Nautimill S.A. v. Legacy Marine Transportation, LLC, No. 2:2015cv01065 - Document 85 (E.D. La. 2016)
Court Description: ORDER AND REASONS re: Defendant Legacy Marine Transportation, LLC MOTION for summary judgment on all of plaintiff Nautimill S.A.'s claims 49 and, MOTION for summary judgment 50 on all of David Hasselman and International Marine Sales and Export, LLC's counterclaims. The Court DENIES Legacy's motion for summary judgment on Nautimill's claims for fraudulent misrepresentation, negligent misrepresentation, and redhibition. The Court GRANTS Legacy's motion for sum mary judgment on Nautimill's claims for breach of the warranty of fitness for ordinary use and breach of contract. The Court DENIES Legacy's motion for summary judgment on IMSE and Hasselman's counterclaims for lost commission on th e sale of the Legacy Server and dismisses IMSE and Hasselman's counterclaims regarding damage to UTB #41440 for lack of jurisdiction, and therefore DENIES AS MOOT Legacy's motion for summary judgment on the same claim.. Signed by Judge Sarah S. Vance on 7/7/16. (jjs)
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Nautimill S.A. v. Legacy Marine Transportation, LLC Doc. 85 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA NAUTIMILL S.A. CIVIL ACTION VERSUS NO: 15-10 65 LEGACY MARINE TRANSPORTATION, LLC SECTION: R(5) ORD ER AN D REASON S Defendant Legacy Marine Transportation, LLC m oves for sum mary judgm ent on all of plaintiff Nautim ill S.A.’s claim s 1 and, separately, for sum m ary judgment on all of David Hasselm an and International Marine Sales and Export, LLC’s counterclaim s. 2 For the following reasons, the Court denies in part and grants in part both m otions. I. BACKGROU N D This dispute arises out of Nautim ill S.A.’s purchase of the pushboat M/ V LEGACY SERVER from Legacy Marine Transportation, LLC, a Louisiana LLC, in April 20 14. 3 Nautim ill alleges that Legacy m isled Nautim ill and Nautim ill’s Florida agent David Hasselm an about the 1 2 3 R. Doc. 49. R. Doc. 50 . R. Doc. 1 at 2 ¶ 5. Dockets.Justia.com condition of the Legacy Server before the purchase. 4 Specifically, Nautim ill asserts that Legacy portrayed the vessel as a new 2,0 0 0 horsepower pushboat. 5 In reality, the vessel’s two engines produce between 1,20 0 and 1,60 0 horsepower, 6 and both engines, along with one of the two propellers, are rem anufactured. 7 In addition, Nautim ill alleges that the engines are m ism atched in that they do not produce identical horsepower. 8 Nautim ill brings claims for fraudulent and negligent m isrepresentation, breach of the warranty against redhibitory defects, breach of the warranty of fitness for ordinary use, and breach of contract. 9 In response to Nautim ill’s claim s, Legacy filed a third party com plaint against Hasselm an and his Florida company International Marine Sales and Export, LLC (IMSE), seeking indemnity and dam ages. 10 Hasselm an and IMSE have filed counterclaim s against Legacy, alleging that Legacy’s m isrepresentations regarding the vessel caused Hasselm an and IMSE to lose a portion of their com m ission on the sale. 11 Hasselm an and IMSE also 4 5 6 7 8 9 10 11 Id. Id. R. Doc. 65-10 at 2; R. Doc. 56-4 at 21. R. Doc. 65-4 at 26, 31. R. Doc. 1 at 3 ¶ 9. Id. at 5-11. R. Doc. 13. R. Doc. 23. 2 counterclaim for dam age allegedly sustained to another boat transported by Legacy. 12 A. Factu al Backgro u n d Nautim ill is a Uruguayan corporation in the business of shuttling barges between ports on the Uruguay and Parana Rivers. 13 In 20 13, the com pany was in the m arket for an additional pushboat. As part of its search, Nautim ill contacted Hasselm an, an experienced vessel broker. According to Hasselm an, Ruben Varela, the president of Nautim ill, specified to Hasselm an that he was looking for a newly-constructed, 2,0 0 0 horsepower pushboat. 14 On November 14, 20 13, Hasselm an—acting as Nautim ill’s agent— em ailed Varela with details about the Legacy Server. 15 The vessel was offered for sale by Legacy, and had been constructed by R&R Boats, an “affiliated entity” of Legacy. 16 Hasselm an’s em ail described the vessel as a “BRAND NEW Tug” with “Twin Cat[erpillar] 3412 [engines] rated 1,0 0 0 Hp each.” It further stated that the vessel had been used only for “Sea Trail [sic.] hours (8 hours tim e)” and cam e with a “1 Year Warranty on all equipm ent and the 12 13 14 15 16 Id. R. Doc. 65-3 at 1; R. Doc. 1 at 4 ¶13. R. Doc. 49-4 at 6. R. Doc. 65-2 at 1. R. Doc. 49-5 at 1. 3 Hull, Deck, and Paint Work.”17 The em ail listed a purchase price of “$ 2,20 0 ,0 0 0 .0 0 USD FIRM.”18 In February 20 14, Hasselm an and two Uruguayan naval officers, Captain J orge Perez Castro and Edgardo Costa, travelled to Louisiana to inspect another boat. 19 While the officers were inspecting that vessel, Hasselm an arranged an im prom ptu viewing of the Legacy Server. 20 The parties agree that the Uruguayan officers visited the engine room and travelled som e distance aboard the vessel, but dispute whether this visit constituted a full “inspection” and “sea trial.”21 During this visit, Captain Perez Castro observed a dial which indicated the engines had been used for a total of 10 hours. 22 Robert Boudreaux, a m em ber of Legacy, 23 accom panied the three m en during their trip aboard the vessel. 24 In April 20 14, Nautim ill bought the Legacy Server from Legacy for $ 2.1 m illion. 25 Hasselm an and his com pany IMSE brokered the purchase on behalf of Nautim ill. 26 As part of the sale, Nautim ill and Legacy executed a 17 18 19 20 21 22 23 24 25 26 R. Doc. 65-2 at 1. Id. R. Doc. 49-4 14-15. R. Doc. 49-2 at 2; R. Doc. 65-19 at 3. Com pare R. Doc. 49-2 at 2 and R. Doc. 65-19 at 3. R. Doc. 67-5 at 17-18. R. Doc. 49-5 at 1. See R. Doc. 65-4 at 27; R. Doc. 65-1 at 9-10 . R. Doc. 49-2 at 2, 3; R. Doc. 65-19 at 1, 4. R. Doc. 49-2 at 2; R. Doc. 65-19 at 1. 