Kelly v. Tillotson-Pearson, Inc., Civ. A. No. 92-0384L.
| Decision Date | 20 January 1994 |
| Docket Number | Civ. A. No. 92-0384L. |
| Citation | 840 F. Supp. 935 |
| Parties | Bruce V. KELLY and Jeanne S. Heslop, Plaintiffs, v. TILLOTSON-PEARSON, INC., Eastern Yacht Sales of Rhode Island, Inc., and the Yacht Headquarters, Inc., Defendants. |
| Court | U.S. District Court — District of Rhode Island |
COPYRIGHT MATERIAL OMITTED
Laurel K. Bristow, Partridge, Snow & Hahn, Providence, RI, for plaintiffs.
Justin T. Shay, Cameron & Mittleman, Providence, RI, for defendant Tillotson.
Jerry H. Elmer, Licht & Semonoff, Providence, RI, for defendants Eastern Yacht and Yacht Headquarters.
This matter is now before the Court on motions by defendants Tillotson-Pearson, Inc. ("TPI"), Eastern Yacht Sales of Rhode Island, Inc., and The Yacht Headquarters, Inc.1 for summary judgment on all counts of the complaint alleging breach of contract claims as well as claims for fraudulent and negligent misrepresentation. For the reasons stated below, the motion of defendant YHQ is granted and the motion of defendant TPI is granted in part and denied in part.
This suit arises from the purchase by plaintiffs Kelly and Heslop of a powerboat from defendant Tillotson-Pearson, Inc. in May of 1991. In the fall of 1990, plaintiffs contacted Theodore Robie ("Robie"), sales manager of YHQ, a yacht brokerage business located at the Bend Boat Basin in Portsmouth, Rhode Island, to discuss the purchase of a powerboat. Robie and plaintiffs subsequently viewed several boats at the Bend Boat Basin. At this time, plaintiffs noticed but were not shown the 28-foot Rampage powerboat (the "Vessel") which is the subject of this litigation. Plaintiffs later telephoned Robie to ask whether the 28-foot Rampage they had noticed was for sale. Robie inquired of the manufacturer and owner, TPI, and subsequently informed plaintiffs that the Vessel was for sale.
Robie arranged for plaintiffs to view the Vessel in early March of 1991. According to plaintiff Kelly, prior to the initial viewing Robie had informed him in response to a request for a history of the Vessel that the boat had been built as a demonstrator and had been in one boat show. Consistent with this, the engine hours meters indicated approximately three hours of use. After having viewed the Vessel, plaintiffs told Robie they were interested in that powerboat and requested that he inquire about the price.
Plaintiffs, accompanied this time by Robie, viewed the Vessel on a second occasion in March or April of 1991. Plaintiffs allege that they had been informed by Robie prior to this that TPI would fully warrant the hull, engines, gelcoat and mechanical systems for the first season of use. They were also allegedly told that an extended engine warranty was available for purchase from Peninsular Diesel, the manufacturer of the engines. At the conclusion of the second viewing, plaintiffs left a $500 deposit with Robie, taking a copy of the proposed Purchase and Sale Agreement to review.
Prior to entering into the Agreement, plaintiffs claim that they requested further information from Robie about warranties on the Vessel, including warranties on the two diesel engines and protection against gelcoat blistering. In response, they were allegedly assured that TPI stood behind the Vessel and that they would receive written warranty information prior to closing. Robie allegedly reiterated that the engines were warranted by TPI for the first season, and an "extended warranty" was available from Peninsular Diesel if plaintiffs wished to purchase it. According to plaintiffs, Robie convinced them that it would not be necessary to survey the Vessel or the engines, since the boat was a demonstrator with very light use. Plaintiff Kelly also asserts that he had a telephone conversation with Mark Pearson ("Pearson") of TPI, in which Pearson assured him that Peninsular Diesel would stand behind the engines.
Plaintiffs and TPI, through Robie, eventually agreed to the sale of the Vessel for $64,000. In addition to the standard terms set forth in the Purchase and Sale Agreement, plaintiff Kelly added a clause in his own handwriting stating that, "If engine warranty is not taken, Buyer may have engines inspected prior to closing." In the end, however, plaintiffs neither took the engine warranty nor elected to have the engines inspected prior to purchase.
