Cruise Connections Charter Mgmt. 1, LP v. Attorney Gen. of Can.

• Decision Date: 21 July 2014
• Docket Number: Civil Action No. 08–2054 RMC
• Citation: 55 F.Supp.3d 156
• Court: U.S. District Court — District of Columbia
• Parties: Cruise Connections Charter Management 1, LP, et al., Plaintiffs, v. Attorney General of Canada, et al., Defendants.

55 F.Supp.3d 156

Cruise Connections Charter Management 1, LP, et al., Plaintiffs

v.Attorney General of Canada, et al., Defendants.

Civil Action No. 08–2054 RMC

United States District Court, District of Columbia.

Signed July 21, 2014

Cathy A. Hinger, Louis J. Rouleau, Womble, Carlyle, Sandridge & Rice, LLP, Washington, DC, David J. Mazza, Womble, Carlyle, Sandridge & Rice, PLLC, Jack M. Strauch, Jessie C. Fontenot, Jr., Stanley B. Green, Strauch, Fitzgerald & Green, P.C., Winston–Salem, NC, for Plaintiffs.

John M. Townsend, Scott H. Christensen, Hughes, Hubbard & Reed, LLP, Washington, DC, for Defendants.

OPINION

ROSEMARY M. COLLYER, United States District Judge

Canada hosted the 2010 Winter Olympic Games in Vancouver, British Columbia. Expecting crowds, the Royal Canadian Mounted Police sought alternative housing for its multi-agency task force that provided security to athletes and visitors at the various Olympic venues. Through a competitive bidding process in 2008, Plaintiff Cruise Connections Charter Management 1, LP, was selected as the broker to negotiate charters for three ships to be berthed at Vancouver's Ballentyne Pier as floating hotels for security personnel during the Games. Canada later changed its contracting representatives and terminated its agreement with Cruise Connections. Cruise Connections sued for breach of contract and the Court found RCMP liable. The matter then proceeded to a bench trial on damages. For the reasons set forth below, the Court will award $19,001,707, plus prejudgment interest.

I. PROCEDURAL HISTORY

Cruise Connections Charter Management 1, LP, and Cruise Connections Charter Management GP, Inc., (collectively, CCCM) are Plaintiffs in this action. Defendants are the Queen in Right of Canada, the Attorney General of Canada, and the Royal Canadian Mounted Police (RCMP). RCMP executed a contract with CCCM for the performance of brokering services for three ships to house the Integrated Security Unit (ISU), a multi-agency task force composed of security personnel from all Canadian Provinces, at the 2010 Winter Olympics in Vancouver.¹ CCCM filed suit on November 26, 2008, alleging that RCMP breached the Contract. The case was initially assigned to the Honorable James Robertson in Washington, D.C.

RCMP moved to dismiss the Complaint on March 31, 2009, arguing that Canada is immune from suit under the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. §§ 1330, 1602 –1611, and that no exception to FSIA applied. RCMP also argued that the case should be heard in a British Columbia court for convenience to the parties. Judge Robertson granted the motion to dismiss, finding that Canada was immune from suit under FSIA. See June 9, 2009 Minute Entry; Mem. in Support of Ruling [Dkt. 18]. The D.C. Circuit disagreed and reversed on April 6, 2010, holding that Canada was not immune from suit because it had engaged in commercial activities that had a direct effect in the United States. Cruise Connections Charter Mgmt. 1, LP v. Att'y Gen. of Can., 600 F.3d 661 (D.C.Cir.2010).

On remand, RCMP moved to dismiss, arguing that this action should be transferred to British Columbia and that Count II of the Complaint, which alleged that RCMP had violated the North Carolina Unfair and Deceptive Trade Practices Act, N.C. Gen.Stat. § 75–1 et seq. , should be dismissed for failure to state a claim. Because Judge Robertson had retired, the case was transferred to this Court.

On February 15, 2011, the Court granted in part and denied in part RCMP's Motion to Dismiss. See Feb. 15, 2011 Mem. Op. [Dkt. 42]. Specifically, the Court granted RCMP's request that the Court apply British Columbia law and dismiss Count II, and denied its motion to transfer the case to a British Columbia court. The parties then engaged in fact discovery, which was completed on October 12, 2012.

On November 30, 2012, RCMP and CCCM filed cross-motions for summary judgment, each arguing that the opposing party had breached the Contract so that no liability should attach to the movant. After exhaustive review and detailed findings, the Court granted summary judgment to CCCM. See Cruise Connections Charter Mgmt. v. Att'y Gen. of Can., 967 F.Supp.2d 115 (D.D.C.2013). The Court found that RCMP anticipatorily repudiated the Contract on September 26, 2008 and that RCMP formally terminated the Contract on November 17, 2008, by declaring default.

After the parties submitted pretrial motions, the Court set a Contract valuation date of September 26, 2008, i.e., the date on which RCMP anticipatorily breached the Contract, for the purpose of setting an exchange rate from Canadian dollars (CAD) to U.S. dollars (USD). See Nov. 15, 2013 Order [Dkt. 88] at 5; Dec. 6, 2013 Supp. Order.² The Court granted Canada's motion to admit evidence of CCCM's alleged failure to mitigate damages and granted CCCM's motion to exclude evidence of alleged contributory fault. See Nov. 15, 2013 Minute Orders. A three-day bench trial commenced on November 18, 2013. At its conclusion, Canada asked to submit a closing trial brief in lieu of closing argument. The Court agreed and the parties' post-trial submissions were fully briefed on February 10, 2014.

