New Hampshire Insurance Company v. Bennett Brothers Yachts, Inc.

Filing 42

ORDER - The court GRANTS NIDC's motion to amend the judgment [D.E. 38] and VACATES the judgment. The court DENIES the motion for bill of costs [D.E. 37]. The parties shall engage in a court-hosted settlement conference with United States Magistrate Judge Gates. Judge Gates will contact the parties about the settlement conference. Signed by Chief Judge James C. Dever III on 5/22/2018. (Briggeman, N.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
SOUTHERN DIVISION
IN ADMIRALTY
No. 7:16-CV-237-D
NEW HAMPSHIRE INSURANCE,
COMPANY, AS SUBROGEE OF
SANCTUARY, LLC

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)
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Plaintiff,

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v.

ORDER

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BENNETT BROTHERS YACHTS, INC.

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Defendant.

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On December 28, 2017, the court granted Bennett Brothers Yachts, Inc.'s ("Bennett

Brothers") motion for summary judgment [D.E. 36]. On January 15, 2018, New Hampshire
Insurance Company (''NlllC") moved to amend the judgment [D.E. 38] and filed a memorandum
in support [D.E. 39]. On January 26, 2018, Bennett Brothers responded in opposition [D.E. 40]. On

February 1, 2018, NHIC replied [D.E. 41]. As explained below, the court grants NHIC's motion to
amend the judgment.
I.

Federal Rule of Civil Procedure 59(e) permits a court to alter or amend a judgment. See Fed.
R. Civ. P. 59(e). The decision to alter or amend a judgment pursuant to Rule 59(e) rests within the

sound discretion of the district court.

See,~'

Dennis v. Columbia Colleton Med. Ctr.. Inc., 290

F.3d 639, 653 (4th Cir. 2002); Hughes v. Bedsole, 48 F.3d 1376, 1382 (4th Cir. 1995). The Fourth
Circuit has recognized three reasons for granting a motion to alter or amend a judgment under Rule

59(e): "(1) to accommodate an intervening change in controlling law; (2) to account for new
evidence not available [previously]; or (3) to correct a clear error of law or prevent manifest
injustice." Zinkand v. Bro~ 478 F.3d 634, 637(4th Cir. 2007) (quotations omitted); see Bogart
v. Chapell, 396F.3d548, 555 (4thCir. 2005); Pac. Ins. Co. v.Am. Nat'lFireins. Co., 148 F.3d396,
403 (4th Cir. 1998). In other words, the court may grant a Rule 59(e) motion if''the court. has
misapprehended the facts, a party's position, or the controlling law." Anderson v. Waste Mgmt. of
Wilmington, No. 7:15-cv-14-FL, 2016 WL 3211957, at *3 (E.D.N.C. June 7, 2016) (unpublished);
Sobel v. United States, 571 F. Supp. 2d 1222, 1229 (D. Kan. 2008).
A.

NlllC insured Sanctuary LLC's Motor Yacht (''the Vessel"), a sixty-foot power catamaran,
for $2,985,000. See Compl. [D.E. 1] ~ 1. On July 30, 2015, the Vessel struck a submerged object
in the intracoastal waterway in South Carolina. See [D.E. 28] 2. On July 31, 2015, Bennett Brothers
agreed to haul the Vessel to its facility for additional examination and repair. See Compl.

~

5;

Answer [D.E. 10] ~ 5. On August 1, 2015, Bennett Brothers dropped and damaged the Vessel while
moving the Vessel to land for repairs. See Compl. ~ 5; [D.E. 22] ~ 1. NlllC sued Bennett Brothers
for breach ofcontract, breach of implied warranty ofworkman1i.ke performance, and negligence, and
requested $2,190,686.72 in damages, representing the constructive total loss of the Vessel. Compl.

W13, 15, 19. NlllC calculated the total loss as follows: insured value of the Vessel ($2,985,000)
less salvage value ($794,313.28). See Def. Ex. F [D.E. 23-6] 3. On September 18,2017, Bennett
Brothers moved for summacy judgment and argued that NlllC cannot, as a matter oflaw, recover
its claimed damages. See [D.E. 20, 21].
During this case, NlllC repeatedly changed its theory of recovery. For example, in

