R/V Beacon, LLC v. Underwater Archeology & Exploration Corp. et al

Filing 21

ORDER granting 9 Motion to Dismiss. Counts I through IV of Plaintiffs Complaint, as they relate to Defendant Chatterton, are Dismissed Without Prejudice. Plaintiff Shall File an Amended Complaint Containing the Guidance Provided Herein no Later than 10/14/2014. Signed by Judge Beth Bloom on 10/1/2014. (jua)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 14-CIV-22131-BLOOM/Valle

R/V BEACON, LLC,
Plaintiff,
v.
UNDERWATER ARCHEOLOGY &
EXPLORATION CORP.,
JOHN CHATTERTON, and
JOHN MATTERA,
Defendants.
________________________________/
ORDER ON DEFENDANT’S MOTION TO DISMISS
This matter is before the Court upon Defendant John Chatterton’s Motion to Dismiss,
ECF No. [9]. The Court has reviewed the Motion, all opposing and supporting filings, and the
record in this case, and is otherwise fully advised in the premises. For the reasons that follow,
the Court now grants Defendant’s Motion.
I. BACKGROUND1
Plaintiff R/V Beacon, LLC (“Beacon”) is a Louisiana corporation which owns and
operates the 98-foot R/V Beacon (“the Vessel”), a vessel equipped for research and salvage
operations, including treasure salvage. ECF No. [1] at ¶¶ 3-4. On March 8, 2011, Beacon
entered into a three-year contract (“the Charter”) with Defendant Underwater Archaeology &
Exploration Corp. (“Underwater”), wherein Underwater agreed to charter the Vessel for use in a

1
The facts are garnered from Plaintiff’s Complaint and attached documentation, ECF No. [1].
1

treasure hunting enterprise.2 See id. at ¶¶ 9, 11. The enterprise allegedly commenced during the
summer and fall of 2011, when Underwater began treasure hunting operations in the Dominican
Republic. Id. at ¶ 20. Despite supposedly making several finds, in the winter of 2011, the
salvage operation came to a halt, placing a strain on the relationship between the parties.
Pursuant to the Charter, Underwater was required to pay Beacon twenty-percent of the
value of all nongovernmental treasure recovered. Id. at ¶ 12. As Beacon’s success on the
Charter was directly tied with Underwater’s treasure capture, it was in Beacon’s best interest that
the operation be a productive one.

Accordingly, the Charter included terms which required

Underwater to “actively utilize the vessel on as many days as possible” to recover treasure. See
id. at ¶ 11. Although use of the Vessel was seemingly required under the Charter, the Vessel has
not left port since December 10, 2011.

Id. at ¶ 25. That is not to say that there has not been

contact between the parties; in fact, throughout 2011, 2012, and 2013, significant communication
occurred regarding the state of the Vessel and the need for various repairs.
Although the Charter states that Underwater had “inspected the Vessel and found it to be
in acceptable condition for its intended use, and in every respect seaworthy,” Defendant
Chatterton allegedly began demanding that Beacon pay for improvements and repairs shortly
after taking possession of the Vessel. Id. at ¶¶ 49, 51-52. The Charter provides for the upkeep of
the Vessel, specifically, Underwater is responsible for all costs related to operation and
maintenance of the Vessel; however, hull, engine, and other major repairs are relegated to
Beacon as owner. Id. at ¶¶ 10, 15. While Beacon contends that it was not contractually
obligated to make such improvements, it nonetheless made several payments to Underwater in

Although the Complaint does not make such facts readily apparent, it appears that Defendants
John Chatterton (“Chatterton”) and John Mattera (“Mattera”) are officers and/or owners of
Defendant Underwater Archeology & Exploration Corp.

