Hosea Project Movers, LLC et al v. Waterfront Associates, Inc. et al

Filing 43

REPORT AND RECOMMENDATIONS re 17 MOTION to Dismiss the First Amended Complaint filed by C&B Marine, LLC, 18 MOTION to Dismiss for Lack of Jurisdiction filed by Waterfront Associates, Inc., 32 MOTION for Summary Judgment filed by Waterfront A ssociates, Inc. IT IS RECOMMENDED THAT Waterfront's Motion to Dismiss for Lack of subject matter jurisdiction 18 be DENIED; that C&B Marine's Motion to Dismiss for Failure to State a Claim 17 be GRANTED; and that Waterfront Associates' Motion for Summary Judgment 32 be GRANTED IN PART and DENIED IN PART, consistent with this Report and Recommendation. Objections to R&R due by 7/28/2017. Signed by Magistrate Judge Stephanie K. Bowman on 7/14/2017. (km)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
HOSEA PROJECT MOVERS, LLC, et al.,
Plaintiffs,

Lead Case No. 1:15-cv-799
Barrett, J.
Bowman, M.J.

v.

WATERFRONT ASSOCIATES, INC., et al.,
Defendants.
*****************************
UNITED STATES FIRE INSURANCE CO.,

Case No. 1:15-cv-46

Plaintiff/Crossclaim Plaintiff
v.

WATERFRONT ASSOCIATES, INC.,
Defendant/Third-Party Plaintiff,
v.

C&B MARINE, LLC,
Third-Party Defendant/Crossclaim Defendant

REPORT AND RECOMMENDATION
These recently consolidated cases have been referred for all pretrial proceedings
to the undersigned magistrate judge by U.S. District Judge Michael R. Barrett. (See
Doc. 42). Currently pending are two motions to dismiss all claims filed by Hosea Project
Movers, LLC and Hosea Demolition Movers, LLC (hereinafter “Hosea”) in Lead Case

No 15-cv-799.

Also pending is a separate motion for summary judgment filed by

Waterfront Associates (hereinafter “Waterfront”) regarding the same claims.
For the reasons that follow, I recommend denying Waterfront’s motion to dismiss,
granting the motion to dismiss filed by C&B Marine, LLC, and partially granting
Waterfront’s motion for summary judgment. By separate Order, the remainder of the
consolidated cases have been set for a status conference before the undersigned.
I.

Background

Each of the consolidated cases involves slightly different parties and distinct
claims, but arises out of the same core event: the August 5, 2014 sinking of the
Waterfront Barge (hereinafter “Barge”). 1 The cause of the sinking of the Barge, and who
was responsible, remain among the common disputes that all parties seek to resolve.
For the Court’s convenience, the original cases are referred to as the Insurance Policy
case (Case No. 1:15-cv-46) and the Hosea-Waterfront Contract case (Lead Case No.
1:15-cv-799). Before turning to the pending motions in the Hosea-Waterfront Contract
case, the Court briefly summarizes the facts of both cases.
A. The Insurance Policy Case
After the Barge sank, its insurer, United States Fire Insurance Company (“U.S.
Fire”), advanced $500,000.00 of the policy proceeds on Waterfront’s behalf to C&B
Marine, LLC (“C&B”), to remove and dispose of the sunken vessel. The payment was
advanced under a reservation of rights as to coverage issues. U.S. Fire later filed suit
against Waterfront Associates (“Waterfront”) seeking judgment to declare its insurance

1

Though the Barge once contained a well-known floating restaurant called The Waterfront, restaurant
operations ceased in 2011, after the first of what proved to be a series of calamitous events.

2

policy to be void ab initio, or in the alternative, to declare that there is no coverage and
ordering Waterfront to repay U.S. Fire $500,000.00 plus interest, costs, and attorney’s
fees. U.S. Fire maintains that the policy is void in part because Waterfront failed to
disclose or misrepresented “the full condition” of the vessel - namely, that “it was in a
state of advanced deterioration and wastage and was not in a serviceable or
…seaworthy condition.” (See Case No. 1:15-cv-46, U.S. Fire Complaint at ¶¶16-17).
U.S. Fire further alleges that Waterfront misrepresented its intentions to reopen the
Barge as an operating restaurant. (Id. at ¶¶`19-20).
Waterfront filed a Counterclaim against U.S. Fire for breach of its contract of
insurance. Waterfront also alleges bad faith, and seeks a judgment “of Waterfront’s
actual losses and attorney’s fees and expenses and punitive damages in the amount of
$3,400,000.” (Waterfront’s Counterclaim at 14).
Waterfront also filed a third party complaint against C&B Marine, LLC (hereinafter
“C&B”), alleging that C&B’s actions caused the Barge to sink. 2 U.S. Fire followed suit
with a cross-claim against C&B, contingent upon U.S. Fire being subrogated to
Waterfront for the claimed loss of the Barge. If C&B is responsible for the sinking, U.S.
Fire seeks to hold C&B liable for the $500,000 in insurance proceeds that U.S. Fire
previously advanced to pay for the disposal of the sunken Barge.
B. The Hosea-Waterfront Contract Case
The now-consolidated second case arose out of the same event – the sinking of
the Barge - but is based on an entirely separate contract for services that Hosea
2

Waterfront alleges that the Barge was struck by another barge in June 2014 while under C&B’s care,
custody, and control, and additionally, that C&B was negligent when it repositioned the Barge the day
before the Barge sank.

3

entered into with Waterfront on July 3, 2014. The contract required Hosea to remove
personal property from the Barge, use its “best efforts” to sell the Barge on Waterfront’s
behalf, and, if the Barge could not be sold, to demolish the Barge.
As stated, the Barge sank on August 5, 2014, just a month after the execution of
the Hosea-Waterfront contract. The sinking of the Barge simultaneously sank Hosea’s
prospects for selling the Barge to an approved purchaser or for scrap value.
Additionally, Waterfront refused to make a final payment under the contract for the
removal of personal property from the Barge, since Hosea had not completed removal
of the designated property at the time the Barge sank.
In December 2015, Hosea filed suit against Waterfront and C&B, seeking to
recover the revenue that slipped away with the Barge under the Ohio River. When
Waterfront and C&B moved to dismiss, Hosea filed an amended complaint that includes
headings for Counts I-VI. Count I asserts a claim for a constructive trust over any
insurance proceeds recovered by Waterfront in the Insurance Policy case. Count II
alleges that Waterfront breached its contract by obstructing Hosea’s access to the
Barge, thereby preventing Hosea from completing its performance. In Count III, Hosea
asserts a separate claim against C&B for tortious interference with the HoseaWaterfront contract. In Count IV, Hosea brings a claim against both Waterfront and C&B
for conversion of Hosea’s property. Count V asserts that both Waterfront and C&B are
liable for negligence. Last, Count VI asserts “legal malice” and seeks punitive damages
and attorney’s fees.

Hosea alleges that jurisdiction lies in this Court under admiralty

law.
4

In lieu of filing an Answer, the Defendants filed new motions to dismiss.
Waterfront’s motion seeks dismissal on grounds that this Court lacks subject matter
jurisdiction over any of the claims asserted. C&B’s separate motion seeks dismissal for
failure to state a claim.
The parties’ Rule 26(f) report reflects agreement to a stay of all discovery
pending this Court’s ruling on pending motions to dismiss, (Doc. 20), and it does not
appear that the parties have engaged in any formal discovery in the Hosea-Waterfront
Contract case. (See Doc. 28, motion for status conference confirming that no formal
discovery has occurred). However, based in part on discovery in the related Insurance
Policy case, Waterfront filed an additional motion for summary judgment in the HoseaWaterfront contract case.
II.

