a conclusion that the language is ambiguous." Levine v. Massey, 232
Conn. 272, 279 (1995). Rather, the court must give the terms "their natural and ordinary meaning,"
Kelly v. Figueiredo, 223 Conn. at 31, 35 (1992), and interpret them "with each provision read in light
of the other provisions," United Illuminating Co. v. Wisvest-Connecticut, LLC, 259 Conn. 665, 670
(2002).
In the case at bar, the Agreement's terms are clear and unambiguous and should be given
their natural and ordinary meaning. Their interpretation by the Court thus presents a question of law.
The Agreement, entitled "Share Issuance and Shareholder Agreement," states that 49,999 out
of 50,000 shares of Speedboat – "a Cayman Islands exempted company limited by shares" – each
valued at one dollar ($ 1.00), are owned by one Alexander Jackson. Doc. 10-3, at 2. The remaining
individual share ("New Share") was to be issued to Rambler for the purchase price of "One Dollar,"
and become "redeemable by [Speedboat] upon the terms set forth" in the Agreement, which
included, if no prior terminating event occurred, automatically upon termination of the Agreement

18

(i.e., after the conclusion of the races for which the Yacht was leased).24 Id. During the entire term
of the Agreement, the sole Director of Speedboat was and would continue to be "Alexander E.
Jackson," id., at 4 (§ 3.1); and Speedboat was and would remain "the record owner of the Yacht,"
id., at 9 (§ 4.2(b)).
Most importantly to Rambler, under the Agreement, Rambler obtained "[e]xclusive use of
the Yacht" to participate in the series of "eight races in the Atlantic Ocean Racing Series in 2011."
Id., at 4-5 (§ 4.1). In return, Rambler was required to pay all operating expenses, repair and
maintenance costs, racing fees, crew employee salaries and benefits, and all ancillary costs of such
races. 25 Id., at 5 (§ 4.1(a)).
Even during the races, Speedboat retained certain control over the Yacht by requiring
Rambler to hire Speedboat's captain, Chris Higgins, on a full-time basis "through the last race sailed
under this Agreement," and hire crew member Bill Erkelens to serve "as a crew member in each
sailboat race in which the Yacht participates."26 Id., at 5 (§ 4.1(b)). Furthermore, Speedboat placed
"Use Restrictions" on Rambler's use of the yacht, limiting operation "to the navigational limits as

24

The Agreement clarifies that "[p]rior to the Closing Date, all of the issued and outstanding
shares of the Company are owned by [Jackson], beneficially and of record;" and that "[u]pon the
issuance of the New Share to Rambler, . . . Rambler will own one percent (1.00%) of all of the issued
and outstanding shares of the Company." Doc. 10-3, at 3 (§ 2.2). However, Rambler was expressly
prohibited from selling its sole share. Id., at 4 (§ 2.5) ("Rambler shall not sell the New Share").
Rambler was also prohibited from placing any lien on the New Share and/or assigning any other
party to use the Yacht. Id.
25

With respect to insurance during the Agreement's term, as set forth supra, Rambler was
required to insure the Yacht and its equipment against loss or damage and to list Speedboat as the
loss payee. Doc. 10-3, at 6 (§ 4.1(f)).
26

Jackson also secured the right to bring "one guest from a list provided by [him] to
Rambler" to "sail on the Yacht in any racing event in which the Yacht participates during the Term."
Doc. 10-3, at 8 (§ 4.1(n)(1)).
19

set forth in the Yacht's insurance policy," mandating use "for pleasure" purposes only, and banning
drugs and weapons on board.

Id., at 6 (§ 4.1(e)). Speedboat also banned "any permanent

modifications to the Yacht" unless listed in the Agreement and/or after "prior written express consent
of [Jackson]." Id., at 8 (§ 4.1(m)). Furthermore, Rambler could not rename the Yacht or change
"associated graphics" unless "all such changes shall be reversed at the end of the [Agreement's] Term
at the expense of Rambler." Id.
4. Jurisdiction over the Pending Claims
There are essentially two components to the "Share Issuance and Shareholder Agreement"
(herein "Agreement") with respect to the Yacht: (1) a sale of one share of ownership ("one (1)
redeemable share of a nominal par value of U.S. $1.00") in Speedboat, Doc. 10-3, at 2; and (2) a
charter or lease for the use of the Yacht for a set period to sail in the 2011 season of the Atlantic
Ocean Racing Series, id., at 4-5 (§ 4.1). The first contract component of a sale is non-maritime in
nature. See, e.g., The Ada, 250 F. at 196. However, the second portion of the Agreement, the lease
or charter of the Yacht for the specified racing season, is maritime by its terms. See, e.g., Armour
& Co., 270 U.S. at 256.27
At its core, this was an agreement for Rambler to sail a world-class yacht in a series of
international races in the hopes of securing victory. The Agreement's maritime charter provisions
contain what was manifestly the primary objective of the contract: to provide Rambler with the
exclusive use of the Yacht in the 2011 Atlantic Ocean Racing Series. The sale of one share of
Speedboat to Rambler was incidental to the charter (in this case, according to Speedboat to ensure
27

See also generally 29 James Wm. Moore, et al., Moore's Federal Practice, ¶ 703.04(c)(vi)
(3d ed. 2013) ("An integral part of the maritime industry is the hiring and letting of part or all of a
vessel. These types of agreements are referred to as charter parties. It is logical that these kinds of
contracts have long been deemed maritime ones.").
20

that the charter was legal).28 Therefore, under the Second Circuit's "conceptual" test, the Agreement
is maritime in nature, giving rise to admiralty jurisdiction.
Moreover, even if the charter were not the primary objective of the Agreement, the charter
provisions are separable from the stated sale of the Speedboat share. Therefore, employing
"severability," even if the primary objective of the Agreement were not the charter, there is admiralty
jurisdiction over the claims at bar under the "separable provision" test.
Examining the terms giving rise to the charter, Section 4.1(a) of the Agreement provides
Rambler with "[e]xclusive use of the Yacht" from October 14, 2010 to March 15, 2012 for racing
purposes.29 Doc. 10-3, at 4 (§ 4.1). The intended races of the Yacht are described as "eight races
in the Atlantic Ocean Racing Series in 2011 . . . with the objective of winning the Atlantic Ocean
Racing Series overall, winning a majority of the races entered, and setting records." Id., at 4-5
(§ 4.1(a)).
"As a condition to Rambler's exclusive use of the Yacht," Rambler agreed to "pay all
operating expenses, repair and maintenance costs for the Yacht and its Equipment." Id., at 5
(§ 4.1(a)). In addition, pursuant to Section 4.1(b), Rambler agreed to retain two former Speedboat
crew members. Specifically, Rambler was bound to retain the "current captain of the Yacht," Chris
Higgins, on a full time basis and with "a competitive salary consistent with the other senior members
of the Yacht's crew;" and Rambler was required to hire Bill Erkelens as a crew member in each

28

See n.33, infra.

29

Defined in common terms, a "bareboat charter" refers to "[t]he leasing or hiring of [a] .
. . ship, or other vessel" when "the shipowner surrenders possession and control of the vessel to the
charterer, who then succeeds to many of the shipowner's rights and obligations." Black's Law
Dictionary (10th ed. 2014). Under such a charter, "[t]he charterer takes possession and operates the
ship during the period of the charter as though the vessel belong[s] to the charterer." Id.
21

sailboat race in which the Yacht would participate.30 Id.
Under Section 4.1(c), Jackson and Speedboat agreed to "deliver the Yacht . . . to Rambler
at Newport Shipyard, Newport, Rhode Island," or at another agreed upon location, in "ship shape,
sailable racing condition" and to inform Rambler of any "conditions, flaws, damages, or defects
(latent or otherwise) of the Yacht which would render or cause the Yacht not to be in ship shape,
sailable racing condition." Id., at 5 (§4.1(c)). Section 4.1(d) outlined the terms for redelivery of the
Yacht by Rambler to Jackson and Speedboat at the conclusion of the Agreement's term; and Section
4.1(e) defined restrictions on the use of the Yacht, including the navigational limits of the Yacht's
operation. Id., at 6 (§4.1(e)).
These provisions are typical of those found in maritime contracts of charter party. By the
same token, the claims Speedboat asserts against Rambler in its Third Party Complaint, and Rambler
asserts in its counterclaims to that pleading, are typical of the sort traditionally charged as breaches
of a maritime charter. For example, Count One alleges that Rambler "fail[ed] to return the Yacht
in as good a condition as when delivery was taken . . . pursuant to the Lease Agreement." Doc. 20,
at 6 (¶ 26) (relating to § 4.1(d)). Count Two seeks declaratory judgment that Rambler failed to
secure adequate insurance coverage of the Yacht pursuant to the terms of the Lease Agreement. Id.,
at 6 (¶ 29) (relating to § 4.1(f)). Count Three alleges that "as a condition to Rambler's exclusive use
of the Yacht," Rambler was obligated to pay "all operating expenses, repair and maintenance costs
for the Yacht," and Rambler "fail[ed] to maintain and repair the Yacht, including repairs resulting
in major equipment failures." Id., at 7 (¶¶ 34-35) (relating to § 4.1(a)). Finally, Count Four seeks

