Randy Martin v. Performance Boat Brokerage.COM, LLC et al
Filing
230
ORDER granting 199 Motion for Partial Summary Judgment. Signed by Judge S. Thomas Anderson on 10/16/14. (Anderson, S.)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
EASTERN DIVISION
______________________________________________________________________________
RSK CONTRACTING, INC.,
)
)
Intervening Plaintiff,
)
)
v.
)
No. 1:11-CV-1204-STA-egb
)
RANDY MARTIN,
)
)
Defendant in Intervention.
)
______________________________________________________________________________
ORDER GRANTING INTERVENING PLAINTIFF’S MOTION FOR PARTIAL
SUMMARY JUDGMENT FOR RETURN OF VESSEL
______________________________________________________________________________
Before the Court is Intervening Plaintiff RSK Contracting, Inc.’s (“RSK”) Motion for
Partial Summary Judgment, filed May 13, 2014 (ECF No. 199). Intervening Defendant Randy
Martin filed a Response in Opposition to RSK’s Motion on July 11, 2014 (ECF No. 213), to
which RSK filed a Reply (ECF No. 214). For the reasons stated below, RSK’s Motion for
Partial Summary Judgment for Return of Vessel is GRANTED.
BACKGROUND
Randy Martin brought the original action in this matter on July 11, 2011, against
Defendants Performance Boat Brokerage.com, LLC (“Performance”) and Matthew Smith for
damages and injunctive relief.
(Pl.’s Compl. ¶ 1–2, ECF No. 1).
Martin alleged that
Performance fraudulently failed to inform him of a lien on a boat he purchased, failed to satisfy
that lien from the proceeds of the sale, and failed to provide him with good title. (Id.). On July
14, 2011, the Court granted a preliminary injunction prohibiting the Defendants from selling the
business known as Performance Boat Brokerage.com, LLC, or from selling assets of the business
1
except in the normal and ordinary course of business, without permission of the Court. On
November 29, 2011, the Court granted Martin’s petition for a prejudgment writ of attachment for
all funds owed to Defendants Performance Boat Brokerage.com, LLC and/or Matthew Smith by
Mark Waddington and/or Performance, LLC under an asset purchase agreement entered into on
August, 2 2011. (Order on Petition for Issuance of Writ of Attachment 2–3, ECF No. 46).
Martin sought a second writ of attachment on February 28, 2012, for a 2004 Outer
Limits Boat, Hull Identification Number OPL47014B404, Official Number 1188527 (the
“Outerlimits Boat”), 1 supposedly owned by Defendant Performance Boat Brokerage.com, LLC.
(Ex Parte Pet. for Issuance of Second Writ of Attachment 1, ECF No. 59). Martin advised the
Court that the boat and its trailer were located in the showroom of “Performance, LLC” in
Camendon, Missouri (Id. at 4), and the United States Marshals executed the writ on February 29,
2012. (See Process Return & Receipt, ECF No. 62).
RSK filed an intervenor complaint on April 30, 2012. (Intervening Complaint, ECF No.
76). In the complaint, as amended, RSK, whose sole owner is Mr. Rick Brown, alleged that on
October 31, 2009, it purchased the Outerlimits Boat and its trailer from Performance Boat
Brokerage.com, LLC for $250,000. (Amended Intervening Compl. ¶ 6, ECF No. 110). This sale
was not recorded with the National Vessel Documentation Center (“NVDC”), an office of the
United States Coast Guard. As evidence of the purchase, however, RSK presents a cancelled
check for the purchase, a bill of sale for the purchase, the invoice for the purchase, and proof of
Mr. Brown’s insurance on the Outerlimits Boat from May 21, 2010, to the present. (RSK’s
Statement of Undisputed Facts ¶¶ 7–10, ECF No. 199-13). Martin does not dispute the contents
of the documents, but does dispute that the check, bill of sale, and invoice prove RSK’s
1
Previous owners had apparently named the boat G-UNIT, as evidenced by several
filings.
