Nautimill S.A. v. Legacy Marine Transportation, LLC

Filing 119

FINDINGS OF FACT AND CONCLUSIONS OF LAW - the Courtfinds that Nautimill is entitled to recover the following from Legacy in the amount of $240,000.00. In addition, Nautimill is entitled to recover attorney's fees. Counsel for Nautimill are hereby ORDERED to, within five days of the entry of judgment, submit to the Court a sworn affidavit detailing their fees in accordance with Local Rule 54.2. Finally, the Court finds Hasselman not liable for the claims in Legacy's third party complaint, and Legacy not liable for Hasselman'scounterclaims.. Signed by Judge Sarah S. Vance on 8/4/16.(jjs)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
NAUTIMILL S.A.

CIVIL ACTION

VERSUS

NO: 15-1065

LEGACY MARINE
TRANSPORTATION, LLC

SECTION: R(5)

FINDINGS OF FACT AND CONCLUSIONS OF LAW
I.

INTRODUCTION
This dispute arises out of Nautimill S.A.’s purchase of the pushboat

M/V LEGACY SERVER from Legacy Marine Transportation, LLC, a
Louisiana limited liability company,1 in April 2014. Nautimill, a Uruguayan
corporation,2 sued Legacy on April 3, 2015, alleging that Legacy misled
Nautimill and Nautimill’s Florida-based3 agent David Hasselman about the
condition of the Legacy Server before the purchase.4 On July 7, 2016 the
Court granted partial summary judgment in favor of Legacy.5 Following that

1
2
3
4
5

R. Doc. 83 at 2.
Id. at 1.
Id. at 2.
R. Doc. 1.
R. Doc. 82.

ruling, Nautimill retained claims for fraudulent misrepresentation, negligent
misrepresentation, and breach of the warranty against redhibitory defects.6
In response to Nautimill’s claims, Legacy filed a third party complaint
against Hasselman and his Florida limited liability company,7 International
Marine Sales and Export, LLC (IMSE), seeking indemnity and damages.8
Hasselman and IMSE have also filed counterclaims against Legacy.9 After
partial summary judgment, Hasselman and IMSE maintained claims for
fraudulent and negligent misrepresentation.10
On July 18-19, 2016 the Court held a bench trial. Hasselman waived
his opportunity to present evidence during the trial. The Court has diversity
jurisdiction over this case under 28 U.S.C. § 1332 because the parties are
citizens of different states, including a foreign state, and the matter in
controversy exceeds $75,000. The Court has previously determined that the
claims in this case are governed by Louisiana law.11 After hearing live
testimony and reviewing the evidence, the Court rules as follows.

6
7
8
9
10
11

Id.
Id. at 2.
R. Doc. 13.
R. Doc. 23.
R. Doc. 82.
Id.
2

II.

FINDINGS OF FACT AND CONCLUSIONS OF LAW
A.

Background
1. Nautimill’s Search for a Pushboat

Nautimill is in the business of transporting barges along the rivers of
Uruguay.12 In late 2013, the company sought to purchase an additional
pushboat.13 As part of its search, Nautimill contacted Hasselman,14 an
experienced vessel broker.15 Ruben Varela, the president of Nautimill,
specified to Hasselman that he was looking for a new,16 2,000 horsepower
pushboat.17 After speaking with Varela, Hasselman set out to find a vessel
that met Nautimill’s needs.18 He soon identified the M/V LEGACY SERVER
as a suitable candidate.19
The Legacy Server was built by R&R Boats, an affiliated entity of
Legacy. R&R began constructing the Legacy Server in late 2012 from an
unused, partially complete hull it had purchased earlier that year.20 R&R

Testimony of Ruben Varela.
Joint Ex. 1; testimony of Ruben Varela.
14
Joint Ex. 1.
15
Testimony of David Hasselman; testimony of Ruben Varela;
testimony of Robert Boudreaux, Sr.
16
Testimony of David Hasselman; testimony of Ruben Varela.
17
Joint Ex. 2.
18
Testimony of David Hasselman.
19
Id.
20
Uncontested Material Facts 18; Joint Ex. 57.
3
12
13

outfitted the Legacy Server with reconditioned engines,21 which had been
rebuilt in-house at R&R from used, Caterpillar-brand engine blocks.22 The
reconditioned engines did not have engine tags.23 The marine gears and
starboard propeller that R&R installed on the Legacy Server were also
reconditioned.24
On November 14, 2013, Hasselman emailed Varela with details about
the Legacy Server. Hasselman’s email described the vessel as a “BRAND
NEW Tug” with “Twin Cat[erpillar] 3412 [engines] rated 1,000 Hp each.”25
It further stated that the vessel had been used only for “Sea Trail [sic.] hours
(8 hours time)” and came with a “1 Year Warranty on all equipment and the
Hull, Deck, and Paint Work.”26

The email listed a purchase price of

“$2,200,000.00 USD FIRM.”27
The parties agree that these specifications are not accurate. Robert
Boudreaux, Sr. and Robert Boudreaux, Jr. both testified that the Legacy
Server’s engines produce 800, rather than 1,000, horsepower each.28 The

Uncontested Material Facts 6.
Uncontested Material Facts 7.
23
Testimony of Ruben Varela; testimony of Robert Boudreaux, Sr.
24
Uncontested Material Facts 9, 10.
25
Joint Ex. 3.
26
Id.
27
Id.
28
Testimony of Robert Boudreaux, Sr.; testimony of Robert
Boudreaux, Jr.
4
21

22

800 horsepower figure is reflected in advertisements for the Legacy Server
placed by Legacy on R&R Boats’ website and in Boats & Harbor Magazine,
an industry periodical.29 The website listing, which Boudreaux, Sr. testified
was placed in January, 2014,30 states that the vessel is a “new build” with
engines producing 800 horsepower each.31

The Boats & Harbor

advertisement, which ran in March, 2014, describes the vessel as a “1600 HP
PUSHBOAT, 2013 (New Build)” and listed a $2.1 million asking price.32
2. The Inspection
On February 4, 2014, Hasselman emailed Varela to say that Hasselman
would be in Louisiana to inspect and sea trial a potential purchase on behalf
of another client.33 At Varela’s behest, Hasselman arranged an inspection
and sea trial of the Legacy Marine.34 The inspection was conducted by two
Uruguayan naval officers, Captain Jose Perez Castro and Edgardo Costa.35
As part of the inspection, Hasselman and the Uruguayan officers visited the
engine room and travelled some distance aboard the vessel.36

