My v. H&R Marine Eng'g, Inc.

• Decision Date: 11 June 2021
• Docket Number: Case No. 19-61946-CIV-ALTMAN
• Parties: MY. P.I.I. LLC, Plaintiff, v. H&R MARINE ENGINEERING, INC. and K&G Marine, LLC, Defendants.
• Court: U.S. District Court — Southern District of Florida

544 F.Supp.3d 1334

MY. P.I.I. LLC, Plaintiff,

v.H&R MARINE ENGINEERING, INC. and K&G Marine, LLC, Defendants.

Case No. 19-61946-CIV-ALTMAN

United States District Court, S.D. Florida.

Signed June 11, 2021

Filed June 14, 2021

Robert Dewitt McIntosh, McIntosh Schwartz, P.L., Adam B. Cooke, Fowler White Burnett, P.A., Fort Lauderdale, FL, John L. DeMarco, Pro Hac Vice, The Demarco Law Group PLLC, Rochester, NY, for Plaintiff.

Richard James McAlpin, Walter Cooper Jarnagin, McAlpin & Conroy PA, Miami, FL, Christine Carmela Freer, Galloway, Johnson, Tompkins, Burr & Smith, APLC, Fort Lauderdale, FL, for Defendant H&R Marine Engineering, Inc.

Michael Damian Ruel, Christine Carmela Freer, Galloway, Johnson, Tompkins, Burr & Smith, APLC, Fort Lauderdale, FL, J. Michael Grimley, Jr., Galloway, Johnson, Tompkins, Burr & Smith, P.L.C., Tampa, FL, for Defendant K&G Marine, LLC.

ORDER ¹

ROY K. ALTMAN, UNITED STATES DISTRICT JUDGE

The Plaintiff hired H&R to perform necessary maintenance and repairs on the Plaintiff's yacht. H&R, in turn, subcontracted with K&G to assist with those repairs. Unfortunately, while K&G was doing its work, one of the yacht's propeller shafts was damaged. The Plaintiff sued H&R and K&G² in admiralty, seeking (among other things) both the loss of its charter income and reimbursement for the wages it paid the crew during the yacht's detention. The Defendants now move for partial summary judgment as to those two kinds of damages—even as they concede that the Plaintiff's remaining damages claims (for the yacht's deterioration and the insurance deductible) should proceed to trial. Because we agree that awarding the Plaintiff both its lost income and its expenses would result in an unfair windfall, we grant the Defendants’ motion for judgment on the wages claim. But the Plaintiff has adduced just enough evidence for its lost-income claim—and so, that portion of its damages case survives.

THE FACTS ³

The Plaintiff ("PII")⁴ owns the M/Y Pure Insanity⁵ —a motor yacht registered with the U.S. Coast Guard as a recreational vessel, See Plaintiff's SOF [ECF No. 113] ¶¶ 1–2, and endorsed for "coastwise trade," Certificate of Documentation [ECF No. 105-1] at 1. PII has only one member—James Leonardo. See id. ¶¶ 8–12. Leonardo also owns RES Exhibit Services, LLC ("RES"), which has chartered the Vessel over the years. See id. In other words, Leonardo owns two LLCs—the one that owns the Yacht ("PII") and a second that regularly charters it. See id.

Leonardo formed PII in 2012. See id. ¶ 16; Defendants’ SOF ¶ 16. Around 2015, Leonardo began funding PII through RES. The funding worked something like this: RES would transfer money to Leonardo's personal bank account, and Leonardo would send that money to PII. See Plaintiff's SOF ¶ 28. Eventually, RES began funding PII directly—depositing funds from its bank account into PII's rather than using Leonardo's personal bank account as a go-between. Id. In this way, RES funded—and continues to fund—PII's operating expenses. Id. ¶ 34; Leonardo 10/20/2020 Cont'd Depo. [ECF No. 127-1] at 53:13–54:6 ("Q: At the end of the day, if I'm understanding this, the expenses incurred by MY. P.I.I. are paid by RES, correct, all expenses? A: Correct.... Q: But all of the crew wages are paid by RES, correct? A: No. They're paid from M.Y. P.I. The money is transferred from RES to MY. P.I."). PII credits the revenues it earns from RES's Pure Insanity charters towards the operating expenses RES remits to PII. See Plaintiffs’ SOF ¶¶ 28–29, 34.

RES and PII also share an accountant—Jeffrey Jacobson, RES's Vice President of Finance. See id. ¶¶ 27, 31. Jacobson, along with several other RES employees, prepares and manages PII's General Ledger. See id. ¶ 31. When RES charters the Vessel, RES treats the charter costs as an expense, and PII registers the same amount as revenue. See id. ¶ 29. PII's General Ledger describes its charter income as "Due to/from Jim Leonardo." Id. ¶ 30. From 2014 through 2018, the Plaintiff chartered the Yacht approximately five to eleven weeks each year at a daily charter rate of $12,857.14. Id. ¶¶ 22, 34.

