Gorman v. Rocky Pointe Marina Portland, LLC et al, No. 3:2011cv00413 - Document 67 (D. Or. 2012)
Court Description: OPINION AND ORDER: A&D's Motion for Partial Summary Judgment 40 is DENIED. Gorman's Cross Motion for Partial Summary Judgment 45 is DENIED. Signed on 6/27/12 by Magistrate Judge Dennis J. Hubel. (kb)
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1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 DISTRICT OF OREGON 9 PORTLAND DIVISION 10 11 TOM GORMAN, an individual, 12 13 Plaintiff, vs. 14 ROCKY POINTE MARINA PORTLAND, LLC, an Oregon limited liability 15 company, and A&D YACHT SERVICE, LLC, an Oregon limited liability 16 company, 17 Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) 18 ROCKY POINTE MARINA PORTLAND, 19 LLC, an Oregon limited liability company, 20 Third-Party Plaintiff, 21 v. 22 ANDREW BROWN, an individual, 23 Third-Party Defendant. 24 25 Stephen C. Thompson KIRKLIN THOMPSON & POPE LLP 26 522 SW Fifth Avenue, Suite 1100 Portland, OR 97204 27 Attorney for Plaintiff 28 1 - OPINION AND ORDER ) ) ) ) ) ) ) ) ) ) ) 03:11-cv-00413-HU OPINION AND ORDER 1 Thomas E. McDermott James P. McCurdy 2 LINDSAY HART NEIL & WEIGLER, LLP 1300 SW Fifth Avenue, Suite 3400 3 Portland, OR 97201-5640 4 Attorneys for Defendant Rocky Pointe Marina Portland, LLC 5 Thomas G. Waller 6 BAUER MOYNIHAN & JOHNSON LLP 2101 Fourth Avenue, Suite 2400 7 Seattle, WA 98121-2320 8 Attorney for Defendant A&D Yacht Service, LLC & Third-Party Defendant Andrew Brown 9 HUBEL, J., 10 This case involves a dispute between a shipowner, Tom Gorman 11 ( Gorman ), and two shipyards, Rocky Pointe Marina Portland, LLC 12 ( Rocky Pointe ) and A&D Yacht Service, LLC ( A&D ) (collectively, 13 Defendants ), over repairs to a vessel, the DELPHINUS. Gorman s 14 complaint, filed on April 1, 2011, invokes this court s admiralty 15 jurisdiction, 28 U.S.C. § 1333(1), and asserts claims against 16 Defendants for breach of the warranty of workmanlike service and 17 negligence. 18 Now pending are A&D s motion for partial summary judgment and 19 Gorman s cross-motion for partial summary judgment pursuant to 20 Federal Rule of Civil Procedure ( Rule ) 56(c). A&D and Gorman 21 seek a determination as to the scope of damages, but have reserved 22 the issue of liability for trial.1 For the reasons set forth 23 below, A&D s motion (Docket No. 40) for partial summary judgment is 24 DENIED and Gorman s cross-motion (Docket No. 45) for partial 25 summary judgment is DENIED. 26 27 1 The parties have given full consent to adjudication of the 28 case by a magistrate judge pursuant to 28 U.S.C. § 636(c). 2 - OPINION AND ORDER I. 1 2 BACKGROUND In June of 2006, Gorman purchased the DELPHINUS, a 1977 Hans 3 Christian 34 Cutter auxiliary cruising sailboat, for $67,000. In 4 September of 2006, Gorman and Rocky Pointe entered into an oral 5 repair agreement whereby Rocky Pointe would make significant 6 repairs on the DELPHINUS, such as replacing the decks, salon, 7 wiring and breakers; removing moisture from the deck coring; and 8 installing a new bilge pump.2 Between September 2006 and April 9 2008, Rocky Pointe undertook $138,327.02 worth of repairs to the 10 DELPHINUS, which was located at Rocky Pointe Marina for the 11 duration of the repairs. 12 Upon completion in April 2008, Rocky Pointe delivered the 13 DELPHINUS to Gorman, who transported it to Swantown Marina in 14 Olympia, Washington. Gorman noticed cracking in the fiberglass 15 deck laminate and water entering through the scuppers during the 16 summer of 2008. The cracks in the fiberglass laminate, which was 17 applied to the outer deck of the DELPHINUS as part of the repair 18 work performed by Rocky Pointe, allowed water to penetrate behind 19 the floorboards resulting in premature rotting of the wood.3 20 21 22 23 24 25 2 According to A&D s counsel, [t]here is a dispute as to the nature and scope of the relationship between [Rocky Pointe] and A&D . . . as to which of the defendants contracted with plaintiff. [However,] [t]he dispute is unrelated and immaterial to [A&D] s motion. (A&D s Mot. Partial Summ. J. at 2.) Based on the record before me, it appears that both A&D Yacht and Rocky Pointe may have provided laborers to repair the DELPHINUS. (See Waller Decl. Ex. D at 11) ( We surmise from documents received that A&D Yacht was able to provide one skilled laborer for the