Global Quest, LLC v. Horizon Yachts, Inc.

• Decision Date: 24 February 2017
• Docket Number: No. 15-10713,15-10713
• Citation: 849 F.3d 1022
• Parties: GLOBAL QUEST, LLC, Plaintiff–Counter Defendant–Appellant, v. HORIZON YACHTS, INC., Horizon Group, et al., Defendants–Counter Claimants–Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

849 F.3d 1022

GLOBAL QUEST, LLC, Plaintiff–Counter Defendant–Appellant,

v.HORIZON YACHTS, INC., Horizon Group, et al., Defendants–Counter Claimants–Appellees.

No. 15-10713

United States Court of Appeals, Eleventh Circuit.

February 24, 2017

Beverly A. Pohl, Broad & Cassel, Judith Ann Bradshaw, Christopher R. Fertig, Darlene Mondi Lidondici, Andrew Nicholas Mescolotto, Fertig & Gramling, FORT LAUDERDALE, FL, Mark Hicks, Hicks Porter Ebenfeld & Stein, PA, MIAMI, FL, for Plaintiff-Appellant.

Scott Andrew Wagner, Michael T. Moore, Moore & Company, PA, CORAL GABLES, FL, for Defendants-Appellees.

Before MARCUS and FAY, Circuit Judges, and FRIEDMAN,^* District Judge.

FRIEDMAN, District Judge:

Plaintiff Global Quest, LLC appeals from the district court's grant of summary judgment to defendants on all but one count of plaintiff's amended complaint and to defendant Horizon Yachts, Inc. on its counterclaim for foreclosure of a promissory note. Plaintiff appeals from the district court's entry of partial final judgment pursuant to Rule 54(b) of the Federal Rules of Civil Procedure.¹ We reverse the district court's grant of summary judgment to defendants on Counts I, III, IV, VII, and VIII of plaintiff's amended complaint and the grant of summary judgment to defendant Horizon Yachts, Inc. on its counterclaim.²

I. BACKGROUND

Plaintiff purchased a 105 foot luxury super-yacht, specifically a CC-105 Horizon Explorer named "Starlight," from defendant Horizon Yachts, Inc. ("Seller"). The yacht was manufactured by defendant Horizon Yacht Co., Ltd. ("Horizon") and its wholly-owned subsidiary Premier Yacht Co., Ltd. ("Premier") in Taiwan. While both Horizon and Premier are Taiwanese companies, Seller is an independent U.S. Corporation based in Florida. It is undisputed, however, that the Seller is Horizon's agent and appears to be owned, at least in part, by Horizon and Premier's founder and CEO, John Lu. HORIZON YACHTS, INC. , http://www.horizonyachtusa.com (last visited May 10, 2016) ("Horizon Yacht USA is the U.S. agent for Horizon Yachts").

Plaintiff purchased the Starlight for $6,835,000 after negotiating and executing a Purchase and Sale Agreement with Seller, along with an Addendum executed shortly thereafter. That contract, as modified by the Addendum, contains a seemingly self-contradictory provision. The "as is" clause in the original Agreement, paragraph 10, states that "upon closing, buyer will have accepted the vessel in its ‘as is' condition. Seller and the brokers have given no warranty, either express or implied, and make no representation as to the condition of the vessel, its fitness for any particular purpose or merchantability, all of which are disclaimed ." The Addendum, however, modifies this clause—providing that before the word "Seller," "the following language is inserted: ‘Other than the limited express warranty attached here as Exhibit A.’ " With this alteration, paragraph 10 thus reads: "Other than the limited express warranty attached here as Exhibit A, Seller and the broker have given no warranty, either express or implied...." Thus, while the original Agreement purported to disclaim all warranties, express or implied, the Addendum inserted an express limited warranty into the contract. But the Addendum also contains a further provision stating that "[t]he terms of this Acceptance shall govern over any inconsistent terms in the Purchase Agreement which is hereby ratified and declared to be in full force and effect."

As stated in the Addendum, Plaintiff was given a limited express warranty, the terms of which were negotiated by the parties as part of the sale. Issued on Seller's letterhead but purporting to be from "Horizon Group," a trade name for Horizon's companies, the limited warranty covers certain manufacturing and design defects for a period of one year from the contract date. It is limited, however, to "covered defects first discovered and reported to Horizon or the Original Selling Dealer." The limited warranty also disclaims "all other express and implied warranties (except title)," and states that "[n]o employee, representative, authorized dealer or agent of Horizon other than an executive officer of Horizon is authorized to alter or modify any provision of the Limited Warranty or to make any guaranty, warranty or representation, express or implied, orally or in writing which is contrary to the foregoing." The limited warranty also lists Premier and its contact details on the final page, without any explanation as to their relationship to the warranty.