30

In addition, under the Agreement, Jackson and a guest were permitted to accompany the
Yacht on all races and to be included as members of Rambler's crew at their request. Doc. 10-3, at
8 (§ 4.1(n)(1)).
22

attorneys' fees pursuant to Section 5.5 of the Lease Agreement. Id., at 8 (¶ 38) (relating to
"Miscellaneous Provisions" in § 5, pertaining to the entire Agreement).
In addition, as Rambler asserts, four of its proposed counterclaims, "as set forth in its
proposed amended pleadings, concern Jackson's and Speedboat's breaches of Sections 4.1, 4.1(a),
and 4.1(c) of the Agreement," and therefore also relate to the charter or lease of the Yacht.31 Doc.
48 (Rambler's Brief), at 8 (citing Doc. 48-1, Counts I-IV, at 21-24). In addition, as Rambler states,
another of its causes of action "concerns Jackson's and Speedboat's breach of the Agreement's
implied covenant of good faith and fair dealing for, among other things, refusing to allow Rambler
to repair the Yacht so that it could continue to use the Yacht through the end of the term of the
Agreement." Doc. 48, at 8 (citing Doc. 48-1, Count VI, at 25-27). That cause relates to the repair
provisions of the charter portion of the Agreement (§ 4.1(a)). Yet another cause of action, Rambler
alleges, "is based on Speedboat's breach of the Agreement's implied warranty of seaworthiness."
Doc. 48, at 8 (citing Doc. 48-1, Count V, at 24-25) (relating to "Delivery of the Yacht" in "ship
shape, sailable racing condition," pursuant to § 4.1(c)). In sum, according to Rambler, each of these
"foregoing causes of action is based explicitly upon the breach of the Agreement, a maritime contract
that concerns the use of a ship as a ship and that directly relates to the ship's operation, navigation,
and management afloat." Doc. 48, at 8 (emphasis added).
Given these circumstances, there is no substance to Speedboat's contention that the
Agreement is not maritime in nature, but rather "a shareholders' agreement by which Jackson and
Defendant became co-owners of [the] Speedboat entity, provided for its governance, provided that
31

Even prior to any amendment, three of Rambler's claims are expressly based upon breach
of the Agreement's charter terms. Rambler's present counterclaims concern Speedboat's breaches
of Sections 4.1, 4.1(a), and 4.1(c) of the Agreement, as well as breach of the Agreement's implied
covenant of good faith and fair dealing. Doc. 17 (Counts I-V); see also Doc. 48, at 8 n.2.
23

Rambler would finance the maintenance and operation of the Yacht . . . , and provided Rambler as
a co-owner with temporary use of the Yacht, subject to certain conditions." Doc. 50, at 7.
Speedboat asserts that "a contract under which co-owners provide for the management and
operation of a vessel is entirely non-maritime in character, and is distinguishable for purposes of
admiralty jurisdiction from a third-party charter." Id., at 7-8 (citing, inter alia, Ward v. Thompson
(The Detroit), 63 U.S. 330, 333 (1859)). This argument fails because Speedboat's interpretation of
the Agreement as a "co-owners' management agreement" for operation of a vessel misses the mark.
It exalts form (such as the caption, "Share Issuance and Shareholder Agreement") over substance.
This is clearly not a case where, as Speedboat asserts, Doc. 50, at 8, mutual co-owners agreed to
purchase and operate a vessel together, as opposed to "one where an owner of a vessel engages
another to manage or operate her." Cf. Economu v. Bates, 222 F. Supp. 988, 990 (S.D.N.Y. 1963)
("The parties . . . have agreed to purchase a vessel and thereafter to operate her for their mutual
benefit; the profits were to be shared whether the operation was in the name of one or more
individuals or through a corporate entity" and "[t]his is the essence of their arrangement.").
The essence of the contract at bar was not a joint enterprise. Rather, examining the terms of
the contract as a whole and interpreting all terms to give them their full meaning, the contract was
primarily designed to provide Rambler with use of the Yacht "in ship shape, sailable racing
condition" to participate in the Atlantic Ocean Racing Series. Rambler's nominal, one-share
ownership interest expressly and automatically terminated "upon completion of the [Agreement's]
Term" and for the price of "One Dollar ($1.00)."32 Doc. 10-3, at 7 (§ 4.1(j)). Thus, upon expiration
32

Speedboat opposes Rambler's argument that Speedboat's description of the Agreement
in its pleadings as a "Lease Agreement" suggests that Speedboat has conceded the existence of
admiralty jurisdiction. Doc. 50, at 8 (discussing Doc. 48, at 4). Speedboat explains that it "referred
to the 'Share Issuance and Shareholder Agreement' as the 'Lease Agreement,' because that shorthand
24

of the contract, Speedboat resumed full ownership rights; and by January 1, 2012, Speedboat and
Jackson could even elect to "market or otherwise advertise the Yacht for sale."33 Id., at 7-8
(§§ 4.1(i), (j), (n)(2), (o)).
Speedboat accuses Rambler of using "far too simplistic a reading of the legal precedent
governing the distinction between maritime and non-maritime contracts" and concluding that "[t]he

characterization is consistent with Connecticut law governing the Agreement's terms for Rambler's
use of the Yacht." Doc. 50, at 8.
In any event, the Court does not find subject matter jurisdiction based on a party's label for
an agreement, but rather upon consideration of all contents of that agreement. The fact that the terms
may have created a lease or charter arrangement for the vessel is the Court's concern, not whether
Speedboat chose to characterize the Agreement's title in one way. After all, a party may not concede,
forfeit, or waive subject matter jurisdiction over an action.
33

The Court notes that Speedboat provides a possible motive for granting a nominal
ownership interest to Rambler:
In fact, the Agreement could not have been structured as a charter, because the
Yacht could not legally be chartered upon the agreed business terms. The Yacht was
built in New Zealand and was under British Registry at the time of the Agreement.
Ex. B. Under U.S. law, a vessel that has at any time been registered outside of the
United States may not engage in "coastwide trade." 19 C.F.R. § 4.80(f); see
Gillentine v. McKeand, 426 F.2d 717 (1st Cir. 1970). "Coastwise trade," as defined
by 46 C.F.R. § 67.3, includes "the transportation of passengers or merchandise
between points embraced within the coastwise laws of the United States." 46 C.F.R.
§ 67.3. In Gillentine, the First Circuit Court of Appeals held that "coastwise trade"
is broad enough to prevent the chartering of a vessel for pleasure purposes. 426 F.2d
at 720-21.
Doc. 50, at 10 (emphasis added). One can infer that Speedboat believed it was necessary to include
an element of ownership by Rambler in the Agreement to make the contract legal. After all, the
Yacht was to be delivered and returned to ports on the East Coast of the United States, Doc. 48-2,
at 5, 6 (§§ 4.1(c)-(d)). However, Speedboat's broad interpretation of the overall contract as one in
"coastwide trade" fails to take into account that nine of the eleven races specified were located
outside the coastal waters of the United States. See Doc. 10-3, at 5 (§ 4.1(b)) (including, inter alia,
the following races: Pineapple Cup - Montego Bay Race, RORC Caribbean 600, Les Voiles de St.
Barth, Transatlantic Race 2011, Rolex Fastnet Race, Biscay Race, Les Voiles de St. Tropez, Rolex
Middle Sea Race, Sydney-Hobart). The contract at bar was more than one for "transportation of
passengers or merchandise between points embraced within the coastwise laws of the United States;"
it also included several races to occur in foreign and/or international waters.
25

mere fact that a ship is involved will not bring the cause within the jurisdiction of the admiralty
court." Doc. 50, at 8 (citations omitted). Speedboat sets up a straw man and energetically knocks
it down, but the argument disregards reality. Admiralty jurisdiction does not depend upon "the mere
fact that a ship is involved" in the transaction between the parties. On the contrary: for the reasons
stated, the Court interprets the Agreement to contain both a nominal sale and a lease (or charter) of
the Yacht for the 2011 Atlantic Ocean Racing Series. The pending claims between Speedboat and
Rambler relate to the Agreement's primary and/or separable maritime provisions pertaining to that
lease, and consequently fall within admiralty jurisdiction.
In sum, the main and severable purpose of the Agreement was to lease or charter to Rambler
the Yacht to participate in races. "Without doubt a contract for hire either of a ship or of the sailors
and officers to man her is within the admiralty jurisdiction." Kossick v. United Fruit Co., 365 U.S.
731, 735 (1961) (citing 1 Benedict, Admiralty, 366).34 Accordingly, the charter terms of the
Agreement support admiralty jurisdiction in the present case.
5.