4 “Vessel Purchase Agreement.”27 The Agreem ent states that “[t]he vessel (s) and all her tackle apparel, gear, m achinery, equipm ent and furnishings are sold AS IS, WHERE IS, without warranties of m erchantability or fitness for any particular use” and that “the buyer hereby accepts the vessel (s) on an AS IS, WHERE IS BASIS.”28 The Agreem ent also lists under “Terms and Conditions” that “Main engine(s) and Generator to be in proper working condition” and that “Buyer or their representatives have had previous inspect and sea trial of the vessel and found it suitable to their needs.”29 The Agreement provides no details regarding the age or power of the vessel’s engines. 30 The parties also com pleted a U.S. Coast Guard bill of sale, which states: “EQUIPMENT WARRANTIED BY THE VARIOUS MANUFACTURERS.”31 The Legacy Server arrived in Uruguay on or about May 25, 20 14 and began service as a pushboat in J uly 20 14. 32 In J anuary 20 15, attorneys for Nautim ill com plained to Legacy that the vessel’s two propellers were different sizes and that the engines were m ism atched, used rather than new, 27 28 29 30 31 32 R. Doc. 49-5 at 8-13. Id. at 9. Id. Id. at 8-13. Id. at 15. R. Doc. 49-2 at 2; R. Doc. 65-19 at 1. 5 and produced roughly 1,20 0 horsepower rather than 2,0 0 0 . 33 This suit followed on April 2, 20 15. 34 II. LEGAL STAN D ARD Sum m ary judgment is warranted when “the m ovant shows that there is no genuine dispute as to any m aterial fact and the m ovant is entitled to judgm ent as a m atter of law.” Fed. R. Civ. P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Little v. Liquid Air Corp., 37 F.3d 10 69, 10 75 (5th Cir. 1994). When assessing whether a dispute as to any m aterial fact exists, the Court considers “all of the evidence in the record but refrain[s] from m aking credibility determ inations or weighing the evidence.” Delta & Pine Land Co. v. Nationw ide Agribusiness Ins. Co., 530 F.3d 395, 398-99 (5th Cir. 20 0 8). All reasonable inferences are drawn in favor of the nonm oving party, but “unsupported allegations or affidavits setting forth ‘ultim ate or conclusory facts and conclusions of law’ are insufficient to either support or defeat a m otion for sum m ary judgment.” Galindo v. Precision Am . Corp., 754 F.2d 1212, 1216 (5th Cir. 1985); see also Little, 37 F.3d at 10 75. “No genuine dispute of fact exists if the record taken as a whole could 33 34 R. Doc. 49-5 at 18. R. Doc. 1. 6 not lead a rational trier of fact to find for the non-m oving party.” EEOC v. Sim baki, Ltd., 767 F.3d 475, 481 (5th Cir. 20 14). If the dispositive issue is one on which the m oving party will bear the burden of proof at trial, the m oving party “m ust come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial.” Int’l Shortstop, Inc. v. Rally ’s, Inc., 939 F.2d 1257, 1264-65 (5th Cir. 1991). The nonm oving party can then defeat the m otion by either countering with evidence sufficient to dem onstrate the existence of a genuine dispute of m aterial fact, or “showing that the m oving party’s evidence is so sheer that it m ay not persuade the reasonable fact-finder to return a verdict in favor of the m oving party.” Id. at 1265. If the dispositive issue is one on which the nonm oving party will bear the burden of proof at trial, the m oving party m ay satisfy its burden by m erely pointing out that the evidence in the record is insufficient with respect to an essential elem ent of the nonm oving party’s claim . See Celotex, 477 U.S. at 325. The burden then shifts to the nonm oving party, who m ust, by subm itting or referring to evidence, set out specific facts showing that a genuine issue exists. See id. at 324. The nonm ovant m ay not rest upon the pleadings, but m ust identify specific facts that establish a genuine issue for trial. See, e.g., id.; Little, 37 F.3d at 10 75 (“Rule 56 m andates the entry of sum m ary judgment, after adequate tim e for discovery and upon m otion, 7 against a party who fails to m ake a showing sufficient to establish the existence of an elem ent essential to that party’s case, and on which that party will bear the burden of proof at trial.” (quoting Celotex, 477 U.S. at 322)). III. D ISCU SSION A. Ch o ice o f Law All parties briefed this m otion pursuant to Louisiana law. The Vessel Purchase Agreement is not a m aritim e contract, see Gulf Coast Shell & Aggregate LP v. N ew lin, 623 F.3d 235, 240 (5th Cir. 20 10 ) (“[C]ontracts for the construction or sale of a vessel are not m aritim e contracts.”), and state law would therefore ordinarily apply. The agreem ent, however, contains a choice of law provision which states that it “shall be construed in accordance with General Maritim e Laws of the US as supplem ented by Louisiana State laws . . . .”35 No party cited this provision in its sum m ary judgm ent briefing. “It is well established that parties generally are bound by the theory of law they argue in the district court, absent some m anifest injustice.” Am . Int’l Trading Corp. v. Petroleos Mexicanos, 835 F.2d 536, 540 (5th Cir. 1987) (internal quotations om itted). Manifest injustice “exists in extreme circum stances,” and requires m ore than a m ere showing “that application of 35 R. Doc. 49-5 at 10 . 