Blue Dolphin Charters, LTD. v. Knight & Carver Yachtcenter, Inc. et al, No. 3:2011cv00565 - Document 24 (S.D. Cal. 2012)
Court Description: ORDER granting 20 Motion to Dismiss Without Leave to Amend. Signed by Judge M. James Lorenz on 4/6/2012. (mtb)
Download PDF
<![CDATA[
Blue Dolphin Charters, LTD. v. Knight & Carver Yachtcenter, Inc. et al Doc. 24 1 2 3 4 5 6 7 8 9 10 UNITED STATES DISTRICT COURT 11 SOUTHERN DISTRICT OF CALIFORNIA 12 13 14 15 16 17 18 19 20 BLUE DOLPHIN CHARTERS, LTD., ) Civil No. 11-cv-565-L(WVG) ) ) ORDER GRANTING MOTION TO Plaintiff, ) DISMISS WITHOUT LEAVE TO ) AMEND [DOC. 20] v. ) ) KNIGHT & CARVER YACHTCENTER, ) INC., ) ) ) Defendant. ) ) This action arises from Plaintiff Blue Dolphin Charters, LTD’s allegation that the 21 underwing of a catamaran constructed by Defendant Knight & Carver Yachtcenter, Inc. was 22 defective and not built to comply with applicable regulations. Defendant now moves to dismiss 23 the Amended Complaint, which asserts a single cause of action for fraud. Plaintiff opposes. 24 The Court found this motion suitable for determination on the papers submitted and 25 without oral argument. See Civ. L.R. 7.1(d.1). (Doc. 21.) For the following reasons, the Court 26 GRANTS WITHOUT LEAVE TO AMEND Defendant’s motion to dismiss. 27 // 28 // 11cv565 Dockets.Justia.com 1 I. BACKGROUND 2 Plaintiff offers sightseeing, scuba diving, and snorkel tours to tourists from its two sailing 3 catamarans off of the Na Pali Coast in the Hawaiian Island of Kauai. (Am. Compl. ¶ 6 [Doc. 4 19].) Defendant is a full-service marine facility that specializes in the repair and refit of 5 “megayachts,” and advertises itself as a “premier luxury yacht builder” with “an experienced 6 staff of master craftsmen in all marine trades, as well as on-site marine engineering professionals 7 and naval architects.” (Id. ¶ 7.) 8 In 1998, “[P]laintiff commissioned [Defendant] to co-design, construct, and equip a 62' x 9 25' catamaran sailing vessel that was in full compliance with all applicable Coast Guard 10 regulations under 46 Code of Federal Regulations (‘CFR’), Subchapter T-Small Passenger 11 Vessels (Under 200 Gross Tons).” (Am. Compl. ¶ 9.) Plaintiff alleges that Defendant “had the 12 legal duty under federal regulation to meet these requirements.” (Id. ¶ 12.) 13 On or about December 8, 1999, Plaintiff took possession of the catamaran, which was 14 commissioned as the Blue Dolphin II, and transported it to Kauai. (Am. Compl. ¶ 13.) 15 Leading up to and during 2010, Plaintiff learned of “an alarming number of demastings of 16 sailing vessels in the Hawaiian Islands resulting in injuries and/or deaths to passengers.” (Am. 17 Compl. ¶ 14.) As a result, the United States Coast Guard began inspecting sailing vessels in 18 Hawaii. (Id.) In anticipation of the inspection, Plaintiff retained a marine surveyor to pre19 inspect its vessels, including the Blue Dolphin II. (Id.) 20 On or about April 10, 2010, the marine surveyor discovered that “the underwing beneath 21 the Blue Dolphin II’s mast step was flexing and causing her entire sail rig to move in a 22 dangerous manner.” (Am. Compl. ¶ 15.) To investigate the problem, Plaintiff alleges that “the 23 Blue Dolphin II’s mast was removed by crane whereupon it was discovered that the underwing 24 did not comply with the structural design requirements outlined in Title 46 CFR Subchapter T.” 25 (Id.) As a result, Plaintiff alleges that the catamaran was taken out of service and that it will be 26 forced to make over $160,000.00 in repairs. (Id. ¶ 16.) It also adds that “[d]ue to the latency of 27 the defect, [Plaintiff] was blamelessly ignorant of its rights and could not have discovered the 28 facts giving rise to the claims set forth herein until the vessel was dismantled and inspected.” 11cv565 2 1 (Id. ¶ 17.) 2 On March 22, 2011, Plaintiff filed a complaint in this Court asserting six causes of action: 3 (1) breach of contract; (2) fraud; (3) negligence; (4) negligent interference with prospective 4 business advantage; (5) negligent misrepresentation; and (6) breach of warranty. On May 31, 5 2011, Defendant moved to dismiss Plaintiff’s First (breach of contract), Second (fraud), Fourth 6 (negligent interference with prospective business advantage), and Sixth (breach of warranty) 7 Causes of Action. (Doc. 6.) The Court granted the motion, but gave Defendant leave to amend 8 its complaint. (Doc. 14.) 