Star & Crescent Boat Co. v. Sunsplash Marina LLC (In re Star & Crescent Boat Co.)

Citation549 F.Supp.3d 1145
Decision Date14 July 2021
Docket NumberCase No.: 3:21-cv-00169-BEN-JLB
Parties In the MATTER OF the Complaint of STAR & CRESCENT BOAT COMPANY, INC., as owner of the Motor Vessel M/V PATRIOT, U.S. Coast Guard Official No. 1246882, and her engines, equipment, tackle, apparel, appurtenances, etc., for Exoneration from or Limitation of Liability, Star & Crescent Boat Company, Inc. dba Flagship Cruises & Events, Plaintiff, v. Sunsplash Marina LLC, a New Jersey Limited Liability Company; Ocean Rockets, Inc., a New Jersey Corporation; H.O. Bostrom Company, Inc., a Wisconsin Corporation; Seatbeltplanet.com, LLC, an Oklahoma Limited Liability Company, Defendants.
CourtUnited States District Courts. 9th Circuit. United States District Court (Southern District of California)

Jonathan Will Thames, Anna Gourgiotopoulou, Kennedys CMK LLP, San Francisco, CA, for Plaintiff.

Charles A. Phillips, Grimm, Vranjes Greer LLP, San Diego, CA, for Defendant H.O. Bostrom Company, Inc.

Marty B. Ready, Wilson, Elser, Moskowitz, Edelman & Dicker LLP, San Diego, CA, Meagon R. Eagon, Pro Hac Vice, Michael D. Duncan, Pro Hac Vice, Chubbuck Duncan & Robey, P.C., Oklahoma City, OK, for Defendant Seatbeltplanet.com, LLC.

ORDER GRANTING MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION OF DEFENDANTS SUNSPLASH MARINA, LLA AND OCEAN ROCKETS, INC.

ROGER T. BENITEZ, United States District Judge

I. INTRODUCTION

Plaintiff in Limitation Star & Crescent Boat Company, Inc. dba Flagship Cruises & Events ("Plaintiff in Limitation"), as owner of the Motor Vessel PATRIOT, U.S. Coast Guard Official No. 124682, and her engines, equipment, tackle, apparel, appurtenances, etc. (the "Vessel"), brings this admiralty action pursuant to 46 U.S.C. § 30501 et seq. , the Shipowners’ Limitation of Liability Act (the "Limitation Act"), for exoneration from or limitation of liability against Defendants1 Sunsplash Marina, LLC, a New Jersey limited liability company ("Sunsplash"); Ocean Rockets, Inc., a New Jersey corporation ("Ocean Rockets"); H.O. Bostrom Company, Inc., a Wisconsin corporation ("H.O. Bostrom"); and Seatbeltplanet.com, LLC, an Oklahoma limited liability company ("Sealbeltplanet.com") (collectively, "Defendants"). Complaint, ECF No. 1 ("Compl.") at 2.2

Before the Court is the Motion to Dismiss for Lack of Personal Jurisdiction of Defendants Sunsplash and Ocean Rockets ("Movants") brought pursuant to Rules 12(b)(2) and (3) of the Federal Rules of Civil Procedure (the "Motion"). Motion, ECF No. 31-1 ("Mot."). Plaintiff in Limitation opposed. Opposition, ECF No. 38 ("Oppo"). Movants replied. Reply, ECF No. 46 ("Reply"). The Motion was submitted on the papers without oral argument pursuant to Civil Local Rule 7.1(d)(1) and Rule 78(b) of the Federal Rules of Civil Procedure ("FRCP"). ECF No. 39.

After considering the papers submitted, supporting documentation, and applicable law, the Court (1) GRANTS MovantsMotion to Dismiss for Lack of Personal Jurisdiction; (2) DENIES as MOOT MovantsMotion to Dismiss for Improper Venue; and (3) DENIES Plaintiff in Limitation's Request for Jurisdictional Discovery.

II. BACKGROUND
A. Statement of Facts3

Plaintiff in Limitation is a California corporation with its principal place of business in San Diego, California. Oppo. at 6:1-5.

Both Sunsplash and Ocean Rockets are limited liability companies organized under the laws of New Jersey with their principal place of business in Tuckahoe, New Jersey. Mot. at 7:23-8:1; Declaration of John Yank, III in Support of Motion to Dismiss, ECF No. 31-2 ("Yank Decl.") at 3, ¶¶ 1-2; Compl. at 3, ¶¶ 4-5 (admitting that Sunsplash and Ocean Rockets have their principal place of business in Tuckahoe, New Jersey). The President and sole shareholder of both companies, John Yank, III ("Mr. Yank"), is also a citizen of New Jersey. Yank Decl. at 3, ¶ 3. Sunsplash utilizes the Ocean Rockets name in the marketing of the boats it constructs. Yank Decl. at 3, ¶ 4; see also Mot. at 6:13-14. Other than that, Ocean Rockets has not been in active operation—having no business activity, employees, or income—since before 2012. Mot. at 8:1-3; Yank Decl. at 3, ¶ 4. Mr. Yank advises that both Sunsplash and Ocean Rockets (1) are not domiciled in California; (2) do not conduct business in California; (3) have no physical presence in California; (4) have not consented to litigating in California; (5) have never done any business in California; (6) have never owned or leased real or personal property in California; (7) do not sell any goods or services in California; (8) do not maintain any books or records in California; (9) have no employees working in California; (10) have never maintained a bank account, office, address, directory listing, answering services, or telephone number in California; (11) have never paid any taxes to the State of California; (12) have never been a party to a lawsuit filed in state or federal court in California (other than this lawsuit); (13) have no registered agent for service of process in California; and (14) do not conduct meetings of their Board of Directors, managers, officers, or shareholders in California. Mot. at 8:11-10:3; Yank Decl. at 4-5, ¶ 8.