duration, with an added helper assigned near the end of the [DELPHINUS] project. ) 26 3 A&D s counsel cites, among other things, page 13 of Exhibit 27 B to the Declaration of Thomas Waller in support of his claims that: (1) Gorman made no effort to cover the boat or otherwise 28 protect it from the elements ; (2) when the DELPHINUS was not in 3 - OPINION AND ORDER II. 1 2 LEGAL STANDARD Summary judgment is appropriate if pleadings, the discovery 3 and disclosure materials on file, and any affidavits show that 4 there is no genuine issue as to any material fact and that the 5 movant is entitled to judgment as a matter of law. FED. R. CIV. 6 P. 56(c). Summary judgment is not proper if factual issues exist 7 for trial. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 8 1995). 9 The moving party has the burden of establishing the absence of 10 a genuine issue of material fact. 11 U.S. 317, 323 (1986). Celotex Corp. v. Catrett, 477 If the moving party shows the absence of a 12 genuine issue of material fact, the nonmoving party must go beyond 13 the pleadings and identify facts which show a genuine issue for 14 trial. Id. at 324. A nonmoving party cannot defeat summary 15 judgment by relying on the allegations in the complaint, or with 16 unsupported conjecture or conclusory statements. Hernandez v. 17 18 use, it was kept in open moorage (without shelter, tarping, or covering) Marina ; and 19 otherelements, at Swantown mooring the (3) constant exposure to the such as boat without a cover, exponentially increased the amount of water damage to the 20 DELPHINUS. (A&D s Mot. Partial Summ. J. at 3.) However, Exhibit B 21 is only 5 pages long and makes no mention of Gorman s efforts to keep the DELPHINUS protected from the elements. Perhaps A&D s 22 counsel meant to refer to page 13 of Exhibit D which indicates the DELPHINUS was not covered [a]t the time of this survey, i.e., 23 October 11, 2011. (Waller Decl. Ex. D at 13.) But even so, Exhibit D does not support the representations made by A&D s counsel 24 regarding the extent to which Gorman does, or does not, cover his boat while it is moored. In fact, in his declaration, Gorman 25 states, I have always moored the boat with fitted tarps in place since I received it in April 2008. (Gorman Decl. ¶ 7.) On 26 October 11, 2011, Mr. Wienke and lawyers for defendants came to inspect the boat as part of this litigation. The inspection was 27 scheduled to begin at 10:00 am. Mr. Wieneke and the lawyers were late in arriving by 15 to 20 minutes. By the time of their arrival, 28 I had removed and stored all the tarping. (Id. ¶ 8.) 4 - OPINION AND ORDER 1 Spacelabs Medical, Inc., 343 F.3d 1107, 1112 (9th Cir. 2003). Thus, 2 summary judgment should be entered against a party who fails to 3 make a showing sufficient to establish the existence of an element 4 essential to that party s case, and on which that party will bear 5 the burden of proof at trial. 6 Celotex, 477 U.S. at 322. The court must view the evidence in the light most favorable 7 to the nonmoving party. Bell v. Cameron Meadows Land Co., 669 F.2d 8 1278, 1284 (9th Cir. 1982). All reasonable doubt as to the 9 existence of a genuine issue of fact should be resolved against the 10 moving party. Hector v. Wiens, 533 F.2d 429, 432 (9th Cir. 1976). 11 Where different ultimate inferences may be drawn, summary judgment 12 is inappropriate. Sankovick v. Life Ins. Co. of N. Am., 638 F.2d 13 136, 140 (9th Cir. 1981). 14 However, deference to the nonmoving party has limits. The 15 nonmoving party must set forth specific facts showing a genuine 16 issue for trial. FED. R. CIV. P. 56(e). The mere existence of 17 a scintilla of evidence in support of plaintiff s positions [is] 18 insufficient. 19 (1986). Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 Therefore, where the record taken as a whole could not 20 lead a rational trier of fact to find for the nonmoving party, 21 there is no genuine issue for trial. Matsushita Elec. Indus. Co., 22 Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (internal 23 quotation marks omitted). III. 24 25 DISCUSSION I turn now to the only issue raised by Gorman and A&D s 26 motions: Is Gorman s recovery limited to the fair market value of 27 the DELPHINUS at the time of the alleged loss less any residual 28 salvage value? 