Analysis of Pending Motions To Dismiss
A. Standard of Review

Waterfront’s motion to dismiss falls under Rule 12(b)(1), and attacks the factual
predicate asserted by Hosea to support subject matter jurisdiction.
Generally, a Fed. R. Civ. P. 12(b)(1) motion to dismiss for lack of subject
matter jurisdiction falls into one of two categories: facial attacks and
factual attacks. United States v. Ritchie, 15 F.3d 592, 598 (6th
Cir.1994) cert. denied, 513 U.S. 868, 115 S. Ct. 188, 130 L.Ed.2d 121
(1994); see also Wenz v. Rossford Ohio Transp. Improvement Dist., 392
F.Supp.2d 931, 934 (N.D. Ohio 2005). A facial attack challenges the
sufficiency of the pleading itself, and requires the Court to take all of the
material allegations in the complaint as true and construe them in the light
most favorable to the non-moving party. Ritchie, 15 F.3d at 598
(citing Scheuer v. Rhodes, 416 U.S. 232, 235–37, 94 S. Ct. 1683, 40
L.Ed.2d 90 (1974)). In contrast, a factual attack challenges the factual
existence of subject matter jurisdiction, Ohio Hosp. Ass'n v. Shalala, 978
F.Supp. 735, 739 (N.D. Ohio 1997), and requires a court to “weigh the
conflicting evidence to arrive at the factual predicate that subject-matter
5

[jurisdiction] does or does not exist.” Gentek Bldg. Prods. v. Sherwin–
Williams Co., 491 F.3d 320, 330 (6th Cir. 2007)….
When assessing a factual attack on subject matter jurisdiction, the plaintiff
bears the burden of demonstrating that the court has jurisdiction, RMI
Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir.
1996), and “no presumptive truthfulness applies to the factual
allegations....” Ritchie, 15 F.3d at 598 (internal citations omitted). Instead,
“the court is free to weigh the evidence and satisfy itself as to the
existence of its power to hear the case.” Id.; see also RMI Titanium, 78
F.3d at 1135. Moreover, “a district court is to probe the facts and assess
the validity of its own jurisdiction. In doing so, the Court has a wide
discretion to consider affidavits and the documents outside the complaint,
and may even conduct a limited evidentiary hearing if
necessary.” Shalala, 978 F. Supp. at 739 (relying on Ohio Nat'l Life Ins.
Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990)); see also Kroll v.
United States, 58 F.3d 1087, 1090 (6th Cir. 1995) (“The Court may
examine evidence of its power to hear a case, and must make any factual
findings to determine whether it has jurisdiction.”).
In re Steinle, 835 F.Supp.2d 437, 440–41 (N.D. Ohio 2011) (dismissing two of six
complaints filed in consolidated case for lack of subject matter jurisdiction under
maritime law).
In contrast to Waterfront’s jurisdictional challenge, C&B seeks dismissal of
Hosea’s claims under Rule 12(b)(6), for failure to state a claim. Under Rule 12(b)(6),
this Court must “construe the complaint in the light most favorable to the nonmoving
party, accept the well-pled factual allegations as true, and determine whether the
moving party is entitled to judgment as a matter of law.” Commercial Money Ctr., Inc. v.
Illinois Union Ins. Co., 508 F.3d 327, 336 (6th Cir. 2007). At the same time, this Court
need not accept the plaintiff's legal conclusions or unwarranted factual
inferences as true. Gregory v. Shelby County, 220 F.3d 433, 446 (6th Cir.
2000). To state a valid claim, a complaint must contain direct or inferential
allegations respecting all the material elements under some viable legal
theory. Mezibov v. Allen, 411 F.3d 712, 716 (6th Cir. 2005), cert.
denied, 547 U.S. 1111, 126 S. Ct. 1911, 164 L.Ed.2d 663 (2006).
6

Id., 508 F.3d at 336–37. While determination under Rule 12(b)(6) rests primarily upon
the allegations of the complaint, “matters of public record, orders, items appearing in the
record of the case, and exhibits attached to the complaint, also may be taken into
account.” Amini v. Oberlin Coll., 259 F.3d 493, 502 (6th Cir. 2001) (quoting Nieman v.
NLO, Inc., 108 F.3d 1546, 1554 (6th Cir. 1997)) (emphasis omitted).
B. Waterfront’s Motion to Dismiss for Lack of Jurisdiction
I begin with analysis of Waterfront’s motion since without jurisdiction, this Court
has no authority to rule on other motions in the case. The question of this Court’s
subject matter jurisdiction is not mooted by the consolidation of this case with Case No.
1:15-cv-46. See, generally, Heck v. Board of Trustees, Kenyon College, 12 F. Supp.2d
728, 747 (S.D. Ohio 1998) (Courts look at each component action in a consolidated
case independently to determine whether there is subject matter jurisdiction, since
consolidated actions do not lose their separate identity upon consolidation); accord In re
Steinle, supra (dismissing two complaints in consolidated case involving six lawsuits, for
lack of subject matter jurisdiction).
Waterfront presents its jurisdictional challenge in simple terms: “[A] contract to
remove materials from a barge and to broker the [B]arge for sale does not invoke
admiralty jurisdiction merely because a barge is involved.”

(Doc. 18 at 1). 3

In

response, Hosea maintains that the Hosea-Waterfront contract constitutes a “maritime
contract,” over which this Court should exercise admiralty jurisdiction under 28 U.S.C.

3

Waterfront also challenges Hosea’s reference to diversity jurisdiction. Because Hosea concedes that
complete diversity is lacking, further discussion is unnecessary.

7

§1333. Alternatively, Hosea argues that admiralty jurisdiction attaches to its claims of
negligence.
1. The Hosea-Waterfront Contract Is Not A Maritime Contract
I conclude first that the Hosea-Waterfront contract is not the type of “maritime
contract” that could support jurisdiction. Admiralty jurisdiction over contracts “depends
upon the nature and character of the contract, and the true criterion is whether [the
contract] has reference to maritime service or maritime transactions.” New Hampshire
Ins. Co. v. Home Sav. and Loan Co. of Youngstown, Ohio, 581 F.3d 420, 423 (6th Cir.
2009) (quoting Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 24 (2004)) (additional quotation
marks, citations, and editorial marks omitted); see also generally The Thomas Barlum,
293 U.S. 21 (1934). A contract does not fall under maritime law merely because the
services to be performed have some reference to a ship. Instead, the Sixth Circuit has
stressed that trial courts must look at the contract at issue “as a whole” and ascertain
whether the “primary objective” of the contract is maritime commerce.
After the [Supreme] Court's decision in Kirby, there can be no doubt that
our inquiry into whether a contractual dispute falls within our maritime
jurisdiction must focus on whether the contract's “primary objective” has
an “essentially maritime nature” and relates to “maritime commerce.” 543
U.S. at 24–25, 125 S. Ct. 385 (finding that the contracts at issue were
“maritime contracts” because “their primary objective is to accomplish the
transportation of goods by sea from Australia to the eastern coast of the
United States” (emphasis added)). In conducting this inquiry, Kirby also
requires us to consider the contract as a whole. See id. at 24–26, 125
S.Ct. 385.
New Hampshire Ins. Co., 581 F.3d at 424 (emphasis original). The Sixth Circuit also
has made clear, consistent with the majority of other courts, that contracts for the sale of
a vessel, or for procuring a buyer for a vessel, are not maritime contracts. Cary Marine,
8