Both

Joint Ex. 31, 32.
Testimony of Robert Boudreaux, Sr.
31
Joint Ex. 31.
32
Joint Ex. 32.
33
Joint Ex. 4.
34
Uncontested Material Facts 24; testimony of David Hasselman;
testimony of Ruben Varela.
35
Uncontested Material Facts 24.
36
Testimony of Robert Boudreaux, Sr.; testimony of David
5
29

30

Hasselman and Perez Castro testified that, at the time of the inspection, the
engines appeared new.37 Both men also testified that they did not notice that
the engines lacked identification plates.38
3. The Purchase
On March 17, 2014, Boudreaux, Sr. emailed Hasselman to say Legacy
had several potential charter opportunities for the Legacy Server, but would
prefer to sell the vessel.39 Boudreaux, Sr. requested that the parties set a firm
date for Legacy to receive a non-refundable deposit.40

On March 25,

Hasselman sent Legacy a deposit on Nautimill’s behalf,41 and the parties
executed a “Vessel Purchase Agreement” prepared by Hasselman.42 The
Agreement states that “[t]he vessel (s) and all her tackle apparel, gear,
machinery, equipment and furnishings are sold AS IS, WHERE IS, without
warranties of merchantability or fitness for any particular use” and that “the
buyer hereby accepts the vessel (s) on an AS IS, WHERE IS BASIS.”43 The

Hasselman.
37
Deposition of Captain Jose Perez Castro, June 7, 2016, 62:2-9;
testimony of David Hasselman.
38
Deposition of Captain Jose Perez Castro, June 7, 2016, 62:1012; testimony of David Hasselman.
39
Joint Ex. 9.
40
Id.
41
Joint Ex. 12.
42
Uncontested Material Facts 25.
43
Joint Ex. 58 at 2.
6

Agreement also lists under “Terms and Conditions” that “Main engine(s) and
Generator to be in proper working condition” and that “Buyer or their
representatives have had previous inspect and sea trial of the vessel and
found it suitable to their needs.”44 The Agreement provides no details
regarding the age or power of the vessel’s engines.45
On March 28, 2014, three days after completing the Vessel Purchase
Agreement, Nautimill co-owner Carlos Schinoni emailed Hasselman and
said “David: our spare surveyor told us the engines are old. They are not
made since 1990. It’s true?”46 That same day, Hasselman emailed Legacy to
request serial numbers for the Legacy Server’s engines and generators.47 In
the email, Hasselman stated that he needed the serial numbers to research
spare parts.48 Legacy emailed serial numbers to Hasselman on March 31,
2014.49

Id. at 3.
Id. at 1-3.
46
Uncontested Material Facts 26. Hasselman testified that he
found no reply to this email in his records. Testimony of David Hasselman.
47
Joint Ex. 12.
48
Id.
49
Joint Ex. 13. In his testimony, Boudreaux, Sr. asserted that,
although these serial numbers were sent in an email chain concerning the
Legacy Server, they corresponded to unrelated engines Hasselman and
Boudreaux, Sr. had discussed over the telephone. The Court finds
Boudreaux, Sr.’s account implausible and does not credit it.
7
44
45

In April, 2016 Legacy completed a U.S. Coast Guard bill of sale.50 A
draft version of the bill of sale, prepared by Legacy, stated that the Legacy
Server

was

“BEING

SOLD

‘AS

IS

WHERE

IS’

WITHOUT

REPRESENTATION OF WARRANTY OF ANY KIND WHATSOEVER BY
SELLER, EXPRESSED OR IMPLIED.”51 Although this language matched
Hasselman’s Vessel Purchase Agreement, Hasselman emailed Legacy to say
that the “as is” warranty language in the draft bill of sale was inconsistent
with the parties’ agreement.52 Hasselman insisted that “[t]he arrangement
was that the equipment is under warranty by the various manufacturers and
[Legacy] would warranty vessel construction and workmanship but [] would
not travel to do so.”53 Legacy agreed to the change, and an updated bill of
sale was executed on April 29, 2014.54 The executed bill of sale states:
“EQUIPMENT WARRANTED BY THE VARIOUS MANUFACTURERS.

ONE

YEAR

WARRANTY

ON

VESSEL

CONSTRUCTION

AND

WORKMANSHIP ADDRESSED LOCALLY FOR CORRECTIVE ACTION
AND COSTS TO BE AGREED UPON BEFORE UNDERTAKING.

ALL

WARRANTIES DO NOT COVER ANY FAILURES WHATSOEVER FOR

50
51
52
53
54

Joint Ex. 37.
Joint Ex. 35.
Joint Ex. 15.
Id.
Uncontested Material Facts 13.
8

FAILURE TO MAINTAIN, NEGLECT, MISUSE, OR NORMAL WEAR AND
TEAR.” 55
Following completion of the bill of sale, Legacy transported the vessel
to Houston, where it was loaded onto a larger ship for the trip to South
America.56 The Legacy Server arrived in Uruguay on or about May 25,
2014.57
4. Nautimill is disappointed by the Legacy Server
Captain Jose Maran, a Nautimill employee, met the Legacy Server
when it arrived in Uruguay aboard the transport ship.58 Maran testified that
before the boat was unloaded into the water, he noticed that the Legacy
Server’s propellers were different shapes.59 Shortly thereafter, Uruguayan
authorities inspected the vessel as part of the requirements for registering it
under the Uruguayan flag.60 According to Varela, it was the Uruguayan

Joint Ex. 37.
Uncontested Material Facts 30, 31. While the Legacy Server was
being loaded onto the transport ship, the cradle used to lift the vessel
snapped and the vessel fell some distance into the water below. Uncontested
Material Facts 32. No party submitted evidence suggesting that the vessel
was damaged by the drop.
57
Uncontested Material Facts 33.
58
Testimony of Captain Jose Maran.
59
Id.
60
Testimony of Ruben Varela.
9
55