8 another jurisdiction’s law would yield a different result.” Id.; see also Sam pson v. GATX Corp., 547 F. App’x 369, 377 (5th Cir. 20 13) (noting that the parties “have an obligation to call the applicability of another state’s law to the court’s attention in tim e to be properly considered.”). Because there has been no showing of m anifest injustice, this Court need not consider the effect of the choice of law provision, and m ay apply Louisiana law to all claim s at issue in this case. See e.g. Goldm an Sachs Bank USA v. Moreno, No. 15-20 18, 20 16 WL 30 40 450 , at *2 n.13 (W.D. La. May 24, 20 16) (applying Louisiana law, despite “som e question as to the body of law governing this m atter,” where parties briefed pursuant to Louisiana law); Preis v. N ew England Life Ins. Co., No. 0 7-582, 20 0 9 WL 1530 994, at *1 n.1 (W.D. La. May 28, 20 0 9) (applying Louisiana law where both parties “rel[ied] upon Louisiana law for their argum ents”); J & D Aircraft Sales, LLC v. Cont’l Ins. Co., No. 0 3-0 0 0 7, 20 0 4 WL 2389445, at *5 (N.D. Tex. Oct. 26, 20 0 4) (“Because the parties appear to agree that Texas law should apply, and because there is no showing that m anifest injustice would otherwise result, the Court will apply Texas law to the issues presented in the parties’ summ ary judgm ent papers.”). B. N au tim ill’s Frau d u le n t Mis re p re s e n tatio n Claim Legacy challenges Nautim ill’s fraudulent m isrepresentation claim on two fronts. First, it attacks the plausibility of Nautim ill’s allegation that 9 Boudreaux represented the Legacy Server’s engines as 1,0 0 0 horsepower each. Second, Legacy argues that Nautim ill could have determ ined the true condition of the vessel “without difficulty, inconvenience, or special skill” and that the fraud claim therefore fails under Louisiana Civil Code article 1954. Disputed factual issues preclude both argum ents. Under Louisiana’s Civil Code, “[f]raud is a m isrepresentation or a suppression of the truth m ade with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other. Fraud m ay also result from silence or inaction.” La. Civ. Code art. 1953. In the context of a contract of sale, “[t]he elem ents of an action for fraud are: ‘(1) a m isrepresentation, suppression, or om ission of true inform ation; (2) the intent to obtain an unjust advantage or to cause dam age or inconvenience to another; and (3) the error induced by a fraudulent act m ust relate to a circum stance substantially influencing the victim ’s consent to (a cause of) the contract.’” Jones v. W ells Fargo Bank, N .A., 626 F. App’x 50 0 , 50 4-0 5 (5th Cir. 20 15) (quoting Shelton v. Standard/ 70 0 Assocs., 798 So.2d 60 , 64 (La. 20 0 1)). Fraud, however, “does not vitiate consent when the party against whom the fraud was directed could have ascertained the truth without difficulty, inconvenience, or special skill.” La. Civ. Code art. 1954. As the Fifth Circuit holds, “sum m ary judgm ent is rarely proper in fraud cases because the intent required to establish fraud is a factual question ‘uniquely 10 within the realm of the trier of fact because it so depends upon the credibility of witnesses.’” Rim ade Ltd. v. Hubbard Enters., Inc., 388 F.3d 138, 144 (5th Cir. 20 0 4) (quoting Beijing Metals & Minerals v. Am er. Bus. Ctr., 993 F.2d 1178, 1185 (5th Cir. 1993)). With regard to Legacy’s first argument, whether Legacy m isrepresented the horsepower and age of the Legacy Server’s engines is plainly a disputed question of fact. Legacy impliedly concedes this point in its briefing when it argues that “[b]esides the . . . testim ony of Mr. Hasselm an . . . , Nautim ill does not have a shred of evidence to support [the m isrepresentation] claim s.”36 In his deposition, Hasselm an states—with varying certainty and specificity—that Legacy represented the vessel’s engines as 2,0 0 0 horsepower several tim es. First, Hasselm an claim s that Legacy portrayed the vessel as having 2,0 0 0 horsepower when he initially initial called to inquire about a pushboat. 37 Second, Hasselm an alleges that Legacy—through either its principal Robert Boudreaux or its employee J essica—provided Hasselm an with the specifications that he em ailed to Nautim ill in Novem ber 20 13. 38 These specifications described the vessel as 36 R. Doc. 49-3 at 10 . This statement ignores, of course, the testim ony of Captain Perez Castro. 37 See R. Doc. 65-1 at 6, 39 (“[W]hen I asked about a boat, I said, ‘I need something 2,0 0 0 horsepower.’ They offered m e the LEGACY SERVER. Q: On the Phone? A: I im agine that was the first tim e, yes.”). 38 Id. at 2-3 (“Q: . . . where did you get . . . the specifications of the 11 “BRAND NEW” and the engines as rated at 1,0 0 0 horsepower each. 39 Third, Hasselm an states that Robert Boudreaux confirm ed that the engines totaled 2,0 0 0 horsepower during the February 20 14 viewing perform ed by Hasselm an and the Uruguayan naval officers. 40 Hasselm an m aintains that he was never told that the engines were rebuilt rather than new. 41 Hasselm an further states that, had he known the true age and power of the engines, he would not have recom m ended that Nautim ill purchase the vessel. 42 Captain J ose Perez Castro, one of the Uruguayan naval officers that viewed the vessel on behalf of Nautim ill, partially corroborates Hasselm an’s account. Although they differ as to who asked about the engines, Captain Perez Castro alleges that Boudreaux stated during the November viewing that each engine produced 1,0 0 0 horsepower. 43 vessel? A: I would have gotten it from J essica or from Robert. And since I had very little com m unication with Robert in writing, I’m assum ing it was from J essica. Q: In writing? A: I im agine so. Most of it I got was from J essica or from inspection. I m ean, there’s very specific details in here, transm issions, engines, fuel capacity. All of this inform ation had to com e from somebody. I didn’t pull it out of thin air.”). 39 R. Doc. 65-2 at 1. 40 R. Doc. 65-1 at 10 , 34-35 (“[One of the Uruguayan naval officers a]sked, you know, ‘The horsepower is 1,0 0 0 horsepower each?’ I don’t know if he said 2,0 0 0 or 1,0 0 0 horsepower. And they said, ‘yes.’ Q: Who is ‘they’? A: the Uruguayan naval officer. Q: You said ‘they’ said yes. A: Robert and whoever was standing there. Robert said ‘yes’ . . . .”). 41 Id. at 18. 42 Id. at 24. 43 R. Doc. 67-5 at 12-14. 