Inc. v. Motorvessel Papillon, 872 F.2d 751 (6th Cir. 1989); see also generally
Lynnhaven Dauphin Corp. v. E.L.O. Enterprises, 776 F.2d 538 (5th Cir. 1985).
The language of the contract attached to the amended complaint confirms that
the “primary objectives” of the contract were for Hosea to: (1) remove and transport
personal property from the Barge; (2) broker the Barge for sale, and (3) demolish and
sell the Barge for scrap value if no buyer could be found. None of these tasks are of an
“essentially maritime nature,” nor does the contract have anything to do with the repair
or service of the Barge. In addition, the damages sought by Hosea do not arise under
maritime law, but under state law, if at all.
In its opposition to Waterfront’s motion, Hosea asserts that the contract imposes
upon Hosea an “obligation to repair and prepare the Waterfront Barge for resale.” (Doc.
22 at 9). But the express terms of the contract include no such “obligation to repair.”
Instead, incidental to the intended sale of the vessel, the contract expressly grants
Hosea only a limited and permissive “right to prepare the Barge for marketing and sale
by improving its appearance, only so long as it receives the prior consent of
Waterfront…to any such improvements.” (Doc. 15 at 12, emphasis added).
Hosea also claims that its “right and obligation to cause the Barge to be
transported from its mooring and to be stored at Warsaw, Kentucky” somehow confers
maritime jurisdiction. Again, however, examination of the precise language to which
Hosea refers confirms that the obligation constitutes no more than an incidental
requirement to effectuate the anticipated future sale or demolition, and is not itself a
“primary objective.” The language reads:
9

Following the Removal Completion Date and after the current prospective
purchasers have toured the Barge (which is estimated to be August 16,
2014), [Hosea] will cause the Barge to be moved from its current location
to and moored at Mike Kautzman Landing in Warsaw, Kentucky…at
[Hosea’s] expense….
(Doc. 15 at 12). 4 In context, it is clear that the language required Hosea to make
arrangements and pay for the expense of a third party (like C&B) to move the Barge
after Hosea completed its removal of certain personal property, as opposed to Hosea
itself transporting the vessel. 5 In short, based upon the controlling authority of the
Supreme Court’s decision in Kirby and the Sixth Circuit’s analysis in New Hampshire
Ins. Co., 6 the undersigned finds that the primary objective of the Hosea-Waterfront
contract was not maritime in nature.
2. Hosea’s Negligence Claim Arguably Pleads A Maritime Tort
Having determined that there is no admiralty jurisdiction over the contract, the
Court next examines the only other possible basis for such jurisdiction:

Hosea’s

negligence claim against Waterfront and C&B.
Waterfront argues that Hosea cannot rest on this claim for maritime jurisdiction,
because Hosea lacks standing to assert any claim based upon the sinking of a vessel in
which Hosea had no ownership interest. Standing to sue is a jurisdictional prerequisite.
4

Because the Barge sank prior to Hosea completing the removal of designated personal property, the
obligation for Hosea to make arrangements to move the Barge to Warsaw “following” the “Removal
Completion Date” never arose.
5
The transport of a barge on navigable waters is highly regulated. Hosea neither alleges nor argues that
it was authorized to physically move the Barge. Instead, it alleges that Hosea Project Movers operates as
a general “business relocating businesses” and that Hosea Demolition Services handles “demolition and
related tasks.” (Doc. 15 at ¶¶ 2-3). By contrast, C&B is alleged to be a “‘full-service marine company’
specializing in river transportation including barge towing by tug boat.” (Id. at ¶ 6).
6
Hosea relies chiefly on case law from New York and Illinois that is both factually distinguishable, and
contrary to controlling Sixth Circuit authority. See, e.g., Kalafrana Shipping Ltd. v. Sea Gull Shipping Co.,
591 F. Supp.2d 505 (S.D. N.Y. 2008); Orgulf Transport Co. v. Hill’s Marine Enterprises, Inc., 188 F.
Supp.2d 1056 (S.D. Ill. 2002).

10

See Tartt v. Wilson County, Tenn., 982 F.Supp.2d 810, 823 (M.D. Tenn. 2013)
(explaining that standing permits a plaintiff to invoke federal jurisdiction only if the
plaintiff has a “personal stake in the outcome of the controversy.”) (internal quotation
marks and additional citations omitted). Although Hosea would have been entitled to a
share of the profits if Hosea had been able to sell or scrap the Barge, the contract
specified that “[t]itle and ownership of the Barge will remain with Waterfront until transfer
to an approved purchaser…or demolition….” (Doc. 15 at 12).

Waterfront argues that

Hosea’s position is analogous to that of a real estate broker who has contracted to sell a
house that is destroyed prior to sale by fire or flood. Just as a real estate broker
generally could not sue the owner of the home for his lost commission under those
circumstances, neither, argues Waterfront, may Hosea sue for its loss. In other words,
Waterfront maintains that admiralty jurisdiction cannot arise out of a maritime tort that
relates solely to a Barge in which Hosea had no ownership interest.
Waterfront’s analogy is an imperfect one, however, because the real estate
broker’s commission prior to securing a buyer remains an uncertain hope. By contrast,
the contract here provided for a broker’s “commission” even if Hosea could not secure a
buyer for the Barge. In that event, Hosea was to demolish and sell the Barge for scrap
value, whereupon it would still receive a share of the proceeds on terms specified under
the contract. 7

7

In addition, while Waterfront fails to cite to any authority, secondary sources suggest that whether a real
estate broker can recover a commission when a sale falls through or property is destroyed may depend
on the facts presented. See, e.g., Burke, B., The Broker’s Commission: The Majority Rule, Law of Real
Estate Brokers § 5.02 (2017).

11

Notably, Waterfront does not dispute that it owed Hosea some duty of care,
whether as a business invitee or under the contract. Certainly, the contract anticipated
that Waterfront would provide Hosea “access” to a Barge that was floating on the Ohio
River, not submerged beneath it. 8

Based on the seminal case of Sisson v. Ruby, 497

U.S. 358 (1990), I conclude that Hosea has adequately asserted maritime jurisdiction
over its negligence claims. In so concluding, the undersigned returns to the previously
noted distinction between the failure to plead federal jurisdiction under Rule 12(b)(1)
and the failure to state a claim under Rule 12(b)(6). See Bush v. State Indus., Inc., 599
F.2d 780, 785 (6th Cir. 1979)(“the fact that a complaint may not state claim upon which
relief can be granted is of no relevance to the question of subject matter jurisdiction”);
Cherokee Exp. Inc. v. Cherokee Exp.. Inc., 924 F.2d 603, 609 (6th Cir.1991)(“question
of whether a complaint states a cause of action or a claim for relief calls for a decision
on the merits not for a determination of jurisdiction”); accord Pitstick Farms, Inc. v.
Sanders Sales and Service, Inc., 2005 WL 1151684 (S.D. Ohio May 16, 2005).
Even if Hosea’s negligence claim fails for other reasons, this Court cannot agree
that the claim does not invoke maritime jurisdiction, since the claim centers on the issue
of which party was to blame for the sinking of the Barge (either Waterfront or C&B,
according to Hosea’s amended complaint). Under the test set forth in Sisson, Hosea’s
allegations of negligence that led to the sinking of the Barge involve activities: (1) “likely
to disrupt [maritime] commercial activity, and (2) bear a “substantial relationship” with
“traditional maritime activity.”

Id. at 364-367.