2
ownership. (Response to RSK’s Statement of Undisputed Facts ¶¶ 7–10, ECF No. 213-1). RSK
has also attached to its Motion a new piece of evidence: a document from the NVDC purporting
to show that the Outerlimits Boat has not been a “documented vessel” with the NVDC since
January 2, 2009. (Exhibit K to RSK’s Mem. in Supp. of Mot. for Partial Summ. J., ECF No.
199-11). This “Evidence of Deletion” letter, RSK argues, shows that the federal priority law
under 46 U.S.C. § 31321 does not apply.
STANDARD OF REVIEW
Federal Rule of Civil Procedure 56(a) provides that a party is entitled to summary
judgment if the moving party “shows that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.” 2 In reviewing a motion for summary
judgment, the court views the evidence in the light most favorable to the nonmoving party, 3 and
it “may not make credibility determinations or weigh the evidence.” 4 When the motion is
supported by documentary proof such as depositions and affidavits, the nonmoving party may
not rest on his pleadings but, rather, must present some “specific facts showing that there is a
genuine issue for trial.” 5 It is not sufficient “simply [to] show that there is some metaphysical
doubt as to the material facts.” 6 These facts must be more than a scintilla of evidence and must
meet the standard of whether a reasonable juror could find by a preponderance of the evidence
2
Fed. R. Civ. P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Eastham
v. Chesapeake Appalachia, L.L.C., 754 F.3d 356, 360 (6th Cir. 2014).
3
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
4
Laster v. City of Kalamazoo, 746 F.3d 714, 726 (6th Cir. 2014).
5
Celotex, 477 U.S. at 324.
6
Matsushita, 475 U.S. at 586.
3
that the nonmoving party is entitled to a verdict. 7 When determining if summary judgment is
appropriate, the Court should ask “whether the evidence presents a sufficient disagreement to
require submission to a jury or whether it is so one-sided that one party must prevail as a matter
of law.” 8 In this Circuit, the nonmoving party must “put up or shut up” as to the critical issues of
the claim. 9 The Court must enter summary judgment “against a party who fails to make a
showing sufficient to establish the existence of an element essential to that party’s case, and on
which that party will bear the burden of proof at trial.” 10
ANALYSIS
On September 23, 2013, the Court denied Martin’s Motion for Summary Judgment on
RSK’s claims. 11 In the order, Chief United States District Judge Daniel Breen addressed the
issue of “whether the unrecorded sale to RSK of a federally documented vessel is valid against
Martin, a judgment creditor.” 12 Since that order, RSK has obtained a document styled “Evidence
7
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986).
8
Id. at 251–52.
9
Lord v. Saratoga Capital, Inc., 920 F. Supp. 840, 847 (W.D. Tenn. 1995) (citing Street
v. J.C. Bradford & Co., 886 F.2d 1472, 1478 (6th Cir. 1989)).
10
Celotex, 477 U.S. at 322.
11
Martin v. Performance Boat Brokerage.com, LLC, 973 F. Supp. 2d 820 (W.D. Tenn.
2013).
12
Id. at 823. The order primarily addressed whether, under the federal priority law
governing documented vessels, Martin had “actual notice” of RSK’s interest in the boat. Id. at
828. At that time, the Court did not have before it evidence that the Outerlimits Boat had been
deleted from documentation. See Exhibit K to Mem. in Supp. of Mot. for Partial Summ. J., ECF
No. 199-11.
4
of Deletion from United States Documentation” (“Evidence of Deletion”) from the NVDC,
discussed below. 13
Now, RSK asks the Court to grant partial summary judgment for return of the Outerlimits
Boat and on Martin’s alleged liability for damages. The Motion, at its core, is about who owns
the Outerlimits Boat. RSK’s stance is founded on two assertions: (1) federal priority law
governing “documented vessels” does not apply to the Outerlimits Boat; and (2) RSK has owned
the boat since October 31, 2009, when it paid $250,000 to Performance. On the other hand,
Martin claims that (1) based on federal priority law governing “documented vessels,” Martin’s
writ of attachment on the Outerlimits Boat—which he received to satisfy a judgment against
Performance—takes priority over RSK’s legally invalid purchase of the Outerlimits Boat; and
(2) RSK has never actually owned the boat.