2

2

April 2011, totaling $12,450.52, and purchased a new twenty-horsepower motor for the Vessel’s
skiff. See id. at ¶¶ 53-55. In March 2012, Defendant Mattera wrote to Beacon, indicating that
further upgrades needed to occur before salvage operations could resume. Id. at ¶¶ 30-31, 59.
Several months later, with exploration still on hiatus, Defendant Mattera informed Beacon that
the vessel was too expensive to operate and demanded that Beacon make more repairs. Id. at ¶¶
31-33, 58-60. Again, Beacon obliged, sending Underwater $7,000.00 for the replacement of a
diesel generator, and $8,000.00 for other expenses. See id. at ¶¶ 62-63, 65-66. Underwater also
claimed to have spent approximately $15,000.00 on other repairs. Id. at ¶ 69. Beacon again
compensated Underwater, sending two payments of $8,000.00. Id. at ¶ 70. Finally, in 2013
Beacon sent Defendant Mattera approximately $3,000.00 to replace the Vessel’s air conditioning
unit. Id. at ¶¶ 72-75.
Beacon’s willingness to pay for the aforementioned repairs stemmed from its hope that
treasure hunting operations would not be further delayed. See id. at ¶ 53. Nonetheless, in
November 2013, Beacon came to the realization that Underwater had no intention to resume
operations and had effectively abandoned the Vessel in the Dominican Republic. Id. at ¶ 36.
After inspection, Beacon discovered that many of the repairs that Underwater claims to have
completed were not made, most conspicuously, the air conditioning unit and diesel generator had
not been replaced. See id. at ¶¶ 67, 76-78. Beacon was also unable to locate the twentyhorsepower skiff engine. Id. at ¶ 56.
To this day the Vessel remains in the Dominican Republic in defiance of the Charter’s
requirement that Underwater return the Vessel to port in Bayou Le Batre, Alabama, at the
expiration of the arrangement. See id. at ¶¶ 13, 39-41. Presently, Beacon labors under the belief
that Underwater’s claims that it invested money in repairing the Vessel were entirely fraudulent.

3

Id. at ¶ 77. Day by day, Beacon continues to accrue damages based on moorage and caretaker
fees. See id. at ¶¶ 81-86. Accordingly, Beacon commenced the instant litigation, asserting
claims for breach of contract (Counts I and II) and breach of oral contract (Count III) against all
Defendants, as well as fraud (Count IV) against Defendants Chatterton and Mattera, individually.
See id. at ¶¶ 80-115.
II. LEGAL STANDARD
A pleading in a civil action must contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). While a complaint “does
not need detailed factual allegations,” it must provide “more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007); see Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (explaining
that Rule 8(a)(2)’s pleading standard “demands more than an unadorned, the-defendantunlawfully-harmed-me accusation”). Nor can a complaint rest on “‘naked assertion[s]’ devoid of
‘further factual enhancement.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557
(alteration in original)). The Supreme Court has emphasized “[t]o survive a 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.’” Id. (quoting Twombly, 550 U.S. at 570). When reviewing a motion to
dismiss, a court, as a general rule, must accept the plaintiff’s allegations as true and evaluate all
plausible inferences derived from those facts in favor of the plaintiff. See Chaparro v. Carnival
Corp., 693 F.3d 1333, 1337 (11th Cir. 2012); Miccosukee Tribe of Indians of Fla. v. S.
Everglades Restoration Alliance, 304 F.3d 1076, 1084 (11th Cir. 2002). While the Court is
required to accept all of the allegations contained in the complaint and exhibits attached to the
pleadings as true, this tenet is inapplicable to legal conclusions. Iqbal, 556 U.S. at 678; Thaeter

4

v. Palm Beach Cnty. Sheriff’s Office, 449 F.3d 1342, 1352 (11th Cir. 2006). The Supreme Court
was clear that courts “are not bound to accept as true a legal conclusion couched as a factual
allegation.” Twombly, 550 U.S. at 555.
III. DISCUSSION
Defendant Chatterton now seeks to dismiss those claims brought against him. See ECF
No. [9].

More specifically, Chatterton asserts that the breach of contract claims must be

dismissed because he is not a party to the Charter, and the fraud claim is both barred by the
maritime economic loss rule and has not been pled with sufficient particularity as required by
Federal Rule of Civil Procedure 9(b). See id. The Court addresses these arguments in turn.
A.

Breach of Contract and Piercing the Veil

Although Beacon’s claims for breach of the Charter, as well as breach of the oral contract
are seemingly directed against Underwater, Beacon utilizes “Defendants” throughout the Counts
and includes Defendants Chatterton and Mattera in the “wherefore clause.” See ECF No. [1] at
¶¶ 80-101. The Charter states,
THIS CHARTER PARTY is entered into between RV Beacon,
LLC (hereinafter referred to as “OWNER”), whose address is P.O.
Box 967, Mohegan Lake, New York 10547, and Underwater
Archaeology and Exploration Corp., (hereinafter referred to as
“CHARTERER”), whose address is 1825 Ponce de Leon
Boulevard, #324, Coral Gables, Florida 33134.
See id. at 15 (emphasis added). At no point does the Charter make mention of either Defendant
Chatterton or Defendant Mattera. It is axiomatic that a contract cannot bind a nonparty. See
Whetstone Candy Co. v. Kraft Foods, Inc., 351 F.3d 1067, 1073 (11th Cir. 2003) (“Generally, a
contract does not bind one who is not a party to the contract, or who has not in some manner
agreed to accept its terms.”); see also E.E.O.C. v. Waffle House, Inc., 534 U.S. 279, 294 (2002)
(“It goes without saying that a contract cannot bind a nonparty.”); Norfolk S. Ry. Co. v. Groves,
5