5 - OPINION AND ORDER 1 A&D argues that where, as here, a vessel is considered a 2 constructive total loss -- when the costs of repairing the ship 3 exceeds its fair market value -- damages are measured by the value 4 of the vessel at the time loss minus its salvage value. Based on 5 a June 2006 condition and valuation survey conducted at Gorman s 6 request, A&D asserts that the fair market value of the DELPHINUS at 7 the time of the loss was $68,000, while the current costs estimate 8 to make full repairs to the DELPHINUS as they relate to damage 9 caused by poor workmanship and related effects would be $68,600.4 10 (Waller Decl. Ex. D at 13.) Because the value of the DELPHINUS is 11 less than the cost of repairs, A&D contends the vessel is a 12 constructive total loss and Gorman s damages should be capped at 13 the value of the DELPHINUS at the time of the loss ($68,000) less 14 any residual salvage value. 15 In support of its position, A&D relies almost exclusively on 16 McCutcheon v. Charleston Boatworks, Inc., No. 2:07-cv-4079, 2010 WL 17 2431017 (D.S.C. June 14, 2010). There, a vessel was delivered to 18 defendant s boatyard for the swim platform to be repaired and cleat 19 replaced. Id. at *1. Following completion of the repairs, the 20 vessel began taking on water because defendant failed to properly 21 adjust the stuffing boxes and failed to charge the bilge pump 22 batteries before delivering the vessel back to plaintiff s slip. 23 Id. In her complaint, plaintiff asserted causes of action for 24 breach of bailment duty and negligence. Id. at *4. After the 25 26 4 This estimate was provided by Kuhrt Wieneke ( Wieneke ), a 27 marine surveyor who was retained by A&D to board and inspect the DELPHINUS in order to provide an opinion as to the scope of 28 damages. 6 - OPINION AND ORDER 1 matter was tried without a jury, the McCutcheon court concluded 2 plaintiff was entitled to recover the vessel s pre-loss value 3 ($60,000) minus its post-loss value ($20,000) plus $4,935 for the 4 pumping and towing of the vessel after submersion, for a total of 5 $44,935 in damages. Id. at *5. Defendant also asserted 6 counterclaims against plaintiff for its storage of the vessel at 7 its boatyard following submersion ($4,540) and for the costs of 8 post-submersion repairs ($11,300); however, the McCutcheon court 9 determined the counterclaims lacked merit because defendant refused 10 to release the vessel based on plaintiff s refusal to pay for 11 defendant s unauthorized post-submersion repairs (i.e., the repairs 12 necessitated by defendant s failure to properly adjust the vessel s 13 stuffing boxes and charge the bilge pump batteries). Id. 14 McCutcheon provides little, if any, guidance here. In 15 ascertaining the fair market value of the vessel in McCutcheon, the 16 court had the benefit of being provided listings of similar 17 vessels on the U.S. East Coast market[.] 18 2431017, at *3. McCutcheon, 2010 WL This record does not have comparable listings. It 19 might be wise to investigate whether any vessels comparable to the 20 DELPHINUS exist in the marketplace. (See Mot. Partial Summ. J. 21 Hr g Tr. 36) (indicating that counsel was not sure whether such a 22 boat exists. ) Additionally, although it appears that the 23 plaintiff in McCutcheon paid for the pre-submersion repairs to the 24 vessel, and was spared with respect to post-submersion repairs 25 performed by defendant without her authorization, the McCutcheon 26 decision does not address which party would have been required to 27 bear the post-submersion costs if defendant had in fact received 28 authorization from 7 - OPINION AND ORDER plaintiff. Moreover, the plaintiff in 1 McCutcheon was able to sell her boat for $20,000 (i.e., it had a 2 post-loss value). By contrast, Gorman s counsel claims it may cost 3 his client $30,000 just to dispose of the DELPHINUS in an 4 environmentally safe manner . . . [because] you can t simply take 5 hulls and leave them on a sand bar anymore. (Hr g Tr. 36.) 6 In the alternative, A&D argues that, even if Gorman has 7 alleged a contract claim, which he did not, he would only be 8 entitled to recover his expectation interest. See Marine Overseas 9 Servs., Inc. v. Crossocean Shipping Co., 791 F.2d 1227, 1234 (5th 10 Cir. 1986) (noting the basic proposition that the measure of 11 contract damages is based on the injured party s expectation 12 interest. 