12 This testim ony is sufficient to raise a fact issue as to Legacy’s prepurchase m isrepresentations. Legacy’s challenge to the plausibility of Nautim ill’s allegations sim ply asks this Court to weigh the evidence and decide that Nautim ill’s witnesses lack credibility. Such an evaluation is im proper at the sum m ary judgm ent stage. EEOC v. Chevron Phillips Chem . Co., 570 F.3d 60 6, 612 n.3 (5th Cir. 20 0 9) (noting the well-established prohibition against a district court making credibility determ inations or weighing evidence in ruling on sum m ary judgm ent). Legacy’s first argument regarding the fraud claim therefore fails. Legacy also argues that Nautim ill could have determ ined the true condition of the vessel “without difficulty, inconvenience, or special skill” and that Nautim ill’s fraud claim therefore fails under article 1954. In support, Legacy avers that had Nautim ill researched the engine serial num bers, it could have easily discovered that they were neither new, nor capable of producing 1,0 0 0 horsepower. 44 Legacy argues that the engine m odel number, which was provided to Hasselm an, revealed the true horsepower rating and that the m odel had been out-of-production since 20 0 8. 45 Legacy also points to Hasselm an’s testim ony that a person perform ing an inspection of a boat should investigate engine serial num bers 44 45 R. Doc. 49-3 at 14-15. Id. at 15. 13 as “part of their due diligence,” as well as Hasselm an’s adm ission that Legacy sent him engine serial num bers, for the purpose of sourcing replacem ent parts, before the sale. 46 Legacy also highlights Captain Perez Castro’s adm ission that had he performed a “com plete inspection” of the Legacy Server, he would have “noted the difference in the two engines and the difference in the two propellers.”47 Finally, Legacy contends that both Hasselm an and Nautim ill are sophisticated parties with significant m arine expertise. 48 In response, Nautim ill points to the testim ony of Hasselm an and its expert Norman Dufour, who both state that the freshly-painted engines appeared new from the outside. 49 Dufour further m aintains that the engines would have to be partially disassem bled to determ ine they had been reconditioned, 50 and he disputes Legacy’s suggestion that a m arine expert would know the engines were used just by looking at the m odel num ber. 51 With regard to the serial numbers, Nautim ill points to Boudreaux’s adm ission that the port engine serial num ber is “not a good num ber,” in that 46 R. Doc. 49-4 at 20 . R. Doc. 67-2 at 3 (citing R. Doc. 67-5 at 17). 48 R. Doc. 49-3 at 13. 49 R. Doc. 65-17 at 1; R. Doc. 65-1 at 34. Captain Perez Castro also testified that the vessel “seem[ed] to be a new boat.” R. Doc. 67-5 at 17. 50 R. Doc. 65-17 at 1. 51 Id. at 6. 47 14 it does not correspond to the engine on which it is stam ped. 52 Finally, Nautim ill asserts that its perceived need to inspect the vessel carefully was reasonably reduced by Legacy’s repeated confirm ations of the engines’ horsepower and portrayal of the vessel as “brand new.” The parties’ dispute on this point is largely a disagreem ent regarding the level of diligence required by article 1954. Two recent Fifth Circuit cases are instructive. In Jones v. W ells Fargo Bank, N .A., 626 F. App’x 50 0 (5th Cir. 20 15), a homebuyer sued the bank that sold her a previously-foreclosed property alleging fraud and redhibitory defect. As part of the sale, the hom ebuyer signed a m old disclosure that “advised that m old and/ or other m icroscopic organism s m ay exist at the property” and “put Buyers on notice to conduct their own due diligence regarding this matter using appropriate, qualified experts.” Id. at 50 3. After the purchase, the homebuyer discovered that her new home had extensive m old dam age, which had been concealed by cosm etic repairs. Id. at 50 2. The District Court dism issed the 52 R. Doc. 65-4 at 25. There are m ultiple conflicting accounts of the state of the Legacy Server’s engine serial numbers. Hasselm an m aintains that the engines have no serial num bers at all. R. Doc. 65-1 at 27. Norm an Dufour, Nautim ill’s expert, states that the port engine number cannot be retrieved because it has been partially “obliterated.” R. Doc. 6517 at 6. Finally, a report from a Uruguayan Caterpillar engine technician finds that one of the engines’ serial num bers corresponds to an electronic m otor, and therefore clearly does not match the diesel engine it is stam ped on. R. Doc. 65-18 at 4. 15 hom eowner’s fraud claim s, finding that “the Mold Disclosure and Release should have at least caused Plaintiff to investigate, thereby allowing her to ascertain the truth ‘without difficulty, inconvenience, or special skill.’” Jones v. W ells Fargo Bank, N .A., No. 13-2513, 20 14 WL 21180 36, at *4 (W.D. La. May 20 , 20 14). The Fifth Circuit reversed. It held that the hom eowner “could not ‘have ascertained the truth without difficulty, inconvenience, or special skill’ because the m old was within the walls and had been actively concealed by Wells Fargo.” Jones, 626 F. App’x at 50 5. In Petrohaw k Properties, L.P. v. Chesapeake Louisiana, L.P., 689 F.3d 380 (5th Cir. 20 12), the Fifth Circuit upheld the trial court’s finding of fraud in the procurem ent of a m ineral lease. The fraudulent m isrepresentation at issue “concerned the legal effect of recordation on the validity of a m ineral lease.” Id. at 390 . Defendants argued that the lessor could easily have ascertained the true rule, and the fraud claim was therefore precluded by article 1954. Id. The court rejected this argument because the lessor’s “only likely avenue to uncovering the truth was by consulting a knowledgeable attorney—which would have entailed difficulty and inconvenience.” Id. at 390 -91. The court explained that “[w]hen a fraudulent m isrepresentation can be easily uncovered, the com plaining party will be expected to exercise this m inim um amount of diligence. However, when uncovering the truth requires fam iliarity with peculiar technicalities, which calls for a special skill, 16 the com plaining party cannot be blamed for lack of diligence.” Id. at 390 (internal quotations om itted). The court also noted that “in determ ining the diligence of the com plaining party, subjective aspects such as a party’s business experience or professional capacity m ust be taken into account.” Id. (internal quotations and m odifications om itted). Here there is at least a factual issue as to whether the condition of the Legacy Server could have been determ ined without difficulty, inconvenience, or special skill. Nautim ill’s witnesses testified that visual inspections of the engines did not reveal that they were reconditioned, and that determ ining the truth would have required “[s]om e amount of disassembling” of the engines. 