8

Having determined that admiralty

Hosea’s negligence claim assumes the existence of a duty of care owed by both Waterfront and C&B to
Hosea to prevent the Barge from sinking. Whether Hosea has pleaded facts sufficient to state such a
claim are discussed below.

12

jurisdiction exists over the negligence claims, supplemental jurisdiction is appropriately
exercised over all other claims asserted by Hosea.

For that reason, I recommend

denial of Waterfront’s motion to dismiss.
C. C&B’s Motion To Dismiss
C&B’s motion argues that Hosea has failed to state any claim against C&B,
based upon the fact that the real dispute involves the contract between Hosea and
Waterfront to which C&B was not privy. In contrast to the recommended denial of
Waterfront’s motion, I recommend that C&B’s motion to dismiss be granted.
1. No Claim Stated for Tortious Interference by C&B
Hosea’s complaint alleges that C&B is liable for “tortious interference” with the
portion of the Hosea-Waterfront contract that permitted Hosea “access” to the Barge to
remove personal property. Hosea’s amended complaint clarifies that its claim against
C&B is limited to funds that Hosea lost based upon the Barge sinking prior to Hosea’s
removal of personal property, and that Hosea is not seeking to recover from C&B for
damages from the loss of the sale/demolition value of the Barge. (Doc. 15 at 1).
To understand the basis for Hosea’s damage claims against C&B, the
undersigned turns to the contract provision at issue.

The contract describes three

categories of personal property that Hosea was to remove from the Barge. First, “[o]n
July 8th, 2014, [Hosea]…will remove and pack all of the previously tagged items located
on the Barge identified by Jeff Ruby during the parties[’]s prior walkthrough, including,
without limitation, the removal of all items bearing The Waterfront name or marks….”
(Doc. 15 at 11). Hosea was to provide “materials needed to safely pack” the designated
13

items, described as “including…identified artwork and other items, and transport… to
the warehouse owned by Jeff Ruby Culinary Entertainment, Inc.” (Id.)
The contract next directs Hosea to “[a]dditionally…pack, remove and transport all
chandeliers, mirrors and other miscellaneous items already identified to be retained by
Waterfront,” which items were to be delivered to the same warehouse by a date
described as the “Removal Completion Date.” (Id.) The “Removal Completion Date” is
later “estimated to be August 16, 2014.” (Id. at 12). There is no dispute that Hosea did
not complete removal of this second category of personal property prior to the date that
the Barge sank. Because a contractual payment of $32,500 was conditioned “upon the
Removal Completion Date,” (id. at 11), Hosea did not receive that payment. 9
In a separate paragraph that follows the directives for Hosea to remove and
transport the first two categories of personal property to a warehouse on Waterfront’s
behalf, the contract describes a third category of personal property that Hosea “will, at
[Hosea’s] expense, remove” from the Barge. The language of that provision states that
Hosea will
remove all remaining items from Waterfront that are not Ruby Retained
Items. All of these items are the responsibility of and will become property
of [Hosea], which will perform all legal requirements related to such
removal and the sale, destruction or other disposition of these items. All
debris removal and related compliance will be at the expense of [Hosea].
(Doc. 15 at 11). Because Hosea did not complete the removal of the second category
of personal property, it also failed to remove this third category of “remaining” property.
In its amended complaint, Hosea alleges that as a result, it was “prevented from taking
9

Hosea received an initial payment of $27,500. The sum of $32,500 is comprised of a second payment of
$27,500 plus an additional $5,000 in trade credit usable at any Jeff Ruby Culinary Entertainment
restaurant.

14

possession of … Waterfront kitchen equipment, valued at $80,000 and two 16' Box
trucks of large, high quality tables and chairs, valued at $5,000 (totaling $85,000).”
In order for Hosea to physically remove all three categories of personal property,
as well as to show the Barge to prospective purchasers, the contract stated that
beginning on July 8, 2014, “Waterfront will provide access” to Hosea. (Doc. 15 at 11,
12). Hosea’s claim of “tortious interference” alleges that with “actual knowledge of the
terms of the Hosea - Waterfront Agreement” C&B “interfered” with Hosea’s performance
when C&B “intentionally and purposefully denied [Hosea] access to the…Barge, thereby
preventing it from performing and completing the removal of personal property.” (Doc.
15 at ¶43).
Assuming that Kentucky law applies, C&B persuasively argues that the facts
alleged fail to state any claim for intentional or “tortious” interference with the HoseaWaterfront contract. 10

To prove intentional interference with contractual relations,

Hosea must show: (1) the existence of a contract; (2) C&B’s knowledge of the contract;
(3) that C&B intended to cause its breach; (4) that C&B’s conduct caused the breach;
(5) that the breach resulted in damages to Hosea; and (6) that C&B had no privilege or

10

In its response, Hosea does not directly dispute that Kentucky law would apply over its state law claims,
despite frequently citing Ohio law. Waterfront also relies primarily on Ohio law in its motion for summary
judgment. Because no party has identified any material distinction between Ohio and Kentucky law
concerning the issues presented, and because the parties have failed to fully brief what is often a
complex issue, the undersigned declines to make a definitive ruling on choice of law. But see generally
Donais v. Green Turtle Bay, Inc., 2012 WL 399160 (W.D. Ky. Feb. 7, 2012)(noting that admiralty choice
of law rules apply in tort cases based upon admiralty jurisdiction); Barge v. Jaber, 831 F. Supp. 593 (S.D.
Ohio 1993) (noting that the place where a contract is made and the place where it is performed is often
significant); Pivnick v. White, Getgey & Meyer Co., LPA, 2007 WL 2236609, 2007 U.S. Dist. LEXIS 55423
at * 11 (S.D. Ohio July 31, 2007)(Barrett, J., applying Kentucky law after recognizing that “the applicable
law will usually be the local law of the state where the injury occurred”).

15

justification to excuse its conduct. Griffin v. Jones, 170 F. Supp.3d 956, 967 (W.D. Ky.
2016).
Here, Hosea’s allegations appear to be inconsistent with the element that C&B
“caused” the breach. 11 To the contrary, the facts alleged by Hosea are that Waterfront
first breached the contract, and that Waterfront subsequently enlisted C&B’s aid in
continuing an existing breach of the provision requiring Waterfront to allow Hosea
“access” to the Barge. (See Doc. 15 at ¶¶ 32-33, 37-38). Thus, the amended complaint
asserts that was it was Waterfront and not C&B who intentionally “caused” the breach.
“Waterfront …instructed Defendant C&B Marine to deny [Hosea] access, thereby
preventing removal of the personal property….” (Doc. 15 at ¶¶33, 48).
C&B asserts that based on Hosea’s allegation that Waterfront first denied Hosea
“access” to the Barge - before C&B allegedly complied with Waterfront’s directive –
C&B cannot be held liable for intentional interference with the Hosea-Waterfront
contract. I agree. See Grant v. Dean Witter Reynolds, 952 F. Supp. 512, 515 (E.D.
Mich. 1996) (finding a tortious interference claim to be without merit when “defendants’
actions could not have instigated” a contractual breach that “had already taken place”).
Hosea does not dispute that if the referenced allegations stood alone, C&B’s
argument would be persuasive. 12 However, Hosea points to additional allegations that
“[w]ith actual knowledge of the terms of the Hosea-Waterfront Agreement, Defendant
C&B Marine interfered with the Hosea Plaintiffs’ performance without their consent or
11

To the extent that Hosea believes that Ohio law rather than Kentucky law applies, Hosea has cited to no
Ohio authority that would not similarly require a plaintiff to prove that the defendant caused the breach.
12
C&B first argues that because Hosea’s response in opposition was untimely filed (by one day), this
Court should not consider it. However, the undersigned exercises judicial discretion to fully consider the
response as if timely filed.