Choice of Law Provisions

Speedboat has argued that the Agreement's choice-of-law provision, stating that the
Agreement "shall be governed by and construed in accordance with the laws of the State of
Connecticut," Doc. 48-2 (¶ 5.4, at 9), defeats admiralty jurisdiction. I do not agree. The Second
Circuit has clearly held that choice-of-law provisions, in and of themselves, do not defeat admiralty
jurisdiction. See Williamson v. Recovery Ltd. P'ship, 542 F.3d 43, 49 (2d Cir. 2008) ("The fact that
a choice-of-laws provision exists in a contract does not, by itself, remove the contract from the scope
34

In Kossick, the Supreme Court further clarified that "Benedict goes on to quote from an
anonymous commentary on the Mediaeval Statutes of Culm, one of the early sources of maritime
law, that anything pertaining to navigation or seamen is to be considered a part of the maritime law."
365 U.S. at 736.
26

of maritime law."). "To allow a plaintiff to elect a state forum would defeat the uniformity the
Constitution requires in maritime law." Jack Neilson, Inc. v. Tug Peggy, 428 F.2d 54, 60 (5th Cir.
1970), cert. denied, 401 U.S. 955 (1971).
As one commentator aptly summarized:
Defendant's counsel may not assert a failure of admiralty jurisdiction by reliance on
provisions in a contract that its terms are to be governed exclusively by the laws of
a particular state, on the ground that such provisions indicated the parties' intention
to regard the contract as nonmaritime in nature, since a court may not be ousted of
jurisdiction by agreement.
29 A.L.R. Fed. 325. See also, e.g., Ocean Sci. & Eng'g Inc. v. Int'l Geomarine Corp., 312 F. Supp.
825, 828-29 (D.Del. 1970) ("Once the contract is found to be maritime and within admiralty
jurisdiction, an agreement amounting to a private repeal of 28 U.S.C. § 1333 would be a nullity.").
"As the Supreme Court explained, the first step of the analysis is determining whether
something is a maritime contract; then, once a contract has been deemed a maritime contract, the
next step is determining whether a specific state's laws should be used to supplement any area of
contract law for which federal common law does not provide."35 Williamson, 542 F.3d at 49 (citing
Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 27 (2004) (emphasis added)). In Norfolk S. Ry. Co. the
Court said succinctly: "When a contract is a maritime one, and the dispute is not inherently local,
federal law controls the contract interpretation." 543 U.S. at 22-23. See also Szollosy v. Hyatt Corp.,
396 F. Supp. 2d 159, 164 (D. Conn. 2005) ("In admiralty cases, federal maritime law applies where
it exists. State law may be imported to federal admiralty actions in limited circumstances, to supply
a rule of decision in areas where admiralty is silent.") (citing Mentor Ins. Co. (U.K.) Ltd. v.
35

Initially, "federal law controls the procedural inquiry, namely, whether a plaintiff's claim
sounds in admiralty." Blue Whale Corp. v. Grand China Shipping Dev. Co., Ltd., 722 F.3d 488, 494
(2d Cir. 2013). Once a claim sounds in admiralty, the relevant substantive law governs whether a
plaintiff has alleged a valid prima facie claim. 722 F.3d at 495.
27

Brannkasse, 996 F.2d 506, 513 (2d Cir.1993)).
Admiralty speaks through the decisions of federal judges in admiralty cases, a body of law
often referred to as "the general maritime law,"36 and through acts of Congress addressing particular
issues of a maritime nature. "These, then, are the components of federal law in maritime cases: the
general maritime law as above described, and applicable Acts of Congress." Gilmore and Black, The
Law of Admiralty, at 47 (2d ed. 1975).
In the case at bar, the Court has found that a maritime contract exists for the use of the
vessel, and the claims in dispute arise out of that contract. Federal admiralty jurisdiction exists. The
application of Connecticut's state laws, as chosen by the parties, may supplement certain legal areas
that the federal maritime law does not provide. See, e.g., Williamson, 542 F.3d at 49; Norfolk S. Ry.
Co., 543 U.S. at 27; Farrell Lines Inc. v. Columbus Cello-Poly Corp., 32 F.Supp.2d 118, 127
(S.D.N.Y. 1997). But the limited effect of Connecticut law does not extend beyond that. Any such
supplementation does not deprive this Court of admiralty jurisdiction, which is determined by the
nature of the contract.
6.

Summary on Admiralty Jurisdiction

A century ago the United States Supreme Court held that admiralty jurisdiction extends only
to "wholly maritime contracts" – i.e., "contracts, claims, and services purely maritime, and touching
right[s] and duties appertaining to commerce and navigation." The Eclipse, 135 U.S. 599, 608
(1890). However, this restriction has been modified over time. In Compagnie Française de
Navigation a Vapeur v. Bonnasse, 19 F.2d 777 (2d Cir. 1927), Judge Learned Hand held that the fact
36

Chief Justice Marshall summarized this historic and creative process in American Ins. Co.
v. Canter, 26 U.S. (1 Pet.) 511, 545-46 (1828): "A case in admiralty does not, in fact, arise under the
Constitution or laws of the United States. These cases are as old as navigation itself; and the law
admiralty and maritime, as it existed for ages, is applied by our Courts to the cases as they arise."
28

that a contract encompasses both maritime and non-maritime subject matter does not prevent the
court from exercising its admiralty jurisdiction.37 If the maritime provisions predominate and/or can
be separately enforced without prejudice to the other provisions, admiralty may take jurisdiction and
enforce them. See, e.g., Natasha, Inc. v. Evita Marine Charters, Inc., 763 F.2d 468, 471 (1st Cir.
1985) (finding admiralty jurisdiction over "charter" provisions of the contract where "both the record
below and the contract at issue [made] it quite clear that [the lessee/buyer of vessel's] promise to
'charter' was a separate—and easily 'separable'—obligation over and above the [purchase] price").
In general, the sale of stock in a vessel transfers a percentage of ownership to the buyer. In
the case at bar, the incidental sale of a $1.00 share or "New Share" in the Yacht created a temporary
1% interest in the vessel for Rambler. Upon termination of the contract, Rambler's New Share was
automatically redeemed by Speedboat and Jackson. The Agreement's provisions giving rise to the
sale were non-maritime in nature.
Sale of the New Share was not, however, the principal objective of the Agreement. Rather,
the contract's main purpose was Speedboat's charter of the Yacht to Rambler to compete in the
Atlantic Ocean Racing Series of 2011. By its terms, Rambler was granted use of the vessel for
racing in a specified list of races; and Speedboat retained considerable control over the vessel by
dictating terms for use during the races (including employing Speedboat's captain and one crew
member). The charter provisions of the Agreement are distinctly maritime in nature and also
separable from the sale of the New Share. The charter terms, and their alleged breaches, are also the
bases of the majority of claims pending between Speedboat and Rambler. These claims address such
issues as the proper use and repair of the Yacht. Pursuant to the primary and separable maritime

37

Cert. denied, 275 U.S. 551 (1927).
29

charter provisions in the Agreement, the Court possesses admiralty jurisdiction over this action.
The remaining two non-contract counterclaims, as proposed by Rambler, arise out of the
same nucleus of operative facts which pertain to the formation and breach of the Agreement. These
claims are "so related to claims in the action" within the Court's admiralty jurisdiction "that they
form part of the same case or controversy under Article III of the United States Constitution." 28
U.S.C. § 1367(a). The Court thus possesses supplemental jurisdiction over the non-contract claims
pursuant to 28 U.S.C. § 1367.38
Finally, in light of the Court's admiralty jurisdiction, federal maritime law prevails.
However, Connecticut state law, which was expressly chosen by the parties in the Agreement, will
supplement legal areas that the federal common law does not provide, such as the elements of state
law claims.
7.

Plaintiff's Request for Voluntary Dismissal of the Action under Rule 41, Fed. R.
Civ. P.

Having found the existence of admiralty jurisdiction over this matter, the Court turns to the
question of whether Speedboat may, in any event, withdraw this action. Speedboat was originally
the defendant in this action, and then became the third-party plaintiff in suing Rambler and the
defendant on Rambler's counterclaims. With the exit of Federal, Speedboat stands in the shoes of
the plaintiff. Federal Rule 41(a) of Civil Procedure sets forth the procedures and grounds upon
which a plaintiff may request a voluntary dismissal of an action.

