Lieblong v. Abella

• Decision Date: 30 November 2020
• Docket Number: CIV. NO. 19-00425 LEK-WRP
• Citation: 503 F.Supp.3d 1011
• Parties: Matthew LIEBLONG, Plaintiff, v. Ursula ABELLA, S/V Talisker, in Rem, Her Engine, Appurtenances, Equipment, and Tackle, Doc. No. 1269157; Doe Defendants 1-20, Doe Corporations 1-20, Doe Government Agencies 1-20, Doe Partnerships 1-20, Defendants.
• Court: U.S. District Court — District of Hawaii

503 F.Supp.3d 1011

Matthew LIEBLONG, Plaintiff,

v.Ursula ABELLA, S/V Talisker, in Rem, Her Engine, Appurtenances, Equipment, and Tackle, Doc. No. 1269157; Doe Defendants 1-20, Doe Corporations 1-20, Doe Government Agencies 1-20, Doe Partnerships 1-20, Defendants.

CIV. NO. 19-00425 LEK-WRP

United States District Court, D. Hawai‘i.

Signed November 30, 2020

Jared A. Washkowitz, Jaw Legal, Honolulu, HI, for Plaintiff.

Jesse J.T. Smith, Jaime Heather Chizu Tokioka, McCorriston Miller Mukai MacKinnon LLP, Honolulu, HI, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR JUDGMENT ON THE PLEADINGS AS TO COUNTS VIII AND XI OF PLAINTIFF'S VERIFIED SECOND AMENDED COMPLAINT

Leslie E. Kobayashi, United States District Judge

Before the Court is Defendant/Counterclaim Plaintiff Ursula Abella's ("Abella") Motion for Judgement on the Pleadings as to Counts VIII and XI of Plaintiff's Verified Second Amended Complaint Filed January 24, 2020 ("Motion"), filed on June 12, 2020. [Dkt. no. 38.] Plaintiff/Counterclaim Defendant Matthew Lieblong ("Plaintiff") filed his memorandum in opposition on June 28, 2020, and Abella filed her reply on July 13, 2020. [Dkt. nos. 41, 42.] The Court finds this matter suitable for disposition without a hearing pursuant to Rule LR7.1(c) of the Local Rules of Practice for the United States District Court for the District of Hawaii ("Local Rules"). On September 30, 2020, an entering order was issued informing the parties of the Court's rulings on the Motion. [Dkt. no. 43.] This Order supersedes that entering order. Abella's Motion is hereby granted in part and denied in part for the reasons set forth below.

BACKGROUND

Plaintiff initiated this action on August 7, 2019, he filed his Verified First Amended Complaint for Damages ("First Amended Complaint") on August 13, 2019, [dkt. no. 6,] and his Verified Second Amended Complaint for Damages ("Second Amended Complaint") on January 24, 2020, [dkt. no. 20].¹ According to the Second Amend Complaint, in December 2017, Plaintiff and Abella entered into a lease with option to purchase agreement ("the Agreement") for Defendant in rem S/V Talisker ("the Talisker"), a "52 foot Schionning Designs customized Waterline 1480 sailing vessel." [Second Amended Complaint at ¶¶ 5, 7.] The initial lease term ran from December 7, 2017 through December 31, 2018, during which time Plaintiff agreed to pay Abella $2,000 per month. [Id. at ¶ 8.] Prior to the termination of the lease, Plaintiff could exercise an option to purchase the Talisker for $195,000 by notifying Abella and making a $500 deposit; upon his execution, all lease payments already made would be deducted from the purchase price. [Id. at ¶ 9.] In exchange for the option to purchase, Plaintiff agreed to pay the legal expenses and court costs for clearing the Talisker's liens and encumbrances, half of which would be deducted from the purchase price (not to exceed $10,000). [Id. at ¶ 10.] He was also responsible for the maintenance, repair, insurance, and mooring costs for the Talisker. [Id. at ¶ 11.] On December 6, 2018, the parties extended the Agreement to run through June 30, 2019 ("the Extension"). [Id. at ¶ 13.] Between December 2017 and June 2019, Plaintiff paid: lease payments in the amount of $38,000; insurance and mooring costs of $13,869.26; legal costs of $8,895.47; and maintenance and repair costs of $231,074.44. [Id. at ¶ 12.]

On May 14, 2019, Abella, claiming scrivener's error, informed Plaintiff that she wanted to "reform the contract for the purchase price of $295,000." [Id. at ¶ 15.] Ten days later, Plaintiff informed Abella he intended to exercise the purchase option in the Agreement for the original price of $195,000, made his $500 deposit, and provided proof he had financing for the remainder. [Id. at ¶ 16.] Abella refused to honor the option contract, terminated the lease, "had her friends send threatening text messages to Plaintiff," and demanded Plaintiff vacate the Talisker [Id. at ¶ 17.] Plaintiff vacated the vessel, and returned to Little Rock, Arkansas. [Id. ]

The Second Amended Complaint alleged: 1) breach of written contract ("Count I"); 2) breach of the implied warranty of good faith and fair dealing ("Count II"); 3) intentional misrepresentation ("Count III"); 4) negligent misrepresentation ("Count IV"); 5) unjust enrichment ("Count V"); 6) conversion ("Count VI"); 7) quantum meruit ("Count VII"); 8) a claim seeking a maritime lien against the Talisker for necessaries, pursuant to 46 U.S.C. § 31301, et seq. ("Count VIII"); 9) fraudulent deceit ("Count IX"); 10) promissory estoppel ("Count X"); and 11) a claim seeking a declaratory judgment ("Count XI").