56

inspectors who first discovered that the engines lacked identification
plates.61
On June 18, 2014, Hasselman obtained engine reports from Caterpillar
based on the serial numbers Legacy had emailed him on March 31.62
According to the reports, the serial numbers provided by Legacy matched
engines producing 625 and 540 horsepower respectively.63 In order to
permit the vessel to pass inspection, Hasselman prepared, at Nautimill’s
request, engine identification plates based on the serial numbers provided
by Legacy.64
The Legacy Server began work as a pushboat in July 2014,65 earning
Nautimill $4,000 per day.66 According to Varela, a 2,000 horsepower vessel
would have earned Nautimill $8,000 per day, but the company was forced
to accept the lower rate because it did not know the true power output of the
Legacy Server’s engines.67
On January 23, 2015 Hasselman contacted Legacy and advised them
that Nautimill had requested a meeting to discuss complaints concerning the

61
62
63
64
65
66
67

Id.
Joint Ex. 27.
Id.
Testimony of David Hasselman; testimony of Ruben Varela.
Uncontested Material Facts 35.
Testimony of Ruben Varela.
Id.
10

Legacy Server.68 The parties met at Legacy’s office the next day.69 Nautimill
and Legacy were unable to amicably resolve their dispute, and this suit
followed in April, 2015.
Two months after filing suit, Nautimill placed the Legacy Server in dry
dock.70 Norman Dufour, a marine surveyor, inspected the vessel while it was
out of the water.71 Varela testified that he observed Dufour examining the
Legacy Server’s engines.72 Dufour showed Varela that one of the engine
blocks displayed a legible serial number, but the other engine’s number had
been scratched away and was illegible.73
There are two principal fact issues that must be resolved by the Court:
1) whether Legacy represented the Legacy Server’s engines to be new, 1,000
horsepower engines, and 2) what the physical condition of the Legacy Server
was at the time of delivery. For the reasons outlined below, the Court finds
that Nautimill has failed to meet its burden to show that the 1,000
horsepower representations originated with Legacy, rather than Hasselman.
The Court further finds that at the time of delivery, the vessel’s engines

68
69
70
71
72
73

Uncontested Material Facts 36.
Uncontested Material Facts 37.
Joint Ex. 89; testimony of Ruben Varela.
Testimony of Ruben Varela.
Id.
Id.
11

produced approximately 600 horsepower each, but that the propellers and
other equipment were in working condition.
B. Whether Legacy Represented the Legacy Server’s
Engines To Be New, 1,000 Horsepower Engines
Nautimill contends that Legacy falsely portrayed the Legacy Server as
outfitted with two new, 1,000 horsepower engines. Legacy asserts that it
specifically told Hasselman several times that the engines were rebuilt and
produce 800 rather, than 1,000 horsepower.
It is undisputed that Nautimill and Legacy never spoke directly; all
communication went through Hasselman or the Uruguayan naval officers.74
Hasselman’s November 14, 2013 email to Varela described the vessel as a
brand new, 2,000 horsepower pushboat.75

There is no evidence that

Nautimill ever received corrected specifications.

The parties, however,

dispute where the incorrect information originated: Nautimill blames
Legacy; Legacy blames Hasselman.
Robert Boudreaux, Sr. and Robert Boudreaux, Jr. both testified that
they told Hasselman the engines were reconstructed, 800 horsepower
engines several times. Boudreaux, Jr. testified in detail about the three times
he met Hasselman.76 Boudreaux, Jr. stated that the first meeting occurred
74
75
76

Testimony of Ruben Varela; testimony of Robert Boudreaux, Sr.
Joint Ex. 3.
Testimony of Robert Boudreaux, Jr.
12

in January 2013, when Hasselman visited Legacy’s yard.77 During that visit,
Boudreaux, Jr. showed Hasselman the Legacy Server’s then-unfinished
engines.78 Boudreaux, Jr testified that he and Hasselman stood next to the
engines and discussed the rebuild process that R&R was performing.79 One
of the two engines was obviously mid-rebuild, and parts of the engine were
lying on the floor surrounding it.80 According to Boudreaux Jr., Hasselman
asked detailed questions about the engines, including questions about the
rebuild process itself.81 Boudreaux Jr. testified that during this discussion
he told Hasselman that the engines produced 800 horsepower at 1,800
rpm.82
Hasselman visited Legacy’s yard a second time, in May 2013, and
toured both the Legacy Server and another pushboat, the 2,000 horsepower
Legacy Provider.83 According to Boudreaux, Jr, the tour was extensive,
covering everything from the wheelhouse to the engine room.84 Boudreaux,
Jr. testified that he told Hasselman during this tour that the Legacy Server

77
78
79
80
81
82
83
84

Id.
Id.
Id.
Id.
Id.
Id.
Id.
Id.
13

produced 1,600 horsepower, and that the vessel was equipped with the 800
horsepower engines Hasselman had seen under construction during his last
visit.85 Finally, Boudreaux Jr. testified that Hasselman visited Legacy’s yard
for a third time in March 2014 to view a pair of engines for another client.86
On that visit Boudreaux, Jr. once again described the Legacy Server as a
1,600 horsepower tug.87
Robert Boudreaux, Sr. corroborated his son’s testimony regarding
Hasselman’s visits to the Legacy yard in January and May of 2013.88
Boudreaux, Sr. stated that Hasselman was told that the Legacy Server’s
engines produce 800 horsepower on both visits, and was also informed that
the vessel’s gears were remanufactured.89 Boudreaux, Sr. also described the
February, 2014 inspection by Hasselman and the Uruguayan naval officers.
Boudreaux, Sr. testified that during the sea trial, Hasselman himself told the
Uruguayans that the Legacy Server was a 1,600 horsepower vessel, and that
Boudreaux, Sr. agreed.90

Boudreaux, Sr. also stated that during the

inspection he told one of the Uruguayan officers that the engines were

85
86
87
88
89
90

Id.
Id.
Id.
Testimony of Robert Boudreaux, Sr.
Id.
Id.
14

reconditioned.91 Finally, Boudreaux, Sr. testified that he told Hasselman,
prior to the signing of the final bill of sale, that most or all of the
manufacturer warranties on the Legacy Server’s component parts were
expired or close to expiring.92
Hasselman disputed the Boudreauxs’ account.