38

Rambler's non-contract claims, as set forth in its amended pleadings – negligent
misrepresentation and violation of Connecticut's Unfair Trade Practices Act ("CUTPA"), Conn. Gen.
Stat. § 42-110b, et seq. – arise from the same set of facts as the contract claims. Namely, they
address "Speedboat's failure to disclose to Rambler dangerous defects in the keel fin of the Yacht[,]
which ultimately caused [it] to capsize in the Celtic Sea and nearly caused the loss of life." Doc. 48,
at 9 (citing Doc. 48-1, Counts VII-VIII, at 27-29).
30

Specifically, under Rule 41(a)(1)(A), "the plaintiff may dismiss an action without a court
order by filing: (i) a notice of dismissal before the opposing party serves either an answer or a motion
for summary judgment; or (ii) a stipulation of dismissal by all parties who have appeared." In
general, such a dismissal is deemed "without prejudice."39 In the case at bar, neither such
circumstance has occurred to enable Speedboat to dismiss the action without court approval.
Rambler, as the opposing party, has answered the third-party complaint and has not stipulated to
dismissal of the action. In fact, Rambler opposes dismissal.
Consequently, Speedboat may only withdraw the action under Rule 41(a)(2) "by court order."
Under that provision, "an action may be dismissed at the plaintiff's request only by court order, on
terms that the court considers proper." Moreover, "[i]f a defendant has pleaded a counterclaim
before being served with the plaintiff's motion to dismiss, the action may be dismissed over the
defendant's objection only if the counterclaim can remain pending for independent adjudication."
Fed. R. Civ. P. 41(a)(2).
Rambler filed counterclaims prior to Speedboat's filing of the motion to dismiss; and
Rambler has objected to dismissal of the action at this time. See Doc. 29 (Rambler's Answer) and
Doc. 44 (Speedboat's Motion to Dismiss). Rambler's counterclaims, both pending and proposed,
respond to and counter the claims brought by Speedboat so that allowing Rambler's claims to go
forward independently would only necessitate Speedboat's refiling of its present claims as
counterclaims. This would simply create a circular pattern going round like a carousel. In other
words, a court cannot adjudicate Rambler's claims without considering Speedboat's counter-

39

Rule 41 clarifies, however, that "if the plaintiff previously dismissed any federal - or state
- court action based on or including the same claim, a notice of dismissal operates as an adjudication
on the merits." Fed. R. Civ. P. 41(a)(1)(B).
31

allegations or counterclaims, and vice versa.

The claims of both parties arise out of the same

nucleus of operative facts – namely, the parties' actions and duties in relation to the Agreement with
respect to the charter of the Yacht.
In general, a court "has discretion to deny voluntary withdrawal." Zagano v. Fordham Univ.,
900 F.2d 12, 14 (2d Cir. 1990), cert. denied, 498 U.S. 899 (1990). However, that discretion must
be exercised after careful analysis. "[T]he presumption in this circuit is that a court should grant
a dismissal pursuant to Rule 41(a)(2) absent a showing that defendants will suffer substantial
prejudice as a result." Harlem Teams for Self Help, Inc. v. Abyssinian Baptist Church of City of
New York, 189 F.R.D. 284, 286 (S.D.N.Y. 1999) (quoting Gap, Inc. v. Stone Int'l Trading, Inc., 169
F.R.D. 584, 588 (S.D.N.Y.), aff'd, 125 F.3d 845 (2d Cir. 1997)). Legal prejudice has been defined
as the impairment of "some legal interest, some legal claim, [or] some legal argument." Westlands
Water Dist. v. United States, 100 F.3d 94, 97 (9th Cir.1996) (identifying as examples of legal
prejudice, such as loss of a federal forum, the loss of jury trial rights, the loss of a statute-oflimitations defense).
With respect to voluntary dismissal, the court primarily seeks to protect a defendant who is
ready to pursue a claim or defense "in the same action that the plaintiff is seeking to have
dismissed."40 Camilli v. Grimes, 436 F.3d 120, 124 (2d Cir. 2006) (emphasis in original). "Legal
40

The Second Circuit has found that the mere prospect of starting an entirely new litigation,
along with the attendant additional expense, does not translate to legal prejudice sufficient to deny
a plaintiff's motion to voluntarily withdraw. D'Alto v. Dahon California, Inc., 100 F.3d 281, 283 (2d
Cir.1996). However, a recognized exception to this rule occurs "when the cause has proceeded so
far that the defendant is in a position to demand on the pleadings an opportunity to seek affirmative
relief and he would be prejudiced by being remitted to a separate action." 100 F.3d at 283 (citation
and internal quotations omitted). In other words, "[h]aving been put to the trouble of getting his
counter case properly pleaded and ready, [the defendant] may insist that the cause proceed to a
decree." Id.
32

prejudice would occur, for example, if dismissal of the plaintiff's case also impairs the ability of a
defendant to pursue a counterclaim in the same action that plaintiff seeks to dismiss." Brown v.
Nat'l R.R. Passenger Corp., 293 F.R.D. 128, 131 (E.D.N.Y. 2013) (citation omitted).
In Zagano v. Fordham University, the Second Circuit enunciated a list of factors relevant to
the determination of whether a Rule 41(a)(2) motion should be granted. 900 F.2d at 14. The factors
include: "(1) the plaintiff's diligence in bringing the motion [to dismiss]; (2) any 'undue
vexatiousness' on plaintiff's part; (3) the extent to which the suit has progressed, including the
defendant's effort and expense in preparation for trial; (4) the duplicative expense of relitigation; and
(5) the adequacy of plaintiff's explanation for the need to dismiss." Catanzano v. Wing, 277 F.3d
99, 110 (2d Cir. 2001) (quoting Zagano, 900 F.2d at 14). See also Brown v. Nat'l R.R. Passenger
Corp., 293 F.R.D. 128, 131 (E.D.N.Y. 2013) (same).
In the case at bar, one or more of the Zagano factors militate against granting dismissal of
the action. First, if the action is dismissed, there will likely be duplicative expense for the parties
to relitigate this matter in federal or state court. As described supra, Rambler, having already been
put to the trouble and expense of drafting and filing its counterclaims, would have to refile its claims
in a new action. To defend itself, Speedboat would then respond by filing its current claims as
counterclaims so that the litigation would recommence, creating additional expense. Second, and
most importantly, Speedboat's sole stated basis to warrant dismissal is lack of subject matter
jurisdiction and that argument is meritless in light of the Court's finding of admiralty jurisdiction.
Therefore, even if Rambler were willing to pursue its counterclaims independently and with
additional expense, the lack of merit in Speedboat's motion to dismiss militates against, rather than
warrants, an order of dismissal.

33

B.

Rambler's Motion to Amend/Correct Its Answer and Counterclaims
Because this Court has admiralty jurisdiction and Speedboat's request for voluntary dismissal

will be denied, Rambler's motion to amend or correct its answer and counterclaims must be resolved.
In requesting leave to amend pursuant to Rule 15(a)(2), Fed. R. Civ. P., Rambler seeks to "(1) amend
its allegations of jurisdiction, (2) add additional causes of action, and (3) clarify and add facts in its
answer and its counterclaims." Doc. 46, at 1. In addition, under Federal Civil Rule 21, Rambler
moves the Court to join Alexander E. Jackson as a defendant to Rambler's counterclaims.41
1.

Rule 15(a)

In general, a party may amend its pleading once as a matter of course within 21 days after
serving it.42 Although this is Rambler's first motion to amend, the motion was filed approximately
five months after service of its original pleading. See Doc. 29 & 46. Rambler's motion to amend
is thus governed by Rule 15(a)(2), Fed. R. Civ. P., which provides that "a party may amend its
pleading only with the opposing party's written consent or the court's leave" and "[t]he court should
freely give leave when justice so requires." Speedboat has filed an objection to the amendment,
asserting that the Court lacks subject matter jurisdiction. On that basis alone, Speedboat urges the

41

Federal Civil Rule 21, captioned "Misjoinder and Nonjoinder of Parties" authorizes the
court, "[o]n motion or on its own," to "at any time, on just terms, add or drop a party."
42

Rule 15(a), Fed. R. Civ. P., provides:

(1) Amending as a Matter of Course. A party may amend its pleading once as a
matter of course within:
(A) 21 days after serving it, or
(B) if the pleading is one to which a responsive pleading is required,
21 days after service of a responsive pleading or 21 days after service
of a motion under Rule 12(b), (e), or (f), whichever is earlier.
34

Court to find that amendment would be futile.
Because this Court in fact has admiralty jurisdiction, it has discretion to decide whether to
grant leave to amend. The Court must examine the proposed amendments, guided by the last
sentence of Rule 15(a)(2), which instructs that justice be done.43
"In the absence of any apparent or declared reason – such as undue delay, bad faith or
dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments
previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment,
futility of the amendment, etc.—the leave sought should, as the rules require, be 'freely given.'"
Foman v. Davis, 371 U.S. 178, 182 (1962). See also Milanese v. Rust-Oleum Corp., 244 F.3d 104,
110 (2d Cir. 2001) ("Leave to file an amended complaint 'shall be freely given when justice so
requires,' Fed. R. Civ. P. 15(a), and should not be denied unless there is evidence of undue delay,
bad faith, undue prejudice to the non-movant, or futility.").
Applying the Foman standard to the case at hand, there is no evidence that the proposed
amendments are the product of any undue delay or bad faith. In particular, Rambler filed its motion
to amend the pleadings and to join Jackson as a party within the deadlines of the current scheduling
order. The motion is thus timely on its face. Furthermore, there is no evidence demonstrating that
Rambler sought to delay the proceedings, only to enhance the pleadings and add all necessary parties.
In particular, Rambler represents that it has a good faith basis to amend its allegations of