53 Further, researching the engine serial or m odel num bers—like the legal research at issue in Petrohaw k—also required both skill and “fam iliarity with peculiar technicalities.” Petrohaw k, 689 F.3d at 390 . Fortifying this inference is evidence that the serial num bers did not m eaningfully correspond with the vessel’s engines. Finally, it appears to be undisputed that determ ining that one of the propellers was reconditioned would have required placing the vessel in drydock, and that such an operation is costly and tim e-consum ing. 54 53 54 R. Doc. 65-17 at 1. See R. Doc. 67-5 at 6-7. 17 Although Legacy relies on the business experience of Nautim ill and its agent Hasselm an and their opportunity to inspect the vessel, that evidence does not negate the fact issues concerning whether discovery of the vessel’s condition entailed inconvenience and difficulty, and required special skill. Legacy is not entitled to sum m ary judgm ent on its argum ent that Nautim ill’s fraud claim fails under 1954. To resist this conclusion, Legacy cites Sm oothie King Franchises, Inc. v. Southside Sm oothie & N utrition Ctr., Inc., No. 11-20 0 2, 20 12 WL 1698365 (E.D. La. May 15, 20 12), aff’d 516 F. App’x 362 (5th Cir. 20 13). In that case, defendants raised fraud in the inducem ent as an affirm ative defense to claim s that they had violated a non-com pete clause in a franchise contract. Id. at *1-2. The alleged m isstatements concerned the plaintiffs’ com pliance with com plex provisions of federal and state consumer protection law. Id. at *10 . In that situation, where defendants had the opportunity to consult their own independent advisors to advise them on the legal effect of the contract, the court found defendants’ fraud defense barred under article 1954. Id. Unlike the Sm oothie King defendants, Nautim ill has alleged a false statement of fact, the falsity of which was allegedly known to Legacy. Nautim ill could not have ascertained the truth by simply reading the Vessel 18 Purchase Agreem ent with the help of experts. The cases are therefore distinguishable on their facts. 55 C. N au tim ill’s N e glige n t Mis re p re s e n tatio n Claim Nautim ill also alleges negligent m isrepresentation under Louisiana Civil Code articles 2315 and 2316. “To m ake out a negligent m isrepresentation claim in Louisiana: (1) there m ust be a legal duty on the part of the defendant to supply correct inform ation; (2) there m ust be a breach of that duty, which can occur by om ission as well as by affirmative m isrepresentation; and (3) the breach m ust have caused dam ages to the plaintiff based on the plaintiff’s reasonable reliance on the m isrepresentation.” Kadlec Med. Ctr. v. Lakeview Anesthesia Associates, 527 F.3d 412, 418 (5th Cir. 20 0 8). Mirroring its argum ent under the fraud claim , Legacy contends that Nautim ill’s reliance on Boudreaux’s alleged statements is unreasonable in light of Nautim ill’s opportunity to inspect the 55 In its reply, Legacy cites three m ore cases on the article 1954 issue. These cases are clearly distinguishable. In Busby v. Par. N at. Bank, 464 So. 2d 374 (La. App. 1 Cir. 1985), the court held that plaintiffs could not reasonably construe vague statem ents by bank employees as unqualified loan com m itm ents. In Crow v. Laurie, 729 So. 2d 70 3 (La. App. 1 Cir. 1999), the appellate court reversed a trial court judgm ent that a claim for fraud in the sale of a boat was barred by article 1954. Finally, in In re Ford Motor Co. Bronco II Prod. Liab. Litig., 982 F. Supp. 388, 397 (E.D. La. 1997), the court found that it was not reasonable for plaintiffs to rem ain unaware of a defect in a vehicle m odel “considering the widespread attention [the defect] received prior to and during the years they purchased their vehicles.” 19 vessel. 56 Legacy cites no authority, and the Court has not found any, suggesting that the diligence required under the reasonable reliance prong of negligent m isrepresentation is greater than that required by article 1954 of a purchaser alleging fraud. For the reasons discussed above, there is an issue of m aterial fact as to whether Nautim ill’s reliance on Legacy’s representations was justifiable. Legacy’s request for sum m ary judgment on Nautim ill’s negligent m isrepresentation claim s m ust therefore be denied. D . N au tim ill’s Re d h ibitio n Claim Under the Louisiana law of redhibition, a “seller warrants the buyer against redhibitory defects, or vices, in the thing sold.” La. Civ. Code art. 2520 . A defect is redhibitory when it either (1) “renders the thing useless, or its use so inconvenient that it m ust be presumed that a buyer would not have bought the thing had he known of the defect”; or (2) “dim inishes its usefulness or its value so that it m ust be presumed that a buyer would still have bought it but for a lesser price.” Id. Further, “a seller who declares that the thing has a quality that he knows it does not have” can be liable under redhibition. La. Civ. Code. art. 2545; see also id. cm t. (a) (explaining that article 2545 allows a buyer to bring an action in redhibition “against a seller who, knowingly, made a false declaration regarding a quality of the thing.”). 56 R. Doc. 49-3 at 16. 