Sweat Pea Marine, Ltd. v. Apj Marine, Inc.

Citation411 F.3d 1242
Decision Date08 June 2005
Docket NumberNo. 03-16575.,03-16575.
PartiesSWEET PEA MARINE, LTD., a Foreign Corporation, Plaintiff-Appellant, Cross-Appellee, Bobby Stevenson, a Texas Citizen, Plaintiff-Cross-Appellee, v. APJ MARINE, INC., a Florida Corporation, Alan P. Jellis, Defendants-Appellees, Cross-Appellants. A.P.J. Marine, Inc., a Florida Corporation, Plaintiff-Appellee, Cross-Appellant, v. M/V SWEET PEA, her Engines, Tackle, Apparel, Appurtenances, Furniture, Official No. 7708184, in rem, Defendant, Sweet Pea Marine Ltd., a Foreign Corporation in Personam, Defendant-Appellant, Cross-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)

Alaine S. Greenberg, William R. Clayton, Greenberg Traurig, P.A., Ft. Lauderdale, FL, for Sweet Pea Marine, Ltd.

John Lawrence Korthals, Pompano Beach, FL, David F. Pope, Fowler, White, Gillen, Boggs, Villareal & Banker, PA, Tampa, FL, for APJ Marine, Inc.

Appeals from the United States District Court for the Southern District of Florida.

Before BIRCH, CARNES and RONEY, Circuit Judges.

BIRCH, Circuit Judge:

This appeal requires us to review the propriety of an award of damages in admiralty and the imposition of a maritime lien on a pleasure yacht. Plaintiff-appellant/Cross-appellee Sweet Pea Marine, Ltd. ("Sweet Pea"), a Cayman Islands corporation whose sole enterprise is the upkeep and management of the vessel M/V SWEET PEA ("the Vessel"), appeals the district court's omnibus order in which it: (1) entered the jury's verdict against Defendant-appellee/Cross-appellant APJ Marine, Inc. ("APJ") in the amount of $243,904 on Sweet Pea's claims brought on the basis of diversity jurisdiction; and (2) awarded APJ $244,689.31 in damages on its in personam maritime claim against Sweet Pea and its in rem maritime lien claim against the Vessel. Because there was complete diversity of citizenship between the parties when the case was filed, the district court's exercise of federal subject matter jurisdiction over Sweet Pea's claims was not improper. Because APJ failed to offer at trial any evidence on a required element of its admiralty claims, however, the district court's award of damages to APJ and its imposition of a maritime lien against the Vessel were clearly erroneous. Accordingly, the district court's order is AFFIRMED in part, VACATED in part, and REMANDED.

I. BACKGROUND

This appeal arises from a dispute about an oral contract to outfit and remodel the interior of the Vessel, a 127-foot pleasure yacht. In September 1999, Alan Jellis, on behalf of APJ, met with Bobby Stevenson1 to discuss the renovation of the Vessel. At that meeting, Jellis and Stevenson reached an oral agreement which the district court found included the following terms: (1) APJ would redesign and refit the interior of the Vessel and warranty that the work would result in a "world class vessel"; (2) the scope of the project may change and evolve over time; (3) the interior work would be done in tandem with engineering, electrical, and mechanical work being done by other parties; (4) the interior work was estimated to be completed within 9-12 months and would cost $1.75 million; and (5) APJ would be paid as follows: (a) Labor: Jellis would be paid $85/hour; skilled laborers would be paid $56/hour; semi-skilled laborers would be paid $36/hour; unskilled laborers would be paid $26/hour; and there would be no additional "mark-up" for work performed by these subcontractors; (b) Materials/Goods: APJ would add a 15% mark-up when it charged Sweet Pea for materials and supplies bought by APJ for the Vessel from vendors. In November/December 2000, the parties modified the contract such that APJ was responsible for the engineering, electrical, and mechanical work being done on the Vessel in addition to the interior work and, as a result, Jellis's pay rate was increased to $125/hour.

During the early part of 2001, Sweet Pea began to have problems with the work being done by APJ. APJ was behind schedule and kept submitting to Sweet Pea longer timetables for completion and increased cost estimates. Despite these problems, however, Sweet Pea continued to pay APJ for its work. In June 2001, Sweet Pea had Jellis and APJ audited and discovered irregularities in APJ's billing practices. For example, Sweet Pea's accountant found that APJ used subcontractors to perform the interior work; that these subcontractors were hiring unskilled workers for $11/hour but were billing them at $22/hour as semi-skilled worker to APJ; and that APJ was then billing these workers to Sweet Pea as skilled workers at $56/hour. As a result of these irregularities and APJ's failure to complete the job according to its estimated schedule, Sweet Pea terminated APJ in November 2001.