43

With respect to amendments other than those which may be made a matter of course,
Rule 15(a)(2), Fed. R. Civ. P., provides:
(2) Other Amendments. In all other cases, a party may amend its pleading only with
the opposing party's written consent or the court's leave. The court should freely give
leave when justice so requires.
35

jurisdiction to specify the presence of admiralty jurisdiction pursuant to 28 U.S.C. § 1653, which
provides that "defective allegations of jurisdiction may be amended, upon terms, in the trial or
appellate courts." Id. (citing Johnson Prods. Co., Inc. v. M/V La Molinera, 619 F.Supp. 764, 767
(S.D.N.Y. 1985) ("It is well settled that, pursuant to 28 U.S.C. § 1653, the court may allow
amendments of the pleadings to cure defective allegations of jurisdiction.")). In addition, Rambler
asserts that it has a "good faith basis" to join Jackson as a party because he is "a party to the
[Agreement] that forms the basis of many of Rambler's claims and because Jackson was intimately
involved in the facts giving rise to this dispute." Doc. 46, at 2.
Furthermore, the Court notes that because this case remains in its early stages, there is no
evidence that there will be any undue prejudice to Speedboat in allowing the amendments to be made
at this time. In sum, unless there would be futility of amendment, which will be examined infra,
Pt. II.B.3., justice will require that the Court freely grant leave to the proposed amendments.
2.

Rules 19 & 20 - Required and Permissive Joinder of Parties

With respect to the proposed addition of Jackson as a counterclaim defendant, although
Rambler solely cites Federal Civil Rule 21 regarding misjoinder and nonjoinder of parties, Rules
19 and 20 also address joinder. Under Rule 19, a required party is one in whose absence "the court
cannot accord complete relief among existing parties," or who "claims an interest relating to the
subject of the action and is so situated that disposing of the action in [his or her] absence may: (i)
as a practical matter impair or impede the person's ability to protect the interest; or (ii) leave an
existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent
obligations because of the interest."
Rule 20 directs "permissive joinder of parties," and provides in relevant part:

36

Persons – as well as a vessel, cargo, or other property subject to admiralty process in
rem – may be joined in one action as defendants if: (A) any right to relief is asserted
against them jointly, severally, or in the alternative with respect to or arising out of
the same transaction, occurrence, or series of transactions or occurrences; and (B) any
question of law or fact common to all defendants will arise in the action."
Fed. R. Civ. P. 20.
It is unclear whether Rambler seeks to add Jackson as a "required" or "permissive" defendant;
Rambler simply asserts that the failure to join him is a "misjoinder." In any event, given the fact that
Jackson participated in and was a party to the Agreement at issue, he is at the very least a permissive,
and more likely a required, defendant. As Rambler asserts, Jackson is "the principal of Speedboat
and has been intimately involved in this dispute and the facts giving rise to this dispute." Doc. 46,
at 3. He was a party to the Agreement at the very heart of this litigation. It is arguable that his
absence from the action may impair the Court's ability to grant complete relief to the existing parties.
Moreover, as Speedboat's principal, Jackson is likely already fully aware of the action so not subject
to the prejudice of surprise of its existence. After all, he allegedly resides at 33 Gilliam Lane,
Riverside, Connecticut, which is the same address as Speedboat's principal place of business. See
Doc. 46, at 21 (¶ 3). Practically speaking, as the principal of Speedboat, Jackson is likely already
participating in this action in all but name. Furthermore, his presence in this action would not
deprive the Court of subject matter jurisdiction, which is based in admiralty.44
3.

Prospect of Futility under Foman

The Court will thus examine the remaining ground for denying amendment of the pleading:
the prospect of futility with respect to the proposed amendments. As set forth supra, although leave

44

According to Rambler, there is also personal jurisdiction over Jackson because he resides
in the state of Connecticut. Doc. 46, at 53. In its objection to Rambler's motion to amend,
Speedboat does not address or refute the presence of personal jurisdiction.
37

to amend must be freely given under ordinary circumstances, denial is proper where the proposed
amendment would be "futile." Foman, 371 U.S. at 182. An amendment is considered "futile" if
the amended pleading fails to state a claim or would be subject to a successful motion to dismiss on
some other basis. See, e.g., Lucente v. Int'l Bus. Machs. Corp., 310 F.3d 243, 258 (2d Cir. 2002 )
("An amendment to a pleading is futile if the proposed claim could not withstand a motion to dismiss
pursuant to Fed. R. Civ. P. 12(b)(6).") (citing Dougherty v. North Hempstead Bd. of Zoning
Appeals, 282 F.3d 83, 88 (2d Cir. 2002)); Donovan v. Am. Skandia Life Assur. Corp., 217 F.R.D.
325, 325 (S.D.N.Y. 2003) ("Where a proposed amended complaint cannot itself survive a motion
to dismiss, leave to amend would be futile and may clearly be denied.") (citations omitted), aff'd,
96 F. App'x 779 (2d Cir. 2004); see also Bentley v. Greensky Trade Credit, LLC, No. 3:14-CV-1157
(VAB), 2015 WL 9581730, at *2 (D.Conn. Dec. 30, 2015) ("a Court may deny leave to amend if the
proposed amendment would be futile because it fails to state a claim that would survive a motion
to dismiss under Federal Rule of Civil Procedure 12(b)(6)), reconsideration denied sub nom.,
Bentley v. Tri-State of Branford, LLC, No. 3:14-CV-1157 (VAB), 2016 WL 2626805 (D. Conn. May
6, 2016).45
Examining the proposed amendments for "futility," Rambler first seeks to supplement and
clarify subject matter jurisdiction as "admiralty jurisdiction." As set forth supra, such amendment
is proper under 28 U.S.C. § 1653 and clearly not futile. In the Answer portion of its pleading,
Rambler also seeks to correct citation to the Agreement (Section 4.1(m) versus 4.1(h), at ¶ 13).
Throughout the pleading, Rambler inserts Jackson's name as a party, including in the factual

45

For example, a proposed amendment would be futile if it failed to state a claim, destroyed
the Court's subject matter jurisdiction, or asserted claims which are time-barred by the relevant
statutes of limitation.
38

allegations (e.g., Answer, ¶¶ 19, 23, Parties, ¶ 3), and provides additional background facts
regarding the manufacture of the Yacht's keel, which eventually cracked, giving rise to this litigation.
a.

Counts I-IV: Breach of Contract

As to Rambler's proposed counterclaims, the first four allege breach of contract. Under
Connecticut law, the state law chosen by the parties (in instances where federal maritime law does
not control), "[t]he elements of a breach of contract action are the formation of an agreement,
performance by one party, breach of the agreement by the other party and damages."46 Keller v.
Beckenstein, 117 Conn. App. 550, 558 (2009) (quoting American Express Centurion Bank v. Head,
115 Conn.App. 10, 15-16 (2009)). Each of these four claims includes the mandatory elements for
a contract claim, alleging that the parties entered the Agreement, Rambler performed its duties under
the Agreement while attempting to race the Yacht in the Atlantic Ocean Racing Series; breach by
Speedboat and Jackson (by depriving Rambler of exclusive use of the Yacht after late August 2011
(Count I, ¶ 48), by failing to deliver the Yacht in "ship shape, sailable racing condition" (Count II,
¶ 52), "by failing to provide Rambler with photographs of the crack found during the manufacturing
of the keel and the repair to the crack attempted by Eligi Re Fraschini Spa and/or Re Fraschini

46

The Court notes that Connecticut's statute of limitations for a breach of contract action is
"six years after the right of action accrues," Conn. Gen. Stat. § 52-576(a). Therefore, Rambler's
contract counterclaims, including breach of the implied covenant of good faith and fair dealing and
implied warranty of seaworthiness, filed in 2013, fall well within the six-year period following the
contract's alleged breach in 2011. In addition, Rambler's negligent misrepresentation and CUTPA
claims fall within the mandatory respective statutes of limitation. See Conn. Gen. Stat. § 52-577
(creating 3-year statute of limitations for "action founded upon a tort"); In re Colonial Ltd.
Partnership Litigation, 854 F.Supp. 64, 90 (D.Conn.1994) ("All common law tort claims, including
claims for fraud, negligent misrepresentation, and breach of fiduciary duty, are subject to a three-year
statute of limitations, which runs from the date of 'the act or omission complained of.'") (citing and
quoting Conn. Gen. Stat. § 52-577); Conn. Gen. Stat. § 42-110g(f) (imposing 3-year statute of
limitations for CUTPA claim). The contract containing the alleged misrepresentations was formed
within 3 years before these claims were filed in 2013.
39