9 On December 8, 2011, Plaintiff filed an Amended Complaint asserting a single cause of 10 action for fraud. (Doc. 19.) Defendant now moves to dismiss the Amended Complaint. (Doc. 11 20.) Plaintiff opposes. (Doc. 22.) 12 13 II. LEGAL STANDARD 14 The court must dismiss a cause of action for failure to state a claim upon which relief can 15 be granted. Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the legal 16 sufficiency of the complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The court 17 must accept all allegations of material fact as true and construe them in light most favorable to 18 the nonmoving party. Cedars-Sanai Med. Ctr. v. Nat’l League of Postmasters of U.S., 497 F.3d 19 972, 975 (9th Cir. 2007). Material allegations, even if doubtful in fact, are assumed to be true. 20 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). However, the court need not “necessarily 21 assume the truth of legal conclusions merely because they are cast in the form of factual 22 allegations.” Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir. 2003) 23 (internal quotation marks omitted). In fact, the court does not need to accept any legal 24 conclusions as true. Ashcroft v. Iqbal, 556 U.S. 662, — , 129 S. Ct. 1937, 1949 (2009) 25 “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed 26 factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’ 27 requires more than labels and conclusions, and a formulaic recitation of the elements of a cause 28 of action will not do.” Twombly, 550 U.S. at 555 (internal citations omitted). Instead, the 11cv565 3 1 allegations in the complaint “must be enough to raise a right to relief above the speculative 2 level.” Id. “To survive a motion to dismiss, a complaint must contain sufficient factual matter, 3 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Iqbal, 129 S. Ct. at 4 1949 (citing Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff 5 pleads factual content that allows the court to draw the reasonable inference that the defendant is 6 liable for the misconduct alleged.” Id. “The plausibility standard is not akin to a ‘probability 7 requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” 8 Id. A complaint may be dismissed as a matter of law either for lack of a cognizable legal theory 9 or for insufficient facts under a cognizable theory. Robertson v. Dean Witter Reynolds, Inc., 749 10 F.2d 530, 534 (9th Cir. 1984). 11 Generally, courts may not consider material outside the complaint when ruling on a 12 motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 13 (9th Cir. 1990). However, documents specifically identified in the complaint whose authenticity 14 is not questioned by parties may also be considered. Fecht v. Price Co., 70 F.3d 1078, 1080 n.1 15 (9th Cir. 1995) (superceded by statutes on other grounds). Moreover, the court may consider the 16 full text of those documents, even when the complaint quotes only selected portions. Id. It may 17 also consider material properly subject to judicial notice without converting the motion into one 18 for summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994). 19 20 III. DISCUSSION 21 The economic loss rule “prevent[s] the law of contract and the law of tort from dissolving 22 one into the other.” Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal. 4th 979, 988 (2004) 23 (internal quotations marks omitted). The rule generally bars tort actions for contract breaches, 24 thereby limiting contracting parties to contract damages. Aas v. Super. Ct., 24 Cal. 4th 627, 643 25 (2000). It precludes recovery for “purely economic loss due to disappointed expectations,” 26 unless the plaintiff “can demonstrate harm above and beyond a broken contractual promise.” 27 Robinson Helicopter, 34 Cal. 4th at 988. In other words, “[a] person may not ordinarily recover 28 in tort for the breach of duties that merely restate contractual obligations.” Aas, 24 Cal. 4th at 11cv565 4 1 643. “[C]onduct amounting to a breach of contract becomes tortious only when it also violates a 2 duty independent of the contract arising from principles of tort law.” Robinson Helicopter, 34 3 Cal. 4th at 989. 4 In this case, there is no harm above and beyond a broken contractual promise. Plaintiff 5 argues that Defendant committed fraud “when it represented to the plaintiff that the Blue 6 Dolphin was built according to Coast Guard regulations and the design specifications.” (Pl.’s 7 Opp’n 5:7–10 [Doc. 22].) However, these are duties that arise from the construction agreement 8 between the parties. That agreement required Defendant to “co-design, construct and equip a 62' 9 x 25' catamaran sailing vessel that was in full compliance with all applicable Coast Guard 10 regulations . . . .” (Am. Compl. ¶ 9 (emphasis added); see also Vessel Construction Agreement 11 ¶ 2 [Doc. 1-1].) Thus, Defendant’s failure to meet these requirements does not violate a duty 12 independent of the contract. See Robinson Helicopter, 34 Cal. 4th at 989. 