First, Hasselman

asserted that he obtained the specifications in his November 14, 2013 email
from Legacy.93 Second, Hasselman testified that during the February, 2014
inspection one of the Uruguayan officers—he could not recall which—asked
Boudreaux, Sr. for confirmation that the engines were 1,000 horsepower,
and Boudreaux, Sr. answered affirmatively.94 Captain Perez Castro, one of
the Uruguayan naval officers, partially corroborates this account.95
The Court finds that Hasselman’s testimony on this point is not
credible for several reasons. First, Hasselman could give no specifics about
where he obtained the information contained in his initial email to Varela,
beyond that the information was probably conveyed to him orally, and that
this conversation may have occurred over the telephone.96 Second, although

91
92
93
94
95

Id.
Id.
Testimony of David Hasselman.
Id.
Deposition of Captain Jose Perez Castro, June 7, 2016, 63:19-

65:9.
96

Testimony of David Hasselman.
15

Captain Perez Castro also states that Boudreaux, Sr. claimed the engines
produced 1,000 horsepower during the inspection, in Perez Castro’s account
Hasselman, not one of the Uruguayans, asked Boudreaux, Sr. about the
This disagreement on the key point of who asked about

engines.97

horsepower significantly curtails the persuasive force of the two men’s
testimony.98
Third, the evidence before the Court gives rise to serious doubts
concerning Hasselman’s general veracity. Hasselman executed an affidavit
on July 20, 2015, concerning the facts at issue in this case.99 The affidavit
plainly contradicts his testimony on several points. Most glaringly, the
affidavit states that during the February 2014 inspection “it was noted the
engine plates showing the serial numbers of the engines were missing,” and
“Legacy Marine/Boudreaux promised the plates would be installed before
the vessels were transported to Uruguay.”100 In contrast, Hasselman testified
at trial that he never noticed that the Legacy Server’s engines lacked plates.101
The Court finds Hasselman’s attempt to blame these misstatements on the

97

Deposition of Captain Jose Perez Castro, June 7, 2016, 63:19-

65:9.
This testimony is also contradicted by Captain Roy Pena, in
addition to the Boudreauxs. Testimony of Captain Roy Pena.
99
Joint Ex. 82.
100
Id. at 2.
101
Testimony of David Hasselman.
16
98

attorney who prepared the affidavit unconvincing, especially because emails
between Hasselman and the attorney suggest that Hasselman reviewed the
affidavit closely enough to fill in a blank date field at the beginning of the
specific paragraph concerning the engine plates.102
Hasselman’s actions surrounding his commission on the sale of the
Legacy Server further undermine his credibility.

According to Varela’s

testimony and emails between the parties, Hasselman and Varela agreed
that, because the Legacy Server had a much higher sales price than other
vessels Nautimill had bought through Hasselman, Hasselman’s usual ten
percent commission was too high.103 Hasselman stated that he would instead
“handle it for 5% of the sales price,” or $110,000.104 This figure, according to
Hasselman, represented “a 50% reduction based on our long term business
and the high value of the vessel.”105 What Varela did not know, is that
Hasselman had inflated the price of the vessel from $2.1 million to $2.2
million and kept the $100,000 difference for himself.106 Unaware of the

Joint Ex. 83 at 9 (email from Hasselman stating “I was able to
obtain the ACTUAL dates via my records”).
103
Joint Ex. 5; testimony of Ruben Varela.
104
Joint Ex. 5.
105
Id.
106
Testimony of Ruben Varela; Joint Ex. 10.
17
102

initial payment, Varela agreed to pay Hasselman an additional $120,000 in
monthly, $10,000 installments.107
For these reasons, the Court does not credit Hasselman or Captain
Perez Castro’s testimony on the issue of Legacy’s pre-sale representations.
Because Nautimill offers no other evidence tending to show that Legacy
represented the Legacy Server as having new, 1,000 horsepower engines, the
Court finds that Nautimill has failed to meet its burden of proof on this point.
C.
The Physical Condition of the Legacy Server at the
Time of Delivery
The second major factual issue before the court concerns the physical
condition of the Legacy Server at the time of delivery. Here, the parties agree
on much. It is undisputed that: (1) the Legacy Server’s engines and marine
gears were reconditioned, rather than new;108 (2) the port propeller was new
and the starboard propeller was used;109 (3) the propellers had different disc
area ratios (DARs);110 and (4) neither the engines themselves, nor their
component parts were under warranty.111 The parties disagree, however, on
the horsepower produced by the vessel’s engines and whether the difference

107
108
109
110
111

Testimony of Ruben Varela.
Uncontested Material Facts 9, 36.
Uncontested Material Facts 10.
Uncontested Material Facts 11.
Testimony of Robert Boudreaux, Sr.; testimony of Ruben

Varela.
18

between the two propellers affects the vessel’s performance. The Court finds,
for the reasons that follow, that the Legacy Server’s engines produced
approximately 600 horsepower each at the time of delivery, but that any
difference between the two propellers is insignificant and causes no
operational difficulties.
In support of its claim that the Legacy Server’s engines are
underpowered, Nautimill relies chiefly on expert Wayne Wingate. In his
testimony, Wingate opined that the Legacy Server’s engines do not produce
1,000, or even 800, horsepower.112 Wingate based his testimony on a test
performed by Frank & Jimmie’s Propeller, a company hired by Nautimill to
test the horsepower of the Legacy Server’s engines.113 Frank & Jimmie’s
administered a strain gauge test and found that the maximum horsepower
produced by the port and starboard engines was 591 horsepower and 614
horsepower respectively.114 Wingate performed independent calculations
that supported the validity of the Frank & Jimmie’s test, and opined that a
strain gauge test is the most accurate test for determining the true maximum
output of an installed engine.115 Wingate further testified that a dock push

112
113
114
115

Testimony of Wayne Wingate.
Testimony of Ruben Varela; testimony of Wayne Wingate.
Testimony of Wayne Wingate.
Id.
19

test, which Legacy used to test the Legacy Server’s horsepower prior to the
sale, is a significantly less accurate test.116 Wingate stated that the accuracy
of a dock push test depends on having a properly calibrated tachometer, and
that the Frank & Jimmie’s report indicated that the Legacy Server’s
tachometer was not properly calibrated.117 Wingate conceded, however, that
the Frank and Jimmie’s report was prepared more than a year after Legacy’s
dock push test.118 Wingate further conceded that if the engines had actually
achieved 1800 revolutions per minute (rpm) during a dock push test, that
would suggest the engines can in fact produce 800 horsepower each.119
At trial, Legacy argued that its own dock push test—performed in June
or July 2013120—is a more reliable indicator of the vessel’s capabilities at the
time of sale. Robert Boudreaux, Sr., Robert Boudreaux, Jr., and Dylan
Boudreaux all testified that the vessel achieved approximately 1785 rpm
during the dock push test.121

