St. Clair Marine Salvage, Inc. v. Bulgarelli

• Decision Date: 22 July 2015
• Docket Number: No. 14–2135.,14–2135.
• Citation: 796 F.3d 569
• Parties: ST. CLAIR MARINE SALVAGE, INC., Plaintiff–Appellant, v. Michael BULGARELLI; 2004 36 Foot Sea Ray, MC No. 2220 TM, Defendants–Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

796 F.3d 569

ST. CLAIR MARINE SALVAGE, INC., Plaintiff–Appellant

v.Michael BULGARELLI; 2004 36 Foot Sea Ray, MC No. 2220 TM, Defendants–Appellees.

No. 14–2135.

United States Court of Appeals, Sixth Circuit.

July 22, 2015.

ON BRIEF:Brandon J. Wilson, HOWARD & HOWARD ATTORNEYS PLLC, Royal Oak, Michigan, for Appellant. Dennis M. Rauss, GIARMARCO, MULLINS & HORTON, P.C., Troy Michigan, for Appellees.

Before COLE, Chief Judge; MERRITT and BATCHELDER, Circuit Judges.

OPINION

ALICE M. BATCHELDER, Circuit Judge.

Defendant Michael Bulgarelli owns a boat that ran aground in Lake St. Clair, necessitating the services of a salvage ship to tug it free by towing it several feet. Plaintiff St. Clair Marine Salvage, Inc., alleges that the agreed-upon price was approximately $9,000, while Bulgarelli insists he was quoted a price range of $1,000–$1,200. The district court denied St. Clair Marine's motion for summary judgment in this maritime case, citing the obvious dispute on a question of material fact. Following a bench trial in admiralty, the magistrate judge entered judgment in favor of Bulgarelli, finding that St. Clair Marine had engaged in fraud when the captain of its salvage vessel induced Bulgarelli to sign the salvage contract at issue. We AFFIRM.

I.

On August 18, 2012, Michael Bulgarelli's 36–foot Sea Ray boat ran aground on Michigan's Lake St. Clair. Groundings fall into two categories: “soft” groundings where the boat can be freed by a tug from a tow boat, and “hard” groundings where the vessel's weight is bearing upon the bottom of the vessel, endangering the craft and those aboard. Bulgarelli contacted Tow Boat US, which dispatched a salvage vessel from St. Clair Marine commanded by Captain William Leslie to assist Bulgarelli. Leslie claims that when he arrived, he conferred with Bulgarelli, and quoted Bulgarelli the price of $250 per foot of the Sea Ray's 36–foot length. Bulgarelli, however, insists that the quoted price was $1,000–$1,200, and that Leslie assured him that insurance would pay the bill. Bulgarelli signed the contract, which did not include a printed price, but has “$250.00 FT” (i.e., “per foot”) scrawled in its bottom margin. Bulgarelli claims that handwriting was not present on the paper when he signed it, and since St. Clair did not use copies at the time, Leslie had exclusive possession and personal control of the sole copy of the contract once he and his vessel departed the area upon completing the operation. Calling this a “hard” grounding in high winds and very rough waters, Leslie claims that he used his vessel to “churn up” the waterbed in front of Bulgarelli's vessel to “dig out” the Sea Ray, “tucked” his boat under the Sea Ray's bow, and pulled it into the channel, in a process that took 29 minutes. Bulgarelli and a corroborating witness provided a very different account, saying that the wind and water were both calm, and that Leslie merely secured a tow line, tugged the Sea Ray first from one angle, then from a second, and pulled the vessel free in a process that took less than ten minutes. In either event, once the Sea Ray was free, Leslie departed that area of the lake, and promptly drafted a narrative report of the incident, in which he claimed, inter alia, that he knew from the initial phone call that this would be a “hard” grounding, and provided details of his account.

St. Clair Marine filed a three-count complaint in U.S. District Court for the Eastern District of Michigan, invoking the district court's admiralty jurisdiction under 28 U.S.C. § 1333, seeking enforcement of a maritime lien, alleging breach of a maritime salvage contract, and claiming quantum meruit/unjust enrichment. Bulgarelli counterclaimed for fraud, innocent misrepresentation, and reformation. Bulgarelli also filed an affidavit accusing Leslie of physically altering the contract at some point after Bulgarelli signed it, adding the handwritten notation “$250.00 FT.” The district court denied St. Clair Marine's motion for summary judgment, given the factual dispute about the agreed-upon price and the allegation that one party had deceived the other in forming the contract.

