Mitseaah Yacht, LLC v. Thunderbolt Marine, Inc.
Filing
34
ORDER granting in part and denying in part 20 Motion for Summary Judgment. Signed by Judge William T. Moore, Jr on 3/28/16. (bcw)
C
IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF GEORGIA
SAVANNAH DIVISION
MITSEAAH YACHT, LLC,
1Mi\
U
U 59
)-G
OF
Plaintiff,
V
CASE NO. CV414-236
.
THUNDERBOLT MARINE, INC.,
Defendant.
ORDER
Before the Court is Defendant's Motion for Summary
Judgment. (Doc. 20.) For the following reasons, Defendant's
motion is GRANTED IN PART and DENIED IN PART.
Plaintiff Mitseaah
Yacht, LLC may only recover direct damages. Accordingly,
Plaintiff's claims for dockage fees, compensation for a builder
representative, and a stolen prop blade and kayak are DISMISSED.
Plaintiff's remaining claims survive. This case will proceed to
trial.
BACKGROUND
This case arises from the attempted repair of the sailing
yacht MITSeaAH. (Doc. 26 at 1.) Plaintiff initially brought the
yacht to Defendant Thunderbolt Marine, Inc. in October of 2012
for repair of the yacht's gear boxes. (Doc. 20, Attach. 3 at 2.)
Although the work was expected to be limited and brief, it
expanded over time. (Id.) The work ultimately encompassed
:
-
approximately 179 work orders; 288 job tasks; and work on the
yacht's engine, hull, and exterior. (Id.) Captain Adam Lambert'
oversaw the repair work on behalf of Plaintiff and was
authorized to approve work orders and act as Plaintiff's agent.
(Id.) The work was performed subject to certain Terms and
Conditions (the "Terms"). (Doc. 20, Attach. 4.) The Terms stated
in an "APPLICABLE LAW" clause that
"[t]he rights and obligations
of [Plaintiff and Defendant] shall be governed and determined by
the laws of the state of Georgia . . . ." (Id.)
The Terms include clauses requiring Plaintiff to take
certain actions before seeking relief and purporting to limit
the types of damages that Plaintiff could seek. Specifically,
1
Plaintiff initially filed an unsworn, unsigned declaration on
behalf of Captain Lambert because Captain Lambert was at sea and
unable to transmit a signed copy of his declaration. (Doc. 26 at
2.) Defendant did not file a motion to strike Captain Lambert's
declaration. On August 26, 2015, Plaintiff submitted a "Notice
of Filing" (Doc. 28), which the Court construes as a motion to
substitute, containing a signed, unsworn declaration. Generally,
Courts do not consider unsworn statements when deciding a motion
for summary judgment. McCaskill v. Ray, 279 F. App'x 913, 915
(11th Cir. 2008) . However, unsworn declarations that are signed
and dated under penalty of perjury in compliance with 28 U.S.C.
§ 1746 are sufficient. Id. Because Plaintiff has shown good
cause, the Court GRANTS the motion to substitute and has
considered Captain Lambert's unsworn declaration when deciding
this motion for summary judgment. Moreover, Defendant admits
that, "Captain Lambert was either present or had the opportunity
to be present to oversee and inspect all the work that was
performed on the vessel." (Doc. 20, Attach. 3 at 2-3.) Captain
Lambert's declaration provided specific detail from personal
knowledge about Defendant's repair errors including why and how
damage occurred. This is sufficient to rebut Defendant's
argument that there is no evidence supporting many of
Plaintiff's claims.
2
Section 2 of the Terms—titled "PAYMENT"—requires Plaintiff to
"notify the [Defendant] in writing of any alleged billing
discrepancies within 7 days of discovery and shall review such
discrepancies with [Defendant] in writing 15 days after such
notice." (Id.) Likewise, Section 7—titled "DELAY"—states that
Defendant shall not "incur or be liable or responsible for any
nonperformance of or delay in the work." (Id.) Section 10—titled
"CUSTOMER'S INSPECTION/CLAIMS"—requires Plaintiff to
inspect the Vessel or repaired parts immediately upon
delivery thereof and shall within ten (10) days
thereafter notify [Defendant] in writing of any claims
of incomplete or unacceptable work. The failure of
[Plaintiff] to notify [Defendant] of any such claims
within said ten (10) day period shall constitute an
irrevocable acceptance of the Vessel and all work and
an admission by [Plaintiff] that the work fully
complies with all agreed terms, specifications, and
conditions.
(Id.)
The Terms also include a "WARRANTY AND DISCLAIMERS" clause
stating that
[t]he warranty shall be for a period of six (6) months
from the date of delivery of the Vessel to [Plaintiff]
and shall cover only the repair or replacement of work
done or materials supplied to [Plaintiff] by
[Defendant] . THE STATEMENT OF WARRANTY IS EXCLUSIVE
AND IN LIEU OF ALL OTHER EXPRESS AND IMPLIED
WARRANTIES WHATSOEVER, INCLUDING, BUT NOT LIMITED TO,
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
PARTICULAR PURPOSE.
(Id.) Finally, the Terms include a "LIMITATIONS OF LIABILITY"
clause. It states that
3
IN NO EVENT SHALL [Defendant] BE LIABLE FOR ANY LOSS
OF USE OF THE VESSEL OR LOSS OF, PROFITS, OR SPECIAL,
INCIDENTIAL OR CONSEQUENTIAL DAMAGES OR LOSSES, IN NO
EVENT SHALL ANY ACTION BE COMMENCED AGAINST COMPANY
MORE THAN ONE YEAR AFTER THE CAUSE OF ACTION WITH
RESPECT TO WHICH THE CLAIM IS MADE HAS ACCRUED.