20 A seller, however, “owes no warranty for defects in the thing that were known to the buyer at the tim e of the sale, or for defects that should have been discovered by a reasonably prudent buyer of such things.” La. Civ. Code art. 2521. To determ ine whether a defect should have been discovered, “courts consider whether a reasonably prudent buyer, acting under sim ilar circum stances, would discover it through a sim ple inspection of the thing sold.” Spraggins v. Lam beth, 973 So. 2d 165, 167 (La. App. 2 Cir. 20 0 7). A “sim ple inspection” requires “m ore than casual observance,” id., but “[t]he buyer is under no obligation . . . to inspect with expertise or to deface the thing purchased while inspecting it.” Jones v. W ells Fargo Bank, N.A., 626 F. App’x 50 0 , 50 4 (5th Cir. 20 15) (quoting McGough v. Oakw ood Mobile Hom es, Inc., 779 So.2d 793, 80 1 (La. App. 2 Cir. 20 0 0 )); see also Am end v. McCabe, 664 So. 2d 1183, 1188 (La. 1995) (holding that, in the context of term ite dam age, when all of the dam age “is concealed within the hom e’s structure (e.g., walls and floors) it is considered unapparent because it is not discoverable by a sim ple inspection”). According to Legacy, Nautim ill’s redhibition claim s fail because the problem s identified with the vessel do not rise to the level of a “defect” and should have been discovered by simple inspection. These arguments are unavailing. 21 Here there is an issue of m aterial fact as to whether the Legacy Server suffered from a redhibitory defect. See Hatten v. Estes Cadillac, Inc., 625 F. Supp. 913, 916 (E.D. La. 1986) (citing New m an v. Dixie Sales & Service, 387 So.2d 1333, 1339 (La. App. 1 Cir. 1980 )) (existence of redhibitory effect is question of fact). Nautim ill has produced evidence that the Legacy Server is significantly less useful or valuable than a 2,0 0 0 horsepower pushboat. Varela, Nautim ill’s president, stated in deposition that because of increased capacity, a 2,0 0 0 horsepower pushboat would have earned Nautim ill $ 8,0 0 0 per day, and the Legacy Server earns only $ 4,0 0 0 . 57 As noted, under article 2545 claim s that a seller represented “that the thing has a quality that [the seller] knows it does not have” are redressible in redhibition. Evidence that Boudreaux knowingly m isrepresented that the Legacy Server produced 2,0 0 0 horsepower, and that the vessel is significantly less useful or valuable than a 2,0 0 0 horsepower pushboat, creates a m aterial fact question under article 2545. Legacy’s second argum ent fails for the sam e reasons as its diligence arguments under fraud and negligent m isrepresentation. Nautim ill arranged for three experts to view the vessel and take it out on the water. There is evidence that the vessel appeared to be new at the tim e of the 57 R. Doc. 65-3 at 8-9. 22 viewing, and a dial installed in the vessel reported only ten hours of engine use. The Court finds that there is at least an issue of fact as to whether this exam ination m eets the “sim ple inspection” standard. See Crow v. Laurie, 729 So. 2d 70 3 (La. App. 1 Cir. 1999) (“[A]lthough the trial court correctly determ ined the Crows were required to inspect the boat, it com m itted legal error by im posing upon the Crows a duty to perform a m ore extensive inspection than a ‘sim ple inspection’ . . . .”); Buck v. Adam s, 446 So. 2d 895, 898 (La. App. 1 Cir. 1984) (the ‘sim ple inspection’ standard does not “require[] one to dry-dock a boat to check its seaworthiness.”). E. N au tim ill’s Claim s fo r Bre ach o f W arran ty o f Fitn e s s fo r Ord in ary U s e an d Bre ach o f Co n tract. Finally, Legacy challenges Nautim ill’s breach of warranty of fitness for ordinary use and breach of contract claim s. Because a claim for breach warranty of fitness for ordinary use is a contract claim , see, e.g., Chesapeake Louisiana, L.P. v. Innovative W ellsite Sy s., Inc., No. 12-2963, 20 14 WL 5796794, at *4 (W.D. La. Nov. 6, 20 14), and Nautim ill has not identified any other specific breach, the Court considers these claim s together. See N at’l Inspection & Repairs, Inc. v. George S. May Int’l Co., 60 0 F.3d 878, 886 (7th Cir. 20 10 ) (“[I]n order to survive sum m ary judgm ent, [the non-m oving party] m ust point to a specific obligation that [the m oving party] failed to 23 perform , and it cannot ask this court to speculate as to which provision or provisions [the m oving party] m ight have breached.”). Under Louisiana Civil Code article 2524, a “thing sold m ust be fit for its ordinary use.” In addition, “[w]hen the seller has reason to know the particular use the buyer intends for the thing, or the buyer’s particular purpose for buying the thing, and that the buyer is relying on the seller’s skill or judgment in selecting it, the thing sold m ust be fit for the buyer’s intended use or for his particular purpose.” Id. Legacy argues that the record cannot support a finding that the vessel is unfit for either ordinary use or Nautim ill’s specific intended use. 58 Nautim ill offers no fact or argument to rebut this contention. Furtherm ore, the parties do not dispute that the Legacy Server has been in service as a pushboat since J uly 20 14. 59 Varela stated in his deposition that the vessel has experienced only “norm al problems,”60 and earns Nautim ill $ 4,0 0 0 per day. 61 For these reasons, Nautim ill has failed to raise a genuine issue of m aterial fact regarding the vessel’s fitness for ordinary use. Although its com plaint is not entirely clear on the point, Nautim ill appears to also allege that the vessel was not fit for Nautim ill’s particular, 58 59 60 61 R. Doc. 49 at 19. See R. Doc. 49-2 at 3 and R. Doc. 65-19 at 4. R. Doc. 49-8 at 2. R. Doc. 65-3 at 8-9. 24 intended use. 62 To sustain this claim Nautim ill m ust point to evidence that Nautim ill relied on Legacy’s “skill or judgm ent” in selecting the vessel. La. Civ. Code art. 2524. Nautim ill has failed to do so. The only evidence before the Court suggests that Nautim ill relied on its own expertise, and the expertise of Hasselm an, in selecting the specific type of pushboat it required. 