I. The Ship Mortgage Act and Documentation
A. The Act
Congress enacted the Ship Mortgage Act, upon which Martin relies, to create a new
commercial instrument called the “preferred ship mortgage,” which would have priority over all
maritime liens. 14 The Act sought to “make investment in ship mortgages more attractive.”15
Although neither party claims it has a “preferred ship mortgage” in this case, 16 other courts have
13
Exhibit K to Mem. in Supp. of Mot. for Partial Summ. J., ECF No. 199-11.
14
See 2-VI Benedict on Admiralty § 69.
15
McKorkle v. First Penn. Banking & Trust Co., 459 F.2d 243, 247 (4th Cir. 1972).
Although not affecting this Court’s jurisdiction, which is based on diversity, courts
have casted doubt on their own admiralty jurisdiction when discussing security interests that
were “not ‘preferred mortgages.’” Lewco Corp. v. One 1984 23’ Chris Craft Motor Vessel, 889
F. Supp. 1114, 1118 (D. Minn. 1994). The District Court in Minnesota noted that “when
Congress passed the Ship Mortgage Act of 1920, it did not expand admiralty jurisdiction to
16
5
applied the recording provisions of 46 U.S.C. § 31321 to title disputes similar to the one before
the Court. Section 31321 provides the following:
(a) (1) A bill of sale, conveyance, mortgage, assignment, or related
instrument, whenever made, that includes any part of a
documented vessel or a vessel for which an application for
documentation is filed, must be filed with the Secretary [of the
Department of Homeland Security] to be valid, to the extent
the vessel is involved, against any person except—
(A) the grantor, mortgagor, or assignor;
(B) the heir or devisee of the grantor, mortgagor, or
assignor; and
(C) a person having actual notice of the sale, conveyance,
mortgage, assignment, or related instrument. 17
In other words, for documented vessels, in order for a transfer or purchase to be valid against a
subsequent purchaser—or in this case, a judgment lien creditor—such transfer or purchase must
be recorded immediately with the NVDC. Thus, a subsequent purchaser would be on notice of
another’s interest in the boat before buying. It is undisputed that RSK did not record its purchase
of the Outerlimits Boat with the NVDC. It is RSK’s contention, however, that in order to be the
legal owner of the boat, it did not have to record, since the Ship Mortgage Act’s recording
provision does not apply to this vessel.
Neither party disputes that, at one time, the Outerlimits Boat was a documented vessel.
RSK contends, however, that the Outerlimits Boat was not a documented vessel at the time U.S.
Marshals executed Martin’s judgment against Performance, and thus the priority statute does not
apply. In support of its argument, RSK presents the sealed, signed, and certified copy of the
encompass all ship mortgages, but rather only to ‘preferred maritime mortgages’ within the
meaning of the Act.” Id. (citing McKorkle, 459 F.2d at 248).
17
46 U.S.C. § 31321(a)(1)(C).
6
Evidence of Deletion document. 18 The Evidence of Deletion, signed by the Director of the U.S.
Coast Guard’s NVDC and certified as a true copy by the NVDC’s Documentation Officer,
provides that “[t]he records maintained by [the National Vessel Documentation Center] indicate
that the vessel named above [official number 1188527] was deleted from documentation on
01/02/2009.” 19 Citing “Ownership Change” as the reason for deletion, the document further
states that “[a] bill of sale transferring ownership to the entity shown above [Performance Boat
Brokerage] was filed and recorded, however, the vessel was not documented in the new
ownership.” 20 RSK argues that the Evidence of Deletion conclusively establishes, as a matter of
law, that the Outerlimits Boat has not been a documented vessel since January 2, 2009, and thus,
RSK was not required to record its bill of sale with the Coast Guard.
Martin, on the other hand, claims that his judgment against Performance Boat
Brokerage.com, LLC, granted February 28, 2012, takes priority over any purchase by RSK
because such purchase was not recorded with the Coast Guard. To make this claim, Martin
asserts that the Outerlimits Boat was a documented vessel, thus requiring recordation of any sale.