(Id.
The yacht's repair was fraught with conflict. The parties
estimated that the initial repairs would take 5-6 months, but
the yacht remained in Defendant's care for nearly two years.
(Doc. 26 at 1.) In June of 2014, the yacht left Defendant's
shipyard after Plaintiff paid approximately $2,153,364.00. (Doc.
1 at 2.) Defendant claims that this two-year delay was the
result of Plaintiff's unexpected broadening of the scope of work
on the yacht. (Doc. 20, Attach. 1 at 2.) Plaintiff asserts that
Defendant's defective work, mismanagement, and unskilled and
unqualified workers caused the delay. (Doc. 28 at 3-4.)
Even with the long-lasting repair and high cost, much of the
yacht remained unrepaired or damaged and further work had to be
done. (Doc. 26.) According to Plaintiff, both parties discussed
many of the issues prior to the yacht leaving Defendant's
shipyard, while others were discovered sometime after the yacht
was delivered. (Doc. 28 4-7.) These issues were also
communicated to Defendant.
(Id.) Plaintiff has alleged 18
specific injuries caused by Defendant:
1.
Plaintiff claims that Defendant dented the yacht's hull
during its haul and launch. (Doc. 25, Attach. 1 at 2; Doc.
28 at 4.) According to Plaintiff, the parties discussed
this issue multiple times prior to the yacht's delivery.
(Doc. 28 at 4.) However, Defendant argues that the types of
lifts used to haul and launch the yacht could not have
caused the damage. (Doc. 20 at 4.) Defendant also states
that Plaintiff did not notify Defendant of the dent within
10 days of the yacht's delivery or make a warranty claim
against Defendant. (Id.)
2.
Plaintiff
claims
that
Defendant
defectively applied
antifouling paint on the hull of the yacht. (Doc. 25,
Attach. 1 at 2; Doc. 28 at 4.) Plaintiff asserts that this
was discussed "on numerous occasions." (Doc. 28 at 4.)
However, Defendant claims Plaintiff was responsible for any
defects because Plaintiff authorized Defendant to paint in
patches to save time.
(Doc.
20,
Attach.
7 at 2.)
Furthermore, Defendant provided Plaintiff with a report on
the quality of the paint job
. 2
(Doc. 20 at 5.) Moreover,
Plaintiff did not notify Defendant of the paint problems
within 10 days of the yacht's delivery, or make a warranty
claim against Defendant. (Id.)
2
The report from Interiux—the company which selected the paint—
details a number of errors in the paint job, including thin
application, and poor adhesion. (Doc. 20, Attach. 7 at 7.)
5
3.
Plaintiff claims that Defendant caused damage to the
engines when Defendant failed to pressure wash the fuel
tanks and, as a result, left welding materials inside.
(Doc. 25, Attach. 1 at 2; Doc. 28 at 4-5.) However,
Defendant notes that Plaintiff did not notify Defendant of
the error within 10 days of the yacht's delivery or make a
warranty claim against Defendant. (Doc. 20 at 5.)
4.
Plaintiff claims that a prop blade and a kayak were stolen
despite Defendant charging for security while the yacht was
in the shipyard. (Doc. 25, Attach. 1 at 2; Doc. 28 at 5.)
However, Defendant contends that it had no obligation to
protect Plaintiff's personal property and that Plaintiff
was offered, and declined, the opportunity to secure such
property in lockers. (Doc. 20 at 6.)
S. Plaintiff claims that Defendant crushed certain valuable
materials while operating a forklift. (Doc. 25, Attach. 1
at 2; Doc. 28 at 5.) However, Defendant states it has no
record of Plaintiff making such a claim for damaged
materials or a record of such an incident. (Doc. 20 at 6.)
6. Plaintiff claims that Defendant damaged a piano hinge on
the yacht when Defendant's employees bent the hatch cover
back too far. (Doc. 25, Attach. 1 at 2; Doc. 28 at 5.)
However, Defendant states that Plaintiff did not notify
Defendant of the damaged hinge within 10 days of the
yacht's delivery or make a warranty claim against
Defendant. (Doc. 20 at 6.)
7.
Plaintiff claims that Defendant charged for work that was
not performed on the stern thruster. (Doc. 25, Attach. 1 at
2; Doc. 28 at 5.) However, Defendant states that it was not
notified of this billing discrepancy. (Doc. 20 at 7.)
8.
Plaintiff claims that Defendant defectively painted the
yacht's hull. (Doc. 25, Attach. 1 at 3; Doc. 28 at 5.)
However, Defendant claims that Plaintiff is at fault
because Plaintiff rejected multiple draft work orders for
the job due to high costs. (Doc. 20 at 7.) Defendant claims
that Plaintiff ultimately determined that the yacht's crew
would perform a portion of the work—sanding the vessel and
performing the prep work—while Defendant would merely be
responsible for painting. (Doc. 20 at 7.) Defendant claims
it warned Plaintiff that Defendant could not be responsible
if the crew performed an inadequate job. (Id.) Defendant
also alleges that Plaintiff did not notify Defendant of the
painting errors within 10 days of the yacht's delivery or
make a warranty claim against Defendant. (Id.)