16

other privilege,” and that C&B “intentionally and purposefully denied Hosea…access to
the Waterfront Barge, thereby preventing it from …completing the removal of personal
property” under the contract. (Doc. 15 at ¶¶42, 43).

Hosea argues that under notice

pleading standards, it may plead even seemingly inconsistent facts and theories. 13
Based on the referenced allegations, Hosea contends that a “genuine issue of material
fact” exists concerning whether or not Waterfront first breached the contract (which
would be inconsistent with C&B’s liability) or whether C&B directly caused the breach.
In its reply memorandum, C&B points out that even under this “alternate” theory,
Hosea has failed to connect the dots. Hosea never alleges that Waterfront breached
the contract after C&B interfered with the contract, but instead alleges only that
Waterfront first breached the contract, beginning as early as July 8, 2014. Nowhere
does Hosea actually allege that C&B intended to cause a breach of the contract.
Instead, Hosea’s amended complaint asserts only that C&B was aware that the contract
required Waterfront to allow Hosea access, and “interfered with” Hosea’s performance
(removal of personal property from the Barge). But Hosea does not allege or argue that
C&B intended to cause either Hosea or Waterfront to breach the contract. Thus, the
amended complaint fails to state a claim against C&B for intentional interference with
the Hosea-Waterfront contract, because Hosea does not allege that C&B’s actions
caused Waterfront to breach the contract, as opposed to Waterfront initiating the breach
and instructing C&B to deny Hosea access.

13

Of course, Rule 11, Fed. R. Civ. P. provides some additional limitations on the ability to plead
inconsistent facts and legal theories.

17

2. No Claim Stated for Conversion Against C&B
C&B’s argument that Hosea has failed to state a claim for conversion is equally
persuasive.

Under Kentucky law, a claim of conversion consists of the following

elements:
(1) the plaintiff had legal title to the converted property; (2) the plaintiff had
possession of the property or the right to possess it at the time of the
conversion; (3) the defendant exercised dominion over the property in a
manner which denied the plaintiff[']s rights to use and enjoy the property
and which was to the defendant's own use and beneficial enjoyment; (4)
the defendant intended to interfere with the plaintiffs possession; (5) the
plaintiff made some demand for the property's return which the defendant
refused; (6) the defendant's act was the legal cause of the plaintiffs loss of
the property; and (7) the plaintiff suffered damage by the loss of the
property.
James T. Scatuorchio Racing Stable, LLC v. Walmac Stud Management, LLC, 941
F.Supp.2d 807, 826 (E.D. Ky. 2013) (quoting Ky. Ass’n of County’s All Lines Fund Trust
v. McClendon, 157 S.W. 3d 626, 632 n. 12 (Ky. 2005) (additional citations omitted)).
“[T]he property converted must be property which the plaintiff has the exclusive right to
control.” Id., 941 F. Supp.2d at 826.
C&B first points out that, under the contract, Hosea had no ownership interest in
the Barge.

C&B further argues that Hosea had no property interest in any of the

personal property on the Barge “unless and until the items were removed.” (Doc. 17 at
7).
In its memorandum in opposition to C&B’s motion to dismiss, Hosea argues that
it has sufficiently alleged an ownership interest in the personal property located on the
Barge, because the amended complaint contains multiple allegations that either directly
or indirectly state that C&B and Waterfront denied Hosea access to “property that
18

belonged not only to Ruby/Waterfront but also to the Hosea Plaintiffs.” (Doc. 15 at ¶33,
emphasis added); see also id., at ¶¶35, 47, 48, 49).
The difficulty is that the allegations of Hosea’s ownership interest are
contradicted by the express language of the Hosea-Waterfront contract, which is
incorporated into Hosea’s pleading as an exhibit attached to the amended complaint.
When allegations in a complaint contradict an attached contract that forms the basis for
the claims, the provisions of the contract control. Apex Energy Grp., LLC v. Apex
Energy Sols. Of Cincinnati, LLC, 2013 U.S. Dist. LEXIS 14758 at *14, 2013 WL 394464
(S.D. Ohio Jan. 31, 2013) (Barrett, J.) (declining to accept allegations that “directly
contradict the unambiguous language” of a contract attached to the complaint); accord
Ingram v. State Prop. & Bldg. Commission, 309 S.W.2d 169, 172 (Ky. App.
1957)(“[W]hen a cause of action is founded upon a written contract which constitutes a
portion of the pleading and the contract contradicts the allegations of the pleading, the
provisions of the contract control”).
As previously stated, the contract provided that title to the Barge was to remain
with Waterfront. Contrary to Hosea’s assertion of an ownership interest in the personal
property that was physically located on the Barge, the language of the contract clarifies
that ownership interest in that property would not inure to Hosea until after the removal
of the first two categories of property destined for the warehouse. The contract sets
forth its objectives in chronological fashion. The terms first direct Hosea to remove
“previously tagged items” on July 8, 2014, with a second category of “chandeliers,
mirrors and other miscellaneous items” to be removed on a “Removal Completion
19

Date.” (Doc. 15 at 11-12). The contractual language states that only after that condition
will Hosea acquire a property interest in “remaining items.”

In addition to the

chronological format of the stated provisions, the use of past and future tense is
contextually clear. Thus, the contract specifies that only “remaining items” from the
Barge “will become property of [Hosea], which will perform all legal requirements related
to such removal and the sale, destruction or other disposition of these items….” (Doc.
15 at 11, emphasis added).
Hosea fails to state a claim for conversion because such a claim “cannot be
brought where ‘the property right alleged to have been converted arises entirely from
the contractual rights’” of the plaintiff. Beacon Enter. Sols. Grp. v. MDT Labor, LLC,
2013 U.S. Dist. LEXIS 10573, at * 13, 2013 WL 253134 (W.D. Ky. Jan. 23, 2013)
(additional citation omitted). Thus, to the extent that Hosea alleges damages based
upon the loss of personal property that it had a contractual right to remove from the
Barge, its remedy lies in its breach of contract claim against Waterfront, not through a
tort claim against C&B. See id., at *13.
3. No Claim for Negligence Against C&B
In order to state a negligence care against C&B, Hosea must show that C&B
owed Hosea a duty of care. See Penco, Inc. v. Detrex Chem. Indus., Inc., 672 S.W.2d
948, 951 (Ky. App. 1984). Hosea’s explanation for the foundation of its negligence
claim is succinct, if unilluminating: “It is axiomatic that after [C&B] refused to allow
Plaintiffs Hosea onto the Waterfront Barge to obtain possession of the personal property

20

that they owned, [C&B] voluntarily assumed a duty of due care as to Plaintiffs
Hosea.” (Doc. 23 at 9, emphasis original).
For the reasons stated above, the undersigned does not agree that such a duty
of care is “axiomatic” or that C&B “voluntarily assumed” such a duty. To the contrary,
Hosea’s claim of an ownership interest in personal property that remained on the Barge
at the time of its sinking must give way to express language in the Hosea-Waterfront
contract that refutes any such ownership interest. Because Hosea had no property
interest in the items that remained on the Barge, C&B owed Hosea no duty of care that
could support a negligence claim. Nor can Hosea rely upon any contractual rights in the
Hosea-Waterfront contract to assert a negligence claim against C&B, since C&B was
not a party to that contract. See generally Penco, Inc., 672 S.W.2d at 951; Derby Road
Bldg Co. v. Com., Dept. of Highways, 317 S.W.2d 891, 895 (Ky. 1958) (“ordinarily only
those who are parties are liable for the breach of a contract, and the parties cannot
impose any liability upon a stranger to the contract under its terms.”), overruled on other
grounds by Foley Constr. Co. v. Ward, 375 S.W.2d 392 (Ky. 1963).
In the alternative to C&B owing the alleged duty of care, Hosea briefly argues
that “the legal relationship between [Hosea] and [C&B] could have been one of a
‘bailment’ or ‘constructive bailment.’” (Doc. 23 at 9, emphasis added).