The parties consented to have the case tried by a magistrate judge, who conducted a bench trial and found Bulgarelli and his corroborating witness credible and persuasive, while finding Leslie not credible. The court also found that Leslie could not have known from the brief initial phone call that this was a “hard” grounding, and inferred from the tone and structure of Leslie's written account that it was intended to persuade its reader rather than objectively convey the facts of the situation, and thus was designed to deceive Bulgarelli's insurance provider as to the nature of the salvage job. The court further found that Leslie was not credible when, on cross-examination, he professed not to recall the salient facts regarding previous lawsuits involving unpaid towing/salvage fees for towing jobs which he had performed. Consequently, the court made a finding of fact that Leslie had quoted the price of $1,000–$1,200 to Bulgarelli while assuring him that his insurance would cover the entire cost, intending all along to bill Bulgarelli's insurance company for $9,000. The court further found that Leslie had added the handwritten margin note of $250 per foot to the sole copy of the contract after Bulgarelli had signed it, and thus that it was not part of the agreement to which Bulgarelli assented. The court accordingly found that Leslie had engaged in fraud in the procurement of the towing contract, and voided the contract.

II.

We begin, as the district court did, by confirming our jurisdiction. Because the requisite elements of diversity jurisdiction under 28 U.S.C. § 1332 are not present here, in order for us to have appellate jurisdiction under 28 U.S.C. § 1291, the district court must have had admiralty jurisdiction under 28 U.S.C. § 1333. In the absence of admiralty jurisdiction, we would dismiss this matter, leaving the parties the option of pursuing it in Michigan's courts.

The Supreme Court long ago held that for disputes arising from contracts for salvage carried out between vessels upon the water, “there can be no doubt of the jurisdiction of a Court of Admiralty ... [it] is the only Court where such a question can be tried.” Houseman v. Cargo of The Schooner North Carolina, 40 U.S. (15 Pet.) 40, 48, 10 L.Ed. 653 (1841). Much more recently, the Court noted that “The Rules of Construction Act defines a ‘vessel’ as including ‘every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water.’ ” Lozman v. City of Riviera Beach, ––– U.S. ––––, 133 S.Ct. 735, 739, 184 L.Ed.2d 604 (2013) (quoting 1 U.S.C. § 3 ). No one disputes that Bulgarelli's boat and Leslie's salvage boat are both vessels that are “capable of being used” for water transportation, or that this lawsuit arises from a dispute over the contract price charged for salvage services. Although Houseman is almost two centuries old, as a Supreme Court precedent that is directly on point and has never been overruled, it fully controls our analysis here. Agostini v. Felton, 521 U.S. 203, 237, 117 S.Ct. 1997, 138 L.Ed.2d 391 (1997).¹ The district court therefore had jurisdiction to hear this case, and we have appellate jurisdiction to review the district court's judgments.

III.

St. Clair Marine appeals the district court's denial of its motion for summary judgment, arguing in essence that the material facts surrounding the salvage contract were not genuinely in dispute, and that St. Clair Marine was entitled to summary judgment on both its claim for breach of that contract and on Bulgarelli's counterclaim for fraud. Although neither party addresses the threshold question of whether the order denying summary judgment is appealable following a full trial on the merits, we must.

Confronted with a circuit split on the issue, the Supreme Court, in Ortiz v. Jordan, 562 U.S. 180, 131 S.Ct. 884, 178 L.Ed.2d 703 (2011), said:

May a party, as the Sixth Circuit believed, appeal an order denying summary judgment after a full trial on the merits? Our answer is no ... Once the case proceeds to trial, the full record developed in court supersedes the record existing at the time of the summary-judgment motion.

Id. at 183–84, 131 S.Ct. 884. Although Ortiz was a case in which summary judgment had been sought and denied on qualified immunity grounds, the Court's holding is not limited to such cases. This circuit has interpreted Ortiz as “leav[ing] open the possibility that [in] cases ‘involv[ing] ... [only] disputes about the substance and clarity of pre-existing law’ ” the denial of summary judgment may still be considered on appeal following a full trial on the merits. See Nolfi v. Ohio Ky. Oil Corp., 675 F.3d 538, 545 (6th Cir.2012).

Here, the district court denied summary judgment because it concluded that material facts regarding the contract remained in dispute, and hence, this is not a case involving only legal issues. But even if the district court's order denying summary judgment in this case is appealable, the appeal is meritless. St. Clair Marine argues that the contract Bulgarelli signed contained a merger clause specifying that the written contract represents the entirety of the agreement between the parties, and thus federal courts may not look beyond the written instrument to decide this case. Because the document contained the notation “$250.00 FT” along its bottom margin, St. Clair Marine argues, it was entitled to summary judgment in its favor. Citing the rule against using verbal statements as parol evidence to defeat the plain language of a written contract, St. Clair Marine contends that Bulgarelli's claim that St. Clair Marine quoted him a significantly lower price may not be considered by the court. That rule generally prohibits the use of verbal evidence in contract interpretation when that extrinsic oral evidence contradicts...