supplemental disclosures and interrogatories, NlllC stated that it was not seeking damages for the
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Vessel's constructive total loss, but in opposition to defendant's motion for summary judgment,
NHIC argued that the Vessel was a constructive total loss. Compare Def. Ex. L [D.E. 23-12], and
Def. Ex. M [D.E. 23-13] 2, with [D.E. 28] 8. Alternatively, NlllC argued that it should recover
damages based on the Vessel's diminution in value or the estimated cost of repairs immediately
following the accident. See id. at 15; Def. Exs. L, M.
\
On December 28, 2017, the court held thatNHIC cannot, as a matter oflaw, recover damages
for the Vessel's constructive total loss. See [D.E. 35] 6. The court also held that "NillC never
amended its complaint to seek damages for diminution in value or cost of repairs. Instead, NHIC
discussed these theories in supplemental disclosures, discovery, and briefing," and that
"[e]stablishing damages for cost of repairs or diminution in value requires proving a separate set of
facts from constructive total loss." Id. at 7. Thus, because NlllC never amended its complaint to.
add these claims, the court granted Bennett Brothers's motion for summary judgment.
In its motion to alter the judgment, NHIC argues that it was not required to amend its
complaint because pursuing damages for diminution in value (or estimated cost of repairs) did not
"alter the elements of the causes of action articulated in the Complaint, nor require additional facts
to prove[.]" [D.E. 39] 5. Upon review, the court agrees that NlllC did not have to amend its
complaint because pursuing damages for diminution in value or estimated cost ofrepairs did not alter
the elements of the causes of action or require additional facts to be proven.
Although NlllC repeatedly changed its theory of recovery, the theories are premised on the
same facts. NHIC cites three theories of recovery: (1) constructive total loss; (2) diminution in
value; and (3) cost of repairs. As for the calculation of constructive total loss, a vessel is a
constructive total loss when the cost of repairs exceeds the fair market value of the vessel
immediately before the damage occurred. See Gaines Towing & Transp.• Inc. v. Atlantia Tanker

3

Corp., 191 F.3d 633, 635 (5th Cir. 1999) (per curiam); Self Towing. Inc. v. Brown Marine Servs..
Inc., 837 F.2d 1501, 1506 (11th Cir. 1988); Hewlett v. Barge Bertie, 418 F.2d 654, 657 (4th Cir.
1969). As for the calculation concerning diminution in value, the diminution in value is ''the value
ofthe vessel before and after the collision." Stevens v. FN Bonnie Doon, 731 F.2d 1433, 1436 (9th
Cir. 1984); seeLaConner Assocs. Ltd. Liab. Co. v. Island Tug & Barge Co., No. C07-175RSL, 2008
WL 8415154, at *4 (W.D. Wash. June 16, 2008) (unpublished). Diminution in value, however, is
calculated based on the estimated cost ofrepairs. See Stevens, 731 F .2d at 1436; Hewl~ 418 F.2d
at 658; LaConner, 2008 WL 8415154, at *4; Detroit & Cleveland Navigation Co. v. The Elbert H.
~'

161 F. Supp. 570, 577 (E.D. Mich. 1958). Thus, all three theories of recovery require

determining the Vessel's fair market value immediately before the damage, the Vessel's fair market
value immediately after the damage, and the reasonable cost of repairs that would restore the Vessel
to its pre-collision condition. 1 Accordingly, the court grants NlllC's motion to amend the~
judgment order and vacates the judgment. NlllC may not pursue damages for constructive total loss
of the Vessel. See [D.E. 35] 6. NlllC can, however, pursue dam8ges for the diminution in value or
estimated cost of repairs.

1

To the extent Bennett Brothers argues that the only relevant evidence of damages is the cost
of actual repairs, the argument fails. The Vessel's owner chose not to repair the Vessel, and an
injured ~powner may recover estimated cost of repairs, even when the vessel is not repaired. See,
~Yarmouth Sea Prods. Ltd.v. Scully, 131 F.3d 389, 399 (4th Cir. 1997); The Tug JuneS v.
Bordagain Shipping Co., 418 F.2d 306, 307 (5th Cir. 1969); United States v. Shipowners &
Merchants Tugboat Co., 103 F. Supp. 152, 153 (N.D. Cal. 1952) ("Damages in collision cases,
where the repairs are not made, can be measured either by estimated cost of repairs at a time
immediately following the accident ... or by the diminution in the market value of the vessel."),
aff'd. 205 F.2d 352 (9th Cir. 1953). Although there is evidence of actual repairs, the third-party
purchaser completed the repairs, not the injured party. A third-party's actions do not limit NlllC's
damages. See,~ Moreno v. Ross Island Sand & Gravel Co., No. 2:13--cv--{)0691-KJM-KJN,
2015 WL 6690067, at *2 (E.D. Cal. Oct. 29, 2015) (unpublished).

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II.
In sum, the court GRANTS NIDC's motion to amend the judgment [D.E. 38] and
VACATES the judgment. The court DENIES the motion for bill of costs [D.E. 37]. The parties

shall engage in a court-hosted settlement conference with United States Magistrate Judge Gates.
Judge Gates will contact the parties about the settlement conference.
SO ORDERED. This 11.day of May 2018.

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