Nat'l Liab. & Fire Ins. Co. v. Rick's Marine Corp.

• Decision Date: 17 May 2017
• Docket Number: Civil Action No. 15–6352(DRH)(ARL)
• Citation: 268 F.Supp.3d 371
• Parties: NATIONAL LIABILITY & FIRE INSURANCE CO., Plaintiff, v. RICK'S MARINE CORP. and Adam Weinstein, Defendants.
• Court: U.S. District Court — Eastern District of New York

268 F.Supp.3d 371

NATIONAL LIABILITY & FIRE INSURANCE CO., Plaintiff,

v.RICK'S MARINE CORP. and Adam Weinstein, Defendants.

Civil Action No. 15–6352(DRH)(ARL)

United States District Court, E.D. New York.

Signed May 17, 2017

For Plaintiff: Nicoletti Horning & Sweeney, Wall Street Plaza, 88 Pine Street, Seventh Floor, New York, New York 10005, By: John A.V. Nicoletti, Esq., William M. Fennell., Esq., Cali L. Eckler, Esq.

For Defendant Rick's Marine: Kennedy Lillis Schmidt & English, 75 Maiden Lane, Suite 402, New York, New York 10038, By: Craig S. English, Esq.

For Defendant Adam Weinstein : Rosenberg & Pittinsky, LLP, 232 Madison Avenue, Suite 906, New York, New York 10016, By: Laurence D. Pittinsky, Esq.

MEMORANDUM & ORDER

HURLEY, Senior District Judge:

Plaintiff National Liability & Fire Insurance Co. ("Plaintiff" or "National") commenced this action against defendants Rick's Marine Corp ("RMC") and Adam Weinstein ("Weinstein") pursuant to 28 U.S.C. § 1333 asserting claims against RMC for (1) a declaration pursuant to 46 U.S.C. § 31343 that RMC does not have a valid lien upon the vessel M/V Pelagic (the "Pelagic" or "Vessel"); (2) conversion; and (3) negligence. Its claims against Weinstein are for (1) breach of contract and (2) a declaratory judgment that National has no duty to indemnify or defend him against the foregoing breach of contract claim. Presently before the Court is Plaintiff's motion for summary judgment on its claim against RMC for wrongful conversion of the Vessel. For the reasons set forth below, the motion is denied.

BACKGROUND

The following facts are taken from the parties' Rule 56.1 statements and are undisputed as between National and RMC¹ unless otherwise noted.

Weinstein purchased the Vessel in or about mid-year 2014. National insured Weinstein for the Vessel pursuant to an insurance policy effective from June 19, 2014 to June 19, 2015. RMC performed certain work and repairs on the vessel at Weinstein's instructions and launched the Vessel during the afternoon of May 8, 2015. Subsequent to its launch but that same day, the Vessel sank alongside a dock at RMC. The Vessel was refloated and then brought ashore and placed in the marina at RMC.

National acquired title to the vessel when, on or about June 29, 2015, Weinstein executed a bill of sale to National as the purchaser and recorded the sale with the U.S. Coast Guard's National Vessel Documentation Center. National made several requests to RMC to allow it to take possession of the Vessel but RMC refused, asserting that there is an unpaid balance of $25,038.92 for storage and repairs of the Vessel, and has maintained possession of the Vessel. National assumes there is a balance owed to RMC for purposes of this motion.

The instant action was commenced on November 5, 2015. Although RMC commenced a third party action against the Vessel on March 4, 2016, it has not effected an arrest of the Vessel pursuant to Rules C and E of the Supplemental Rules for Admiralty or Maritime Claims. According to both its answer and the third-party complaint, at the time the Vessel sank, RMC had not been fully paid for the repair work it performed on the Vessel, which charges, together with accrued storage charges, remain outstanding despite demand for payment. RMC admits it has not filed a federal notice of lien against the Vessel but asserts that the filing of such a lien was neither possible nor required.

DISCUSSION

I. Standard: Motion for Summary Judgment

Summary judgment pursuant to Rule 56 is only appropriate where admissible evidence in the form of affidavits, deposition transcripts, or other documentation demonstrates the absence of a genuine issue of material fact, and one party's entitlement to judgment as a matter of law. See Viola v. Philips Med. Sys. of N. Am. , 42 F.3d 712, 716 (2d Cir. 1994). The relevant governing law in each case determines which facts are material; "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). No genuinely triable factual issue exists when the moving party demonstrates, on the basis of the pleadings and submitted evidence, and after drawing all inferences and resolving all ambiguities in favor of the non-movant, that no rational jury could find in the non-movant's favor. Chertkova v. Conn. Gen. Life Ins. Co. , 92 F.3d 81, 86 (2d Cir. 1996) (citing Fed. R. Civ. P. 56(c) ).