9.
Plaintiff claims that Defendant inappropriately painted the
mast and boom rigs. (Doc. 25, Attach. 1 at 3; Doc. 28 at
5.)
However,
Defendant
claims
that
Plaintiff
was
responsible for the error because Captain Lambert oversaw
7
the application of primer and authorized Defendant to apply
the topcoat. (Doc. 20 at 8.) Defendant also states that
Plaintiff did not notify Defendant of the error within 10
days of the yacht's delivery or make a warranty claim
against Defendant. (Id.)
10. Plaintiff claims that Defendant wasted specially ordered
material due to sloppy cutting. (Doc. 25, Attach. 1 at 3;
Doc. 28 at 6.) According to Defendant, no material was
wasted because some was repurposed for use on other parts
of the boat while the remainder was given to Captain
Lambert.
(Doc. 20 at 8.) Defendant also states that
Plaintiff did not notify Defendant of this claim. (Id.)
11. Plaintiff claims that it had to retain a representative
from the yacht's builder to oversee repairs. (Doc. 25,
Attach. 1 at 3; Doc. 28 at 6.) However, Defendant claims
that it was never asked, and did not consent, to cover the
cost of Plaintiff's representative.
(Doc.
20 at 9.)
Defendant also states that Plaintiff did not notify
Defendant of the error within 10 days of the yacht's
delivery or make a warranty claim against Defendant. (Id.)
12. Plaintiff claims that Defendant charged an excessive
dockage fee. (Doc. 25, Attach. 1 at 3; Doc. 28 at 6.)
However, Defendant notes that the Terms did not guarantee a
completion date for the work. (Doc. 20 at 9.) Likewise,
IN
Defendant points out that the Terms state that Defendant
shall not "be liable or responsible for any nonperformance
of or delay in the work." (Id.)
13. Plaintiff claims that it had to repair faulty hatch dogs
installed by Defendant. (Doc. 25, Attach. 1 at 4; Doc. 28
at 6.) However, Defendant states that Plaintiff did not
notify Defendant of the error within 10 days of the yacht's
delivery or make a warranty claim against Defendant. (Doc.
20 at 10.)
14. Plaintiff claims that it had to redo modifications
Defendant made to the yacht's drive line. (Doc. 25, Attach.
1 at 4; Doc. 28 at 6.) However, Defendant states that
Plaintiff did not notify Defendant of the error within 10
days of the yacht's delivery or make a warranty claim
against Defendant. (Doc. 20 at 10.)
15. Plaintiff claims that hydraulic fittings Defendant repaired
leaked and had to be repaired elsewhere. (Doc. 25, Attach.
1 at 4; Attach. 2 at 2; Doc. 28 at 6.) However, Defendant
states that Plaintiff did not notify Defendant of the error
within 10 days of the yacht's delivery or make a warranty
claim against Defendant. (Doc. 20 at 10-11.)
16. Plaintiff claims that work Defendant performed on the aft
door hydraulics prevented the pins from retracting. (Doc.
25, Attach. 1 at 4; Doc. 25, Doc. 28 at 7.) Plaintiff also
WO
claims that Defendant attempted to repair this issue, but
was unable to complete the repair. (Id.) However, Defendant
states that Plaintiff did not notify Defendant of the error
within 10 days of the yacht's delivery or make a warranty
claim against Defendant. (Doc. 20 at 11.)
17. Plaintiff claims that Defendant's faulty painting of the
transom caused a blister that had to be painted out. (Doc.
25, Attach. 1 at 4; Doc. 25, Attach. 2 at 2; Doc. 28 at 7.)
However, Defendant states that Plaintiff did not notify
Defendant of the error within 10 days of the yacht's
delivery or make a warranty claim against Defendant. (Doc.
20 at 11.)
18. Plaintiff claims that Defendant's painting of the name
boards was faulty. (Doc. 25, Attach. 1 at 4; Doc. 28 at 7.)
However, Defendant complains that any fault lies with
Plaintiff because Plaintiff would not allow Defendant to
remove the hardware on the name boards in order to perform
a more adequate job. (Doc. 20 at 11.) Defendant also states
that Plaintiff did not notify Defendant of the error within
10 days of the yacht's delivery or make a warranty claim
against Defendant. (Id.)
Plaintiff filed a complaint on October 27, 2014 invoking
this Court's maritime jurisdiction. (Doc. 1 at 1.) Plaintiff
alleges claims of negligence, breach of contract, breach of
10
implied warranty of workmanlike performance, and breach of
duties as a bailee. (Id. at 3.) Plaintiff seeks as damages fees
and expenses for surveyors, inspectors and a builder
representative; the value of time expended by the captain and
crew of the yacht in supervising and completing unfinished work
and repairs; the costs of bringing outside contractors to
Savannah to oversee repairs; the cost to haul, inspect and
repair the yacht due to the defective paint job; the cost to
repair the yacht's fuel tanks; the amount Plaintiff overpaid
Defendant for uncompleted work; and the cost of the extended
dockage and electricity charges while the yacht was in
Defendant's possession. (Id.) Defendant filed a Motion for
Summary Judgment (Doc. 20) arguing that the Terms restrict or
prohibit Plaintiff's recovery on the 18 issues discussed above.