586 F.3d 1273, 1281-82 (11th Cir. 2009) (“Furthermore, it is a tenet of contract law that a thirdparty cannot be bound by a contract to which it was not a party.” (citation omitted)). Beacon has
not adduced any facts from which the Court may infer that Defendant Chatterton, in his
individual capacity, has assented to the terms of the Charter. Indeed, Beacon concedes this
point, stating that “the Complaint never suggests that [Chatterton] was [a party to the Charter], or
that he could be sued for breach of contract directly.” ECF No. [18] at 3. Instead, Beacon
asserts that the cause of action is properly brought against Chatterton because damages are being
sought from him via piercing the corporate veil. See id. at 3-4.
A corporation and its owners are separate legal entities existing independently of each
other. See United States v. Bestfoods, 524 U.S. 51, 61 (1998) (“It is a general principle of
corporate law deeply ingrained in our economic and legal systems that a parent corporation (socalled because of control through ownership of another corporation’s stock) is not liable for the
acts of its subsidiaries.” (quotation omitted)); see also Burnet v. Clark, 287 U.S. 410, 415 (1932)
(“A corporation and its stockholders are generally to be treated as separate entities”).
Notwithstanding this general principle, a shareholder may be held liable for the corporation’s
conduct under certain circumstances. See Bestfoods, 524 U.S. at 62. When “the corporate form
would otherwise be misused to accomplish certain wrongful purposes, most notably fraud,” the
corporate veil may be pierced to impose liability on the shareholder. Id. (citation omitted).
Piercing the corporate veil is an available remedy in maritime matters. See Hilton Oil Transp. v.
Oil Transp. Co., S.A., 659 So. 2d 1141, 1151 (Fla. 3d DCA 1995) (citing Swift and Co. Packers
v. Compania Colombiana Del Caribe, S.A., 339 U.S. 684 (1950) (“It is clear and wellestablished that a court presiding over maritime matters does have the power to pierce the
corporate veil of a corporation in order to reach the ‘alter egos’ of a corporate defendant.”).

6

“The prerequisites for piercing the veil in federal maritime law are the same as elsewhere,”
including under Florida law. See LIG Ins. Co. v. Inter-Florida Container Transp., Inc., 2013
WL 4516104, at *6 (S.D. Fla. Aug. 23, 2013) aff’d, 564 F. App’x 495 (11th Cir. 2014) (quoting
Popescu v. CMA CGM, 2009 WL 5606131, at *8 (S.D. Fla. Nov. 5, 2009)). Under Florida law,
the corporate veil will not be pierced absent a showing of improper conduct. Eckhardt v. United
States, 463 F. App’x 852, 855 (11th Cir. 2012) (citing Dania Jai-Alai Palace, Inc. v. Sykes, 450
So. 2d 1114, 1121 (Fla. 1984)). Florida law requires that the plaintiff prove three elements in
order to pierce the veil and reach the assets of an owner: (1) that the shareholder dominated and
controlled the corporation to such an extent that the corporation did not exist independently of
ownership and the owners were in fact the “alter egos” of the corporation; (2) that the corporate
form was utilized for a fraudulent or improper purpose; and (3) that the fraudulent or improper
use of the corporate form caused injury to the plaintiff. See Molinos Valle Del Cibao, C. por A.
v. Lama, 633 F.3d 1330, 1349 (11th Cir. 2011) (citing Gasparini v. Pordomingo, 972 So.2d
1053, 1055 (Fla. 3d DCA 2008)); see also LIG Ins. Co., 2013 WL 4516104, at *6 (“To pierce the
corporate veil, the individual must have used the corporate entity to perpetrate a fraud or have so
dominated and disregarded the corporate entity’s corporate form that the corporate entity
primarily transacted the individual’s personal business rather than its own corporate business.”
(internal quotation and citation omitted)).
The Complaint is rife with accusations that Underwater inappropriately obtained funds
under the guise of making repairs on the Vessel. See ECF No. [1]. However, the only statement
or action specifically attributable to Defendant Chatterton is that Chatterton emailed Beacon in
April 2011 claiming to have expended “considerable resources into making [the Vessel]
operational,” and further demanding that Beacon indemnify Underwater for such improvements