To defeat a summary judgment motion properly supported by affidavits, depositions, or other documentation, the non-movant must offer similar materials setting forth specific facts that show that there is a genuine issue of material fact to be tried. Rule v. Brine, Inc. , 85 F.3d 1002, 1011 (2d Cir. 1996). The non-movant must present more than a "scintilla of evidence," Delaware & Hudson Ry. Co. v. Consol. Rail Corp. , 902 F.2d 174, 178 (2d Cir. 1990) (quoting Anderson , 477 U.S. at 252, 106 S.Ct. 2505 ), or "some metaphysical doubt as to the material facts," Aslanidis v. U.S. Lines, Inc. , 7 F.3d 1067, 1072 (2d Cir. 1993) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586–87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ), and cannot rely on the allegations in his or her pleadings, conclusory statements, or on "mere assertions that affidavits supporting the motion are not credible." Gottlieb v. Cnty. of Orange , 84 F.3d 511, 518 (2d Cir. 1996) (internal citations omitted).

The district court, in considering a summary judgment motion, must also be "mindful of the underlying standards and burdens of proof," Pickett v. RTS Helicopter , 128 F.3d 925, 928 (5th Cir. 1997) (citing Anderson , 477 U.S. at 252, 106 S.Ct. 2505 ), because the evidentiary burdens that the respective parties will bear at trial guide district courts in their determination of summary judgment motions. Brady v. Town of Colchester , 863 F.2d 205, 211 (2d Cir. 1988).

II. The Parties' Contentions

As presented by the parties, the pivotal issue on this motion for summary judgment on National's conversion claim is whether RMC has any lien rights in the Vessel that would allow it to retain possession of the Vessel.

National answers that question in the negative, making several arguments in support thereof. First, to the extent that RMC has a maritime lien, the relevant federal maritime statute does not confer the right of self-help enforcement and any such lien cannot be enforced because a notice of lien was not recorded. Second, to the extent that RMC relies upon New York Lien Law § 184, federal maritime law is the exclusive remedy to enforce liens and preempts state law.

RMC responds that (1) the existence of a federal mechanism by which a lienholder may perfect and assert a maritime lien against a vessel in rem does not invalidate a state possessory lien on the same vessel; (2) the preemption language of 26 U.S.C. § 31307 is limited in that it only prevents state laws from creating actions against vessels as juridical persons in rem, which N.Y. Lien Law § 184 does not create, and therefore its retention of the Vessel pursuant to the Lien Law is not a conversion; and (3) under federal maritime law liens for necessaries are not required to be filed.

The Court will begin with a brief discussion of the law of conversion and the relevant statutes.

III. Conversion

"A conversion takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person's right of possession." Colavito v. New York Organ Donor Network, Inc. , 8 N.Y.3d 43, 49–50, 827 N.Y.S.2d 96, 860 N.E.2d 713 (2006) : accord Alzheimer's Disease Res. Ctr., Inc. v. Alzheimer's Disease & Related Disorders Ass'n, Inc. , 981 F.Supp.2d 153, 163 (E.D.N.Y. 2013) ("[A] plaintiff must allege: (1) the property subject to conversion is a specific identifiable thing; (2) plaintiff had ownership, possession or control over the property before its conversion; and (3) defendant exercised an unauthorized dominion over the thing in question ... to the exclusion of the plaintiff's rights." (internal quotation marks omitted)). "Two key elements of conversion are (1) plaintiff's possessory right or interest in the property and (2) defendant's dominion over the property or interference with it, in derogation of plaintiff's right." Id. at 50, 827 N.Y.S.2d 96, 860 N.E.2d 713 (citations omitted). To prevail on its conversion claim, National must establish that RMC " ‘exercised an unauthorized dominion over the [Vessel] to the exclusion of [National's] rights.’ " TAP Manutencao e Engenharia Brasil S.A. v. Int'l Aerospace Group, Corp. , 127 F.Supp.3d 202, 210 (S.D.N.Y. 2015) ; see English v. Lattanzi , 2015 WL 5038315, *7 (E.D.N.Y. Aug. 26, 2015) (denying summary judgment on conversion claim where there was a question of fact as to whether defendant exercised "unauthorized" dominion over property in question). "Consent and taking pursuant to legal process or valid court order, are both recognized justifications in conversion, as are public and private necessity, ... the right of distraint and many others." 2A N.Y. Pattern Jury Instructions 3:10 at p. 122 (2017) (citing cases). Additionally, "[o]ne entitled to the immediate possession of a chattel is not liable to another for dispossessing him of it." Restatement of the Law—Torts § 272 (1965).

"Where the original possession is lawful, a conversion does not occur until after a demand and refusal to return the property." D'Amico v. First Union Bank , 285 A.D.2d 166, 172, 728 N.Y.S.2d 146 (1st Dept. 2001) (citing MacDonnell v. Buffalo Loan, Trust & Safe Deposit Co. , 193 N.Y. 92, 85 N.E. 801 (1908) ). "The refusal that will turn lawful possession into conversion must, however, be absolute. If it be qualified and the qualification is reasonable, made in good faith and communicated to the owner, there is no conversion." 2A N.Y....