Without notice of a sale to RSK and believing the Outerlimits Boat was owned by Performance
Boat Brokerage.com, LLC, Martin claims that his writ was lawfully executed, giving him rights
superior to RSK. In reply, RSK argues that Martin is relying on the “false assumption that any
change in ownership must be registered with the Coast Guard,” an assumption for which Martin
has provided “no legal authority.” 21
18
Exhibit K to Mem. in Supp. of Mot. for Partial Summ. J., ECF No. 199-11.
19
Id.
20
Id.
21
RSK’s Reply 3, ECF No. 214.
7
B. Deletion from Documentation
Coast Guard regulations define a “documented vessel” as “a vessel which is the subject
of a valid Certificate of Documentation.” 22 A Certificate becomes “invalid immediately” when
“the ownership of the vessel changes in whole or in part.” 23 Here, the Outerlimits Boat was
deleted from documentation on January 2, 2009, because of an ownership change. Martin,
however, asks this Court to apply the broader definition of 46 U.S.C. § 106, which explains that
a “documented vessel” is “a vessel for which a certificate of documentation has been issued.”24
This statutory definition, however, does not address the issue before the Court: whether a
documented vessel remains documented after invalidation by deletion from documentation. 25
Thus, Congress has not “spoken directly to the precise question at issue,” and “the question for
22
46 C.F.R. § 67.3.
23
Id. § 67.167(b)(1). Furthermore, section 67.161 states that invalidation does not apply
for purposes of “an instrument filed or recorded before the date of invalidation, and an
assignment or a notice of claim of lien filed after that date.” Id. § 67.161(c)(1)(A). Thus,
although invalidation does not affect an instrument filed before the date of invalidation,
according to the regulation, it would affect an instrument filed after such invalidation.
24
46 U.S.C. § 106.
25
Martin cites an Eleventh Circuit case for the proposition that “[n]owhere in the Vessel
Documentation Act is automatic loss of documentation and status as a U.S. vessel mentioned as
a consequence of violating the Act or any particular provision.” United States v. Correa, 750
F.2d 1475, 1479 (11th Cir. 1985). The case involved appellants seeking to overturn convictions
under 21 U.S.C. § 955a, “which makes it an offense to possess marijuana on board a United
States vessel with intent to distribute.” Id. at 1477. The “U.S. vessel” in that case, however, was
never deleted from documentation.
8
the court is whether the agency’s answer is based on a permissible construction of the statute.” 26
Courts in the Sixth Circuit limit review of agencies’ interpretations of statutes “to whether the
regulation is a reasonable, but not necessarily the best, interpretation.” 27
The agency’s
reasonable interpretation in 46 C.F.R. § 67.3 deserves deference, as the broader statutory
definition does not address the status of a vessel after deletion from documentation. 28
Another federal statute states that the priority provisions of § 31321 continue to apply
“for an instrument filed or recorded before the date of invalidation and an assignment after that
date.” 29 Martin argues that this section continues application of § 31321 until a “surrender” of
the certificate of documentation. But the writ of attachment was not filed or recorded before the
date of invalidation—January 2, 2009. The Evidence of Deletion proves that the Outerlimits
Boat’s Certificate of Documentation became invalid, and thus the boat was undocumented.
II. Ownership of the Boat
Although the Evidence of Deletion proves that the vessel was not documented, the Court
still must answer whether RSK owned the boat. This question cannot be answered by § 31321,
which only discusses priority for federally documented boats. Instead, the Court must analyze
which state’s law applies to the undocumented boat.
A. Choice of Law
26
Chevron USA v. Natural Resources Def. Counsel, Inc., 467 U.S. 837, 842–43 (1984).
27
Intermet Corp. v. Comm’r, 209 F.3d 901, 904 (6th Cir. 2000) (citing Atl. Mut. Ins. Co.
v. Comm’r, 523 U.S. 382, 390 (1998)).
28
See id. (citing Martin v. Occupational Safety & Health Review Comm’n, 499 U.S. 144,
151 (1991).
29
46 U.S.C. § 12136.
9
A federal court sitting in diversity applies the choice of law rules of the forum state. 30
Here, in determining whether RSK bought the Outerlimits Boat from Performance Boat
Brokerage.com, LLC, the Court must analyze the transaction as a sale of goods.