Plaintiff contends that defendants made numerous false representations regarding the yacht's condition during the negotiation of the sale. Specifically, plaintiff claims that the yacht was represented to be MCA LY2 compliant and built to DNV standards, both in statements made by Seller's sales representative and on Horizon's webpage advertising the Starlight.³ Plaintiff claims that after it took possession it quickly discovered that the yacht was not MCA LY2 compliant nor was it built to DNV standards. The yacht had numerous problems that sharply limited the range of the vessel to short distances and also had electrical issues that rendered it unsafe. After defendants refused to repair or address the problems under the warranty, plaintiff filed suit against the three defendants, bringing ten claims under the amended complaint against each defendant: (1) fraud in the inducement; (2) revocation of acceptance under the Magnuson-Moss Warranty Act; (3) breach of the implied warranties of merchantability and usage of trade; (4) breach of the implied warranty of fitness for a particular purpose; (5) breach of a pre-purchase express oral warranty; (6) breach of a post-purchase express oral warranty; (7) breach of the implied warranty of workmanlike performance; (8) breach of the express written limited warranty; (9) rescission of the promissory note executed with the purchase; and (10) an injunction barring defendants from foreclosing on the promissory note or taking possession of the yacht for non-payment. Seller counterclaimed to foreclose on the promissory note.

The district court entered summary judgment for defendants on all but two claims: the breach of express warranty claims against Horizon and Premier. The district court also entered summary judgment for Seller on its counterclaim to foreclose on the promissory note. Pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, the district court certified the judgment as a partial final judgment for interlocutory review. Plaintiff appeals, challenging the district court's entry of summary judgment as to Counts I, III, IV, VII, and VIII and the counterclaim.

II. DISCUSSION

We review a district court's grant of summary judgment de novo . Stephens v. Mid-Continent Cas. Co. , 749 F.3d 1318, 1321 (11th Cir. 2014) (citing Kragor v. Takeda Pharm. Am., Inc. , 702 F.3d 1304, 1307 (11th Cir. 2012) ). Summary judgment is appropriate when the evidence, viewed in the light most favorable to the nonmoving party, presents no genuine issue of material fact and compels judgment as a matter of law. Id . ; see also FED R. CIV . P. 56(a) ; Celotex Corp. v. Catrett , 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

Plaintiff challenges the entry of summary judgment as to: (1) the fraudulent inducement claims against all three defendants (Count I); (2) the breach of implied warranty claims against all three defendants (Counts III, IV, and VII); and (3) the breach of express warranty claim against Seller, Horizon Yachts, Inc. (Count VIII). Each is addressed in turn.

A. Fraudulent Inducement: Count I

The district court granted summary judgment to all three defendants on plaintiff's fraudulent inducement claim, relying on Florida precedent holding that a plaintiff "cannot recover for fraudulent oral representations which are covered in or contradicted by a later written agreement." Sherwin-Williams Co. v. Auto Body Tech. Inc. , No. 12-23362, 2014 WL 2177961, at *4 (S.D. Fla. May 26, 2014) (citing Giallo v. New Piper Aircraft, Inc. , 855 So.2d 1273, 1275 (Fla. Dist. Ct. App. 2003) ). Relying on the "as is" and "entire agreement" clauses in the contract, the district court held that the claim is based on alleged pre-contractual misrepresentations that were expressly contradicted by the later written agreement, concluding that plaintiff could not have relied on the earlier statements as a matter of law due to the conflicting conditions in the agreement.

The district court expressly declined to follow Oceanic Villas, Inc. v. Godson , 148 Fla. 454, 4 So.2d 689 (1941), which, contrary to the district court's reasoning, held that an "as is" clause does not bar a plaintiff from bringing a fraud claim. Specifically, the Florida Supreme Court in Oceanic Villas held that where an agreement is procured by fraud or misrepresentation "every part of the [ ] contract" is vitiated because "[i]t is well settled that a party can not contract against liability for his own fraud." Id . at 690. The district court declined to follow Oceanic Villas because, in its view, (1) it "is distinguishable because it did not involve a warranty disclaimer or address recent Florida law, stating that a party cannot recover in fraud for misrepresentations covered or expressly contradicted in a later written agreement;" (2) it was decided before the enactment of Florida's Uniform Commercial Code in 1965, which permits "as is" clauses and the exclusion of warranties; and (3) the Florida Supreme Court's holdings are "fact intensive and depend on a review of the conditions of the contract as a whole, not just one clause."

Plaintiff argues that the district court erred by refusing to follow Oceanic Villas and granting summary judgment to defendants on the fraudulent inducement claim. We agree.

"As a federal court sitting in diversity jurisdiction, we apply the substantive law of the forum state, in this case Florida, alongside federal procedural law."...