13 (1981))).5 (citing Restatement (Second) of Contracts § 347 A&D s counsel claims Gorman s expectation interest is 14 a 30 year old boat purchased for $67,000 (its FMV) in the condition 15 it would have been had the contract not (allegedly) been breached. 16 (A&D s Mot. Partial Summ. J. at 8.) 17 Gorman counters by arguing that the caselaw upon which A&D 18 relies - collision or mishap cases where the tort measure of 19 damages is applied when two parties unknown to each other come into 20 contact and one comes away damaged - is inapposite.6 Gorman 21 5 In fact, in his reply memorandum, A&D s counsel go so far as to say that Gorman never pled a breach of contract claim and that 23 the words breach and contract appear nowhere in the complaint, despite (1) Gorman s complaint bearing the caption COMPLAINT24 CLAIM IN ADMIRALTY FOR BREACH OF THE WARRANTY OF WORKMANLIKE PERFORMANCE. . . ; and (2) A&D s counsel s prior concession that 25 Gorman appears to allege breach of warranty of workmanlike service. (A&D s Mot. Partial Summ. J. at 6.) 26 6 Although Gorman seems to concede that McCutcheon is not a 27 collision or mishap case, he nevertheless argues that A&D s counsel reliance on McCutcheon is misplaced because the court actually 28 applied a consequential (i.e contractual) measure of damages. 22 8 - OPINION AND ORDER 1 contends this case involves his claims for breach of Defendants 2 duties while under contract to effect workmanlike repairs to his 3 boat. As Gorman points out, a shipowner has a maritime cause of 4 action in tort for the negligent performance of a maritime contract 5 or in contract for breach of warranty of workmanlike service. Alcoa 6 S.S. Co. v. Charles Ferran & Co., 383 F.2d 46, 50 (5th Cir. 1967); 7 see also Midwest Marine, Inc. v. Sturgeon Bay Shipbuilding and Dry 8 Dock Co., 247 F. Supp. 283, 284 (E.D. Wisc. 1965) (indicating that 9 an oral contract for repair of a vessel gives rise to an implied 10 warranty of workmanlike service). 11 With respect to damages based on A&D s alleged breach of its 12 warranty of workmanlike service, Gorman draws the court s attention 13 to Todd Shipyards Corp. v. Turbine Serv., Inc., 674 F.2d 401 (5th 14 Cir. 1982). In Todd, the Court of Appeals for the Fifth Circuit 15 recognized that 16 17 18 19 20 21 22 23 24 25 a shipowner has a maritime cause of action whether he sues in contract for its breach by a person with whom there was a contract for repairs of the vessel, or in tort for the negligent performance of the maritime contract. . . . [The] tort measure of damages is applied in classic cases when two parties unknown to each other come into contact and one comes away damaged, such as collision cases and other maritime torts. [In this case, however, defendant] breached its contract to repair the [vessel s low pressure] turbine and this fact permits the adoption of a different measure of damages. It is too well settled to require citation of authorities that damages awarded for breach of contract should return the party to the position he would have occupied had the contract not been violated. [Plaintiff is] entitled to have the [low pressure] turbine in the condition contracted for, and to recover as well for loss of use of the vessel, out-of-pocket expenses, and (since defendants breached warranties of workmanlike performance) costs and attorneys fees. 26 Todd, 674 F.2d at 412. 27 28 (Pl. s Reply at 3.) 9 - OPINION AND ORDER 1 The Todd court, according to Gorman, also rejected the very 2 argument that A&D now makes regarding whether Gorman s damages 3 should be limited since the DELPHINUS is allegedly a constructive 4 total loss, stating: 5 6 7 8 9 The defendants next insist that since the cost of repairing the damages caused by the defendants exceeded the market value of the vessel in her condition prior to the casualty, the vessel was a constructive total loss and recoverable damages are limited to the value of the vessel in her damaged condition. . . . Further discussion of the defendants constructive total loss argument, would serve no useful purpose however, because it ignores the fact that the district court properly applied a contractual rather than a tort measure of damages. 