63 Although Legacy’s allegedly offered the Legacy Server during Hasselm an’s initial call requesting a 2,0 0 0 horsepower pushboat, article 2524 requires m ore than a sim ple suggestion that a product has a specific attribute requested by the buyer. Because Nautim ill has not pointed to specific evidence in the record creating an issue of m aterial fact as to whether the Legacy Server was fit for ordinary use, or whether Nautim ill relied on Legacy’s skill and judgm ent in selecting the vessel, sum m ary judgm ent m ust be granted on Nautim ill’s claim for breach of the warranty of fitness for ordinary use. Further, because Nautim ill has identified no other provision of the Vessel Purchase Agreem ent allegedly breached by Legacy, summ ary judgm ent is also warranted on Nautim ill’s breach of contract claim . 62 R. Doc. 1 at 10 (alleging that “the vessel was not fit for the ordinary use in the m arine towing service for which it was intended”). 63 See, e.g., R. Doc. 49-4 at 6 (Varela specified to Hasselm an that Nautim ill wanted a new, 2,0 0 0 horsepower pushboat). 25 F. H as s e lm an an d IMSE’s Claim s In their counterclaim Hasselm an and his LLC, IMSE (collectively “IMSE”) allege that (1) due to the intentional or negligent m isrepresentations alleged by Nautim ill, IMSE has not received part of its earned com m ission on the sale of the vessel; and (2) Legacy is liable for damage sustained by another boat, the 41’ Ex USGG UTB # 41440 , during transport. Legacy m oves for sum m ary judgm ent on all of IMSE’s claim s. The Court considers each in turn. 1. In te n tio n al Mis re p re s e n tatio n In opposing IMSE’s claim s for intentional m isrepresentation, Legacy incorporates its argum ents—rejected above—in favor of sum m ary judgment against Nautim ill. Beyond this repetition, Legacy’s only opposition to the intentional m isrepresentation claim is a statem ent, citing no authority or evidence, that “the legal cause of Hasselm an’s and/ or IMSE’s dam ages, if any, is not any alleged action or inaction attributable to Legacy, but rather Nautim ill’s breach of its contractual agreem ent to pay a com m ission to IMSE in full.”64 This purely conclusory statem ent fails to m eet Legacy’s burden under Rule 56. Sum mary judgm ent on m isrepresentation claim is therefore not warranted. 64 R. Doc. 50 -3 at 7. 26 IMSE’s intentional 2 . N e glige n t Mis re p re s e n tatio n With regard to IMSE’s negligent m isrepresentation claim , Legacy asserts that it owed IMSE no duty to accurately describe the Legacy Server before Nautim ill’s purchase. Whether the defendant owed the plaintiff a duty is a “threshold issue in any negligence action.” Audler v. CBC Innovis Inc., 519 F.3d 239, 249 (5th Cir. 20 0 8) (quoting Meany v. Meany , 639 So.2d 229, 233 (La. 1994)). “The relevant inquiry under Louisiana law in a negligent m isrepresentation case is ‘whether, as a m atter of law, a duty is owed to this particular plaintiff to protect him from this particular harm .’” Audler, 519 F.3d at 249 (quoting Barrie v. V.P. Exterm inators, Inc., 625 So. 2d 10 0 7, 10 16 (La. 1993)). Under Louisiana law, plaintiffs m ay recover in tort for purely econom ic loss caused by negligent m isrepresentation even absent privity of contract. Barrie, 625 So. 2d at 10 14. The Fifth Circuit has identified four factors used by Louisiana courts to determ ine whether a defendant owes a duty when, as here, the parties lack privity of contract or a fiduciary relationship: First, is whether the tortfeasor could expect that the plaintiffs would receive and rely upon the information. Second, is whether the plaintiffs are mem bers of the lim ited group for whose benefit and guidance the [inform ation] was contracted and supplied. Third, is whether the [information] is prepared in the context of a business transaction for which the alleged tortfeasor received 27 com pensation. Fourth, is whether extending tort liability would serve public policy. Audler, 519 F.3d at 250 . Each of these factors supports extending Legacy’s duty to avoid negligent m isrepresentations to IMSE. Under the first factor, Legacy could expect that IMSE would receive and rely on the alleged m isrepresentations because they were allegedly m ade directly to Hasselm an. Under the second factor, IMSE, as Nautim ill’s agent and a key player in the decision of whether to purchase the vessel, is a mem ber of the lim ited group for whose benefit and guidance the inform ation was supplied. See Paul v. Landsafe Flood Determ ination, Inc., 550 F.3d 511, 517 (5th Cir. 20 0 8) (“[B]oth Barrie and the Restatement focus on whether a plaintiff is a m ember of a lim ited, intended group for whom a report is prepared.”). Third, Legacy allegedly prepared the inform ation in the context of a business transaction (the sale of the vessel) for which it received com pensation (the sale price of the vessel). See Kadlec Med. Ctr. v. Lakeview Anesthesia Associates, No. 0 4-997, 20 0 5 WL 130 9153, at *5 (E.D. La. May 19, 20 0 5) (distinguishing a “gratuitous situation,” which does not give rise to a duty, “from the situation where inform ation is given ‘in the course of the defendant’s business.’” (quoting Restatem ent (Second) of Torts § 552 cm t. c.)). 