7

or suffer delay of the treasure hunting operation. See id. at ¶¶ 51-53. Accordingly, Beacon
contends that Chatterton repeatedly misrepresented the status of the operation in order to extort
further funds from Beacon. Id. at ¶ 103. As a result of this allegedly fraudulent conduct, Beacon
asserts that “Chatterton will ultimately be individually liable for Underwater’s breach [of the
Charter].” See ECF No. [18] at 4. However, in this regard, the Complaint is deficient.
First, Beacons’ accusations of fraud are unrelated to its claims for breach of contract.
The breach of contract claims stem from Underwater’s abandonment of the vessel in the
Dominican Republic in contravention of the Charter, see ECF No. [1] at ¶¶ 80-86 (Count I), and
Underwater’s failure to maximize the use of the vessel and pay Beacon its required twentypercent stake, see id. at ¶¶ 87-96 (Count II). Essentially, Beacon attempts to hold Defendants
Chatterton and Mattera individually liable for Underwater’s breach of contract, even though the
breach of contract, in this case, did not involve any fraudulent or improper use of the corporate
form. See Molinos, 633 F.3d at 1349 (noting that one of the elements required in order to pierce
the corporate veil is that “the fraudulent or improper use of the corporate form caused injury to
the plaintiff”).

While Beacon does allege a multitude of fraudulent acts, those acts are

inapplicable to Beacon’s claims for breach of contract, which simply allege breach of the
specific terms of the Charter, not fraud.
Second, the aforementioned accusations do not reach the level of pleading required under
Federal Rule of Civil Procedure and associated Supreme Court precedent. While Beacon’s
allegations are not “naked assertions devoid of further factual enhancement,” at no point does the
Complaint allege that Chatterton was the “alter ego” of Underwater. Moreover, any asserted
misuse of the corporate form by Chatterton is equally unclear. Defendant Chatterton is forced to
infer that Beacon is seeking to pierce the corporate veil simply by his inclusion in the wherefore

8

clauses of the breach of contract claims. The Complaint does not set forth sufficient facts to
suggest that the Court should ignore the corporate form and hold Chatterton individually liable
for Counts I and II. Accordingly, those claims are dismissed.
Similarly, Count III must also be dismissed as it relates to Defendant Chatterton. The
Complaint alleges that Beacon loaned a “side scan sonar unit” for use in the treasure salvage
operations. ECF No. [1] at ¶¶ 98-99. Although the loan was made free of charge, Underwater,
not necessarily Chatterton himself, allegedly agreed to pay for shipping the unit back to the
United States, but did not do so, thereby forcing Beacon to pay $1,500.00 to ship the unit. Id. at
¶¶ 99-100. Again, there is no indication that Beacon is seeking to pierce the corporate veil other
than including Defendant Chatterton in the Count’s wherefore clause. See id. at ¶¶ 97-101.
Moreover, there is no evidence of any fraud or improper purpose related to this claim. As with
Counts I and II, Count III appears to be a straightforward breach of contract claim, devoid of any
evidence of fraud or improper purpose as is required to pierce the corporate veil. Therefore,
Count III is dismissed as to Defendant Chatterton. Although it is unlikely that Beacon can
properly plead facts sufficient to pierce the corporate veil with respect to its breach of contract
claims, in an abundance of caution, the opportunity to replead will nonetheless be granted. See
Fed. Deposit Ins. Corp. v. Law Office of Rafael Ubieta, P.A., 2012 WL 5307152 (S.D. Fla. Oct.
29, 2012) (dismissing breach of contract claims without prejudice because plaintiff’s complaint
could not satisfy the pleading standard of Rule 8 with respect to piercing the corporate veil).
B.