Components" (Count III, ¶ 56), by "fail[ing] to disclose that the keel fin had been manufactured with
a limited expected life of as short as one to two years and that simply hitting obstructions at speeds
as low as six knots could introduce cracks into the keel fin," and by "fail[ing] to disclose one or more
additional cracks in the Yacht’s keel fin that developed after the crack discovered on or about March
17, 2008 and the defective and improper repair work on the keel fin that took place after the repair
by Eligi Re Fraschini Spa and/or Re Fraschini Components prior to March 28, 2008" (Count IV,
¶¶ 62-63)); and damages in millions of dollars in operating expenses, repair and maintenance costs,
racing fees, crew and employee salaries and benefits, and other ancillary costs in connection with
the Yacht.
Because they contain the requisite elements for a prima facie contract claim, these four
proposed contract claims, set out in Rambler's amended Counterclaims I-IV, may proceed as facially
plausible claims.47 Their amendment is not futile.48
The remaining proposed amended counterclaims are breach of the implied warranty of
seaworthiness (against Speedboat) (Count V), breach of the covenant of good faith and fair dealing
(against Jackson and Speedboat) (Count VI), negligent misrepresentation (against Jackson and
Speedboat) (Count VII), and violation of the Connecticut Unfair Trade Practices Act (Conn. Gen.
Stat. §§ 42-110a, et seq.) (against Speedboat) (Count VIII). The Court will examine these claims

47

In describing claims as "facially plausible" in this Omnibus Ruling, the Court employs the
United States Supreme Court's seminal "plausibility" standard set forth in Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009). Under Iqbal, "[t]o survive a [Rule 12(b)(6)] motion to dismiss, a complaint
must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on
its face.'" 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
48

In permitting these claims to proceed, the Court voices no opinion as to the merits or
truth of the factual allegations contained therein. Rather, the Court leaves Rambler to its proof on
these pending claims.
40

to see whether their amendment would be futile – i.e., whether, as drafted, these claims are capable
of withstanding a motion to dismiss for failure to state a valid claim.
b.

Count V: Breach of the Implied Warranty of Seaworthiness

As to Count V, under federal maritime law, "[t]he general rule is that a warranty of
seaworthiness attaches to every charter." McAllister Lighterage Line v. Ins. Co., 244 F.2d 867, 871
(2d Cir. 1957).49 Under such a warranty, the shipowner must "furnish a vessel and appurtenances
reasonably fit for their intended use." Morales v. City of Galveston, Tex., 370 U.S. 165, 169 (1962)
(citation and internal quotation marks omitted). See also Mitchell v. Trawler Racer, Inc., 362 U.S.
539, 550 (1960) (same).50 More specifically, all "things about a ship, whether the hull, the decks,
the machinery, the tools furnished, the stowage, or the cargo containers, must be reasonably fit for
the purpose for which they are to be used."51 Gutierrez v. Waterman S.S. Corp., 373 U.S. 206, 213
(1963).
The warranty of seaworthiness is absolute so that the shipowner's liability does not depend
on a finding of negligence or a lack of due diligence. Mitchell, 362 U.S. at 549. Moreover, when
the charter delineates a set term of time, "the warranty generally extends through[out] the entire

49

In McAllister Lighterage Line v. Ins. Co., 244 F.2d 867, 871 (2d Cir. 1957), the Second
Circuit clarified that "parties to a contract of private carriage are free to bargain as they please, and
the warranty [of seaworthiness] will not be implied where it is waived."
50

As Justice Stewart explained in Mitchell, "[t]he duty [to furnish a seaworthy vessel] is
absolute," but "[t]he standand is not perfection." 362 U.S. at 550. There must be "reasonable
fitness[:] not a ship that will weather every conceivable storm or withstand every imaginable peril
of the sea, but a vessel reasonably suitable for her intended service." Id.
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As defined by the Second Circuit, "[s]eaworthiness is the ability of a vessel adequately to
perform the particular services required of her on the voyage she undertakes." McAllister Lighterage
Line v. Ins. Co., 244 F.2d 867, 870 (2d Cir. 1957) (citing, inter alia, The Silvia, 1898, 171 U.S. 462,
464 (1898)).
41

charter term." JJ Water Works, Inc. v. San Juan Towing & Marine Servs., Inc., 59 F. Supp. 3d 380,
395 (D.P.R. 2014). See also Matter of P & E Boat Rentals, Inc., 872 F.2d 642, 647 (5th Cir. 1989)
("a time charterer who has no control over the vessel, assumes no liability for . . . unseaworthiness
of the vessel absent a showing that the parties to the charter intended otherwise.") (citation and
internal quotation marks omitted). See also generally 2 Thomas J. Schoenbaum, Admiralty and
Maritime Law § 11-5 (5th ed. 2013).
In the case at bar, Rambler alleges that the implied warranty of seaworthiness was violated
by Speedboat because Speedboat was obligated to provide Rambler with the exclusive use of the
Yacht for a set term for the purpose of racing in the Atlantic Ocean Racing Series, so that
"seaworthiness was necessary and inherent to Speedboat's performance of its obligations under the
contract." Doc. 46, at 30-31 (¶¶ 67-68). Speedboat thus allegedly breached the implied warranty
of seaworthiness in the Agreement by "providing the Yacht in a defective condition that was unfit
for the agreed intended use of the Yacht." Id., at 31 (¶ 69). In particular, "the Yacht’s keel fin was
in a defective condition because it contained multiple cracks and at least one defective repair, had
been defectively manufactured using poor quality and defective welds, had been manufactured with
a limited expected life of as short as one to two years, and was unusually fragile." Id. Under these
circumstances, Speedboat has pled a plausible claim for breach of the implied covenant of
seaworthiness.
c.

Count VI: Breach of the Covenant of Good Faith and Fair Dealing

With respect to Count VI, breach of the implied covenant of good faith and fair dealing
(against Jackson and Speedboat), under Connecticut state law, "[i]t is axiomatic that the . . . duty of
good faith and fair dealing is a covenant implied into a contract or a contractual relationship." De

42

La Concha of Hartford, Inc. v. Aetna Life Ins. Co., 269 Conn. 424, 432 (2004). Specifically, "every
contract carries an implied duty requiring that neither party do anything that will injure the right of
the other to receive the benefits of the agreement." 269 Conn. at 432 (citation and internal quotation
marks omitted). The covenant, therefore, "presupposes that the terms and purpose of the contract
are agreed upon by the parties and that what is in dispute is a party's discretionary application or
interpretation of a contract term." Id. at 433 ( quoting Celentano v. Oaks Condo. Ass'n, 265 Conn.
579, 617 (2003)).
In order to constitute a breach of the implied covenant of good faith and fair dealing, the
defendant's acts which deprive the plaintiff of its right to receive the benefits reasonably expected
under the contract "must have been taken in bad faith." Keller v. Beckenstein, 117 Conn. App. 550,
563 (2009) (citing Landry v. Spitz, 102 Conn.App. 34, 42 (2007)) .
In the instant case, Rambler's proposed Count VI alleges actions by Jackson and Speedboat
which were taken in bad faith and deprived Rambler of its intended purpose of racing the Yacht in
the 2011 Atlantic Ocean Racing Series. Specifically, Rambler alleged that Jackson and Speedboat
breached the implied covenant of good faith and fair dealing because: (1) "they knew of but failed
to disclose the crack in the keel fin that was discovered on or about March 17, 2008;" (2) "knew of
but failed to disclose the repair to the crack by Eligi Re Fraschini Spa and/or Re Fraschini" between
March 17 and 28, 2008; (3) "knew but failed to disclose that the keel fin had been manufactured with
a limited expected life of as short as one to two years and that simply hitting obstructions at speeds
as low as six knots could introduce cracks into the keel fin;" (4) "knew of but failed to disclose one
or more additional cracks in the Yacht’s keel fin that developed after the crack discovered on or
about March 17, 2008 and the defective and improper repair work on the keel fin that took place

43

after the repair by Eligi Re Fraschini Spa and/or Re Fraschini Components prior to March 28, 2008;"
and (5) "refus[ed] to allow Rambler to repair the Yacht so that Rambler could continue racing the
Yacht through the end of the term of the Agreement." Doc. 46, at 31-32 (¶¶ 72-76). Each of these
alleged actions created "conditions, flaws, damages, or defects that rendered or caused, or would
render or cause, the Yacht not to be in ship shape, sailable racing condition." Id., at 31-32 (¶¶ 7275).52 Moreover, Jackson's and Speedboat's refusal to allow Rambler to make repairs allegedly
"destroy[ed] the right of Rambler to receive the benefits of the Agreement," thereby "evading the
spirit of the Agreement." Id., at 32 (¶ 76).
As a result of Jackson's and Speedboat's alleged actions in breach of the implied covenant
of good faith and fair dealing, Rambler "incurred millions of dollars in operating expenses, repair,
and maintenance costs, racing fees, crew and employee salaries and benefits, and other ancillary
costs in connection with the Yacht," "sustained damages by having to pay these and other costs and
expenses," and "was denied the benefit of its bargain by not being able . . . to complete the racing
program contemplated by the Agreement." Id., at 32-33 (¶ 77).
Upon review of these allegations, the Court finds that Count VI states a facially plausible
claim for breach of the implied covenant of good faith and fair dealing. Under the Agreement,
Rambler was expressly granted the use of the Yacht to sail in the races of the 2011 Atlantic Ocean
Racing Series. Moreover, the Yacht was intended to be in "ship shape, sailable racing condition"
upon delivery to Rambler so that the Yacht could compete in those races. Doc. 10-3, at 5 (§ 4.1(c)).