The sole

reference to bailment occurs in ¶55 of the amended complaint, wherein Hosea alleges:
“As a proximate result of [Waterfront’s and C&B’s] negligence, and/or, in the alternative,
breach of bailment/constructive bailment, the Hosea Plaintiffs have been damaged in an
amount to be proven at trial.” (Doc. 15 at ¶55). However, any bailment claim also fails
21

as a matter of law based upon the lack of Hosea’s ownership interest. Moreover, there
are no factual allegations pleaded in the amended complaint to support a “bailment.”
4. No separate claim for Malice Against C&B
Last, despite Hosea’s inclusion of a separate caption of “Count VI” for a claim of
malice, “Kentucky does not recognize an independent claim for malice.” IB Agric. Inc. v.
Monty’s Plant Food Co., 2014 U.S. Dist. Lexis 136833 at *25, 2014 WL 4851774 (W.D.
Ky. Sept. 29, 2014). Likewise, any “claims” for punitive damages and attorney’s fees
stated under “Count VI” are not independent causes of action, but instead are mere
remedies. See e.g., Vandon Boasch v. Bayer Healthcare Pharms., Inc., 13 F. Supp.3d
730, 751 (W.D. Ky. 2014). Because Hosea has not otherwise stated any claim against
C&B, and there is no independent cause of action for malice, punitive damages, or
attorney’s fees, Hosea’s “Count VI” also must be dismissed as to C&B.
III.

Analysis of Waterfront’s Motion for Summary Judgment

On April 19, 2017, Waterfront filed an alternative motion for summary judgment. 14
Because little if any discovery has been conducted to date in the Hosea-Waterfront
Contract case, Waterfront’s motion relies in part on discovery conducted in the
Insurance Policy Case, as well as on the express language of the Hosea-Waterfront
contract.
A. Summary Judgment Standard of Review
In considering a motion for summary judgment, “a court must view the facts and
any inferences that can be drawn from those facts ... in the light most favorable to the

14

Waterfront ‘s motion states that it is not withdrawing its motion to dismiss and “respectfully requests that
the Court still consider that motion.” (Doc. 40 at 5).

22

nonmoving party.” Keweenaw Bay Indian Comm. v. Rising, 477 F.3d 881, 886 (6th Cir.
2007) (internal quotation marks and additional citations omitted). “Summary judgment is
only appropriate ‘if the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law.’“ Id. (quoting Fed. R. Civ. P. 56(c), internal quotation marks omitted).
“Weighing of the evidence or making credibility determinations are prohibited at
summary judgment-rather, all facts must be viewed in the light most favorable to the
non-moving party.” Id.
The requirement that facts be construed in the light most favorable to the
nonmoving party, however, does not mean that the court must find a factual dispute
where record evidence contradicts wholly unsupported allegations. After a moving party
has carried its initial burden of showing that no genuine issues of material fact remain in
dispute, the burden shifts to the non-moving party to present specific facts
demonstrating a genuine issue for trial. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 586–87, 106 S. Ct. 1348 (1986). “The ‘mere possibility’ of a factual
dispute is not enough.” Mitchell v. Toledo Hosp., 964 F.2d 577, 582 (6th Cir. 1992)
(citing Gregg v. Allen–Bradley Co., 801 F.2d 859, 863 (6th Cir. 1986)). In order to defeat
the motion for summary judgment, the non-moving party must present probative
evidence that supports its complaint. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
249–50, 106 S .Ct. 2505 (1986). The non-moving party's evidence “is to be believed,
and all justifiable inferences are to be drawn in his favor.” Id. at 255 (emphasis added).
23

The court determines whether the evidence requires submission to a jury or whether
one party must prevail as a matter of law because the issue is so one-sided. Id. at 251–
52.
Although reasonable inferences must be drawn in favor of the opposing
party, see Matsushita, 475 U.S. at 587, 106 S. Ct. at 1356, inferences are not to be
drawn out of thin air. Rather, once the moving party has demonstrated the absence of
evidence to support the nonmoving party's case, the nonmoving party must “ ‘go beyond
the pleadings' ” to show that “ ‘there is a genuine issue for trial.’ ” Horton v. Potter, 369
F.3d 906, 909 (6th Cir.2004) (quoting Celotex, 477 U.S. at 324). To demonstrate a
genuine issue, the opposing party “must do more than simply show that there is some
metaphysical doubt as to the material facts.... Where the record taken as a whole could
not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue
for trial.’ ” Matsushita, 475 U.S. at 587 (citation omitted).
B. Grounds Asserted in Waterfront’s Motion
As should be clear from the above discussion, Hosea filed suit in part to ensure
that if Waterfront recovers insurance proceeds for the loss of the Barge, 15 then
Waterfront will pay to Hosea an amount that compensates Hosea for its services, as if
those services had been fully performed under the Hosea-Waterfront Contract. In its
motion for summary judgment, Waterfront argues that because there is no dispute that
Hosea did not complete those services, Hosea is barred from any further payment as a
matter of law. Waterfront additionally argues in its reply memorandum that it is seeking
judgment either under Rule 56 or judgment on the pleadings under Rule 12(c), Fed. R.
15

Hosea makes no direct claim against U.S. Fire.

24

Civ. P., as to Hosea’s claims for constructive trust, conversion, and negligence,
because equitable remedies are unavailable for an alleged breach of contract.
For the reasons that follow, I recommend the entry of judgment in Waterfront’s
favor on all but Hosea’s breach of contract claim.
1. The Breach of Contract Claim
Not surprisingly, the Hosea-Waterfront contract is silent on the parties’ duties,
rights, or obligations if the Barge were to sink or otherwise be destroyed prior to
completion of the duties specified under the contract. The contract contained only a
brief reference to insurance, specifying that Waterfront was to keep its existing U.S. Fire
policy through October 2014, but that if insurance were required after that date, the
costs of a policy would be borne equally by Hosea and Waterfront. While the contract
contained no express provisions that anticipated the August 5, 2013 calamity that befell
the Barge, the contract did spell out Hosea’s duties to remove certain personal property
from the Barge and to subsequently sell the vessel to a purchaser or for scrap value.
Given the express requirement that Waterfront allow Hosea “access” to its Barge to
fulfill those duties, it is implicit that access was intended to be to a vessel that – if not
seaworthy – was at least not in imminent danger of sinking during the term of the
contract.
In its breach of contract claim against Waterfront, Hosea alleges that Waterfront
“obstructed…access” to the Barge, and instructed C&B to deny Hosea access, thereby
preventing removal of personal property. (Doc. 15 at ¶33). Hosea further alleges that
Waterfront “obstructed [Hosea] from access” and prevented Hosea from moving the
25

Barge to Warsaw, Kentucky “to facilitate…further performance” including the sale of the
Barge. (Doc. 15 at ¶38). Further, Hosea accuses Waterfront of employing C&B “which
negligently transported the Waterfront Barge thereby causing it to sink.” (Id. at ¶39). As
the undersigned understands Hosea’s theory, it is alleging that Waterfront committed a
material breach of the “access” provision either by failing to provide a seaworthy vessel
capable of being accessed, and/or by otherwise preventing Hosea’s physical access to
the Barge before it sank.
Based on the alleged breach, Hosea seeks expectation damages in an amount
that would compensate Hosea as if it had fully completed its obligations, through the
sale or demolition of the Barge.