13 Plaintiff also argues that its circumstances in this case are the same as those in Robinson 14 Helicopter, and in particular, Defendant’s conduct is “virtually indistinguishable.” (Pl.’s Opp’n 15 4:16, 5:6–7 [Doc. 22].) But Plaintiff is mistaken. In Robinson Helicopter, a helicopter 16 manufacturer purchased sprag clutches manufactured by the defendant to use in its helicopters. 17 Robinson Helicopter, 34 Cal. 4th at 985. As required by the Federal Aviation Administration 18 (“FAA”), the defendant issued a certificate with each delivery affirming that the sprag clutches 19 were ground to a particular level of hardness, described as “50/55 Rockwell.” Id. This 20 arrangement continued for over twelve years before the defendant delivered sprag clutches at a 21 different level of hardness—“61/63 Rockewell”—while continuing to issue written certificates 22 that the sprag clutches were 50/55 Rockwell. Id. at 985-86. Eventually, the California Supreme 23 Court concluded that the economic loss rule did not bar the helicopter manufacturer’s fraud and 24 intentional misrepresentation claims with respect to the defendant’s provision of false 25 certificates of conformance. Id. at 988. 26 // 27 // 28 // 11cv565 5 1 Unlike this case, Robinson Helicopter involved a non-contractual duty—the defendant’s 2 duty to provide certificates as required by the FAA. Robinson Helicopter, 34 Cal. 4th at 985. 3 The defendant also made unequivocal affirmative misrepresentations twelve years after entering 4 into the contractual relationship. Id. at 986. Here, Defendant did not make such unequivocal 5 affirmative misrepresentations. Plaintiff alleges that Defendant “stated . . . that the vessel was 6 being built according to all applicable Coast Guard Regulations of Title 46 CFR, Sub-Chapter T, 7 that it met the required hull structural inspections, that it had obtained the Certificate of 8 Inspection properly, and that the vessel met all professional industry standards in all respects,” 9 and that these representations were false. (Am. Compl. ¶ 19–20.) However, it appears after an 10 inspection by a marine inspector assigned by the Officer in Charge, Marine Inspection 11 (“OCMI”), as required by 46 C.F.R. § 176.400(b), Defendant successfully obtained certification. 12 And this certification is issued by the U.S. Coast Guard, and not by Defendant. See 46 C.F.R. § 13 176.105. Further departing from the circumstances of Robinson Helicopter, these 14 representations were made in the weeks leading up to Plaintiff taking possession of the 15 catamaran and not after. Simply put, the factual circumstances in Robinson Helicopter differ 16 from those here. 17 Finally, damages available under tort theories do not include economic loss, such as 18 “damages for inadequate value, costs of repair and replacement of the defective product[,] or 19 consequent loss of profits—without any claim of personal injury or damages to other property.” 20 Jimenez v. Super. Ct., 29 Cal. 4th 473, 482 (2002). But here, Plaintiff seeks costs of repair, 21 damages for loss of use and lost profits, consequential and incidental damages, as well as 22 exemplary and punitive damages. (Am. Compl. 7.) Aside from the exemplary and punitive 23 damages, Plaintiff only claims economic loss for a defective product. 24 In sum, this case does not involve tortious conduct separate from the breach itself. See 25 Robinson Helicopter, 34 Cal. 4th at 990. Therefore, Plaintiff’s cause of action for fraud is 26 barred by the economic loss rule. 27 // 28 // 11cv565 6 1 IV. CONCLUSION & ORDER 2 In light of the foregoing, the Court GRANTS WITHOUT LEAVE TO AMEND 3 Defendant’s motion to dismiss. See Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 4 1034, 1041 (9th Cir. 2011) (“[A] district court may dismiss without leave where . . . amendment 5 would be futile.”). (Doc. 20.) 6 IT IS SO ORDERED. 7 8 DATED: April 6, 2012 9 10 11 COPY TO: M. James Lorenz United States District Court Judge HON. WILLIAM V. GALLO 12 UNITED STATES MAGISTRATE JUDGE 13 ALL PARTIES/COUNSEL 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11cv565 7
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