Beacon’s Fraud Claims

Defendant Chatterton sets forth two reasons as to why he believes Count IV of the
Complaint must be dismissed as it relates to him. First, Chatterton avers that any claim for fraud
is barred by the maritime economic loss rule. See ECF No. [9] at 7-8. In the alternative,

9

Chatterton asserts that any allegations of fraud do not meet the requirements of Federal Rule of
Civil Procedure 9(b). See id. at 8-10. The Court is inclined to agree with Chatterton’s second
contention: Beacon’s fraud claim is imprecise and inadequate.
Although the Florida Supreme Court has recently limited the application of the economic
loss rule to products liability cases, see Tiara Condo Ass’n, Inc. v. Marsh & McLennan
Companies, Inc., 110 So. 3d 399 (Fla. 2013), no such limitation has been imposed in cases
governed by maritime law. Generally, in admiralty, “a party may not recover for economic
losses not associated with physical injury.” Kingston Shipping Co. v. State of Florida, 667 F.2d
34, 35 (11th Cir. 1982). Stated differently, the maritime economic loss rule “provides that a tort
action may not lie where the basis for liability arises from a contract.” St. Clair Marine Salvage,
Inc. v. M/Y BLUE MARLIN, 2014 WL 2480587, at *4 (E.D. Mich. June 3, 2014) (citing E. River
S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858 (1986)). The rule finds its origins in East
River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858 (1986), where the Supreme Court
held that a “manufacturer in a commercial relationship has no duty under either a negligence or
strict products-liability theory to prevent a product from injuring itself.” Id. at 871. Although
this matter is distinguishable as Beacon does not seek damages for injury to a product, the
maritime economic loss doctrine has been expanded to reach situations where a party is
attempting to bring a breach of contract action couched as a tort claim. See BVI Marine Const.
Ltd. v. ECS-Florida, LLC, 2013 WL 6768646, at *3-4 (S.D. Fla. Dec. 20, 2013). The Supreme
Court’s decision in E. River S.S. Corp. indirectly cautioned that claims sounding in tort but
stemming a contractual dispute are often more appropriately remedied pursuant to the contractual
relationship. See 476 U.S. at 874 (“Permitting recovery for all foreseeable claims for purely
economic loss could make a manufacturer liable for vast sums.”); see also BVI Marine, 2013 WL

10

6768646, at *4 (citing Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303, 307–10 (1927))
(noting that “when an enforceable contract exists, it is preferable to resolve disputes on the basis
of the contractual relationship”). Thus, a breach of contract claim framed as a tort will be
prohibited by the rule.
In BVI Marine, this Court was tasked with determining the applicability of the maritime
economic loss rule. Initially, the plaintiff in BVI Marine asserted a single claim for breach of
contract; however, during the pendency of the litigation, the Florida Supreme Court decided
Tiara Condo. Ass’n, limiting the Florida economic loss rule to products liability actions. See
2013 WL 6768646, at *1. Consequently, the plaintiff sought to add tort claims stemming from
the same operative facts as such claims were seemingly no longer prohibited under Florida law.
Id. The Court permitted amendment, and the defendant’s disputes were raised in a motion to
dismiss. Id. While the Court noted that the plaintiff’s tort claims would not be forbidden given
the Florida Supreme Court’s decision in Tiara, the maritime economic loss rule had not been
similarly limited and did in fact preclude such claims. See id. at *4-5. Thus, Chatterton now
asserts that Beacon is attempting to circumvent the Charter and the maritime economic loss rule
by pursuing fraud claims against Chatterton and Mattera individually. See ECF No. [9] at 7.
To the extent Beacon’s fraud claims are premised on Chatterton’s failure to abide by the
Charter, such claims are barred by the maritime economic loss rule.3 St. Clair, 2014 WL

3
Beacon devotes a significant portion of its Response to providing a recitation of the history
surrounding the maritime economic loss rule, asserting that there currently exist two iterations of
the rule, and that this Court should be persuaded by the Ninth Circuit’s reasoning in Giles v. Gen.
Motors Acceptance Corp., 494 F.3d 865 (9th Cir. 2007). See ECF No. [18] at 4-12. However,
Beacon’s reliance on Giles is entirely misplaced. At no point does the Giles decision address the
maritime economic loss rule. See 494 F.3d 865. Further, although Giles found that a plaintiff’s
fraud claim was not barred by the economic loss rule, the Ninth Circuit’s holding was
unmistakably interpreting and applying Nevada, not Florida, law. See id. at 879 (“Applying the
principles set forth by the Nevada Supreme Court in Calloway, we hold that Appellants’ fraud
11

