Hosea Project Movers, LLC v. Waterfront Assocs., Inc., Lead Case No. 1:15-cv-799

• Decision Date: 14 July 2017
• Docket Number: Case No. 1:15-cv-46,Lead Case No. 1:15-cv-799
• Parties: HOSEA PROJECT MOVERS, LLC, et al., Plaintiffs, v. WATERFRONT ASSOCIATES, INC., et al., Defendants. UNITED STATES FIRE INSURANCE CO., Plaintiff/Crossclaim Plaintiff v. WATERFRONT ASSOCIATES, INC., Defendant/Third-Party Plaintiff, v. C&B MARINE, LLC, Third-Party Defendant/Crossclaim Defendant
• Court: U.S. District Court — Southern District of Ohio

HOSEA PROJECT MOVERS, LLC, et al., Plaintiffs, v. WATERFRONT ASSOCIATES, INC., et al., Defendants.

UNITED STATES FIRE INSURANCE CO., Plaintiff/Crossclaim Plaintiff v. WATERFRONT ASSOCIATES, INC., Defendant/Third-Party Plaintiff, v. C&B MARINE, LLC, Third-Party Defendant/Crossclaim Defendant

Lead Case No. 1:15-cv-799

Case No. 1:15-cv-46

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION

July 14, 2017

Barrett, J.

Bowman, M.J.

REPORT AND RECOMMENDATION

These recently consolidated cases have been referred for all pretrial proceedings to the undersigned magistrate judge by U.S. District Judge Michael R. Barrett. (See Doc. 42). Currently pending are two motions to dismiss all claims filed by Hosea Project Movers, LLC and Hosea Demolition Movers, LLC (hereinafter "Hosea") in Lead Case No 15-cv-799. Also pending is a separate motion for summary judgment filed by Waterfront Associates (hereinafter "Waterfront") regarding the same claims.

For the reasons that follow, I recommend denying Waterfront's motion to dismiss, granting the motion to dismiss filed by C&B Marine, LLC, and partially granting Waterfront's motion for summary judgment. By separate Order, the remainder of the consolidated cases have been set for a status conference before the undersigned.

I. Background

Each of the consolidated cases involves slightly different parties and distinct claims, but arises out of the same core event: the August 5, 2014 sinking of the Waterfront Barge (hereinafter "Barge").¹ The cause of the sinking of the Barge, and who was responsible, remain among the common disputes that all parties seek to resolve. For the Court's convenience, the original cases are referred to as the Insurance Policy case (Case No. 1:15-cv-46) and the Hosea-Waterfront Contract case (Lead Case No. 1:15-cv-799). Before turning to the pending motions in the Hosea-Waterfront Contract case, the Court briefly summarizes the facts of both cases.

A. The Insurance Policy Case

After the Barge sank, its insurer, United States Fire Insurance Company ("U.S. Fire"), advanced $500,000.00 of the policy proceeds on Waterfront's behalf to C&B Marine, LLC ("C&B"), to remove and dispose of the sunken vessel. The payment was advanced under a reservation of rights as to coverage issues. U.S. Fire later filed suit against Waterfront Associates ("Waterfront") seeking judgment to declare its insurance policy to be void ab initio, or in the alternative, to declare that there is no coverage and ordering Waterfront to repay U.S. Fire $500,000.00 plus interest, costs, and attorney's fees. U.S. Fire maintains that the policy is void in part because Waterfront failed to disclose or misrepresented "the full condition" of the vessel - namely, that "it was in a state of advanced deterioration and wastage and was not in a serviceable or ...seaworthy condition." (See Case No. 1:15-cv-46, U.S. Fire Complaint at ¶¶16-17). U.S. Fire further alleges that Waterfront misrepresented its intentions to reopen the Barge as an operating restaurant. (Id. at ¶¶`19-20).

Waterfront filed a Counterclaim against U.S. Fire for breach of its contract of insurance. Waterfront also alleges bad faith, and seeks a judgment "of Waterfront's actual losses and attorney's fees and expenses and punitive damages in the amount of $3,400,000." (Waterfront's Counterclaim at 14).

Waterfront also filed a third party complaint against C&B Marine, LLC (hereinafter "C&B"), alleging that C&B's actions caused the Barge to sink.² U.S. Fire followed suit with a cross-claim against C&B, contingent upon U.S. Fire being subrogated to Waterfront for the claimed loss of the Barge. If C&B is responsible for the sinking, U.S. Fire seeks to hold C&B liable for the $500,000 in insurance proceeds that U.S. Fire previously advanced to pay for the disposal of the sunken Barge.

B. The Hosea-Waterfront Contract Case

The now-consolidated second case arose out of the same event - the sinking of the Barge - but is based on an entirely separate contract for services that Hosea entered into with Waterfront on July 3, 2014. The contract required Hosea to remove personal property from the Barge, use its "best efforts" to sell the Barge on Waterfront's behalf, and, if the Barge could not be sold, to demolish the Barge.

As stated, the Barge sank on August 5, 2014, just a month after the execution of the Hosea-Waterfront contract. The sinking of the Barge simultaneously sank Hosea's prospects for selling the Barge to an approved purchaser or for scrap value. Additionally, Waterfront refused to make a final payment under the contract for the removal of personal property from the Barge, since Hosea had not completed removal of the designated property at the time the Barge sank.