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A crack in a keel may, to a lay observer, appear a relatively small defect on a 30-meter
vessel, but such a crack allegedly led to the capsize of the majestic Yacht. In the words of Benjamin
Franklin, "Beware of little expenses. A small leak will sink a great ship." And allegedly, a small
crack may, in the right circumstances, do so as well.
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Each of the alleged violations of the implied breach are actions which Jackson and Speedboat knew
or should have known would render the Yacht unsailable, and thus unfit for its intended purpose.
Consequently, Rambler allegedly incurred millions of dollars in costs and expenses while being
denied the benefit the bargain, namely the opportunity to compete in the racing series contemplated
in the Agreement. Under these circumstances, Rambler has set forth a plausible claim for breach
of the implied covenant of good faith and fair dealing.
d.

Count VII: Negligent Misrepresentation

Next, Rambler's proposed Count VII attempts to state a claim for negligent misrepresentation
against Jackson and Speedboat. In Connecticut, the "governing principles" of this tort are "set forth
in similar terms in in § 552 of the Restatement Second of Torts (1977): One who, in the course of
business, profession, or employment . . . supplies false information for the guidance of others in their
business transactions, is subject to liability for pecuniary loss caused to them by their justifiable
reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or
communicating the information." Restatement (Second) of Torts § 552 (1977) (emphasis in original;
internal quotation marks omitted). See also Savings Bank of Manchester v. Ralion Fin. Servs., Inc.,
91 Conn. App. 386, 389-90 (2005). Put simply, "an action for negligent misrepresentation requires
the plaintiff to establish (1) that the defendant made a misrepresentation of fact (2) that the defendant
knew or should have known was false, and (3) that the plaintiff reasonably relied on the
misrepresentation, and (4) suffered pecuniary harm as a result." Nazami v. Patrons Mutual Ins. Co.,
280 Conn. 619, 626, 910 A.2d 209 (2006). "Even an innocent misrepresentation can give rise to
liability if the speaker reasonably should have known the truth." Nat'l Groups, LLC v. Nardi, 145
Conn. App. 189, 193 (2013) (citing Glazer v. Dress Barn, Inc., 274 Conn. 33, 72–73 (2005)).

45

In order for the plaintiff to prevail on a negligent misrepresentation claim, the plaintiff must
prove reasonable reliance on the defendant's misrepresentation. Visconti v. Pepper Partners Ltd.
Partnership, 77 Conn.App. 675, 682 (2003). Reliance on a particular statement may become
reasonable based on the statement's context, formal nature, the relationship between the parties, or
the communicator's status as an individual with specialized knowledge. Nat'l Groups, LLC, 145
Conn. App. at 194 (citations omitted). Reasonableness is a question of fact and typically
"determine[d] based on all of the circumstances." Williams Ford, Inc. v. Hartford Courant Co., 232
Conn. 559, 580 (1995). Therefore, "[r]eliance on a contractual term or a writing is not automatically
reasonable – a court still must give due consideration to the surrounding circumstances." Nat'l
Groups, LLC, 145 Conn. App. at 194 (citing Savings Bank of Manchester, 91 Conn.App. at 391-92
and Petitte v. DSL.net, Inc., 102 Conn.App. 363, 373 (2007)). "The plaintiff's knowledge is
particularly relevant to determining whether, under all the circumstances, reliance was reasonable."
Nat'l Groups, LLC, 145 Conn. App. at 194 (citing Gibson v. Capano, 241 Conn. 725, 733–34
(1997))
In the case at bar, in Count VII Rambler alleges that Jackson and Speedboat made
representations to Rambler that they knew or should have known were false. Doc. 46, at 33 (¶ 80).
Included in these alleged misrepresentations were "representations that the Yacht was in ship shape,
sailable racing condition, and free of material defects." Id., at 33 (¶ 79). Also, Jackson and
Speedboat allegedly failed to "disclose material facts" such as "the defective condition of the Yacht's
keel fin, cracks in the Yacht's keel fin, defective and improper repair work on the keel fin," the
manufacture of the keel fin with "a limited expected life span of as short as one to two years," and
"the keel fin was unusually fragile." Id., at 33 (¶ 81). According to Rambler, each of Jackson's and

46

Speedboat's alleged false representations and/or failure to disclose material facts occurred "in order
to induce Rambler to enter into the Agreement." Id., at 33 (¶ 82). Each such alleged action or
omission resulted in Rambler sustaining damages in "costs and expenses" while it was "denied the
benefit of its bargain" – i.e., prevented from competing in the racing program contemplated by the
Agreement. Id., at 33 (¶ 84).
Examining all of the circumstances alleged, Rambler has pled sufficient facts to state a
facially plausible claim for negligent misrepresentation. The terms of the Agreement specifically
stated that the Yacht was to be delivered in ship shape, sailable racing condition. It was reasonable
for Rambler to believe that Jackson and/or Speedboat, as the Yacht's owners, possessed sufficient
information regarding the condition of the Yacht to assess its condition. Furthermore, it was clear
in the Agreement that Rambler's intended use of the Yacht was to compete in a series of sailing
races. Rambler's allegations thus suggest it justifiably relied on Jackson's and Speedboat's
statements regarding the seaworthiness of the Yacht while contracting for the benefit of the bargain
– participation in the racing series. When the Yacht turned out to be defective (possessing cracks
in its keel fin), Rambler incurred pecuniary losses (costs and expenses) and lost the opportunity to
complete the series of races.

Due to its justifiable reliance on Jackson's and Speedboat's

representations that the Yacht was in ship shape, sailable racing condition, Rambler was allegedly
denied the benefit of the bargain, resulting in damages.
e.

Count VIII: Violation of the Connecticut Unfair Trade Practices Act
(Conn. Gen. Stat. §§ 42-110a, et seq.)

Finally, in Count VIII, Rambler alleges that Speedboat's actions in forming the Agreement
"as part of its business" violated Connecticut's Unfair Trade Practices Act ("CUTPA"), Conn. Gen.
Stat. § 42-110a, et. seq. That statute provides that "[n]o person shall engage in unfair methods of
47

competition and unfair or deceptive acts or practices in the conduct of any trade or commerce."
Conn. Gen. Stat. § 42-110b. Moreover, "[a]ny person who suffers any ascertainable loss of money
or property, real or personal, as a result of the use or employment of a method, act or practice
prohibited by section 42–110b" may bring a civil action based on CUTPA.

Conn. Gen. Stat.

§ 42–110g.
The Connecticut Supreme Court has adopted the "cigarette rule by the federal trade
commission for determining when a practice is unfair" under CUTPA: "(1) [W]hether the practice,
without necessarily having been previously considered unlawful, offends public policy as it has been
established by statutes, the common law, or otherwise – in other words, it is within at least the
penumbra of some common law, statutory, or other established concept of unfairness; (2) whether
it is immoral, unethical, oppressive, or unscrupulous; [and] (3) whether it causes substantial injury
to consumers, [competitors or other businesspersons]." Ventres v. Goodspeed Airport, LLC, 275
Conn. 105, 155 (2005) (citation omitted). See also Garcia v. Fry, No. 3:15-CV-597(AWT), 2016
WL 2944517, at *4 (D. Conn. May 12, 2016). All three criteria need not be satisfied to support a
finding of unfairness. Ventres, 275 Conn. at 155. Moreover, a practice may be unfair due to the
degree to which it meets a particular criterion or if it meets all three criteria to a lesser degree. Id.
In the case at bar, Rambler alleges that Speedboat's conduct in failing to disclose material
facts of the defective condition of the Yacht's keel fin – i.e., its unsailable ("unfit') condition for
racing – was "unfair and deceptive," and "unscrupulous, unethical, and immoral." Doc. 46, at 34
(¶¶ 86, 88-90, 92). Moreover, such conduct was "part of [Speedboat's] business," in formulating the
Agreement. Id., at 34 (¶ 87).
As to damages, Speedboat's conduct not only allegedly "put lives at risk," resulting in a