Boudreaux, Jr. testified that the rpm

Id.
Id.
118
Id.
119
Id.
120
Testimony of Robert Boudreaux, Sr.
121
Testimony of Robert Boudreaux, Sr.; testimony of Robert
Boudreaux, Jr.; testimony of Dylan Boudreaux.
20
116
117

measurement was obtained with a handheld tachometer,122 which Wingate
agreed is an accurate tool for measuring rpm.123
Legacy’s expert, John Jay Webster, contested the validity of the Frank
& Jimmie’s test. Webster opined that several factors not described in the
Frank & Jimmie’s report could have caused the test to underestimate the
engines’ potential power output.124 These factors included dirty aftercoolers
and turbochargers, dirty air and fuel filters, fuel line or water restrictions,
water depth, weather, and location.125
Faced with two conflicting tests, the Court finds that Legacy’s dock
push test is unreliable for several reasons. First, the Court credits Wayne
Wingate’s undisputed assertion that the true torque test is far more accurate
than the dock push test. Second, the Court finds that the persuasive weight
of Legacy’s test is undermined by Legacy’s failure to produce any written
documentation memorializing the circumstances of the test or the test’s
results. Third, Webster’s opinion that several environmental and engine
factors may have affected the Frank & Jimmies results is undercut by Varela’s
credible testimony. Varela testified that the Frank & Jimmies test was

122
123
124
125

Testimony of Robert Boudreaux, Jr.
Testimony of Wayne Wingate.
Testimony of John Jay Webster.
Id.
21

performed in a protected bay, in eight to ten meters of water, under calm sea
and wind conditions.126 He further testified that Nautimill later had the
engine turbochargers cleaned, and that this procedure caused no change in
the vessel’s performance.127 The Court therefore credits the results of the
Frank & Jimmie’s true torque test and finds that the Legacy Server’s engines
produced a maximum of approximately 600 horsepower each at the time of
sale.
The Court, however, finds no credible evidence that the engines
installed in the Legacy Server produce meaningfully different levels of power.
Although the Frank & Jimmies test found a 23 horsepower difference
between the two engines, Wingate conceded that this number fell within the
test’s margin of error.128 Furthermore, Nautimill offered no evidence tending
to show that this difference, even if not explained by the margin of error, is
significant enough to affect the performance of the vessel.
Finally, the Court finds for several reasons that the evidence does not
support Nautimill’s assertion that differences between the Legacy Server’s
propellers affect the vessel’s performance. Varela and Maran testified that

126
127
128

Testimony of Ruben Varela.
Id.
Testimony of Wayne Wingate.
22

differences in the propellers cause the vessel to pull to one side.129 The Court
finds that the two men are self-interested on this point, and that their
testimony is contradicted by convincing evidence that the propellers had no
negative operational effect.
There are several indications that the vessel’s propellers cause no
operational problems.

First, Hasselman and the Uruguayan officers

reported no problems during the pre-purchase sea trial of the vessel.130
Second, Captain Roy Pena convincingly testified that he delivered the vessel
from Legacy’s yard to Houston and experienced no problems during the
nearly 40 hour journey.131 Finally, Webster, Legacy’s expert, testified that he
had performed calculations on the relative efficiency of the vessel’s
propellers.132 Based on these calculation, Webster convincingly opined that
the difference between the propellers installed on the vessel is
insignificant.133

Testimony of Ruben Varela; testimony of Captain Jose Maran.
Testimony of David Hasselman; deposition of Captain Jose
Perez Castro, June 7, 2016, 97:1-22; testimony of Ruben Varela.
131
Testimony of Captain Roy Pena.
132
Testimony of John Jay Webster.
133
Id.
23
129

130

For these reasons, the Court finds that at the time of delivery, the
Legacy Server’s engines produced approximately 600 horsepower each, but
that the vessel was otherwise a fully operational pushboat.
D. Whether the Legacy Server
Redhibitory Defect at the Time of Sale

Possessed

a

As noted above, the Court finds that Nautimill failed to show at trial
that Legacy mischaracterized the Legacy Server as a 2,000 horsepower
vessel. Legacy concedes, however, that the Legacy Server was sold as a 1,600
horsepower vessel.134 Because the Court finds that the Legacy Server in fact
produced only approximately 1,200 horsepower the Court must determine
whether this defect rises to the level of being redhibitory.
Under the Louisiana law of redhibition, a “seller warrants the buyer
against redhibitory defects, or vices, in the thing sold.” La. Civ. Code art.
2520. A defect is redhibitory when it either (1) “renders the thing useless, or
its use so inconvenient that it must be presumed that a buyer would not have
bought the thing had he known of the defect”; or (2) “diminishes its
usefulness or its value so that it must be presumed that a buyer would still
have bought it but for a lesser price.” Id. The former entitles the buyer to
recession of the sale, while the latter gives rise only to a claim for reduction

Testimony of Robert Boudreaux, Sr.; testimony of Robert
Boudreaux, Jr.
24
134

of the purchase price. Id. The existence of a redhibitory defect is a question
of fact. Hatten v. Estes Cadillac, Inc., 625 F. Supp. 913, 916 (E.D. La. 1986)
(citing Newman v. Dixie Sales & Service, 387 So. 2d 1333, 1339 (La. App. 1
Cir. 1980)).
As an initial matter, the Court finds that the defects present in the
Legacy Server have not rendered the vessel useless. A thing is generally not
useless under redhibition if the buyer has been able to put it to productive,
trouble-free use. See, e.g., Pardue v. Ryan Chevrolet, Inc., 719 So. 2d 623,
627 (La. App. 2 Cir. 1998), writ denied, 734 So. 2d 639 (La. 1998) (upholding
trial court’s holding “that since the plaintiff continued to drive the vehicle on
a regular basis, the defect in the vehicle did not merit a rescission of the
sale”). As noted above, the Legacy Server has been in service as a pushboat
for two years, earning Nautimill $4,000 per day.135 Varela testified that the
Legacy Server has required only minor repairs and that the vessel’s engines
have suffered only routine problems.136 Furthermore, the Court cannot say
on the evidence before it that Nautimill would not have purchased the vessel
had the defect been disclosed. As noted above, Nautimill has failed to show
that Hasselman was accurately conveying Legacy’s representations to

135
136

Uncontested Material Facts 35; testimony of Ruben Varela.
Testimony of Ruben Varela.
25

Nautimill.