Plaintiff responds, however, that the Terms include
unenforceable "red letter" clauses under maritime law and,
alternatively, that even if the clauses are valid, they do not
defeat Plaintiff's claims for breach of contract, breach of
implied warranty of workmanlike performance, or breach of duty
as a bailee. (Doc. 26.)
ANALYSIS
I.
SUMMARY JUDGMENT STANDARD
According to Fed. R. Civ. P. 56(a),
"[a] party may move for
summary judgment, identifying each claim or defense—or the part
11
of each claim of defense—on which summary judgment is sought."
Such a motion must be granted "if the movant shows that there is
no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law." Id. The "purpose of
summary judgment is to 'pierce the pleadings and to assess the
proof in order to see whether there is a genuine need for
trial.' " Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 587 (1986) (quoting Fed. R. Civ. P. 56 advisory
committee notes)
Summary judgment is appropriate when the nonmovant "fails
to make a showing sufficient to establish the existence of an
element essential to that party's case, and on which that party
will bear the burden of proof at trial." Celotex Corp. v.
Catrett, 477 U.S. 317, 322 (1986) . The substantive law governing
the action determines whether an element is essential. DeLong
Equip. Co. v. Wash. Mills Abrasive Co., 887 F.2d 1499, 1505
(11th Cir. 1989)
As the Supreme Court explained:
[A] party seeking summary judgment always bears the
initial responsibility of informing the district
court of the basis for its motion, and identifying
those portions of the pleadings, depositions,
answers to interrogatories, and admissions on file,
together with the affidavits, if any, which it
believes demonstrate the absence of a genuine issue
of material fact.
12
Celotex, 477 U.S. at 323. The burden then shifts to the
nonmovant to establish, by going beyond the pleadings, that
there is a genuine issue as to facts material to the nonmovant's
case. Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.
1991)
The Court must review the evidence and all reasonable
factual inferences arising from it in the light most favorable
to the nonmovant. Matsushita, 475 U.S. at 587-88. However, the
nonmoving party "must do more than simply show that there is
some metaphysical doubt as to the material facts." Id. at 586. A
mere "scintilla" of evidence, or simply conclusory allegations,
will not suffice. See, e.g., Tidwell v. Carter Prods., 135 F.3d
1422, 1425 (11th Cir. 1998) . Nevertheless, where a reasonable
fact finder may "draw more than one inference from the facts,
and that inference creates a genuine issue of material fact,
then the Court should refuse to grant summary judgment."
Barfield v. Brierton, 883 F.2d 923, 933-34 (11th Cir. 1989)
II. CHOICE OF LAW
As an initial matter, the Court must determine whether the
"APPLICABLE LAW" clause in the Terms is valid. Plaintiff argues
that this Court should look to federal maritime law to determine
the term's applicability. (Doc. 31 at 1.) Defendant initially
disagreed with this proposition, arguing instead that this Court
should apply Georgia law without reference to maritime law.
13
(Doc. 29 at 1-2.) However, Defendant now recognizes (Doc. 33 at
2) that choice of law provisions in maritime contracts are valid
in this circuit only to the extent that they do not frustrate
the national interests provided by maritime law. Accordingly,
the Court must first determine if the contract at issue in this
case is maritime in nature, and second if the application of
Georgia law would frustrate national interests.
"Maritime jurisdiction does arise . . . when a ship
undergoes repairs." Hatteras of Lauderdale, Inc. v. Gemini Lady,
853 F.2d 848, 849-50 (11th Cir. 1988) (citing New Bedford Dr
Dock Co. v. Purdy, 258 U.S. 96, 99 (1922)). Because this case
involves the repair of an oceangoing vessel, federal maritime
law governs unless the matter is inherently local. See e.g.,
Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 22-23 (2004) . Since
the parties have not argued, and the Court cannot determine from
the record, that the matter is inherently local, the Court
proceeds to the second part of the analysis.
In the Eleventh Circuit, "parties to a maritime contract
may set the terms of the agreement between them, including
choice of law, 'provided that the application of state law does
not frustrate national interests in having uniformity in
admiralty law.' " Odyssey Marine Expl., Inc. v. Unidentified
Shipwrecked Vessel or Vessels, 512 F. App'x 890, 893 n.3 (11th
Cir. 2013) (quoting Coastal Fuels Mktg., Inc. v. Fla. Express
14
Shipping Co., Inc., 207 F.3d 1247, 1251 (11th Cir. 2000); citing
King v. Allstate Ins. Co., 906 F.2d 1537, 1541 (11th Cir. 1990)
("There being no public policy problem whatsoever in parties to
a maritime . . . contract setting the terms of the [agreement]
between them, we uphold their freedom to do so.")) . In addition
to desiring uniformity, admiralty law also requires that
maritime contracts operate to "deter negligence." See Edward
Leasing Corp. v. Uhlig & Assocs., Inc., 785 F.2d 877, 888 (11th
Cir. 1986) (citing Bisso v. Inland Waterways Corp., 349 U.S. 85
(1955)) (finding exculpatory clauses invalid in admiralty when
they absolve entities of all liability) . Accordingly, the choice
of law provision in this case is valid only insofar as it does
not violate the policies of maritime law.