2480587, at *4-5 (holding that the plaintiffs tort claim was “inextricably tied” to his breach of
contract claim and was therefore barred by the maritime economic loss rule). However, the
economic loss rule does not purport to bar all tort claims when the relationship between the
parties arose by virtue of a contract. Indeed, the Third Circuit has noted an emerging trend
among jurisdictions which recognizes “a limited exception to the economic loss doctrine for
fraud claims, but only where the claims at issue arise independent of the underlying contract.”
Werwinski v. Ford Motor Co., 286 F.3d 661, 676 (3d Cir. 2002) (citation omitted).4 The
Supreme Court in East River specifically noted that it was not opining on “whether a tort cause
of action [could] ever be stated in admiralty when the only damages sought are economic.” See
E. River S.S. Corp., 476 U.S. at 871 n.6.
The allegations contained in the Complaint extend well beyond any facts contemplated
by the Charter. In short, the Complaint asserts that Defendants requested money for repairs to
the Vessel, but rather than utilize those funds for the stated purpose, Defendants pocketed the
money, allegedly converting it to personal uses.5 Unlike the situation presented in BVI Marine
where the plaintiff’s tort claims were seemingly related to the contract at issue, Beacon’s fraud
claim is distinct from its breach of contract claim. See BVI Marine, 2013 WL 6768646, at *4-5.
A cursory examination of the Complaint further validates this assertion. Beacon’s breach of

and conversion claims are not barred.”). While the Ninth Circuit did engage in a rigorous
investigation of the difficulty courts have faced in applying the economic loss rule, to apply the
Ninth Circuit’s holding here would be wholly inappropriate.
4

In making this observation, the Third Circuit in Wewinski was concerned solely with the
applicability of the standard economic loss rule, not the maritime rule. See 286 F.3d at 670-71.
Therefore, this authority is merely persuasive.
5

Beacon does not bring a claim for conversion. See generally Small Bus. Admin. v. Echevarria,
864 F. Supp. 1254, 1262 (S.D. Fla. 1994) (“Under Florida law, conversion is an unauthorized act
which deprives another of his property permanently or for an indefinite time.”).
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contract claims do not relate to the repairs allegedly made (or not made) on the Vessel; the
breach of contract claims stem from Underwater’s failure to return the Vessel to the port
specified in the Charter, as well as Underwater’s failure to both maximize salvage operations and
pay Beacon its share under the Charter of the treasure recovered during the brief operation of the
Vessel in 2011.6 See ECF No. [1] at ¶¶ 80-96. Contrary to Chatterton’s contention, Beacon’s
fraud claims are not inextricably intertwined with its claims for breach of contract.7
Accordingly, the maritime economic loss rule does not bar Beacon’s fraud claims as such claims
are not premised upon or related to a breach of the Charter.8 See E. River S.S. Corp., 476 U.S. at

Beacon also implores the Court to find the economic loss rule inapplicable because Chatterton
is a nonparty to the Charter. See ECF No. [18] at 11-12. Under pre-Tiara Florida law, it appears
that the economic loss rule would not have barred Beacon’s fraud claim as Chatterton is not a
party to the related contract. See Luigino’s Int’l, Inc. v. Miller, 311 F. App’x 289, 293 (11th Cir.
2009) (citing Indem. Ins. Co. of N. Am. v. Am. Aviation, Inc., 891 So. 2d 532, 534 (Fla. 2004),
receded from by Tiara Condo. Ass’n, Inc. v. Marsh & McLennan Companies, Inc., 110 So. 3d
399 (Fla. 2013)) (“In the absence of contractual privity between [the parties], Florida’s economic
loss rule does not apply.”). However, the Eleventh Circuit and this Court have noted that this
aspect of the economic loss rule does not apply where the individual being sued in tort is an
officer of the corporation in contractual privity. See Miller, 311 F. App’x at 294 (“We recognize
that contractual privity may not be required when a tort action is barred against a corporation
under the economic loss rule and its corporate employee is being sued for the same tortious
conduct.”); see also Ben-Yishay v. Mastercraft Dev., LLC 553 F. Supp. 2d 1360, 1371 (S.D. Fla.
2008). Moreover, Beacon does not direct the Court to precedent indicating that this limitation is
applicable under admiralty law, and the Court is unable to locate the same. Accordingly, the
Court respectfully declines to interject Florida legal principles into federal maritime law. See
State of La. ex rel. Guste v. M/V TESTBANK, 752 F.2d 1019, 1031-32 (5th Cir. 1985) (citing
Kossick v. United Fruit Co., 365 U.S. 731 (1961)) (“It is well-settled that the invocation of
federal admiralty jurisdiction results in the application of federal admiralty law rather than state
law.”).
6