But PII doesn't offer the Pure Insanity to the general public. Leonardo 4/27/2020 Depo., Ex. 2 [ECF No. 105-2] at 124:8–9 ("A: I don't typically do charter activity with just random people."). Instead, to defray some of the Yacht's costs, PII charters it to Leonardo's friends, acquaintances, and business associates. Id. at 124:9–17 ("A: This [chartering] was a move to substantiate some of the cost and sustain some of the costs overall with it. The bottom line is, seeing that the yacht hadn't been used in that time, it was like, all right, let's take up a charter on it and see if we can create some of the revenue. We didn't do it with the general public. We do it through the—no different than I did with IGI.").⁶

In 2018, while aboard the Pure Insanity, AJ Nassar—Leonardo's business acquaintance—told Leonardo that he wanted to charter a yacht from May 25 to June 4, 2019, and he asked Leonardo how much the Pure Insanity would cost. Id. at 111:3–112:11, 119:18–120:2. Leonardo sent Nassar a one-page proposal for those dates, which included the Yacht's daily charter rate. Id. at 112:9–114:2, 123:5–10 ("Q: [I]n response to oral conversations that you had with Mr. Nassar when he expresses an interest in chartering the Pure Insanity, you send him a one-page proposal towards the end of 2018, correct? A: Correct.").

In 2019—after Nassar had expressed interest in chartering the Pure Insanity—PII hired H&R to perform whatever maintenance might be necessary for the Vessel's five-year American Bureau of Shipping ("ABS") inspection (sort of like your car's registration) and to conduct any needed repairs to the running gear (which includes the Yacht's propellers, shafts, couplings, rudders, and cutlass bearings). See Plaintiff's SOF ¶ 3; see also Am. Compl. [ECF No. 22] ¶ 8. While H&R was removing the Vessel's port coupler—an essential link between a yacht's propeller shaft, its transmission, and its engine—H&R breached the coupler's seal. See Plaintiff's SOF ¶¶ 4–5. Because of the breach, the coupler could no longer maintain the pressure that's required to remove it from the propeller shaft's sleeve. See id. ; Defendants’ SOF ¶ 5. Looking to remedy the problem, H&R hired K&G to cut the port coupler—to the sleeve—so that H&R could then remove it. Defendants’ SOF ¶¶ 5–8; Plaintiff's SOF ¶¶ 5–8. In the process of cutting the port coupler, however, K&G (accidentally) penetrated the port coupler's sleeve and cut into the port propeller shaft itself—a cut that required further repairs. See Plaintiff's SOF ¶¶ 5–8. As a result, for the next six-and-a-half months,⁷ from the date of the accident—March 11, 2019, See Defendants’ SOF ¶ 7—through approximately September 30, 2019, the Vessel underwent repairs "on the hard"—that is, out of the water, See Leonardo 4/27/2020 Depo. at 123:12–19 ("A: Okay, at that time we thought it was going to be five weeks or six weeks. It turned into five or six months.").⁸ And, of course, since the Yacht wasn't operational, Nassar wound up chartering a different vessel. See, e.g. , id. at 120:22–25 ("A: ... the bottom line is they ended up using another vessel[.]"), 126:25–127:9.

In its Amended Complaint, PII asserts six causes of action: breach of contract against H&R (Count I); breach of implied warranty against H&R (Count II); negligent supervision against H&R (Count III); breach of third-party beneficiary contract against K&G (Count IV); breach of implied warranty against K&G (Count V); and negligence against K&G (Count VI). See Am. Compl. ¶¶ 16–44. As redress, PII asks for several things: (1) lost charter income; (2) reimbursement for the crew's wages; (3) compensation for damages to the boat (including ultraviolet degradation); and (4) its insurance policy's deductible. See id. At issue here are the first two of these claims: lost income and crew wages. The Defendants have jointly moved for partial summary judgment, arguing that the Plaintiff isn't entitled to either. See Defendants’ Motion for Summary Judgment ("Motion") [ECF No. 105] at 2.⁹ This Order follows.

THE LAW

Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). "By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue of fact is "material" if it might affect the outcome of the case under the governing law. Id. at 248, 106 S.Ct. 2505. A dispute about a material fact is "genuine" if the evidence could lead a reasonable jury to find for the non-moving party. Id. "The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff." Id. at 252, 106 S.Ct. 2505.

At summary judgment, the moving party bears the initial burden of "showing the absence of a genuine issue as to any material fact." Allen v. Tyson Foods, Inc. , 121 F.3d 642, 646 (11th Cir. 1997) ; see also Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ("[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact."). Once the moving party satisfies its initial burden, the burden then shifts to the non-moving party to "come forward with specific facts showing there is a genuine issue for trial." See Bailey v. Allgas, Inc. , 284 F.3d 1237, 1243 (11th Cir. 2002) (emphasis omitted) (q...