See generally University of Louisville v. RAM

Engineering & Const., Inc., 199 S.W.3d 746, 748 (Ky. App.2005) (describing damages
for breach of a contract as “that sum which would put an injured party into the same
position it would have been in had the contract been performed.”); In re Highland
Superstores, Inc., 154 F.3d 573, 580 (6th Cir. 1998). Thus, Hosea seeks damages that
include: (1) the sum of $32,500 due upon completion of delivery of personal property to
a designated warehouse; (2) a sum to compensate Hosea for property rights to property
“remaining” after delivery of the warehouse property (alleged to be valued at $85,000);
and (3) a portion of the net proceeds that would have resulted from either a sale of the
Barge to an approved purchaser, or from the demolition and sale of the Barge for scrap
value.
Waterfront seeks summary judgment on this claim, arguing first that Hosea’s
allegation that it “partially performed the removal of personal property” from the Barge is
26

incompatible with its assertion that Waterfront committed a material breach by denying
Hosea “access.” (See Doc. 15 at ¶ 32). The undersigned does not agree. The fact that
Waterfront provided some access to Hosea at the outset of the contract has no bearing
on whether Waterfront subsequently denied access and breached the contract.
Next, Waterfront points to deposition testimony from David Hosea that physical
removal of the larger items of property could only be completed from the “access doors”
on the vessel, which were positioned on the river side of the Barge at the start of the
term of the contract. 16 The evidence supports Waterfront’s position that Hosea needed
the Barge to be “flipped around” to complete the property removal. (Doc. 32-2).
Waterfront argues that Hosea has produced no evidence that Waterfront refused to
have the Barge moved to accommodate that need. To the contrary, Waterfront asserts
that the Barge sank when it was moved by C&B to provide Hosea with the access it
required under the contract. (See Doc. 40-1 at 6, deposition testimony of David Hosea
that Jeff Ruby was pressing Hosea to complete property removal, and that Hosea was
in direct contact with C&B to reposition Barge).
Waterfront insists that there is “no evidence anyone, especially Waterfront,
expected the …Barge to sink on August 5, 2014.” (Doc. 32 at 7). Waterfront relies on
the legal doctrine of “impossibility of performance” (the Barge sinking) to excuse further
performance under the Hosea-Waterfront contract by either party.

In any event,

because Hosea did not actually fulfill the express conditions required for payment under
the contract (removal of all designated warehouse property by the Removal Completion
16

An August 29, 2014 email attached to Todd Hosea’s affidavit confirms that “the larger pieces of
equipment [] needed to be removed with a crane. There was absolutely no way to hand carry them off
the boat.” (Doc. 38-1).

27

Date, removal of “remaining” property, and sale of the Barge, Waterfront argues that it
owes nothing more under the contract.
A party who raises the impossibility defense bears the burden of proving it. State
ex rel. Dewine v. Washington C.H., 2014-Ohio-3557 at ¶29, 18 N.E.3 448 (Ohio App.
2014). In support of its assertion that the sinking was not foreseeable, Waterfront points
to deposition testimony in which David Hosea attested that, to Hosea’s knowledge,
there had been pumps running on the Barge but that C&B removed them. (Doc 40-2,
Hosea Deposition at 37:15-38:3). In addition, a marine surveyor testified that, during his
visit on an unspecified date in June 2014, the Barge was not in “imminent peril” of
sinking. (Doc. 40-3, Weeter Deposition at 142:5-17). Based upon the cited testimony,
Waterfront asserts that it provided access by taking “all necessary steps to keep the
Waterfront Barge afloat and seaworthy.” (Doc. 40 at 4).
Hosea strongly contests that assertion, as well as the legal viability of
Waterfront’s “impossibility defense.” To demonstrate that a contractual duty is
“impossible” to perform, the impossibility must not be attributable to the party asserting
the defense, and the party asserting impossibility must show that the difficulties could
not have been foreseen. See In re Guardianship of Hards, 2009 WL 580806, 2009Ohio-1002 ¶ 36; see also Stuckey v. Online Resources Corp., 909 F. Supp.2d 912, 932
(S.D. Ohio 2012); accord Lovejoy v. Reed, 302 Ky. 153, 157, 193 S.W.2d 1013 (Ky.
App. 1946). In this case, Hosea argues that the sinking of the Barge was directly
attributable to Waterfront. 17 Hosea further argues that Waterfront, as the party that
17

Technically, Hosea pleads that the negligence that sunk the Barge is also be attributed to
C&B.

28

bears the burden of proof, has not shown that the Barge sank due to unforeseeable
circumstances. At a minimum, Hosea requests that a decision on Waterfront’s pending
motion for summary judgment be deferred to permit Hosea to conduct additional
discovery, under Rule 56(d), to locate and produce evidence that Waterfront knew or
should have known of the likelihood the Barge would sink, or is otherwise liable for the
sinking of the Barge.
The undersigned agrees that Waterfront has failed to show it is entitled to
judgment on Hosea’s breach of contract claim at this time. The reason that the Barge
sank remains a highly disputed issue of material fact, on which full discovery has yet to
be completed. I also conclude that genuine issues of material fact remain concerning
whether Waterfront, at any time after July 8, denied Hosea “access” to the Barge to
fulfill its contractual duties.

In so ruling, however, the undersigned rejects Hosea’s

contention that it has produced evidence that Waterfront or its agents refused Hosea
access to the Barge. The evidence to which Hosea refers concerns events in June
2014, prior to the execution of the contract at issue. The July 3, 2014 Hosea-Waterfront
Contract clearly superseded any prior understanding, and provided Hosea a right of
“access to the Barge” that explicitly began on July 8, 2014. (See Doc. 15 at 12, “This
letter contains the entire agreement of the parties on this subject matter herein. This
letter amends and restates in all respects the June 10, 2014 letter from David S. Hosea
to Jeff Ruby, which letter shall be of no further force or effect.”) (emphasis added).
Based on the express terms of the July 3, 2014 contract, any prior alleged denial of
access in June 2014 is not proof that Waterfront was in breach of the later contract.
29

In sum, material issues of fact remain concerning whether Waterfront’s conduct
denied Hosea access to a Barge that would remain above water for the duration of the
contract, or whether Waterfront otherwise impeded (or directed C&B to deny) access to
the Barge after July 8, 2014. To the extent that Waterfront’s own conduct prevented
Hosea from fulfilling the conditions precedent to Hosea’s entitlement to full payment
under the contract, Waterfront cannot simply state that nothing more is owed because
Hosea did not perform. The undersigned therefore recommends denial of Waterfront’s
motion for summary judgment on Hosea’s breach of contract claim, without prejudice to
renew at the completion of discovery.
While I recommend denial of judgment on the breach of contract claim for the
reasons explained above, I recommend granting Waterfront’s motion for judgment on all
other claims asserted by Hosea. Unlike the breach of contract claim on which material
issues of fact remain, no amount of discovery could produce facts to support Hosea’s
claims for constructive trust, conversion, and negligence, which fail as a matter of law.
b. Constructive Trust Claim
“A constructive trust is imposed where a person holding title to property is
subject to an equitable duty to convey it to another on the ground that he would be
unjustly enriched if he were permitted to retain it.” Bechtol v. Cobb, 1996 WL 464155 at
*4 (Ohio App. 6th Dist. Aug. 16, 1996)(citations omitted); accord Terrill v. State of Terrill,
217 S.W.3d 858, 860 (Ky. App. 2006). Waterfront is entitled to judgment as a matter of
law on Hosea’s constructive trust claim, based on the general principle that “where
damages are available for breach of contract or in tort, the [plaintiff] cannot also invoke
30

the equitable remedy for unjust enrichment,” as Hosea attempts to do in this case.
Delahunt v. Cytodyne Technologies, 241 F. Supp.2d 827, 841 (S.D. Ohio 2003)(quoting
Banks v. Nationwide Mut. Fire Ins. Co., No. 99AP–1413, 2000 WL–1742064, at *5 (Ohio
Ct.App. Nov. 28, 2000). Only “if no remedy is available in contract or tort” will an
equitable remedy in unjust enrichment be permitted to prevent injustice.