In 2012, Plaintiff in Limitation's President, Brad Engel ("Mr. Engel"), approached Mr. Yank, about constructing a new vessel for his company. Oppo. at 7:5-7; see also Declaration of Brad Engel in Support of Opposition, ECF No. 38-3 ("Engel Decl.") at ¶ 4. He states that he approached Sunsplash "over other boat builders/shipyards because of [his] knowledge of and experience with their vessels, and in particular with the vessel [it] built for Blue & Gold Fleet, an entity operating thrill ride tours on San Francisco Bay," which still operates in San Francisco Bay. Engel Decl. at 2, ¶ 3. These "pre-contract negotiations with Mr. Yank lasted a few weeks, during which the parties communicated regularly by phone and skype while based in their respective states of California and New Jersey." Oppo. at 7:13-15 (citing Engel Decl. at ¶ 4). Mr. Engel states that during contract negotiations, he expressly informed Mr. Yank "that the vessel was to be used in California, and in particular in San Diego." Oppo. at 7:16-19; Engel Decl. at ¶ 4.

On or about December 18, 2012, Sunsplash entered into a written contract with Plaintiff in Limitation, pursuant to which Sunsplash agreed, inter alia , to "design, build, and deliver" the seventy-foot-long Vessel to Plaintiff in Limitation at Sunsplash's construction yard in Tuckahoe, New Jersey by June 7, 2013 in consideration for payment of $1,808,440.00 (the "Construction Contract"). Compl. at 5, ¶ 17; Mot. at 6:3-9; see also Exhibit 1 to Mot., ECF No. 31-2 ("Ex. 1") at 7-8; Yank Decl. at 3, ¶ 5; Oppo. at 7:3-7. Section 16.1 of the Construction Contract stated that Plaintiff in Limitation "agree[d] to have Ocean Rockets[’] logo on [the] port and starboard of arch at the Contractor's expense," along with the statement "built by www.oceanrockets.com." Ex 1 at 16; Oppo. at 8:4-8. Payment to Sunsplash was via wire transfer progress payments to Mr. Yank's designated bank from Mr. Engel's California bank account." Engel Decl. at 3, ¶ 6.

Section 11.3 of the Construction Contract stated that even though the place of contractual delivery was New Jersey, "the Owner intends to remove and relocate the Vessel to California promptly following delivery." Ex. 1 at 14; Oppo. at 7:21-24. It also advised that "[w]ith respect to any faulty or defective workmanship furnished by Contractor, reported in writing to Contractor within nine months after delivery of the Vessel to Owner, ... Contractor will make repairs and replacements at the Marine Group Boat Works (MGBW) in Chula Vista, California."4 Ex. 1. at 13; Oppo. at 7:24-27.

Pursuant to Section 15.1 of the Construction Contract, "[a]ny disputes which may arise between the parties out of this Contract," if not resolved through informal settlement discussions, "shall be resolved by binding arbitration before JAMS, pursuant to its Comprehensive Arbitration Rules & Procedures." Mot. at 10:9-23; Ex. 1 at 16. It elaborates that "[s]uch arbitration shall take place in New Jersey in the County of Cape May or such other location as mutually agreed upon by the parties." Mot. at 10:9-23; Ex. 1 at 16. Section 15.2 of the Construction Contract also provided that the agreement "shall be governed by the general maritime law of the United States." Mot. at 10:24-27; Ex. 1 at 16. If no general maritime law applies to a particular issue, "the law of ... the state of New Jersey in the County of Cape May shall govern." Mot. at 10:24-26; Ex. 1 at 16. Additionally, Section 16.2 of the Contract states that "[i]n the event of litigation in regard to collection or any other dispute that may arise out of or in connection with this agreement, the parties hereto expressly agree and consent to the jurisdiction of the court of the State of New Jersey and further stipulate that Cape May County, New Jersey, will be the proper venue for the legal action." Ex. 1 at 16. The Construction Contract was signed by representatives for Sunsplash on December 19, 2012, and representatives for Plaintiff in Limitation on December 20, 2012. Id. at 17. Ocean Rockets was not a party to the Construction Contract, and the parties dispute whether it had any involvement in the design or construction of the Vessel. Yank Decl. at 3, ¶ 4; Oppo. at 17:26-28 (stating that the use of Movants’ names in the contract "combined with the open proclamations about Oceanrockets’ vessel building services on their websites ... at the very least suggests that Oceanrockets was also involved in the [Vessel]’s construction, even though it was not a party to that contract").

Around June 2013, Sunsplash delivered the Vessel to Plaintiff in Limitation in Tuckahoe, New Jersey. Mot. at 6:11-12; Yank Decl. at 3, ¶ 6. Mr. Yank assisted with loading and securing the vessel at its yard in New Jersey. Engel Decl. at 3, ¶ 7. From there, Plaintiff in Limitation took possession of the Vessel and...

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