10 Id. at 415. Based on these excerpts from Todd, Gorman claims he 11 can recover the cost of new repairs designed to bring the boat to 12 where she should have been, regardless of their amount relative to 13 the boat s previous fair market value, or, alternatively, if the 14 DELPHINUS is so far gone that repairs are pointless, then Gorman 15 says he is entitled to his cost in the now lost boat, plus 16 disgorgement of all sums he paid [D]efendants for the failed 17 repairs. (Pl. s Opp n at 9.) 18 To begin, I note that Gorman s counsel concedes that his 19 cross motion for summary judgment should be denied. (See Hr g Tr. 20 44) ( I don t think you can grant my motion, and frankly, I don t 21 think you should. ) In any event, it is not seriously disputed 22 whether Gorman, assuming he proves liability, would be entitled to 23 be placed in the position he would have occupied had the alleged 24 breach not occurred. A&D s counsel concedes as much. (See A&D s 25 Reply at 3) ( In the event he proves liability, plaintiff would be 26 entitled only to be placed in the position he would [have] occupied 27 had the alleged breach . . . not occurred. ) 28 10 - OPINION AND ORDER 1 Questions of fact remain as to the measure of damages. For 2 example, A&D s counsel has put forth evidence suggesting that the 3 current estimate to make full repairs to the DELPHINUS as they 4 relate to damage caused by poor workmanship and related effects 5 would be $68,600. By contrast, Pettit Marine LLC s owner, Walter 6 Pettit ( Pettit ), emailed Gorman and his counsel on March 5, 2012, 7 indicating that he reviewed A&D s surveyor s December 2011 repair 8 estimate and made the following determinations: (1) [i]t is 9 impractical to determine the amount of water damage caused by 10 improper . . . repairs without knowledge of [the] vessel interior 11 condition prior to current water damage ; (2) A&D s estimate is 12 not conclusive based on estimating water damage . . . [which] can 13 only be estimated by a proper open and inspection ; and (3) repairs 14 could costs anywhere between $138,894 and $166,730. 15 Ex. I.) 16 uncommon (Waller Decl. As the marine surveyor retained by A&D admits, it is not for shipyard repairs to climb far above initial 17 estimates . . . due to the nature of ship repair in that a large 18 portion of necessary repairs cannot be accurately estimated from 19 surface inspection. 20 (Waller Decl. Ex. D at 11.) Cascadia Lumber Co. v. Double T. Indus., Inc., 162 F. Supp. 21 478 (D. Or. 1958), should provide some helpful insight for the 22 parties trial preparation on the measure of damages. In Cascadia, 23 a barge owner sued a repairman for the loss of his barge, which 24 sunk during the course of repairs. Id. at 479. One of the 25 primary questions presented to this court was: [W]hat are [the] 26 libelant s damages? Id. at 480. After noting that the measure of 27 damages advocated by the parties were equally absurd, Judge East 28 determined that the measure of damage in a case involving a unique 11 - OPINION AND ORDER 1 vessel should be based upon a logical formula which takes into 2 consideration the fair reasonable cost of a comparable vessel with 3 comparable characteristics. Id. He also found the repairmen 4 liable for the barge owner s claim for salvage service. Id. at 5 481. 6 In summary, I intend on employing an approach similar to Judge 7 East in Cascadia, but there are questions of fact regarding what 8 sum of money would, to the extent possible, put Gorman in as good 9 a position as he would have been in had the contract not been 10 breached. It may well be appropriate to consider the value of a 11 vessel properly repaired by Defendants would have had (if there is 12 any liability for faulty workmanship), or perhaps if there is no 13 comparable vessel to consider in that way, the parties may have 14 to focus on the vessel s value before repairs, the money paid for 15 the repairs, and perhaps the fair salvage costs if the vessel is 16 now worthless. The measure of damages will await the evidence at 17 trial. IV. 18 19 CONCLUSION For the reasons set forth below, A&D s motion (Docket No. 40) 20 for partial summary judgment is DENIED and Gorman s cross-motion 21 (Docket No. 45) for partial summary judgment is DENIED. 22 IT IS SO ORDERED. 23 Dated this 27th day of June, 2012. 24 /s/ Dennis J. Hubel 25 ________________________________ 26 Dennis James Hubel Unites States Magistrate Judge 27 28 12 - OPINION AND ORDER
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