Plaintiff states that enforcement of the "APPLICABLE LAW"
clause would cause the Terms to violate national interest in
maritime law. (Doc. 31 at 6.) Specifically, Plaintiff alleges
that certain exculpatory clauses in the Terms are considered
invalid, "red letter ,3 clauses because they inappropriately limit
"Red letter clauses"
are frequently used in marine service, shipbuilding
and ship repair contracts. Such contracts are
variously worded but, in general attempt to do all of
the following: (1) exclude express and implied
warranties; (2) limit the time for filing suit; (3)
place a ceiling on damage exposure; (4) limit
liability to the cost of repair or replacement of the
defective material or workmanship; (5) exclude
15
liability and do nothing to deter negligence. (Doc. 26 at 4.)
Plaintiff claims that while these clauses may be valid under
Georgia law, they are not valid under maritime law. (Doc. 31 at
MMI
In Diesel "Repower", Inc. v. Islander Invs. Ltd., 271 F.3d
1318, 1324 (11th Cir. 2001), the Eleventh Circuit Court of
Appeals set forth a three part test to determine whether a
limitation of liability clause in a maritime contract is valid.
"First, the clause must clearly and unequivocally indicate the
parties' intentions. Second, the clause may not absolve the
repairer of all liability and the liability risk must still
provide a deterrent to negligence. Third, the 'businessmen' must
have equal bargaining power so there is no overreaching." Id. at
1324. While Defendant agrees with Plaintiff that this Court
should look to the Islander test to determine if the clauses are
valid, it does not agree that Islander voids any of them.
Because the Court has determined that this is a maritime
contract and that "red letter" clauses are inapplicable in
consequential damages such as lost profits, lost
charter hire; (6) exclude specific risks such as
liability for pollution, third party claims, and force
majeure occurrences; (7) exclude the cost of defense
and attorneys' fees.
Thomas J. Schoenbaum, 1 Admiralty & Maritime Law § 5-8 (5th ed.
2015)
16
maritime law, each clause is evaluated according to Islander
prior to determining the clause's validity under Georgia law.
A. Islander Test
As an initial matter, there is no evidence of unequal
bargaining power. Defendant is a corporate entity engaged in the
repair of ships. (Doc. 1 at 1-2.) The sole members of Plaintiff
likewise have significant business acumen and experience. (Doc.
33 at 3.) There is also no evidence that this is a contract of
adhesion or that Plaintiff was unable to negotiate beneficial
contract terms. In fact, Plaintiff was able to negotiate work
orders more suitable to its budget and expectations. (Doc. 20,
Attach. 7 at 9-23.) Accordingly, the Terms comport with
Islander's third requirement.
i.
"PAYMENTS" Clause
Plaintiff argues that the "PAYMENTS" 4 clause is not
applicable to Plaintiff's claims for waste of materials, dockage
fees, and stern thruster repair because it is "inapplicable on
its face". (Doc. 31 at 8.) However, the applicability of a
clause to a claim does not explain whether the clause deters
negligence or unequivocally indicates the parties' intentions.
Absent any further argument under Islander, and after a plain
The Eleventh Circuit Court of Appeals has applied the Islander
test to similar clauses in the past. See Merrill Stevens Dry
Dock Co. v. N/V YEOCOMICO II, 329 F.3d 809, 812 (11th Cir. 2003)
(evaluating presentment clause in light of Islander)
17
reading of the clause, the Court concludes that it meets the
requirements of Islander.
ii.
"DELAYS" Clause
Likewise, this Court concludes that the "DELAYS" clause
passes muster under the Islander test. That clause purports to
exempt Defendant from delays or nonperformance due to "causes
beyond Company's reasonable control and without additional cost
or expense to Company." (Doc. 20, Attach. 4.) As a result, this
clause acts, as both Defendant and Plaintiff have pointed out,
as a "force majeure" clause. (Doc. 26 at 12; Doc. 29 at 10.) The
plain language of the clause does not prohibit recovery for
negligence or otherwise discourage Defendant from performing in
a workman-like capacity. Accordingly, the clause acts a
sufficient deterrent to negligence and is unambiguous. As a
result, this Court cannot conclude that Defendant's "DELAYS"
clause fails under Islander.
iii.
"CUSTOMER'S INSPECTION/CLAIMS" and "WARRANTY AND
DISCLAIMERS" Clauses
Plaintiff argues that the "CUSTOMER'S INSPECTION/CLAIMS"
clause requiring that Plaintiff inspect the yacht within 10 days
and notify Defendant of any claims of incomplete or unacceptable
work is void on its face. (Doc. 26 at 8.) Plaintiff also argues
that the clause causes conflict with the "WARRANTY AND
DISCLAIMERS" clause allowing recovery for issues arising within
six months of delivery. (Id. at 7.) Plaintiff claims that this
conflict results in ambiguity and does not deter negligence.
(Id.) Generally " 'a contractual provision should not be
construed as being in conflict with another unless no other
reasonable interpretation is possible.' " Merrill Stevens Dry
Dock Co. v. M/V YEOCOMICO II, 329 F.3d 809, 814 (11th Cir. 2003)
(quoting Maccaferri Gabions, Inc. v. Dynateria Inc., 91 F.3d
1431, 1439 (11th Cir. 1996)) . Accordingly, "an ambiguity is not
invariably present when a contract requires interpretation." Id.
(quoting Fireman's Fund Ins. Co. v. Tropical Shipping & Constr.