Under
Tennessee Code Annotated section 47-1-301(b), in the absence of a choice-of-law agreement by
the parties, Tennessee’s enacted Uniform Commercial Code will apply to “transactions bearing
an appropriate relation” to Tennessee. 31
The alleged sale from Performance Boat
Brokerage.com, LLC to RSK, however, bears no relation to Tennessee. Instead, both parties
were located in Missouri. Tennessee’s relationship to the parties is based only upon Martin’s
citizenship, and the alleged sale from Performance Boat Brokerage.com, LLC to RSK took place
wholly within the state of Missouri. Therefore, Missouri law applies to the sale.
B. Ownership
The question of “priority” is actually one of ownership:
if Performance Boat
Brokerage.com, LLC was not actually the owner of the boat, then the writ of attachment was not
properly issued. Here, “unless otherwise explicitly agreed title passes to the buyer at the time
and place at which the seller completes his performance with reference to the physical delivery
of the goods.” 32 Furthermore, “if the goods are at the time of contracting already identified and
no documents are to be delivered, title passes at the time and place of contracting.” 33 RSK’s
30
Montgomery v. Wyeth, 580 F.3d 455, 459 (6th Cir. 2009).
31
Tenn. Code Ann. § 47-1-301(b); see Carbon Processing & Reclamation, LLC v. Valero
Mktg. & Supply Co., 823 F. Supp. 2d 786, 801 (W.D. Tenn. 2011).
32
Mo. Rev. Stat. § 400.2-401(2)
33
Id. § 400.2-401(3)(b). The Missouri statutes seemingly do not address what proves
“ownership” of a boat. Although certain provisions require registration with regard to the
payment of taxes, the statutes and case law provide no guidance on ownership. See id. §§
301.200, 210; 144.070. The Missouri Court of Appeals, in at least one case treating the passing
10
evidence that it purchased the Outerlimits Boat proves that it was the legal owner of the boat
when the writ of attachment was executed on February 29, 2012.
RSK presents four pieces of evidence to prove that it did indeed buy the boat from
Performance Boat Brokerage.com, LLC:
(1) a cancelled check for the purchase of the
Outerlimits Boat dated October 31, 2009, in the amount of $250,000, which shows that $250,000
from RSK’s account was credited to the account of “Performance Boat Brokerage” at U.S. Bank
on November 3, 2009; (2) a November 3, 2009 invoice from Performance Boat Brokerage.com,
LLC, billing RSK for the purchase price of $250,000 for the “2004 47’ Outerlimits” and stamped
“PAID”; (3) a signed and notarized bill of sale dated November 5, 2009, showing Performance
Boat Brokerage.com, LLC as seller and RSK as buyer; and (4) insurance declarations showing
Brown’s insurance on the Boat from May 21, 2010, to the present. Although Martin casts doubt
on inferences that may be drawn from these documents, he presents no real evidence to dispute
them.
With regard to the bill of sale, Martin alleges that the seller listed is “Peformance Boat
Brokerage.com, LLC,” rather than “Performance Boat Brokerage,” which is the entity listed as
payee on the check. This, he argues, proves that the entity which sold the Boat to RSK did not
actually own the boat, thus rendering such sale invalid. But Martin, in his petition for writ of
attachment, represented to the Court that the Outerlimits Boat and its trailer were, at the time,
of title for purposes of insurance under section 301.200, recognized previous case law holding
that “‘As a matter of law, a bill of sale is not necessary to pass the title to personal property. A
delivery of the possession of goods under a contract to purchase passes the title, and from that
time they belong to the vendee and are his risk.’” Galemore v. Mid-West Nat’l Fire & Casualty
Ins. Co., 443 S.W.2d 194, 198 (Mo. Ct. App. 1969) (quoting Gatzweiler v. Morgner, 51 Mo. 47,
49 (1872)). Furthermore, “At common law, a title is prima facie evidence of ownership, but is
not the sine qua non of ownership.” Mo. Mexican Prods. v. Dunafon, 873 S.W.2d 282, 285 (Mo.