7

Had Beacon premised its breach of contract claims under Paragraph 9 of the Charter, a different
result may be warranted. See ECF No. [1] at 16 (stating that “Charterer agrees to pay for all
maintenance and upkeep of the vessel during the term of the Charter”). As that is not the case
here, the Court does not reach this issue at this time.
8

The same result would likely be reached if Florida law were applicable. Although Tiara,
limited the scope of the economic loss rule to products liability cases, Justice Pariente, in her
concurring opinion, noted that the Tiara decision was “neither a monumental upsetting of Florida
law nor an expansion of tort law at the expense of contract principles.” Tiara, 110 So. 3d at 408
13

871 n.6.
Because the Court finds that Beacon’s fraud claim is not barred by the maritime
economic loss rule, an examination of whether such claims conform to the heightened pleading
requirements under Federal Rule of Civil Procedure 9(b) is warranted. Rule 9(b) requires a
plaintiff to “state with particularity the circumstances constituting fraud or mistake.” Fed. R.
Civ. P. 9(b). This requirement is intended to alert defendants to the “precise misconduct with
which they are charged.” Durham v. Bus. Mgmt. Associates, 847 F.2d 1505, 1511 (11th Cir.
1988) (quoting Seville Indus. Mach. Corp. v. Southmost Mach. Corp., 742 F.2d 786, 791 (3d Cir.
1984)). The Eleventh Circuit has held that a party satisfies the particularity requirement when
the pleading sets forth: (1) precisely what statements were made; (2) the time and place of each
statement and the person responsible for making (or in the case of omissions, not making) it; (3)
the content of such statements and the manner in which they caused the plaintiff to be misled; (4)
what the defendants obtained as a result of the fraud. See Zarrella v. Pac. Life Ins. Co., 755 F.
Supp. 2d 1231, 1236 (S.D. Fla. 2011) (quoting Ziemba v. Cascade Int’l, Inc., 256 F.3d 1194,
1202 (11th Cir. 2001)). However, the Eleventh Circuit has noted that alternative means are also
available to a plaintiff attempting to plead fraud. Durham, 847 F.2d 1505. Indeed, this Court
has found the particularity requirement satisfied where the complaint identified who made the

(Pariente, J., concurring). This Court has accepted this observation. See Altenel, Inc. v.
Millennium Partners, L.L.C., 947 F. Supp. 2d 1357, 1369 (S.D. Fla. 2013). Notably, pre-existing
applications of the economic loss rule permitted tort claims to be brought in conjunction with a
breach of contract claim so long as the tort was “independent of any breach of contract claim.”
Tiara, 110 So. 3d at 408 (Pariente, J., concurring); see also Stonecreek-AAA, LLC v. Wells Fargo
Bank N.A., 2013 WL 5416970 at *6 (S.D. Fla. Sept. 26, 2013) (“[I]n order for a party to bring a
valid claim in tort based on a breach of contract, the tort must be distinguishable from or
independent of the breach of contract.”) (internal quotation and citation removed); Freeman v.
Sharpe Resources Corp., 2013 WL 2151723 at *8 (M.D. Fla. May 16, 2013) (“Fundamental
contractual principles continue to bar a tort claim where the offending party has committed no
breach of duty independent of a breach of its contractual obligations.”).
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fraudulent representations, set forth the general time frame in which the misrepresentations were
made, the reasons why the representations amounted to fraud, and the alleged scheme in
“considerable detail.” Colonial Penn Ins. Co. v. Value Rent-A-Car Inc., 814 F. Supp. 1084,
1092-93 (S.D. Fla. 1992).
While the Complaint is replete with allegations of fraud on the part of “Defendants,” a
mere three paragraphs refer to Defendant Chatterton specifically:
51.

Despite [the Charter] on April 29, 2011 CHATTERTON
emailed [Beacon] to complain: “I have put considerable
resources into making this boat operational, when it was
supposed to be seaworthy on March 15th.”

52.

CHATTERTON demanded that PLAINTIFF pay for these
improvements and repairs.

53.

Although PLAINTIFF was not contractually responsible
for these payments, PLAINTIFF agreed to pay because the
vessel was sitting in port not making money, and
CHATTERTON was threatening to delay the whole
operation.