Co., 254 F.3d 987, 1004 (11th Cir. 2001))
However, the Court cannot conclude as a matter of law that
these clauses are clear and unequivocal or that they operate to
deter negligence. Plaintiff is correct that requiring Plaintiff
to inspect the yacht within 10 days and notify Defendant of any
issues or else admit "that the work fully complies with all
agreed terms, specifications, and conditions" (Doc. 20, Attach.
4), conflicts with the warranty clause providing Plaintiff with
six months to seek repairs (id.) . Presumably, the "CUSTOMER'S
INSPECTIONS/CLAIMS" clause was intended to address patent
issues, while the "WARRANTY AND DISCLAIMERS" clause was intended
to address latent issues with Defendant's work. However, neither
of these clauses makes that distinction clear and both could be
applied to mutually eliminate recovery under the other.
19
Accordingly, it is possible that acceptance of the yacht under
the "INSPECTION/CLAIMS" clause would prohibit recovery under the
"WARRANTY AND DISCLAIMERS" clause.
Even if these clauses did pass the Islander test and
Georgia law were applied, questions of fact remain. First,
Plaintiff alleges that Defendant waived strict compliance with
the "INSPECTION /CLAIMS" clause. In Georgia, if a Defendant had
"actual notice of [] defects . . . a jury question
exist[s] as
to whether [Defendant] waived strict compliance with the notice
provision contained." RHL Props., LLC v. Neese, 293 Ga. App.
838, 841, 668 S.E.2d 828, 830 (2008) (citations omitted);
accord. Stimson v. Georgia Laycock, Inc., 247 Ga. App. 1, 5, 542
S.E.2d 121, 125 (2000) (waiver in home building contract based
on knowledge); Dep't of Transp. V. Dalton Paving & Constr., 227
Ga. App. 207, 215-16, 489 S.E.2d 329, 337-38 (1997) (waiver in
highway construction contract based on knowledge); APAC-Ga.,
Inc. v. Dep't. of Transp., 221 Ga. App. 604, 606-07, 472 S.E.2d
97, 99-100 (1996) (same) ) . Here, Plaintiff alleges that
Defendant waived strict compliance with the "CUSTOMER'S
INSPECTION /CLAIMS" clause because Defendant was aware of the
issues with the yacht's repair and took some steps to begin
remedying them. (Doc. 26 at 8.) Plaintiff points to Captain
Lambert's statements that Defendant was aware of the yacht's
faulty repairs prior to leaving the shipyard, along with
20
evidence that Defendant was offered the opportunity inspect the
yacht while it was harbored outside of Georgia. (Id. at 9; Doc.
28 at 4.) This is sufficient factual evidence of waiver to deny
summary judgment to Defendant on the basis of the
"INSPECTION/CLAIMS" clause.
Second,
Plaintiff
argues
that
the
"WARRANTY AND
DISCLAIMERS" clause does not bar recovery because the defects
occurred within the warranty period. (Doc. 26 at 11.) Defendant
contends that there is no evidence that the damage occurred
within the six-month warranty period, or that Plaintiff
presented the yacht to Defendant for repair. (Doc. 29 at 9.) In
Georgia, if an injury subject to a limited warranty occurs
within the warranty period, it is recoverable even if the claim
is reported after the termination of that period. Nulite Indus.
Co., LLC. v. Home, 252 Ga. App. 378, 380, 556 S.E.2d 255, 257
(2001) . However, a defendant must be offered a reasonable
opportunity to repair prior to a plaintiff establishing breach
of warranty. McDonald v. Mazda Motors of Am. Inc., 269 Ga. App.
62, 64, 603 S.E.2d 456, 460 (2004). Captain Lambert's affidavit
states that all damage to the yacht either occurred within the
six-month period or was the result of faulty repair work prior
to the yacht's delivery. (Doc. 28 (referencing list of damages
and dates contained in Doc. 25, Attach. 1) .) Furthermore,
Plaintiff's failure to bring the yacht back to Defendant's
21
shipyard for repair does not preclude Plaintiff from obtaining
relief. The record contains evidence that Plaintiff did inform
Defendant of the repair issues and that Defendant's
representative observed and evaluated some of the faulty repair
work. (Doc. 28 at 5.) This, too, prohibits granting Defendant's
request for summary judgment on the basis of the "WARRANTY AND
DISCLAIMER'S" clause.
iv. "LIMITATITIONS OF LIABILITY" and "INDEMNIFICATION"
Clauses
Plaintiff argues next that the "LIMITATIONS OF LIABILITY"
clause is unclear, ambiguous, and does nothing to deter
negligence because it conflicts with the "INDEMNIFICATION"
clause requiring Plaintiff to indemnify Defendant for acts of
gross negligence and willful or wanton conduct. (Doc. 26 at 10.)
The "INDEMNIFICATION" clause states
[w]hile the vessel is in the [Defendant's] possession,
[Plaintiff] shall defend, indemnify and hold harmless
the [Defendant], its employees and agents, from and
against all loss, damage, injury, death, legal fees
and expenses, or other liability, including loss or
damage to [Plaintiff's] vessel or work accomplished on
any portion of the vessel, in the event any such
liability is in any way caused by the negligence or
willful conduct of [Plaintiff], or [Plaintiff's]
employees, agents, or parties contracted or hired by
[Plaintiff]
(Doc. 20, Attach. 4.) As an initial matter, Plaintiff appears to
have confused the terms of this contract. The "INDEMNIFICATION"
clause states only that Plaintiff is required to indemnify
22
Defendant for liability caused by Plaintiff or Plaintiff's
employees. (Id.) The clause does not require Plaintiff to
indemnify Defendant for Defendant's own negligence or willful
misconduct. More importantly, the clause does not bar Plaintiff
from bringing claims against Defendant for Defendant's
negligence, gross negligence, or willful or wanton misconduct.