There is therefore no compelling evidence that an accurate

description of the defect to Hasselman—as opposed to Nautimill—would
have prevented the sale.
The Court finds, however, that the defects in the Legacy Server
diminished the vessel’s value such that it must be presumed that a buyer
would have paid a lesser price. The evidence before the Court strongly
supports a finding that total engine power is a key pushboat attribute. In
Varela’s initial email to Hasselman, Varela specified only the horsepower he
was looking for.137 Varela testified, consistent with common sense, that
greater engine horsepower allows a pushboat to push heavier loads.138
Varela’s testimony was also consistent with the general notion that more
powerful pushboats earn higher rental rates.139

Furthermore, Robert

Boudreaux, Jr. testified that the two most important attributes to convey
when discussing a pushboat are its size and the power of its engines.140 This
testimony is buttressed by the language of Legacy’s advertisement in Boats
& Harbor magazine, which begins by describing the vessel as a “1600 HP
PUSHBOAT”.141 The Court finds that, given the evident importance of engine

137
138
139
140
141

Joint Ex. 1.
Testimony of Ruben Varela.
Id.
Testimony of Robert Boudreaux, Jr.
Joint Ex. 32.
26

power, it is a reasonable inference that a buyer would pay less for a vessel
producing only 75 percent of its advertised horsepower. Accordingly, the
Court finds that the Legacy Server possessed a redhibitory defect at the time
of sale.
E.
Whether a “Simple Inspection” Would Have
Revealed the Legacy Server’s Defective State
In order to recover in redhibition, Nautimill must show that the defects
described above were not discoverable by simple inspection. A seller “owes
no warranty for defects in the thing that were known to the buyer at the time
of the sale, or for defects that should have been discovered by a reasonably
prudent buyer of such things.” La. Civ. Code art. 2521. To determine
whether a defect should have been discovered, “courts consider whether a
reasonably prudent buyer, acting under similar circumstances, would
discover it through a simple inspection of the thing sold.” Spraggins v.
Lambeth, 973 So. 2d 165, 167 (La. App. 2 Cir. 2007). A “simple inspection”
requires “more than casual observance,” id., but “[t]he buyer is under no
obligation . . . to inspect with expertise or to deface the thing purchased while
inspecting it.” Jones v. Wells Fargo Bank, N.A., 626 F. App’x 500, 504 (5th
Cir. 2015) (quoting McGough v. Oakwood Mobile Homes, Inc., 779 So. 2d
793, 801 (La. App. 2 Cir. 2000)); see also Amend v. McCabe, 664 So. 2d 1183,
1188 (La. 1995) (holding that, in the context of termite damage, when all of
27

the damage “is concealed within the home’s structure (e.g., walls and floors)
it is considered unapparent because it is not discoverable by a simple
inspection”).
The Court finds that the Legacy Server’s defects were not discoverable
by simple inspection. Wayne Wingate testified at length regarding the
different methods for testing horsepower.142 Each of these methods require
considerable effort and expertise, and the simple inspection standard does
not oblige a buyer to exhaust all available avenues of assessing the purchased
thing’s soundness. See Crow v. Laurie, 729 So. 2d 703, 708 (La. App. 1 Cir.
1999) (“[A]lthough the trial court correctly determined the Crows were
required to inspect the boat, it committed legal error by imposing upon the
Crows a duty to perform a more extensive inspection than a ‘simple
inspection’ . . . .”); Buck v. Adams, 446 So. 2d 895, 898 (La. App. 1 Cir. 1984)
(holding that the simple inspection standard does not “require[] one to drydock a boat to check its seaworthiness.”). The Court therefore finds that the
Legacy Server’s defects were not discoverable by simple inspection, and
article 2521 has no effect on Nautimill’s redhibition claims.

142

Testimony of Wayne Wingate.
28

F.

Whether Nautimill Waived its Redhibition Claim

Under Louisiana Civil Code article 2548, “[t]he parties may agree to an
exclusion or limitation of the warranty against redhibitory defects.” To be
effective under this article, any contractual waiver “must be clear and
unambiguous and must be brought to the attention of the buyer.” Id. The
seller has the burden of proving that the buyer waived the warranties against
redhibitory defects. Berney v. Rountree Olds-Cadillac Co., Inc., 763 So. 2d
799, 805 (La. App. 2 Cir. 2000). In determining whether a waiver is clear
and unambiguous, “commercially sophisticated parties” are “held to a higher
standard than an unknowledgeable consumer.” Datamatic, Inc. v. Int’l Bus.
Machines Corp., 795 F.2d 458, 465 (5th Cir. 1986).
In this case, the Vessel Purchase Agreement and the bill of sale contain
conflicting warranty provisions. Under the Vessel Purchase Agreement, the
vessel was sold “AS IS, WHERE IS, without warranties of merchantability or
fitness for any particular use.”143 This language, standing alone, may be
sufficient to bar claims under redhibition. See Datamatic, 795 F.2d at 460
(holding that redhibition claims were barred by contractual provision
waiving “warranties express or implied, including but not limited to the
implied warranty of merchantability.”). Hasselman, however, objected by

143

Joint Ex. 52.
29

email to the inclusion of similar language in the bill of sale, saying that “[t]he
NO warranty clause was NOT what Robert had told me,” and demanding the
provision be altered.144 Jessica Boudreaux, an owner of Legacy,145 responded
“[y]es, we do agree to this,”146 and the bill of sale was changed to include a
one year warranty on vessel construction and workmanship.147 The updated
document disclaims any warranty for failures due to neglect, misuse, or
normal wear and tear, but is silent as to warranties of merchantability or
against redhibitory defect.148
Given this conflicting language—and the compelling evidence that the
later-drafted bill of sale reflects the intent of the parties—the Court finds that,
even considering Nautimill’s relative commercial sophistication, Legacy has
failed to meet its burden to show that any warranty waiver was “clear and
unambiguous.”149 See, e.g., Berney, 763 So. 2d at 805 (holding that although
the buyer signed a form stating “that there are no warranties and that the
buyer specifically waives the implied warranty provided by Louisiana law,”