In December 2015, Hosea filed suit against Waterfront and C&B, seeking to recover the revenue that slipped away with the Barge under the Ohio River. When Waterfront and C&B moved to dismiss, Hosea filed an amended complaint that includes headings for Counts I-VI. Count I asserts a claim for a constructive trust over any insurance proceeds recovered by Waterfront in the Insurance Policy case. Count II alleges that Waterfront breached its contract by obstructing Hosea's access to the Barge, thereby preventing Hosea from completing its performance. In Count III, Hosea asserts a separate claim against C&B for tortious interference with the Hosea-Waterfront contract. In Count IV, Hosea brings a claim against both Waterfront and C&B for conversion of Hosea's property. Count V asserts that both Waterfront and C&B are liable for negligence. Last, Count VI asserts "legal malice" and seeks punitive damages and attorney's fees. Hosea alleges that jurisdiction lies in this Court under admiralty law.

In lieu of filing an Answer, the Defendants filed new motions to dismiss. Waterfront's motion seeks dismissal on grounds that this Court lacks subject matter jurisdiction over any of the claims asserted. C&B's separate motion seeks dismissal for failure to state a claim.

The parties' Rule 26(f) report reflects agreement to a stay of all discovery pending this Court's ruling on pending motions to dismiss, (Doc. 20), and it does not appear that the parties have engaged in any formal discovery in the Hosea-Waterfront Contract case. (See Doc. 28, motion for status conference confirming that no formal discovery has occurred). However, based in part on discovery in the related Insurance Policy case, Waterfront filed an additional motion for summary judgment in the Hosea-Waterfront contract case.

II. Analysis of Pending Motions To Dismiss

A. Standard of Review

Waterfront's motion to dismiss falls under Rule 12(b)(1), and attacks the factual predicate asserted by Hosea to support subject matter jurisdiction.

Generally, a Fed. R. Civ. P. 12(b)(1) motion to dismiss for lack of subject matter jurisdiction falls into one of two categories: facial attacks and factual attacks. United States v. Ritchie, 15 F.3d 592, 598 (6th Cir.1994) cert. denied, 513 U.S. 868, 115 S. Ct. 188, 130 L.Ed.2d 121 (1994); see also Wenz v. Rossford Ohio Transp. Improvement Dist., 392 F.Supp.2d 931, 934 (N.D. Ohio 2005). A facial attack challenges the sufficiency of the pleading itself, and requires the Court to take all of the material allegations in the complaint as true and construe them in the light most favorable to the non-moving party. Ritchie, 15 F.3d at 598 (citing Scheuer v. Rhodes, 416 U.S. 232, 235-37, 94 S. Ct. 1683, 40 L.Ed.2d 90 (1974)). In contrast, a factual attack challenges the factual existence of subject matter jurisdiction, Ohio Hosp. Ass'n v. Shalala, 978 F.Supp. 735, 739 (N.D. Ohio 1997), and requires a court to "weigh the conflicting evidence to arrive at the factual predicate that subject-matter [jurisdiction] does or does not exist." Gentek Bldg. Prods. v. Sherwin-Williams Co., 491 F.3d 320, 330 (6th Cir. 2007)....

When assessing a factual attack on subject matter jurisdiction, the plaintiff bears the burden of demonstrating that the court has jurisdiction, RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1134 (6th Cir. 1996), and "no presumptive truthfulness applies to the factual allegations...." Ritchie, 15 F.3d at 598 (internal citations omitted). Instead, "the court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case." Id.; see also RMI Titanium, 78 F.3d at 1135. Moreover, "a district court is to probe the facts and assess the validity of its own jurisdiction. In doing so, the Court has a wide discretion to consider affidavits and the documents outside the complaint, and may even conduct a limited evidentiary hearing if necessary." Shalala, 978 F. Supp. at 739 (relying on Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990)); see also Kroll v. United States, 58 F.3d 1087, 1090 (6th Cir. 1995) ("The Court may examine evidence of its power to hear a case, and must make any factual findings to determine whether it has jurisdiction.").

In re Steinle, 835 F.Supp.2d 437, 440-41 (N.D. Ohio 2011) (dismissing two of six complaints filed in consolidated case for lack of subject matter jurisdiction under maritime law).

In contrast to Waterfront's jurisdictional challenge, C&B seeks dismissal of Hosea's claims under Rule 12(b)(6), for failure to state a claim. Under Rule 12(b)(6), this Court must "construe the complaint in the light most favorable to the nonmoving party, accept the well-pled factual allegations as true, and determine whether the moving party is entitled to judgment as a matter of law." Commercial Money Ctr., Inc. v. Illinois Union Ins. Co., 508 F.3d 327, 336 (6th Cir. 2007). At the same time, this Court

need not accept the plaintiff's legal conclusions or unwarranted factual inferences as true. Gregory v. Shelby County, 220 F.3d 433, 446 (6th Cir. 2000). To state a valid claim, a complaint must contain direct or inferential allegations respecting all the material elements under some viable legal

...