However, the "LIMITATIONS OF LIABILITY" clause does
prohibit Plaintiff from recovering damages for loss of use, loss
of profits, or special, incidental or consequential damages.
While limitations that prohibit recovery for negligence are
invalid under the Islander test, limitations on damages are
valid. See Islander, 271 F.3d at 1325 (holding valid clause
excluding recovery for loss of income, punitive, progressive, or
consequential damages) . Likewise, even Plaintiff recognizes
(Doc. 26 at 10) that similar limitations on damages are valid
under Georgia law. See Edward, 785 F.2d at 888 ("parties to []
repair contracts may validly stipulate that the repaier's
liability is to be limited"); accord Monitronics Int'l, Inc. v.
Veasley, 323 Ga. App. 126, 135, 746 S.E.2d 793, 802 (2013) ("It
is . . . well settled that exculpatory clauses in which a
business seeks to relieve itself from its own negligence are
valid and binding in this State, 'and are not void as against
public policy unless they purport to relieve liability for acts
of gross negligence or willful or wanton conduct.' " (quoting
23
Holmes v. Clear Channel Outdoor, Inc., 284 Ga. App. 474, 477,
644 S.E.2d 311, 314 (2007) ) ) . Here, the "LIMITATIONS OF
LIABILITY" clause does not prohibit recovery for Plaintiff's
negligence, it merely limits recovery only to direct damages.
Accordingly, both clauses passes muster under the Islander test
and Georgia law. As a result, the Court concludes that, while
the "CUSTOMER'S INSPECTION/CLAIMS" clause and "WARRANTY AND
DISCLAIMERS" clause are void or do not prevent Plaintiff from
seeking relief, the "LIMITATIONS OF LIABILITY" clause, "DELAYS"
clause, "PAYMENT" clause, and "INDEMNIFICATION" clause are valid
under the Islander test and Georgia law.
Defendant's argument as to Plaintiff's claims 5, 6, 13, 14,
15, 16, and 17 is that they are barred due to non-compliance
with the "CUSTOMER'S INSPECTION" or "WARRANTY AND DISCLAIMERS"
clauses, or some combination of both. This Court has concluded
that those clauses are either void under maritime law or that
questions of fact remain that may preclude their application.
Accordingly, Defendant's request for summary judgment for those
claims is DENIED.
III. PLAINTIFF'S CLAIMS
Defendant argues that either the Terms or specific facts
preclude recovery for Plaintiff's claims 1, 2, 3, 4, 7, 8, 9,
10, 11, 12, and 18. As to the injuries asserted by claims 1, 2,
24
3, 8, 9, and 18;
Defendant presents certain facts that it
alleges bar recovery. As to claims 2, 8, 9, and 18, Defendant
argues that Captain Lambert authorized or otherwise interfered
with the paint jobs. (Doc. 20.) As to claim 3, Defendant argues
that there is no evidence that slag could have gotten into the
fuel tanks. (Id.) As to claim 1, Defendant argues that the lifts
used could not have caused the dent in the hull. 6 (Id.) However,
Captain Lambert's responsibility for the paint job, or whether
his interference affected its quality, is a question of fact for
the jury. So too is whether the lifts Defendant used caused
damage to the yacht's hull or whether slag 7 was small enough to
enter the fuel tanks. Accordingly, Defendant's request for
summary judgement as to those claims is DENIED.
However, Defendant asserts that claims 4, 7, 10, 11, and 12
are barred either by the "LIMITATIONS OF LIABILITY", "PAYMENT",
or "DELAYS" clauses. Because these clauses comply with the
Defendant claims that the "LIMITATIONS OF LIABILITY" clause
bars recovery under claims 1—dent in hull—and 9—rig paint—but
has provided no support for that assertion.
6
Defendant claims that the Terms required Plaintiff file an
action within "one year after the cause of action with respect
to which the claim is made has accrued." (Doc. 20, Attach. 4 at
2) . Captain Lambert, however, argues that the dent in the hull
happened on both the haul and launch in March of 2013 and in
January of 2014. (Doc. 28 at 3-4 (referencing dates in list of
damages (Doc. 25, Attach 1 at 2)).) Accordingly, the tolling
agreement referenced by Defendant (Doc. 20, Attach. 8) allows
Plaintiff's claim survive as the one year period would not have
expired.
' Plaintiff asserts that the material may have also been grinding
and welding debris. (Doc. 25 at 3; Doc. 28 at 5.)
25
Islander test, the Court turns to Georgia law for their
interpretation and validity. Other than as discussed above,
Plaintiff has not argued that the remaining clauses are invalid
under Georgia law. All that remains for this Court, therefore,
is to determine if the clauses apply to the remaining claims.
A. Claim 7 - Stern Thruster
Plaintiff initially alleged that Defendant charged for work
that was not performed on the stern thruster. Defendant claims
that the "PAYMENT" clause prohibits Plaintiff's recovery. (Doc.
20 at 7.) In Plaintiff's response to Defendant's Notion for
Summary Judgment, Plaintiff explained that the claim is not
whether Defendant "charged for work that wasn't performed" (Doc.
