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

• Decision Date: 24 September 2018
• Docket Number: Lead Case No. 1:15-cv-799
• Parties: HOSEA PROJECT MOVERS, LLC, et al., Plaintiffs, v. WATERFRONT ASSOCIATES, INC., et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

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

Lead Case No. 1:15-cv-799

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION

September 24, 2018

Barrett, J.

Bowman, M.J.

REPORT AND RECOMMENDATION

The above captioned case previously was consolidated with a second related case, U.S. Fire Insurance Co. v. Waterfront Associates, Inc., Case No. 1:15-cv-46 (the "Insurance Policy case"). The Insurance Policy case has since been dismissed,¹ but Hosea Project Movers, LLC and Hosea Demolition Movers, LLC ("Hosea") and Waterfront Associates, Inc. ("Waterfront") have continued to pursue their distinct claims (the "Hosea-Waterfront case").

Currently pending before the undersigned for initial review and a report and recommendation ("R&R") is Waterfront's motion to dismiss, or in the alternative, forsummary judgment. Hosea has filed a response in opposition to Waterfront's motion, to which Waterfront has filed a reply. For the reasons that follow, I now recommend that Waterfront's motion be GRANTED, and that the remainder of this case be dismissed for lack of subject matter jurisdiction. Only in the alternative, if this Court were to retain jurisdiction, do I recommend that Waterfront's motion for summary judgment be GRANTED.

I. Background

The claims filed as the now-dismissed Insurance Policy case and this case arose out of the same event - the sinking of a well-known floating restaurant called the Waterfront (hereinafter "the Barge"). Restaurant operations on the Barge ceased in 2011, when the Barge first broke away from its moorings in Covington, Kentucky. On February 6, 2014, the Barge again broke away from its moorings. In June 2014, Waterfront alleged that the Barge was struck by another vessel, identified as Barge AEP 2015 (Complaint in Case No. 1:15-cv-46, Doc. 1 at ¶27; Third Party Complaint in Case No. 1:15-cv-46, Doc. 35 at ¶17). On or about August 5, 2014, for reasons that remain undetermined,² the Barge sank for good.

Unlike the claims presented by the parties to the Insurance Policy case, the lone claim that remains in this case is based upon a contract for services that Hosea entered into with Waterfront on July 3, 2014. That contract required Hosea to remove personal property from the Barge, to use its "best efforts" to sell the Barge on Waterfront's behalf,and, if the Barge could not be sold, to demolish the Barge. Unfortunately, the Barge sank only a month after the execution of that contract. At the time the Barge sank, Hosea had not removed all designated personal property. 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, since Hosea had not completed removal of the designated property.

In December 2015, Hosea initiated the instant suit against both Waterfront and another entity, C&B Marine, LLC ("C&B"), seeking to recover the revenue that slipped away with the Barge under the Ohio River. Hosea later filed an amended complaint asserting six separate counts and alleging jurisdiction under admiralty law.

In lieu of filing an Answer, both Waterfront and C&B moved to dismiss the amended complaint. Waterfront also moved for summary judgment. More than a year ago, on August 2, 2017, the Court granted C&B's motion to dismiss all claims filed against C&B for failure to state a claim. (Docs. 43 (R&R); Doc. 45 (Order of adoption)). At the same time, the Court partially granted Waterfront's motion for summary judgment on multiple claims, leaving intact only a single state law breach of contract claim filed by Hosea against Waterfront. (Doc. 43 at 25). As to that sole remaining claim, Waterfront has now filed a second motion to dismiss or, in the alternative, for summary judgment.³

Significantly, this Court denied Waterfront's prior motion to dismiss Hosea's amended complaint for lack of federal question jurisdiction. Because the Court's prioranalysis bears directly on the issues at hand, portions of the July 14, 2017 R&R have been fully restated herein. At the same time, Waterfront's latest motion to dismiss raises an entirely new argument as to why this Court lacks jurisdiction. For the reasons discussed below, the undersigned finds the new argument to be persuasive.

Given that this case has been pending for more than two and a half years and that discovery is complete, the late discovery of a fundamental lack of jurisdiction is lamentable. While this Court does not shrink from its own responsibility to independently review the existence of federal jurisdiction, see Hertz Corp. v. Friend, 559 U.S. 77, 94 (2010), federal courts necessarily rely upon the litigants to present jurisdictional issues early in the case. Here, Waterfront's prior motion to dismiss challenged admiralty jurisdiction over the breach of contract and negligence claims filed against it by Hosea. The undersigned carefully reviewed the specific jurisdictional challenges presented in Waterfront's prior motion, finding a lack of admiralty jurisdiction over the breach of contract claim, but finding jurisdiction was proper over the negligence claim. Despite granting summary judgment to Waterfront on that same negligence claim, this Court elected to retain supplemental jurisdiction over the remaining breach of contract claim given the anticipated judicial economies that led to the consolidation of the Insurance Policy case and the Hosea-Waterfront Contract case in the first place. Neither party filed any objections to the July 2017 R&R, which was adopted in full as the opinion of the Court on August 2, 2017. (Doc. 45). Thereafter, the case proceeded through the conclusion of discovery.

Waterfront's "new and improved" motion to dismiss challenges subject matter jurisdiction based upon a 2013 Supreme Court case that refined the definition of a vessel and limits federal maritime jurisdiction. Regrettably, Waterfront did not cite to that controlling case, or reference the argument in its prior motion.

Under Rules 12(g) and 12(h), a party waives any defense listed in Rule 12(b)(3)-(5) by omitting it from an earlier motion to dismiss. "Except as provided in Rule 12(h)(2) or (3), a party that makes a motion under this rule must not make another motion under this rule raising a defense...that was available to the party but omitted from its earlier motion." Rule 12(g)(2). Under Rule 12(h)(3), however, a motion challenging jurisdiction under Rule 12(b)(1) may be raised at any time and is not waived by a party's failure to include the grounds in a prior motion to dismiss. That exception exists because without jurisdiction, a federal court is without authority to proceed, and "must dismiss the action." Id. Therefore, this Court not only can, but must fully consider Waterfront's newfound challenge to subject matter jurisdiction, notwithstanding the fact that Waterfront could have (and should have) presented those same grounds in its prior motion to dismiss.

II. Analysis

A. Grounds Previously Considered Under Rule 12(b)(1)

Even though Waterfront presents a new legal argument, portions of the Court's analysis of Waterfront's first jurisdictional challenge are highly relevant to the analysis of its latest motion. Both Waterfront's prior motion to dismiss and its current motion fall under Rule 12(b)(1).

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 factualattacks. 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.

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). See also, generally, Heck v. Board of Trustees, Kenyon College, 12 F. Supp.2d 728, 747 (S.D. Ohio 1998) (Courts look at each component action in a consolidated case independently to determine whether there is subject matter jurisdiction, since consolidated actions do not lose their separate identity upon consolidation).

In reviewing Waterfront's prior motion to dismiss for lack of jurisdiction, this Court noted:

Waterfront presents its jurisdictional challenge in simple terms: "[A] contract to remove materials from a barge and to broker the [B]arge for sale does not invoke admiralty jurisdiction merely because a barge is involved." (Doc. 18 at 1). In response, Hosea maintains that the Hosea-Waterfront contract constitutes a "maritime contract," over which this Court should exerciseadmiralty

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