Joint Ex. 15.
Testimony of Robert Boudreaux, Jr.
146
Id.
147
Joint Ex. 37.
148
Id.
149
Furthermore, there is no evidence that Legacy brought the
waiver to the attention of the buyer, as required by article 2548. Application
of this requirement seems somewhat incongruous here, however, because
Hasselman, the buyer’s agent, drafted the Vessel Purchase Agreement.
30
144
145

the waiver was not clear and ambiguous because it conflicted with an
extended warranty provision). Nautimill’s claims are therefore unaffected
by the warranty waiver in the Vessel Purchase Agreement.
G. Nautimill and Hasselman’s Claims for Fraudulent
and Negligent Misrepresentation
Because the Court does not credit Hasselman and Captain Perez
Castro’s testimony regarding Legacy’s misrepresentations, Nautimill’s
claims for fraudulent and negligent misrepresentation must fail. In the
context of a contract of sale, “[t]he elements of an action for fraud are: ‘(1) a
misrepresentation, suppression, or omission of true information; (2) the
intent to obtain an unjust advantage or to cause damage or inconvenience to
another; and (3) the error induced by a fraudulent act must relate to a
circumstance substantially influencing the victim’s consent to (a cause of)
the contract.’” Jones v. Wells Fargo Bank, N.A., 626 F. App’x 500, 504-05
(5th Cir. 2015) (quoting Shelton v. Standard/700 Assocs., 798 So. 2d 60, 64
(La. 2001)). Negligent misrepresentation requires a similar showing: such a
claim is made out “when a person, in the course of his business or other
matters in which he has a pecuniary interest, supplies false information
without exercising reasonable care, for the guidance of others, who
justifiably and detrimentally rely on such information and thereby suffer a
pecuniary loss.” Fagan v. Lawrence Nathan Associates, Inc., 957 F. Supp.
31

2d 784, 800 (E.D. La. 2013) (quoting Hardy v. Hartford Ins. Co., 236 F.3d
287, 292 (5th Cir. 2001)).
Although the Court finds that Legacy did misrepresent the Legacy
Server as a 1,600 horsepower, rather than 1,200 horsepower, vessel, there is
no credible evidence that Legacy did so intentionally or without exercising
reasonable case. Nautimill has failed to meet its burden to show that Legacy
did not genuinely—though wrongly—believe that the Legacy Server’s engines
produced 800 horsepower each. Furthermore, although Nautimill’s expert
Wayne Wingate testified that the dock push that Legacy performed to test
the vessel is not the most accurate test available, he acknowledged that it is
an accepted method for determining total horsepower.150 Legacy’s expert,
John Jay Webster, also testified that dock push-style tests are routinely used
to determine engine power in the context of vessel sales.151 Nautimill has
failed to show that, in the context of a vessel sale, reliance on the results of a
dock push test—even one that is ultimately revealed to be faulty—rises to the
level of negligence.

Nautimill’s claims for fraudulent and negligent

misrepresentation therefore lack basis.

150
151

Hasselman’s misrepresentation

Testimony of Wayne Wingate.
Testimony of John Jay Webster.
32

claims against Legacy, which largely mirror Nautimill’s, fail for the same
reasons.
H. Legacy’s Claims for Indemnity and Damages
Against Hasselman
Legacy’s third party complaint against Hasselman asserts claims for
indemnity and damages based on Hasselman’s alleged misstatements. As
explained above, however, the Court finds that Legacy is not liable under
Nautimill’s misrepresentation claims.

Nautimill’s only remaining claim

against Legacy sounds in redhibition, and is based on the vessel’s inability to
produce 1,600 horsepower. This claim is grounded in Legacy’s own admitted
pre-sale representations. Because Legacy has failed to identify any other
injury caused by Hasselman’s alleged misrepresentation, Legacy’s claims
against Hasselman do not survive the above factual findings.
III. DAMAGES
A.

Reduction of the Purchase Price

As detailed above, the Court finds that the Legacy Server’s
underpowered engines reduce the vessel’s usefulness and value such that it
must be presumed that a buyer would have paid a lower price. Under
Louisiana law, “such a defect limits the right of a buyer to a reduction of the
price.” La. Civ. Code art. 2520. The “general rule” in setting the level of price
reduction is that courts must determine the difference “between the value of
33

the defective thing at the time of sale and the value warranted by the seller.”
Bailey v. Delacruz, 143 So. 3d 1220, 1229 (La. App. 2 Cir. 2014). “One of the
principal factors in awarding a reduction in the purchase price is the cost of
repairing the defects, which under certain circumstances may be the only
consideration.” Berney v. Rountree Olds-Cadillac Co., 763 So. 2d 799, 805–
06 (La. App. 2 Cir. 2000). The burden of establishing the appropriate
magnitude of the price reduction lies with the buyer. Id.
Here, the Court finds that the appropriate level of price reduction is the
cost to repair the defects, that is the cost to purchase and install 800
horsepower engines. Nautimill argued that the vessel’s shafts and bearings
must be replaced to accommodate 1,000 horsepower engines. The company
presented no evidence, however, that the Legacy Server’s shafts and bearings
are unfit for a 1,600 horsepower vessel. Furthermore, Robert Boudreaux, Sr.
testified that the vessel’s shafts would be excessively robust for a 1,200
horsepower vessel, which suggests that they are likely appropriate for a 1,600
horsepower vessel.152
In determining the cost of replacement engines, the Court is guided by
evidence in the record concerning a price quote that Jessica Boudreaux
provided to Hasselman on behalf of R&R Boats for a pair of 751 horsepower

152

Testimony of Robert Boudreaux, Sr.
34

Caterpillar 3412 DITA engines on March 21, 2014.153 R&R priced these
engines at $75,000 each.