28 Finally, the Court finds that a Louisiana court would likely determ ine that extending tort liability in this case serves public policy. This conclusion is buttressed by num erous Louisiana cases finding that a duty is owed when “there is comm unication of the m isinform ation by the tortfeasor directly to the user or the user’s agent” and the user relied on it. Barrie, 625 So. 2d at 10 16 (em phasis added); see Cy press Oilfield Contractors, Inc. v. McGoldrick Oil Co., 525 So.2d 1157, 1162 (La. App. 3 Cir. 1988) (in case of direct com m unication, bank had duty to non-customer); Pay ne v. O’Quinn, 565 So.2d 10 49, 10 54 (La. App. 3 Cir. 1990 ) (term ite inspector, hired by realtor, owed duty to prospective purchaser he directly com m unicated with); Pastor v. Lafay ette Bldg. Ass’n, 567 So.2d 793, 796 (La. App. 3 Cir. 1990 ) (first m ortgagee had no preexisting duty to second m ortgagee, however, “once it volunteered the inform ation [directly to plaintiff], it assum ed a duty to insure that the inform ation volunteered was correct.”); see also Kent v. Cobb, 811 So. 2d 120 6, 1212 (La. App. 2 Cir. 20 0 2), w rit denied sub nom . Doug v. Cobb, 818 So. 2d 772 (La. 20 0 2) (“Where privity of contract is absent, but there is com m unication of the m isinform ation by the tort-feasor directly to the user or the user’s agent, the user is owed a tort duty.”). By speaking directly to Hasselm an, Legacy assumed a duty to avoid negligently m isrepresenting the vessel’s capabilities. Legacy’s negligent m isrepresentation arguments therefore lack m erit. 29 3 . D am age to th e 4 1’ Ex U SGG U TB # 4 14 4 0 In addition to IMSE’s claim s regarding the sale of the Legacy Server, IMSE brings a claim for dam age to another vessel, the 41’ Ex USGG UTB # 41440 . 65 IMSE brokered the sale of UTB # 41440 on behalf of another client, Costa Fortuna. According to Hasselm an, Costa Fortuna billed him $ 4,0 0 0 for the cost of repairs. 66 Hasselm an alleges that the Legacy Server and UTB # 41440 were being transported together when UTB # 41440 was dam aged. 67 This Court has a duty to police its own jurisdiction, and is required to dism iss sua sponte any action over which it lacks jurisdiction. Insurance Corp. of Ireland, Ltd. v. Com pagnie des Bauxites de Guinee, 456 U.S. 694, 70 2 (1982). Under Rule 13 of the Federal Rules of Civil Procedure counterclaim s may be com pulsory or perm issive. If IMSE’s counterclaim is perm issive, and IMSE’s dam ages are only $ 4,0 0 0 , then the claim m ust be dism issed for failure to meet the amount-in-controversy requirement of 28 U.S.C. § 1332. See W eber v. Lincoln Nat. Life Ins. Co., No. 13-31, 20 13 WL 5530 257, at *5 (E.D. Va. Oct. 2, 20 13), aff’d sub nom . W eber v. Oliver, 575 F. 65 66 67 R. Doc. 23 at 3. R. Doc. 64-4 at 2. R. Doc. 23 at 3. 30 App’x 162 (4th Cir. 20 14); 6 Wright & Miller, Federal Practice and Procedure § 1423 (3d ed. 20 16). A counterclaim is com pulsory if it “arises out of the transaction or occurrence that is the subject m atter of the opposing party’s claim and . . . does not require adding another party over whom the court cannot acquire jurisdiction.” Fed. R. Civ. P. 13(a). All counterclaim s that are not com pulsory are perm issive. Id. The Fifth Circuit has articulated a four-part test for determ ining whether a counterclaim is com pulsory: (1) whether the issues of fact and law raised by the claim and counterclaim largely are the same; (2) whether res judicata would bar a subsequent suit on defendant’s claim absent the com pulsory counterclaim rule; (3) whether substantially the same evidence will support or refute plaintiff’s claim as well as the defendant’s counterclaim ; and (4) whether there is any logical relationship between the claim and the counterclaim . An affirm ative answer to any of the four questions indicates the claim is com pulsory. Underw riters at Interest on Cover N ote JHB92M10 5820 79 v. N autronix, Ltd., 79 F.3d 480 , 483 n.2 (5th Cir. 1996). The Court concludes that under this test, IMSE’s counterclaim regarding UTB # 41440 is perm issive. The UTB # 41440 counterclaim involves issues of fact and law that are substantially different from those at issue in Legacy’s claim s against IMSE. Every other claim in this case raises issues of m isrepresentation and warranty surrounding the sale of the Legacy Server. This counterclaim , by contrast, concerns dam age to another boat, brokered by Hasselm an for 31 another buyer, that sim ply happened to be transported with the Legacy Server. The issues of fact at the core of the prim ary claim s—whether Legacy m isrepresented the Legacy Server—are irrelevant to the UTB # 41440 claim . Sim ilarly, all factual issues regarding the transportation of UTB # 41440 and the related agreement between Hasselm an, Costa Fortuna, and Legacy are irrelevant to the other claim s in this case. Because the claim s concern different facts, they require different evidence. Moreover, these factual and legal distinctions ensure that res judicata would not bar a later claim by IMSE for dam age to UTB # 41440 , see Ellis v. Am ex Life Ins. Co., 211 F.3d 935, 937 (5th Cir. 20 0 0 ) (describing res judicata test), and underm ine any contention that there is a “logical relationship” between the primary claims and this counterclaim . For these reasons, IMSE’s counterclaim concerning UTB # 41440 is perm issive, rather than com pulsory. Under 28 U.S.C. § 1332, this Court lacks jurisdiction over a perm issive counterclaim that does not m eet the am ount in controversy requirem ent. By Hasselm an’s own admission, the cost of repairing UTB # 41440 was only $ 4,0 0 0 . IMSE’s counterclaim for dam age to UTB # 41440 m ust therefore be dism issed. IV. CON CLU SION 32 For the reasons above, the Court DENIES Legacy’s m otion for sum m ary judgment on Nautim ill’s claim s for fraudulent m isrepresentation, negligent m isrepresentation, and redhibition. The Court GRANTS Legacy’s m otion for summ ary judgm ent on Nautim ill’s claim s for breach of the warranty of fitness for ordinary use and breach of contract. The Court DENIES Legacy’s m otion for summ ary judgment on IMSE and Hasselm an’s counterclaim s for lost com m ission on the sale of the Legacy Server. Finally, the Court dism isses IMSE and Hasselm an’s counterclaims regarding damage to UTB # 41440 for lack of jurisdiction, and therefore DENIES AS MOOT Legacy’s m otion for sum m ary judgment on the sam e claim. 7th New Orleans, Louisiana, this _ _ _ day of J uly, 20 16. ____________________________________ SARAH S. VANCE UNITED STATES DISTRICT J UDGE 33
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