Ct. App. 1994) (citing Machester Ins. & Indemnity Co. v. State Farm Mut. Auto Ins. Co., 460
S.W.2d 305, 308 (Mo. Ct. App. 1970)).
11
“owned by Defendant Performance Boat Brokerage.com, LLC.” 34 It was on this basis that the
Court issued the writ of attachment. Even after successfully representing to the Court that the
boat and its trailer were owned by Performance Boat Brokerage.com, LLC, Martin now asks the
Court to conclude that the same entity never owned the Boat. The Court declines to do so. The
doctrine of judicial estoppel “forbids a party ‘from taking a position inconsistent with one
successfully and unequivocally asserted by the same party in a prior proceeding.’” 35 Martin was
successful in obtaining the writ of attachment on the assertion that Performance Boat
Brokerage.com, LLC owned the boat. He may not now argue the contrary. In essence, Martin
obtained a writ of attachment on a boat he mistakenly believed was owned by Performance Boat
Brokerage.com, LLC.
C. Equitable Estoppel
Martin also previously argued that RSK’s failure to comply with Missouri’s tax and
registration laws and to include the boat as an asset on financial statements means that it is
equitably estopped from claiming ownership of the Outerlimits Boat. 36 The doctrine requires the
party asserting it as a defense to prove “(1) an admission, statement, or act inconsistent with the
claim afterwards asserted and sued upon; (2) an action by the other party on the faith of the
admission, statement, or act; and (3) injury to such other party, resulting from allowing the first
34
Ex Parte Pet. for Issuance of Second Writ of Attachment 1, ECF No. 59.
35
Teledyne Indus., Inc. v. NLRB, 911 F.2d 1214, 1217 (6th Cir. 1990) (quoting Reynolds
v. Comm’r, 861 F.2d 469, 472–73 (6th Cir. 1988)).
36
Although Martin previously raised the defense of equitable estoppel in its own Motion
for Summary Judgment, Chief Judge Breen’s ruling on that motion did not require an analysis of
the doctrine.
12
party to contradict or repudiate the admission, statement or act.” 37 Without reaching the issue of
whether RSK’s omission is considered an “act” that induced Martin to act, the Court holds that
equitable estoppel does not apply in this instance. Equitable estoppel “is not favored in the law
and it will not be invoked lightly.” 38 Instead, the doctrine should only apply “where the equities
clearly are balanced in favor of the party seeking relief.” 39 Here, although RSK’s failure to
comply with certain tax requirements is troubling, allowing Martin to possess the boat in spite of
RSK’s evidence of its expenditures purchasing and insuring the boat would be equally troubling.
Thus, the doctrine cannot be said to clearly favor Martin.
CONCLUSION
Having determined that the Ship Mortgage Act’s priority provisions do not apply to this
case, the Court holds that RSK’s uncontroverted evidence proves that it was the legal owner of
the Outerlimits Boat when the writ of attachment was issued. Thus, RSK’s Motion for Partial
Summary Judgment for Return of Vessel is GRANTED. Furthermore, the Second Writ of
Attachment is VACATED, and Martin is ordered to return the Outerlimits Boat to RSK within
14 days of the issuance of this Order. RSK shall have 30 days from the issuance of this Order to
file any motions, affidavits, or memoranda as to additional damages, if any, that it claims. If
RSK does move for additional damages, Martin shall have 30 days to respond to such motion.
IT IS SO ORDERED.
37
Ryan v. Ford, 16 S.W.3d 644, 651 (Mo. Ct. App. 2000) (citing Farmland Indus., Inc. v.
Bittner, 920 S.W.2d 581, 583 (Mo. Ct. App. 1996)).
38
Comens v. SSM St. Charles Clinic Med. Group, Inc., 258 S.W.3d 491, 496 (Mo. Ct.
App. 2008) (citing Investors Title Co. v. Chi. Title Ins. Co., 983 S.W.2d 533, 537 (Mo. Ct. App.
1998)).
39
Am. Jur. 2d Estoppel and Waiver § 3.
13
s/ S. Thomas Anderson
S. THOMAS ANDERSON
UNITED STATES DISTRICT JUDGE
Date: October 16, 2014.
14
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