Although the quote was for unused surplus

engines, rather than reconditioned engines,154 Legacy’s expert John Jay
Webster testified that the price difference between such engines is
minimal.155 The Court further finds that to the extent the surplus engines
are, in fact, more valuable, that difference is offset by the lower horsepower
rating.
Captain Maran opined, based on his years of experience working in the
field of naval construction, that the cost of removing and replacing the
Legacy Server’s engines would be $80,000.156 The Court finds this estimate
to be credible. Maran also estimated additional repair costs for ten days of
dry docking to replace the engines, bearings, shafts, and propellers. The
Court, however, finds that the bearings and shafts need not be replaced and
credits Robert Boudreaux, Sr.’s testimony that the vessel need not be placed

Joint Ex. 23. Captain Maran testified regarding the price of new,
1,000 horsepower engines. Testimony of Captain Jose Maran. Because the
Court finds that Nautimill is entitled to only 800 horsepower engines,
Maran’s testimony on this point is unhelpful.
154
Investigation by Hasselman later revealed that the engines were
in fact heavily used. Joint Ex. 24. The evidence in the record suggests,
however, that Legacy was unaware of this fact at this time it offered them for
$75,000 each. Joint Ex. 54 at 216, 233.
155
Testimony of John Jay Webster.
156
Testimony of Captain Jose Maran.
35
153

in dry dock to replace only the engines.157 Finally, the Court credits Maran’s
opinion that the estimated cost of recertification of the vessel after replacing
the engines is $10,000.158
Summing these figures, the Court estimates that the cost to repair the
Legacy Server’s defects is $240,000. The Court finds that this total is an
appropriate estimate of the difference in value between the Legacy Server
and a defect-free 1,600 horsepower pushboat.159
B.

Attorney’s Fees, Lost Profits, and Other Damages

In addition to its claims for reduction of the sales price, Nautimill seeks
lost profits and attorney’s fees. A “good faith” seller, who unknowingly
provides a defective product, is not liable for attorney’s fees or lost profits.
See Gaston v. Bobby Johnson Equip. Co., 771 So. 2d 848, 855 (La. App. 2 Cir.
2000) (“The jurisprudence construing [the redhibition] provisions holds
that while a bad faith seller is liable for damages, including loss of profits and
attorney fees, a good faith seller is not.”). “A seller is,” however, “deemed to
Testimony of Robert Boudreaux, Sr.
Testimony of Captain Jose Maran.
159
Legacy argues that it is entitled to a credit for Nautimill’s use of
the Legacy Server. Such a credit, however, does not apply when a court
grants only a reduction of the sales price, rather than full rescission of the
sale. See Weber v. Crescent Ford Truck Sales, Inc., 393 So. 2d 919, 924 (La.
App. 4 Cir. 1981), writ denied, 400 So. 2d 667 (La. 1981) (“[W]here quanti
minoris is decreed the seller is not entitled to a credit for use because the
buyer retains the thing sold and, as the owner, is entitled to its fruits and
use.”).
36
157

158

know that the thing he sells has a redhibitory defect when he is a
manufacturer of that thing.” La. Civ. Code art. 2545. The Court finds that,
Legacy is a manufacturer of the Legacy Server, and that its knowledge of the
defect is therefore presumed.160 Legacy may therefore be liable for attorney’s
fees and lost profits. See, e.g., Foust v. McKnight, 675 So. 2d 1147, 1150 (La.
App. 1 Cir. 1996), writ denied, 683 So. 2d 277 (La. 1996) (“Having concluded
herein that defendants were manufacturers, we further conclude plaintiffs
were entitled to damages and attorney's fees under [article] 2545.”).
Nautimill has the burden to demonstrate that the Legacy Server’s
defective state caused Nautimill to lose profits. See Land & Marine Servs.,
Inc. v. Diablo Data Sys., Inc. of Louisiana, 471 So. 2d 792, 803 (La. Ct. App.
5 Cir. 1985), writ denied, 477 So. 2d 102 (La. 1985). Varela testified that a
2,000 horsepower pushboat would have earned $8,000 per day,161 but
Nautimill produced nothing in writing to support this assertion. Even if the

Although the vessel may have been nominally constructed by
R&R Boats, another Boudreaux entity, rather than Legacy, the record makes
clear that there is little practical division between R&R and Legacy.
Furthermore, the uncontested material facts contained in the pretrial order,
which bind both parties, state clearly that Legacy—not R&R—reconditioned
the Legacy Server’s “engines and other propulsion equipment” and installed
the vessel’s propellers. Uncontested Material Facts 19, 20. Even these
limited actions qualify Legacy as a manufacturer.
See Spillers v.
Montgomery Ward & Co., 294 So. 2d 803, 807 (La. 1974) (seller that
modified truck prior to sale was liable as manufacturer).
161
Testimony of Ruben Varela.
37
160

Court were to credit Varela’s testimony, Nautimill has presented no evidence
tending to show that it would have earned additional profits with a 1,600
horsepower pushboat. The Court therefore finds that Nautimill has failed to
show that it is entitled to lost profits. The Court finds, however, that
Nautimill is entitled to an award of attorney’s fees.

See Hollybrook

Cottonseed Processing, L.L.C. v. Am. Guarantee & Liab. Ins. Co., 772 F.3d
1031, 1037 (5th Cir. 2014) (“[Article] 2545 was designed to impose liability
upon the bad faith seller and the manufacturer of a defective product which
causes damage to a buyer. That liability expressly includes attorney fees.”).
Finally, Nautimill also claims expert witness fees as damages. Federal
law governs awards of expert witness fees in a redhibition case brought in
federal court. Cates v. Sears, Roebuck & Co., 928 F.2d 679, 689 (5th Cir.
1991). Under 28 U.S.C. section 1920, a prevailing party may recover expert
witness fees only for court-appointed experts. Crawford Fitting Co. v. J. T.
Gibbons, Inc., 482 U.S. 437, 442 (1987). Nautimill therefore may not recover
expert witness fees.

IV.

CONCLUSION

Based on the above findings of fact and conclusions of law, the Court
finds that Nautimill is entitled to recover the following from Legacy:
38

Item of Damages
Two 800 Horsepower Engines
Engine Installation
Recertification of the Vessel
TOTAL:

Amount
$150,000
$80,000
$10,000
$240,000

In addition, Nautimill is entitled to recover attorney’s fees. Counsel for
Nautimill are hereby ORDERED to, within five days of the entry of judgment,
submit to the Court a sworn affidavit detailing their fees in accordance with
Local Rule 54.2. Finally, the Court finds Hasselman not liable for the claims
in Legacy’s third party complaint, and Legacy not liable for Hasselman’s
counterclaims.

4th
New Orleans, Louisiana, this ___ day of August, 2016.

____________________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

39