Stanley v. Onetta Boat Works, Inc.
| Decision Date | 30 June 1969 |
| Docket Number | Civ. No. 66-218. |
| Citation | 303 F. Supp. 99 |
| Parties | William A. STANLEY, Plaintiff, v. ONETTA BOAT WORKS, INC., an Oregon corporation, Insurance Company of North America, a corporation, Union Insurance Society of Canton, Ltd., a corporation, Citizens Casualty Company of New York, a corporation, Defendants, ONETTA BOAT WORKS, INC., an Oregon corporation, Third-Party Plaintiff, v. UNION INSURANCE SOCIETY OF CANTON, LTD., a Hong Kong corporation, and Northwest Marine Iron Works, a corporation, Third-Party Defendants. |
| Court | U.S. District Court — District of Oregon |
Alex L. Parks, Parks, Teiser & Morrell, Portland, Or., for plaintiff.
Don H. Marmaduke, Davies, Biggs, Strayer, Stoel & Boley, Portland, Or., for defendant and third-party plaintiff.
Carl R. Neil, Krause, Lindsay & Nahstoll, Portland, Or., for defendants Insurance Co. of North America, Citizens Cas. Co. of New York and Union Ins. Society of Canton, Ltd.
Ben Lombard, Jr., Mautz, Souther, Spaulding, Kinsey & Williamson, Portland, Or., for third-party defendant Northwest Marine Iron Works.
Nathan J. Heath, Gray, Fredrickson & Heath, Portland, Or., for third-party defendant Union Insurance Society of Canton, Ltd. with regard to Builders Risk Policy of Insurance.
Plaintiff seeks to recover damages against defendant Onetta Boat Works, Inc. (Onetta) for an alleged breach of a contract to construct and deliver to plaintiff a 57 foot steel hull fishing vessel. Plaintiff also seeks to recover from the three defendant insurance companies on the policies of hull and machinery insurance which those companies issued on the vessel and in which the plaintiff was named as the assured.
Onetta seeks relief against plaintiff in three counterclaims:
First, to foreclose a preferred ship mortgage given by plaintiff to Onetta to secure the payment of a promissory note in the sum of $17,592.89,
Second, to recover on an unsecured promissory note given by plaintiff to Onetta in the sum of $6,027.44, and
Third, to recover $1,879.10 on account of moneys allegedly advanced on plaintiff's behalf and on account of certain services, material and labor supplied by Onetta to plaintiff which Onetta claims were in excess of the requirements of the contract.
Onetta impleaded, and plaintiff cross-complained, against Union Insurance Society of Canton, Ltd. (Union Insurance) to recover on a builders risk insurance policy in which Onetta is named as the assured and plaintiff is named as a loss payee. Plaintiff also joined as defendants Citizens Casualty Company of New York (Citizens Casualty), Union Insurance and Insurance Company of North America (North America) to recover on policies of hull and machinery insurance issued by those companies to plaintiff on the vessel and in which Onetta is named as loss payee. Onetta cross-complained against the defendant hull insurers to recover on their policies.
In the third action, Stanley and defendant Onetta seek to recover from third party defendant Northwest Marine Iron Works (Northwest Marine), the plaintiff on a direct action, and defendant Onetta on a theory of indemnity in the event Onetta is held liable to plaintiff for part or all of the damages. Defendant insurance companies Union, North America and Citizens seek to recover from third-party defendant Northwest Marine on a theory of indemnity in the event they are held liable to plaintiff and to Onetta on the hull insurance policies which they issued to plaintiff. Said defendants also seek to recover from Onetta on a theory of indemnity in the event that they are held liable to plaintiff on the hull insurance policies and the loss was caused by the negligence of Onetta.
Defendant insurance companies North America, Citizens Casualty and Union Insurance paid into court on an ex gratia basis, without admitting liability, the sum of $3,100.00 on account of physical damage to the vessel hereafter mentioned in paragraph VII of the agreed facts. Defendant Union Insurance, with respect to its Builder's Risk Policy, contributed an additional $3,100.00 on an ex gratia basis, without admitting liability, to apply on physical damage to the vessel. Consequently, orders were entered dismissing defendant insurance companies North America, Citizens Casualty and Union Insurance only with respect to their liability, if any, on the policy of hull insurance issued by each company. Defendant Union Insurance remains in the case as a third-party defendant with respect to liability, if any, relative to plaintiff's claim for loss of profits and Onetta's claim for indemnity in the event plaintiff recovers from Onetta with respect to loss of profits.
The parties concede diversity jurisdiction and additional jurisdiction pursuant to 46 U.S.C. § 951 and the Supplemental Rules for Certain Admiralty and Maritime Claims.