Plaintiffs completed purchase of the Vessel and took possession in May of 1991. According to plaintiffs, they inquired of Robie both prior to and after the closing regarding the expected warranty paperwork. Approximately three weeks after the closing, Robie presented plaintiffs with a limited warranty covering the gelcoat and the overall structure of the hull, which they executed and returned to TPI, believing it was an affirmation of the hull and blistering warranty. Plaintiffs claim that they did not understand that the document they were executing was actually a limitation of all warranties. Plaintiffs never received any written warranty for the remainder of the systems or the engines.
Plaintiffs immediately began to have mechanical problems with the Vessel, including oil leaks, defective gauges, broken plumbing hoses, and overheating problems with the engines. Unbeknownst to plaintiffs, TPI had experienced similar engine overheating when it had used the Vessel prior to its purchase by plaintiffs. Also unbeknownst to plaintiffs, the cooling problems as well as other engine deficiencies had been discovered by Peninsular Diesel in this line of diesel engines and TPI had been made aware of these defects, but had failed to correct them prior to the sale.
In October of 1991, plaintiffs, through their attorney, contacted TPI and revoked acceptance of the Vessel pursuant to the Uniform Commercial Code, Rhode Island General Laws § 6A-2-608.
After extensive negotiations, plaintiffs and TPI settled their dispute and plaintiffs reaccepted the Vessel in January of 1992. (YHQ was not involved in the settlement negotiations between plaintiffs and TPI.) In the Settlement Agreement, TPI agreed to purchase an extended engine warranty from Peninsular Diesel (which plaintiffs allege TPI failed to do until four months after launch of the Vessel); to haul and store the Vessel indoors for the winter of 1991-92; to winterize the Vessel in accordance with normal standards (plaintiffs allege a failure to winterize to normal standards); to commission and launch the Vessel in the spring; to make a slip available for one week following the launch of the Vessel and to permit plaintiffs to operate the Vessel during that week to ensure that it was in good operating condition (plaintiffs allege that TPI failed to commission and dewinterize the Vessel for six days following the launch); to prepare a complete history of the Vessel (plaintiffs allege that all histories received were incomplete); to fill and winterize the diesel fuel tanks at plaintiffs' expense (TPI failed to do this, a failure which TPI claims resulted from a malfunctioning fuel gauge which indicated that the tanks were full); to buff out scratch marks on the hull caused by rubbing of the fenders while in storage; and to pay $2,000 to plaintiffs in settlement of their claims with respect to the Vessel.
Prior to execution of the Settlement Agreement, plaintiffs received a history of the Vessel (after rejecting an initial version as insufficient) which indicated that the Vessel's engines had been used for approximately 60 to 85 hours before plaintiffs purchased the Vessel. The history stated that there had been problems with the engines, but plaintiffs allege that the history failed to disclose that the engines had previously been installed in another boat.
Plaintiffs continued to experience problems with the Vessel and revoked acceptance again in June of 1992. In July of 1992, plaintiffs filed this suit seeking to recover damages and to void both the original Purchase and Sale Agreement and the Settlement Agreement. The parties engaged in oral argument on May 21, 1993, and the matter was taken under advisement. It is now in order for decision.
Counts I and VI of the complaint seek judgment against both YHQ and TPI based on contract: Count I alleges breach of the Settlement Agreement entered into by plaintiffs and TPI; Count VI asks that the Court declare as "void ab initio" the Purchase and Sale Agreement for the Vessel and the subsequent Settlement Agreement between plaintiffs and TPI. Counts II and IV are directed against TPI and allege, respectively, fraudulent and negligent misrepresentation. Counts III and V are directed against YHQ and also allege, respectively, fraudulent and negligent misrepresentation.
Rule 56(c) of the Federal Rules of Civil Procedure sets forth the standard for ruling on a summary judgment motion:
The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
In determining whether summary judgment is appropriate, the Court must view the facts on the record and all inferences therefrom in the light most favorable to the nonmoving party. Continental Casualty Co. v. Canadian Universal Ins. Co., 924 F.2d 370, 373 (1st Cir.1991). Additionally, the moving party bears the burden of showing that no evidence supports the nonmoving party's position. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). In order for defendants to prevail on their motion, they must show that no genuine issue of material fact exists to support plaintiffs' case. The motion can then be granted if, as a matter of law, defendants are entitled to judgment in their favor.
In Count III, ¶ 41 of their...
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