In the Motion, Abella seeks judgment on the pleadings as to Counts VIII and XI and asks the Court to "issue a declaratory judgment that [Plaintiff] does not hold a valid maritime lien against the [Talisker]." [Mem. in Supp. of Motion at 13.]

DISCUSSION

I. Jurisdiction and Applicable Law

A. Admiralty Jurisdiction Pursuant to Contract

"As a general rule, admiralty law applies to all maritime contracts." Aqua-Marine Constructors, Inc. v. Banks, 110 F.3d 663, 670 (9th Cir. 1997) (citing Insurance Co. v. Dunham, 78 U.S. (11 Wall.) 1, 29, 20 L. Ed. 90 (1870) ); see also 28 U.S.C. § 1333(1) (stating, in effect, same). "[T]he fundamental interest giving rise to maritime jurisdiction is the protection of maritime commerce." Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 25, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004) (citation, emphasis, and internal quotation marks omitted). "It is, therefore, the subject matter (rather than the place of execution or place of performance) of a contract which determines the existence of federal maritime jurisdiction over a contractual claim." Aqua-Marine Constructors, 110 F.3d at 671 (some citations omitted) (citing North Pac. S.S. Co. v. Hall Bros. Marine Ry. & Shipbuilding Co., 249 U.S. 119, 39 S. Ct. 221, 63 L. Ed. 510 (1919) ). "If the subject of the contract relates to the ship and its uses as such, or to commerce or navigation on navigable waters, or to transportation by sea, the contract is maritime." Id. (citation omitted). A charter is clearly a maritime contract. See Simon v. Intercontinental Transp. (ICT) B.V., 882 F.2d 1435, 1441 (9th Cir. 1989) (some citations omitted) (citing Armour & Co. v. Ft. Morgan S.S. Co., 270 U.S. 253, 259, 46 S. Ct. 212, 214, 70 L. Ed. 571 (1926) ).² At least part of the Agreement is a charter because it identifies the terms under which Plaintiff would take over the use of the Talisker, a ship belonging to Abella. See Second Amended Complaint at ¶¶ 7-8. Therefore, the portion of the Agreement related to the charter of the Talisker is a maritime contract. See Simon, 882 F.2d at 1441.

However, the Agreement also contained an option to purchase the Talisker.³ [Second Amended Complaint at ¶ 9.]

The classification problem becomes complex because, historically, charters are maritime contracts, interpreted by admiralty courts, Morewood v. Enequist, 1860, 64 U.S. (23 How.) 491, 16 L. Ed. 516 ; see 1 Benedict on Admiralty § 66, and cases cited therein, while contracts for the sale of a vessel have been held non-maritime. The Ada, 2nd Cir. 1918, 250 F. 194 ; Grand Banks Fishing Co. v. Styron, D. Me. 1953, 114 F. Supp. 1. Generally, whether or not an agreement passes title to a vessel is to be determined by state law. See First National Bank & Trust Co. of Vicksburg, Miss. v. The Seneca, E.D. La. 1960, 179 F. Supp. 847.

Kane v. Motor Vessel Leda, 355 F. Supp. 796, 800 (E.D. La. 1972), aff'd , 491 F.2d 899 (5th Cir. 1974).⁴ The option in the Agreement relates to the passing of the title of the Talisker, therefore Hawai‘i law applies. Under Hawai‘i state law:

An "option" is defined in relevant part as a:

Right of election to exercise a privilege. Contract made for consideration to keep an offer open for prescribed period. A right, which acts as a continuing offer, given for consideration, to purchase or lease property at an agreed upon price and terms, within a specified time.... An option to purchase or to sell is not a contract to purchase or sell , as optionee has the right to accept or to reject the offer, in accordance with its terms, and is not bound .

Black's Law Dictionary 1094 (6th ed. 1990) (emphases added) (citations omitted). See alsoIn re Estate of Damon, 5 Haw. App. 304, 311, 689 P.2d 204, 208 (1984) (defining "option to purchase real property").

Arthur v. Sorensen, 80 Hawai‘i 159, 165 n.14, 907 P.2d 745, 751 n.14 (1995) (emphases added). Thus, pursuant to the Agreement, in addition to the right to use and possess the Talisker under the lease terms, for a specified time, Plaintiff also owned the right to purchase the vessel for an agreed upon price and terms.

A contract for the sale of a vessel is not a maritime contract and therefore does not give rise to admiralty jurisdiction. Cary Marine, Inc. v. Motorvessel Papillon, 872 F.2d 751, 755 (6th Cir. 1989) ; accord Richard Bertram & Co. v. Yacht Wanda, 447 F.2d 966, 967 (5th Cir. 1971) (per curiam) (affirming district court order included in the appendix).⁵ Under the conceptual approach, admiralty jurisdiction depends on "whether the contract references ‘maritime service or maritime transactions.’ " ProShipLine Inc. v. Aspen Infrastructures Ltd., 609 F.3d 960, 967 (9th Cir. 2010) (quoting Norfolk, 543 U.S. at 24, 125 S. Ct. 385 ). The option to purchase was one step removed from the actual contract for sale, because, as an option, it merely held open Abella's offer for Plaintiff to buy the Talisker. Regardless, the transfer of the ultimate ownership of the Talisker, the transaction underlying the option to purchase, was not a maritime service or transaction, therefore the option itself, which held open the non-maritime offer, is also a non-maritime contract.

The Agreement

would therefore be a "mixed" maritime and non-maritime contract. Ordinarily, a contract must be "wholly maritime" in nature to be cognizable

...