At that point, Sweet Pea had paid APJ $4.3 million according to the agreed-upon rates ($355,000 went directly to APJ or Jellis and the rest was paid to vendors and laborers). In March 2002, APJ sent Sweet Pea a bill for $1.292 million for outstanding costs it had incurred prior to its termination. According to the bill, APJ had spent $5.6 million on the renovation of the Vessel ($3.67 million for labor, $1.878 million for materials/supplies, and $55,755 in petty cash), and was paid only $4.3 million by Sweet Pea. Sweet Pea refused to pay the outstanding balance.

On 17 May 2002, Sweet Pea filed a complaint against APJ in federal court based on diversity jurisdiction and alleged breach of an oral contract, negligent misrepresentation, fraud in the inducement, breach of an oral express warranty, and breach of fiduciary duties. In response, on 22 May 2002, APJ filed a complaint in personam against Sweet Pea and in rem against the Vessel for the $1.292 million it claimed it was owed for work performed on the Vessel. APJ's claims were brought in federal court under admiralty jurisdiction, and therefore were framed as a breach of an oral contract under maritime law and as a maritime lien claim, rather than a claim for quantum meruit. The district court then issued a show cause order to require APJ to demonstrate why its admiralty claims should not be dismissed with instructions that it file the claims as counterclaims to the diversity action initiated by Sweet Pea. Although the district court initially dismissed APJ's complaint, it granted APJ's motion to reconsider because Sweet Pea had deposited a bond pursuant to admiralty law procedure to secure the Vessel in the in rem action, and APJ was concerned that a dismissal would forfeit its interest in that bond. Accordingly, the district court consolidated the two actions for discovery purposes, but allowed them to proceed on separate dockets.

On 20 October 2003, a two-week jury trial commenced in which both actions were tried together. Because Sweet Pea had demanded a jury for its diversity claims, the jury was allowed to render a verdict on Sweet Pea's claims. Because APJ's admiralty claims precluded resort to a jury, the district court allowed the jury to issue an advisory opinion on APJ's admiralty claims, but insisted that it would make the ultimate findings of fact for APJ's claims. At the conclusion of the trial, the jury found for Sweet Pea on its breach of warranty claim and awarded it $239,000. The jury also found for Sweet Pea on its negligent misrepresentation and breach of fiduciary duty claims, but did not award any damages for these claims. The jury found for APJ on the breach of contract and fraud claims. In addition, in its advisory capacity, the jury found for APJ on its maritime claims in the amount of $244,000. Turning to APJ's claims, the district court found that the jury ruled against Sweet Pea on its contract-related claims, and therefore res judicata did not preclude it from reaching APJ's maritime contract claims. The district court found that APJ was not entitled to any compensation for labor performed by subcontractors because it had already been paid by Sweet Pea for the work performed and APJ was not entitled, under the terms of the oral contract, to any mark-up over the rate at which the subcontracted workers were billed to Sweet Pea. However, the district court found that APJ was entitled under the oral contract to a mark-up on goods and materials supplied to the Vessel, and that APJ had not yet recovered the agreed-upon mark-up. Accordingly, based on its conclusion that Exhibit 5 showed that APJ had paid $1,631,262.15 to vendors for goods and materials, the court multiplied that number by 15% and ruled that Sweet Pea owed APJ $244,689.31 in damages. The district court also imposed a maritime lien on the Vessel in the same amount.

On appeal, APJ argues that the district court lacked jurisdiction over Sweet Pea's diversity claims because Sweet Pea's principal place of business was Florida and APJ was a Florida corporation. For its part, Sweet Pea argues that the district court erred by awarding APJ damages and imposing a maritime lien on the Vessel because APJ failed to present sufficient evidence on the required elements of its claims. Alternatively, Sweet Pea argues that the district court erred by refusing to set off its award of damages on APJ's admiralty claims with the jury's award of damages on Sweet Pea's diversity claims. We will address each argument in turn.

II. DISCUSSION
A. Jurisdiction Over Sweet Pea's Diversity Claims

Because federal courts are courts of limited jurisdiction, we must address as a threshold matter APJ's argument that the district court lacked subject matter jurisdiction. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94, 118 S.Ct. 1003, 1012, 140 L.Ed.2d 210 (1998) (noting that appellate courts must examine the subject matter jurisdiction of the trial court before considering the merits of the appeal). We review a district court's determination of its subject matter jurisdiction de novo. See Asociacion De Empleados Del Area Canalera v. Pan. Canal Comm'n, 329 F.3d 1235, 1237 (11th Cir.2003). A district court's finding as to a corporation's principal place of...

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