In October, 1964, plaintiff and Onetta entered into a written contract whereby Onetta, for a stated price, agreed to build for plaintiff a 57 foot steel hull fishing vessel (LYNN KENDALL) in accordance with plans and specifications prepared by naval architect Alfred Trachi. As part of the contract, plaintiff agreed to pay to Onetta the sum of $54,479.90 for the construction of the hull and the furnishing of such materials and the performance of such labor as was specified by the parties in their contract. Plaintiff agreed further that all other material, equipment or machinery and/or contract labor, purchased by Onetta upon the request and direction of plaintiff would be paid for by plaintiff at the net invoice cost to Onetta, plus 3%, and that any work ordered by plaintiff in addition to the work specified in the contract would be paid for at the rate of $7.00 per hour. Plaintiff and Onetta agreed that all sums due Onetta would be payable upon delivery of the boat to plaintiff. After plaintiff and Onetta entered into the contract, and during the construction of the vessel, numerous alterations and additions were made by Onetta at plaintiff's request whereby the contract work and materials were modified and extra charges were incurred.
By November 6, 1965, Onetta had presented to plaintiff invoices in the total amount of $92,285.56 and Onetta claimed that $37,805.66 of that amount was due and owing for extra equipment and labor performed and a certain advance made at plaintiff's request above and beyond the contract price of $54,479.90. Onetta demanded payment, or satisfactory arrangements therefor, of $31,778.22 of such amount in addition to the basic contract price of $54,479.90 before delivery of the boat to plaintiff. After delivery of the boat, Onetta presented to plaintiff invoices for an additional $1,879.10 which it also claimed was due and payable.
On or about October 29, 1965, plaintiff paid Onetta the sum of $68,665.23 on account of the basic contract price and the additional charges claimed by Onetta, and plaintiff made and delivered to Onetta his promissory note for $17,592.89, with interest to accrue at 8% per annum from October 29, 1965. Contemporaneously, plaintiff executed and delivered to Onetta a preferred ship mortgage on the LYNN KENDALL to secure payment of the promissory note. Payments upon the note and mortgage were to be made in three equal installments of $5,864.29 on the 31st day of October, 1966, 1967, and 1968, and plaintiff agreed therein to pay reasonable attorneys' fees in any action to collect the note, or any portion thereof. The promissory note for $17,592.89 and preferred ship mortgage securing payment thereof were delivered to Onetta pursuant to the terms of a written agreement between plaintiff and Onetta, dated October 29, 1965. No payments have been made on the promissory note and mortgage although due demand for payment of the entire principal and interest has been made.
On or about November 6, 1965, plaintiff, for a valuable consideration, made, executed and delivered to Onetta a promissory note dated November 1, 1965, by the terms of which plaintiff promised to pay the principal sum of $6,027.44 to the order of Onetta 12 months after such date, with interest from November 1, 1965, payable at maturity at 8% per annum until paid. Plaintiff further promised as part of such promissory note to pay reasonable attorneys' fees awarded by the court in case action was instituted to collect the note. No payments have been made on this note although due demand therefor has been made.
Launching of the LYNN KENDALL was undertaken by Onetta at its boat-yard in Portland, Oregon on October 18, 1965. At that time, there was in force Builders Risk Policy No. H-DB-636 which had been issued to Onetta by Union Insurance in which Onetta and plaintiff were named as the assureds and the sum insured was $90,000.00.
On or about October 18, 1965, before delivery of the vessel to plaintiff and while the vessel was being launched by Onetta, a steel rail of the ways broke and the vessel fell onto and along the ways and grounded in the river as a result of which the vessel was damaged. Thereafter the vessel was delivered to Northwest Marine for repair work necessitated by the launching accident. While Northwest Marine was performing its repair work, Onetta also performed certain work in repair of damage caused by the launching accident. The charges made by Northwest Marine for its repairs amounted to $3,188.00 and the charges made by Onetta for its repairs amounted to $1,138.47. Union Insurance has paid these charges pursuant to the terms of its Builders Risk Policy. Delivery of the vessel was tendered and accepted in Portland, Oregon, on or about November 4, 1965, pursuant to the written agreement entered into between plaintiff and Onetta dated October 29, 1965. Although the vessel is currently in Alaskan waters, the parties expect that it will be returning to Oregon.
Subsequent to accepting delivery as aforesaid, and on or about the 15th day of November, 1965, plaintiff and his crew departed...
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...clause; damage to the insured vessel itself is not. Bender supports its argument for liquidated damages with Stanley v. Onetta Boat Works, Inc., 303 F.Supp. 99 (D.Or.1969), aff'd, 431 F.2d 241 (9th Cir.1970), which allowed recovery from the insurer of the amount paid by a vessel constructio......
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