ECF No. [1] at ¶¶ 51-53. More often than not, the Complaint simply states that “Defendants”
engaged in some manner of fraud. See, e.g., id. at ¶¶ 55-56 (“Defendants” never purchased the
skiff motor, or lost it),

62-63 (“Defendants” claimed they needed to replace the diesel

generator). Even within Beacon’s Count for fraud, Beacon continues to commingle which
statements were made by whom, referring to both “Defendants,” “Individual Defendants,” and
Defendant Mattera individually. See id. at ¶¶ 102-115. Although the allegations found in the
Complaint vaguely inform Chatterton of the “precise misconduct with which [he is] charged,”
Durham, 847 F.2d at 1511, they do not do so with sufficient particularity under Rule 9(b).
Beacon’s fraud claim is a mélange of accusations made against the “Individual Defendants”
which fails to include the simplest of accusations: who made what statements. Compare S.E.C.

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v. Spinosa, 2014 WL 2938487, at *2-3 (S.D. Fla. June 30, 2014) (finding 9(b) satisfied where
plaintiff alleged exact statements made by defendant, as well as when such statements were
made and how such statements were fraudulent) with Reese v. JPMorgan Chase & Co., 686 F.
Supp. 2d 1291, 1302 (S.D. Fla. 2009) (holding that particularity requirement was not satisfied
where plaintiff failed to identify the time, place, or precise statements made). Other than this
failure, Beacon has sufficiently pled the circumstances amounting to fraud. Nonetheless, this
misstep requires dismissal of such claims. As with Beacon’s claims for breach of contract,
Count IV is dismissed without prejudice so that Plaintiff may amend if so inclined.
C.

Punitive Damages

Although doubt has been cast upon the current viability of punitive damages given the
Supreme Court’s decision in Atlantic Sounding Co., Inc. v. Townsend, 557 U.S. 404 (2009), such
nonpecuniary damages are generally disallowed under maritime law. See In re Amtrak Sunset
Ltd. Train Crash in Bayou Canot, Ala. On Sept. 22, 1993, 121 F.3d 1421, 1429 (11th Cir. 1997)
(“Unless or until the United States Supreme Court should decide to add state remedies to the
admiralty remedies for personal injury, personal injury claimants have no claim for nonpecuniary
damages such as . . . punitive damages . . . .”). Nevertheless, “[p]unitive damages may be
awarded in maritime tort actions where defendant’s actions were intentional, deliberate or so
wanton and reckless as to demonstrate a conscious disregard of the rights of others.” Stires v.
Carnival Corp., 243 F. Supp. 2d 1313, 1322 (M.D. Fla. 2002) (quoting Muratore v. M/S Scotia
Prince, 845 F.2d 347, 354 (1st Cir. 1988)); see also Doe v. Royal Caribbean Cruises, Ltd., 2012
WL 920675, at *2-4 (S.D. Fla. Mar. 19, 2012) (holding that “punitive damages are generally
available in personal injury actions arising under the Court’s maritime jurisdiction when the

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defendant engaged in wanton, willful or outrageous conduct”).9
Here, Defendant Chatterton asserts that Plaintiff has not pled any intentional, deliberate,
wanton, or reckless conduct that has caused harm to Beacon. See ECF No. [9] at 10. The Court
respectfully disagrees. In sum, the Complaint alleges that Beacon sent money to Defendants
based on Defendants’ false assurances that such fees were to be used for repairs, when, in reality,
they were not. See ECF No. [1] at ¶¶ 102-115. Such allegations certainly qualify as intentional
or deliberate conduct resulting in harm to Beacon. However, because Beacon’s fraud claim, as
currently pled, necessitates its dismissal under Federal Rule of Civil Procedure 9(b), Beacon’s
claim for punitive damages is also dismissed.
IV. CONCLUSION
For the aforementioned reasons, it is hereby ORDERED AND ADJUDGED that
Defendant John Chatterton’s Motion to Dismiss, ECF No. [9], is GRANTED. Counts I through
IV of Plaintiff’s Complaint, as they relate to Defendant Chatterton, are DISMISSED
WITHOUT PREJUDICE. Plaintiff shall file an Amended Complaint containing the guidance
provided herein no later than October 14, 2014. Should Plaintiff fail to submit an Amended
Complaint within the required time period, Defendant Chatterton will be dismissed.
DONE AND ORDERED in Fort Lauderdale, Florida, this 1st day of October, 2014.

___________________________________
BETH BLOOM
UNITED STATES DISTRICT JUDGE

There exists a tension as to whether a plaintiff must demonstrate intentional conduct in order to
recover punitive damages in an action pursued under federal admiralty law. For further
discussion on the current state of the law on this issue, see Judge Goodman’s concise yet
thorough examination in Doe, 2012 WL 920675, at *2-4.
9

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Copies to:
Counsel of Record

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