II. FINDINGS OF FACT³

A. The Contract: Charter Costs

1. RCMP contracted to pay CCCM $55,348,136 CAD to provide three cruise ships as accommodations for the ISU during the 2010 Winter Olympics in Vancouver. Nov. 18, 2013 Trial Tr. [Dkt. 97] at 62; Pls. Trial Ex. 3 (Aug. 25, 2008 CCCM Contract Amendment).

2. The valuation date for the Contract is set at September 26, 2013. See Dec. 6, 2013 Supp. Order. As of September 26, 2008, $55,348,136 CAD converted to $53,482,904 USD. See Bank of Canada Daily Noon Exchange Rates, (last visited June 7, 2014).

3. It is undisputed that, under British Columbia law, CCCM's lost profits must be measured by subtracting the anticipated costs of Contract performance from the $53,482,904 USD contract price. See Bank of Am. Can. v. Mut. Trust Co., 2002 CarswellOnt 1114, ¶ 47 (S.C.C. 2002) (reciting the “general rule of contract damages” that “ ‘the amount which would have been received if the contract had been kept, is the measure of damages if the contract is broken’ ” (quoting Hadley v. Baxendale, 9 Exch. 341 (Eng. 1854) (other citation omitted))); M.J.B. Enters. Ltd. v. Defence Constr., 1999 CarswellAlta 301, ¶ 55 (S.C.C. 1999) (“The general measure of damages for breach of contract is, of course, expectation damages.”). The first category of expenses relates to costs that CCCM would have paid to charter the ships.

4. In its charter party agreement with Holland America Lines (occasionally, Holland America), CCCM agreed to pay $9,440,080 USD for the ms Statendam, plus $651,040 USD for hotel service charges and $2,408,848 USD for guaranteed net onboard revenue (OBR).⁴ Pls. Trial Ex. 4 (Holland America Charter Party Agreement) at 2. In total, CCCM would have paid $12,499,968 USD for the charter hire of one Holland America ship named the ms Statendam . Id. ; Nov. 18, 2013 Trial Tr. at 65.

5. In a charter party agreement with Royal Caribbean Cruise Lines (occasionally, Royal Caribbean), CCCM agreed to pay $18,167,100 USD for two Royal Caribbean ships named Jewel of the Seas and Radiance of the Seas ; $1,240,830 USD for hotel service charges; and $6,330,000 USD for guaranteed net OBR. Pls. Trial Ex. 5 (Royal Caribbean Charter Party Agreement) at 3–4. In total, CCCM contracted to pay $25,737,930 USD for the charter hire of two Royal Caribbean ships. Nov. 18, 2013 Trial Tr. at 66.

6. The parties do not dispute that the total cost to CCCM for the charters of one ship from Holland America and two ships from Royal Caribbean would have been $38,237,898 USD.

B. The Contract: Administrative and Operational Costs

7. CCCM also would have incurred port-related costs while performing its obligations under the Contract. See Nov. 19, 2013 Trial Tr. [Dkt. 98] at 24.

8. Stanley Webber, an experienced Port Agent at Ballentyne Pier in Vancouver, would have been CCCM's Port Agent for the 2010 Winter Olympic Games. Id. at 40–41. Mr. Webber's testimony went largely unchallenged by RCMP, and thus, the Court accepts as true those statements that went unchallenged.

9. In his career as a port agent, Mr. Webber has been tasked with the negotiation of various services, including garbage, recycling, and stevedoring. Id. at 28. Further, Mr. Webber has contracted for services on behalf of cruise lines involved in this matter, including Royal Caribbean Radiance Class vessels and the Holland America ms Statendam. Id. at 30.

10. Mr. Webber testified that he would have charged CCCM approximately $46,000 CAD to serve as its Port Agent for the duration of the charter hire. Id. at 40–41.

11. Mr. Webber's company “arrange[s] contracts with and maybe even negotiate [s] contracts with the folks who are going to take garbage off and do recycling.” Id. at 28. Based on his years of experience at the Ballentyne Pier, Mr. Webber estimated that recycling and solid garbage removal would have cost CCCM approximately $212,000 CAD. See id. at 39.

12. Mr. Webber testified that the costs of one embarkation and one disembarkation⁵ would have been $80,000 CAD each, or $160,000 CAD total. Id. at 41–42. This estimate was in accord with CCCM's expectations and the Contract, although the Contract also allowed RCMP to add embarkations and disembarkations for additional fees.

13. Yet Donna Kaluza testified that RCMP did not intend to use CCCM's port agent to “collect its personnel from airports and hotels ... before embarking on the cruise ships.” Nov. 20, 2013 Trial Tr. at 75. CCCM, however, included this service in its estimated costs for embarkation and disembarkation. See Nov. 19, 2013 Trial Tr. at 42.

14. Because RCMP would not have used CCCCM's transportation and greeting services for purposes of embarkation and disembarkation, the Court finds that Mr. Webber's estimated costs must be reduced. However, since the parties have not submitted alternative cost estimates, the Court

...