48

catastrophic capsize; such conduct also caused Rambler to sustain the ascertainable loss of "millions
of dollars in operating expenses, repair, and maintenance costs, racing fees, crew and employee
salaries and benefits, and other ancillary costs in connection with the Yacht." Id., at 34 (¶¶ 91, 93).
The allegations of Count VIII thus include assertions that Speedboat engaged in unfair,
deceptive behavior in business, failing to disclose key material facts regarding defects in the Yacht's
keel fin, while forming the Agreement with Rambler. Id., at 34 (¶¶ 86-89). In light of Rambler's
stated purpose to sail the Yacht in the Atlantic Ocean Racing Series, Speedboat's failure to disclose
these defects was "unscrupulous, unethical, and immoral." Id. (¶ 92). Furthermore, the alleged
failure to disclose offended public policy, risking the lives of others, and resulted in the ascertainable
loss of millions of dollars. Id., at 34 (¶¶ 91, 93). In total, Rambler's allegations in Count VIII
describe business conduct which (1) offends public

policy under common law (e.g.,

misrepresentation, breach of contract) and/or under established notions of unfairness; (2) was
"immoral, unethical, [and] unscrupulous;" [and] (3) caused substantial injury (loss of millions of
dollars) to Rambler, a business entity. These allegations thus state a plausible claim for violation
of CUTPA by Speedboat.
In sum, after careful review, the Court finds that Rambler's proposed amendments to its
answer and counterclaims would not result in futility under Foman. These claims possess facial
plausibility under Iqbal and accordingly would not be subject to dismissal. Rambler will thus be
granted leave to amend its pleading as requested.
C.

Speedboat's Motion to Stay Discovery [Doc. 52] and Rambler's Motion to Compel
[Doc. 57]
"In the interest of saving the time, expense and burden of discovery," Speedboat filed a

motion to request "that discovery be stayed until the Court rules on Speedboat's pending Motion to
49

Dismiss for lack of subject matter jurisdiction." Doc. 53 (Speedboat's brief in support of motion to
stay discovery), at 4. The Court has found that it has admiralty jurisdiction so will deny the Motion
to Dismiss [Doc. 44] in this Ruling. Accordingly, Speedboat's "Motion to Stay Discovery" [Doc.
52] will be denied as moot.
With respect to the status of discovery, Rambler filed a "Motion to Compel" [Doc. 57]. In
that motion, Rambler requested that Speedboat turn over additional documents with respect to
Rambler's document requests, served on Speedboat on January 17, 2013, and Rambler's second set
of four interrogatories, served on May 30, 2013. At the time Rambler filed the motion, Speedboat
had only returned 35 pages of documents, compared to 4,500 pages of documents Rambler had
produced to Speedboat in response to its document requests.
Based on the parties' briefs, Speedboat's asserted justification for failing to turn over
additional documents to Rambler was reliance upon its motion to dismiss. In particular, Speedboat
challenged the Court's subject matter jurisdiction. See, e.g., Doc. 57-1 (Rambler's brief in support
of Motion to Compel), at 7 (Speedboat "continued to refuse to produce any more documents and
to answer interrogatories on the basis that this Court had no jurisdiction"); Doc. 58 (Speedboat's brief
in opposition to motion to compel), at 7 (suggesting "that discovery should be stayed pending
resolution of the jurisdictional issue"), id., at 10 (asserting that "continuing discovery would be futile
and wasteful since the Court lacks subject-matter jurisdiction over the parties' claims").
Given the passage of time since the discovery dispute arose and the Court's current finding
that it has admiralty jurisdiction, Rambler's motion to compel will be denied without prejudice to
renewal. Speedboat can no longer rely on its jurisdictional argument and must, if it has not already
done so, produce relevant, responsive, and non-privileged documents to Rambler. Should

50

Speedboat fail to respond, Rambler may renew its motion to compel, if so advised.
III. CONCLUSION
For purposes of clarity, pursuant to Federal Civil Rule 41(a)(2), the Court hereby
APPROVES the joint "Stipulation of Discontinuance" [Doc. 43] filed by Federal and Speedboat on
June 7, 2013, with respect to Federal's claims against Speedboat. That dismissal was "proper" in
that it resolved Federal's claims in this action, Speedboat expressly approved the stipulation,
Rambler made no objection to the stipulation, and Speedboat and Rambler continued litigating their
claims against each other without asserting any prejudice by Federal's "discontinuance" in the action.
Accordingly, as stated in the stipulation, Federal's "action against the defendant Speedboat Racing
Ltd[.] is hereby discontinued with prejudice and without cost to either party." Doc. 43, at 1.
With respect to Speedboat's "Motion to Dismiss" [Doc. 44], asserting lack of subject matter
jurisdiction, that motion is DENIED. The Court possesses admiralty jurisdiction over the pending
claims relating to the Agreement pursuant to 28 U.S.C. § 1333. The primary objective of the
Agreement was to create a lease or charter for Rambler's use of the Yacht in the 2011 Atlantic Ocean
Racing Series. The charter provisions create a maritime contract, which is related to the navigation,
business or commerce of the sea.
Moreover, the maritime provisions are separable from the incidental, non-maritime sale of
one share of ownership in Speedboat to Rambler. That "sale" was ancillary to the grant of use or
charter of the Yacht and severable. Rambler's ownership was also severely undercut, circumscribed,
and diminished by the many provisions under which Speedboat and Jackson retained control of the
Yacht and regained full ownership upon termination. In essence, this was an agreement for Rambler
to utilize its sailing expertise to race Speedboat's Yacht to glorious victory. After this charter, the

51

Yacht would then be returned to Speedboat.
Employing either the Second Circuit's "conceptual" approach, focusing on the primary
objective, or its "severability" test, the Court possesses admiralty jurisdiction over the pending
claims and counterclaims which relate to the Agreement, its formation, and breach.
The two non-contract counterclaims by Rambler, a tort action for negligent misrepresentation
and a Connecticut state statutory claim under CUTPA, arise out of the same nucleus of operative
facts, and thus form part of the same case or controversy, as the contract claims. In particular, they
address Speedboat's conduct in negotiating and forming the Agreement. The Court possesses
supplemental jurisdiction over these claims pursuant to 28 U.S.C. § 1367.
Rambler's "Motion to Amend or Correct" [Doc. 46] its answer and counterclaims, including
the request for leave to add Alexander E. Jackson as a party, is GRANTED pursuant to Federal Civil
Rules 15(a)(2) and 19-21, respectively. As to the proposed amendments in general, there is no
evidence of "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to
cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue
of allowance of the amendment, [or] futility of the amendment" so that the leave sought shall be
'freely given.'" Foman v. Davis, 371 U.S. 178, 182 (1962). Moreover, the addition of Jackson as
a party is permissible, if not required, in light of his participation as a party to the Agreement at
issue.
Rambler must file and serve its proposed "Second Amended Answer and Counterclaims"
on or before August 26, 2016, and effect proper service in accordance with the Federal and Local
Rules of Civil Procedure. See Fed. R. Civ. P. 4, 5; D. Conn. L. Civ. R. 4, 5. Within 21 days after
service, Speedboat and Jackson must serve their answers or responses to the amended counterclaims.

52

Fed. R. Civ. P. 12 (a)(1)(A)(i).
In light of the Court's finding of admiralty jurisdiction, Speedboat's "Motion to Stay
Discovery" [Doc. 52] is DENIED as moot. In addition, given the passage of time since the discovery
dispute arose and the Court's current finding of admiralty jurisdiction, Rambler's "Motion to Compel
Discovery" [Doc. 57] is DENIED WITHOUT PREJUDICE. Speedboat must respond to Rambler's
discovery requests on or before August 26, 2016, failing which Rambler may renew its motion to
compel. In addition, the parties are directed to file a joint status report with the Court, proposing
revised dates for the remaining case deadlines, on or before September 16, 2016.
Finally, the Court takes judicial notice that the media has reported that the Yacht has been
reborn

and

relaunched

as

"Perpetual

Loyal"

and

resumed

racing.

See,

e.g.,

http://www.sailingscuttlebutt.com/2016/01/04/48454/; www.facebook.com/perpetual.loyal; and
http://www.rolexsydneyhobart.com/the-yachts 2015/perpetual-loyal/.

If this rebirth has indeed

occurred, the parties may be inclined to expedite resolution of this matter. To that aim, the parties
are reminded that, if so advised, they may once again jointly request referral to a magistrate judge
for a settlement conference.
All of the foregoing is SO ORDERED.
Dated: New Haven, Connecticut
August 9, 2016
/s/Charles S. Haight, Jr.
CHARLES S. HAIGHT, JR.
Senior United States District Judge

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