Saraf v.

Maronda Homes, Inc. of Ohio, 2002 WL 31750249, 2002-Ohio-6741 at ¶12 (Ohio App.
2002). Because a valid contract exists that defines the rights between the parties in this
case, 18 Hosea cannot maintain its claim for constructive trust.

Accord Beatley v.

Beatley, 160 Ohio App.3d 600, 828 N.E.2d 180 (Ohio App. 2005); see also Kool, Mann,
Coffey & Co. v. Castellini Co., 1995 WL 453049, at *8 (Ohio App. 1995)(denying theory
of unjust enrichment, for damages in an amount equal to insurance proceeds retained
for destroyed property, holding that “a relationship defined by an express agreement
may not be redefined under a theory of quasi-contract and unjust enrichment in the
absence of fraud, illegality or bad faith.”)
c. Conversion Claim
Waterfront also is entitled to judgment on Hosea’s conversion claim.

In

recommending the grant of judgment on this claim, the undersigned does not rely upon
Waterfront’s citation to limited evidence that Hosea had “access” to the Barge. Instead,
I conclude that judgment is appropriate for the same reasons that the conversion claim
against C&B should be denied. No conversion claim can be stated as a matter of law,
because based upon the express terms of the contract, Hosea had no ownership
18

The undersigned expresses no view on whether Waterfront’s contractual duty to maintain insurance on
the Barge should be read as conveying any contractual benefit to Hosea to share in any insurance
proceeds.

31

interest in either the Barge itself or the personal property that remained aboard at the
time the vessel sank. See also Beacon Enter. Sols. Grp. v. MDT Labor, LLC, 2013 U.S.
Dist. LEXIS 10573, at *13 (holding that a conversion claim cannot be based upon
property rights that arise entirely from contractual rights).
d. Negligence Claim
Last, Waterfront is entitled to judgment as a matter of law on Hosea’s negligence
claim, because Hosea can prove no actual loss or damages from Waterfront’s
negligence, as opposed to its alleged breach of contract.
Hosea pleads negligence against both Waterfront and C&B.

Thus, Hosea

alleges that both Defendants “failed to use due care in the maintenance, repair,
preparation and movement of the…Barge,” and that both Defendants “failed to properly
and fully repair the damage it suffered when Barge AEP 3015 collided with it while
moored, thereby rendering it unseaworthy.” 19 (Doc. 15 at ¶¶ 50, 51). Additionally,
Hosea alleges that both Defendants were negligent when “persons in charge of and in
control of the … Barge…moved the work boat/ work barge that was providing power to
the Waterfront Barge, including but not limited to its bilge pump, thereby causing it to
take on water and rending it unseaworthy.” (Doc. 15 at ¶52). Last, Hosea alleges that
“persons in charge” failed to maintain a proper lookout, causing the Barge to collide with
a wreck” on an unspecified time/date, and “failed to timely react” to save the Barge.
(Doc. 15 at ¶¶53-54). Hosea concludes that as a result of the alleged negligence,
“and/or, in the alternative, breach of bailment/constructive bailment” Hosea has suffered

19

The referenced collision occurred in June 2014, prior to the execution of the Hosea-Waterfront contract.

32

damages in the amount it would have obtained if it had been able to fulfill its duties
under the contract.
“A fundamental element of any negligence claim is actual loss or damage to the
claimant.” M/V Oslo v. U.S., 709 F. Supp. 1386, 1386-87 (E.D. Va. 1988)(additional
citation omitted). In Kentucky, the economic loss rule precludes the recovery of tort
damages based on a relationship that was created by contract. See generally Giddings
& Lewis, Inc. v. Industrial Risk Insurers, 348 S.W.3d 729 (Ky. 2011). Though most often
cited in products liability litigation, the principle is also applied in negligence.

See

MedChoice Financial, LLC v. ADS Alliance Data Systems, Inc.., 857 F. Supp.2d 665,
671 (S.D. Ohio 2012); see also East River S.S. Corp. v. Transamerica Delaval, Inc., 476
U.S. 858 (1986) (adopting economic loss rule in admiralty law)..
As discussed above, C&B is entitled to dismissal of Hosea’s negligence claim
because C&B owed no direct duty of care to Hosea to preserve property in which Hosea
had acquired no ownership rights.

For similar reasons, Waterfront is entitled to

judgment as a matter of law on Hosea’s negligence claim. Because Hosea can claim
no ownership interest in either the personal property aboard the Barge or the Barge
itself at the time of any of Waterfront’s allegedly negligent actions, Hosea has no claim
to any damages in tort. Hosea cannot recover in tort for damages that arise solely from
the alleged breach of contract.
IIII. Conclusion and Recommendations
For the reasons discussed above, IT IS RECOMMENDED THAT Waterfront’s
motion to dismiss for lack of subject matter jurisdiction (Doc. 18) be DENIED; that
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C&B’s motion to dismiss for failure to state a claim (Doc. 17) be GRANTED; and that
Waterfront’s motion for summary judgment (Doc. 32) be GRANTED in part and DENIED
in part, consistent with this Report and Recommendation.

s/ Stephanie K. Bowman
Stephanie K. Bowman
United States Magistrate Judge

34

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION

HOSEA PROJECT MOVERS, LLC, et al.,

Lead Case No. 1:15-cv-799

Plaintiffs,

Barrett, J.
Bowman, M.J.

v.

WATERFRONT ASSOCIATES, INC., et al.,
Defendants.
*****************************
UNITED STATES FIRE INSURANCE CO.,

Case No. 1:15-cv-46

Plaintiff/Crossclaim Plaintiff
v.

WATERFRONT ASSOCIATES, INC.,
Defendant/Third-Party Plaintiff,
v.

C&B MARINE, LLC,
Third-Party Defendant/Crossclaim Defendant

NOTICE
Pursuant to Fed. R. Civ. P 72(b), any party may serve and file specific, written
objections to this Report and Recommendation (“R&R”) within FOURTEEN (14) DAYS
of the filing date of this R&R. That period may be extended further by the Court on
35

timely motion by either side for an extension of time. All objections shall specify the
portion(s) of the R&R objected to, and shall be accompanied by a memorandum of law
in support of the objections. A party shall respond to an opponent’s objections within
FOURTEEN (14) DAYS after being served with a copy of those objections. Failure to
make objections in accordance with this procedure may forfeit rights on appeal. See
Thomas v. Arn, 474 U.S. 140 (1985); United States v. Walters, 638 F.2d 947 (6th Cir.
1981).

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