25, Attach. 1 at 2), but instead that "the stern thruster was
worked on but never made operable." (Doc. 28 at 5.) As recast,
this is a claim for negligence or breach of contract rather than
a payment dispute. Since the "PAYMENT" clause applies only to
payment disputes, it does not operate to bar Plaintiff's claim.
As a result, Defendant's request for summary judgment as to that
claim is DENIED.
B. Claim 10 - Material for Hull Platin
Plaintiff alleges that Defendant's sloppy work wasted
material. (Doc. 25, Attach. 1 at 3; Doc. 28 at 6.) Defendant
again asserts that this claim is barred under the payment
clause. Similar to claim 7 above, this claim appears to be based
26
on breach of contract or negligence rather than a payment
dispute. Accordingly, Defendant's motion for summary judgment as
to that claim is DENIED.
C. Claim 4 - Stolen Prop Blade and Kayak, Claim 11 Shipyard Representative, and Claim 12 - Dockage
Plaintiff's
remaining claims are more appropriately
characterized as damages for either Plaintiff's negligence,
breach of contract, breach of implied warranty, or breach of
duty as a bailee. 8 Plaintiff claims that a prop blade and kayak
were stolen while the yacht was in Defendant's care (Doc. 25,
Attach. 1 at 2; Doc. 28) and that Defendant should cover
Plaintiff's costs associated with hiring a shipyard
representative to oversee the repairs (Doc. 25, Attach. 1 at 3;
Doc. 28) . Plaintiff also alleges that it paid excessive dockage
fees because of Defendant's negligence and faulty work. (Id.)
Defendant asserts that Plaintiff's claims for recovery for the
costs of the shipyard representative, the stolen prop blade and
kayak, and dockage fees are barred by the "LIMITATIONS OF
LIABILITY" clause. (Doc. 20 at 6.)
8
The Court notes that Defendant has argued solely that Plaintiff
is prohibited from recovery for each of the repair errors or
damages that Plaintiff alleged. Defendant has provided no
argument that it was not negligent, did not breach the contract,
did not breach the implied warranties, or complied with its
duties as a bailee. Absent that argument, the Court cannot
conclude as a matter of law that the causes of action themselves
fail.
27
Plaintiff has not pointed to any case law, either in
Georgia or under federal maritime law holding that the
"LIMITATIONS OF LIABILITY" clause is invalid. Morever, Georgia
courts have routinely recognized that failure of a limited
warranty, as may have occurred here, does not negate clauses
excluding specific types of damages. See, e.g., Hightower v.
Gen. Motors Corp., 175 Ga. App. 112, 114, 332 S.E.2d 336, 338-39
(1985) ("The breach or defeat of a limited warranty to repair or
replace, of course, does not simultaneously invalidate other
limitations of damages contained in the new car warranty
.") (overruled on other grounds); A-larms, Inc. v. Alarms
Device Mfg. Co., 165 Ga. App. 382, 386, 300 S.E.2d 311, 314
(1983)
("[Clonsequential damages may be excluded or limited
unless such would be unconscionable, and such limitation of
damages where the loss is commercial is not prima fade
unconscionable."). Accordingly, under the terms of that clause,
Plaintiff may not recover for loss of use, loss of profits, or
special, incidental or consequential damages. (Doc. 20, Attach.
1 at 3.) All that remains for Plaintiff are direct damages. See,
e.g., Atl. Sounding Co., Inc. v. Townsend, 496 F.3d 1282, 1284
(11th Cir. 2007) (whether certain types of damages may be
recovered a question of law) . Direct damages are those damages
that "represent the benefit of the bargain." Imaging Sys. Int'l,
Inc. v. Magnetic Resonance Plus, Inc., 227 Ga. App. 641, 644,
W
.
490 S.E.2d 124, 127 (1997); see also Ga. Grain Growers Ass'n v.
Craven, 95 Ga. App. 741, 747, 98 S.E.2d 633, 637 (1957) ("Direct
damages are such as follow immediately upon the act done.")
Even if Plaintiff could prove the injuries alleged in
claims 4, 11, and 12, Plaintiff would not be entitled to recover
the damages it seeks. No reasonable jury could conclude that
recovery for the cost of the yacht's builder is a direct damage.
Likewise, no reasonable jury could conclude that the costs of
the stolen prop blade and kayak are direct damages. Finally,
recovery for dockage fees is also not a direct damage. There is
no evidence that recovery for the cost of a builder
representative, securing Plaintiff's personal property, or
dockage fees represents the benefit of the bargain Plaintiff
entered into for repair of the yacht. Accordingly, Defendant's
Motion for Summary Judgment as to claims 4, 11, and 12 is
GRANTED.
Plaintiff is on notice that it may not seek any
special, incidental, or consequential damages stemming from the
injuries in this case.
CONCLUSION
Before the Court is Defendant's Motion for Summary
Judgment. (Doc. 20.) For the foregoing reasons, Defendant's
motion is GRANTED IN PART and DENIED IN PART. Plaintiff may only
recover direct damages. Accordingly, Plaintiff's claims for
dockage fees, compensation for a builder representative, and a
29
stolen prop blade and kayak are DISMISSED.
Plaintiff's remaining
claims survive. This case will proceed to trial.
SO ORDERED this 28day of March 2016.
WILLIAM T. MOORE, JR.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA
30
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