United States District Court, E.D. North Carolina, Southern Division, Admiralty
NEW HAMPSHIRE INSURANCE, COMPANY, AS SUBROGEE OF SANCTUARY, LLC Plaintiff,
BENNETT BROTHERS YACHTS, INC. Defendant.
C. DEVER III, Chief United States District Judge
29, 2016, New Hampshire Insurance Company ("NHIC"
or "plaintiff'), as subrogee of Sanctuary LLC, sued
Bennett Brothers Yachts, Inc. ("Bennett Brothers"
or "defendant") for breach of contract, breach of
implied warranty of workmanlike performance, and negligence.
See Compl. [D.E.1]. On September 18, 2017, Bennett
Brothers moved for summary judgment [D.E. 20] and filed a
supporting memorandum [D.E. 21 ]. On October 23, 2017, NHIC
responded in opposition [D.E.28]. On November 6, 2017,
Bennett Brothers replied [D.E. 30]. OnNovember9, 2017, NHIC
moved to exclude Bennett Brothers's Exhibit N [D.E. 32].
On December 1, 2017, Bennett Brothers responded [D.E. 34]. As
explained below, Bennett Brothers's motion for summary
judgment is granted, and NHIC's motion to exclude Exhibit
N is denied as moot.
insured Sanctuary LLC's Motor Yacht ("the
Vessel"), a sixty-foot power catamaran, for $2, 985,
000. See Compl. ¶ 1. On July 30, 2015, the Vessel struck
a submerged object in the intracoastal waterway in South
Carolina. [D.E. 28] 2. A local commercial diver initially
examined the Vessel. See Id. On July 31, 2015,
Bennett Brothers agreed to haul the Vessel to its facility
for additional examination and repair. See Compl. ¶ 5;
Answer [D.E. 10] ¶ 5. On August 1, 2015, Bennett
Brothers dropped and damaged the Vessel while moving the
Vessel to land for repairs. See Compl.
August 3, 2015, Michael Andrews, a professional marine
surveyor hired by NHIC, and Bill Donnalley, a professional
marine surveyor hired by Bennett Brothers's insurance
carrier, conducted a joint survey of the Vessel's
damages. See [D.E. 28] 3; Pl.Ex. 5 [D.E. 29-5]. Andrews
concluded that the Vessel could be repaired "with no
lasting effects." Pl.Ex. 10 [D.E. 29-10] 4; Def. Ex. A
[D.E. 23-1]. Two independent vessel repair yards provided
repair estimates. See Pl.Ex. 10 at 3. Fosters Yacht Service
estimated that the Vessel could be repaired for $328, 185.
See Id. Bradford Marine, Inc. estimated that the
Vessel could be repaired for $820, 625. See id Bennett
Brothers also inspected the Vessel and estimated that repairs
would cost $246, 960. See Def. Ex. C [23-3] 2. On August 10,
2015, the Vessel's manufacturer voided the five-year hull
warranty due to the damages incurred when Bennett Brothers
dropped the Vessel. See Pl. Ex. 6 [D.E. 29-6].
November 13, 2015, NHIC treated the Vessel as a constructive
total loss and paid the insured $2, 985, 000, the limit of
the insurance policy. See Compl. ¶ 6; Pl. Ex. 9 [D.E.
29-9]. In January 2016, NHIC sold the Vessel at a salvage
sale to Ron Brimlow for $900, 000. See Pl. Ex. 12 [D.E.
29-12]. NHIC's net recovery from the sale was $794, 313.
seeks $2, 190, 686.72 in damages, representing the
constructive total loss of the Vessel. Compl. ¶¶
13, 15, 19. NHIC calculated the total loss as follows:
insured value of the Vessel ($2, 985, 000) less salvage value
($794, 313.28). See Def. Ex. F [D.E. 23-6] 3.
judgment is appropriate when, after reviewing the record as a
whole, no genuine issue of material fact exists and the
moving party is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(a); Anderson v. Liberty Lobby. Inc.,
477 U.S. 242, 247-48 (1986). The party seeking summary
judgment initially must demonstrate the absence of a genuine
issue of material fact or the absence of evidence to support
the nonmoving party's case. Celotex Corp. v.
Catrett, 477 U.S. 317. 325 (1986). Once the moving party
has met its burden, the nonmoving party may not rest on the
allegations or denials in its pleading, Anderson,
477 U.S. at 248-49, but "must come forward with specific
facts showing that there is a genuine issue for trial."
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587 (1986) (emphasis and quotation omitted). A
trial court reviewing a motion for summary judgment should
determine whether a genuine issue of material fact exists for
trial. Anderson, 477 U.S. at 249. In making this
determination, the court must view the evidence and the
inferences drawn therefrom in the light most favorable to the
nonmoving party. Scott v. Harris, 550 U.S. 372, 378
admiralty law governs. A plaintiff has "a maritime cause
of action whether he sues in contract for its breach by a
person with whom there was a contract for repairs of the
vessel, or in tort for the negligent performance of the
maritime contract." Todd Shipyards Corp. v. Turbine
Serv. Inc., 674 F.2d 401, 412 (5th Cir. 1982): see
One Beacon Ins. Co. v. Crowley Marine Servs., 648
F.3d 258, 262 (5th Cir. 2011); Clear Marine Ventures.
Ltd. v. Cazadores. Inc. No. 08-22418, 2010 WL 11504400,
at *2 (S.D. Fla. Jan. 28, 2010) (unpublished).
NHIC's claim that it is entitled to damages for the
constructive total loss of the Vessel, the owner of a damaged
vessel is entitled to recover damages in an amount
"sufficient to restore the injured vessel to the
condition in which she was at the time the collision
occurred." F.C. Wheat Maritime Corp. v.
United States, 663 F.3d 714, 721 (4th Cir. 2011)
(quotation omitted); see The Baltimore, 75 U.S. (8
Wall) 377, 385 (1869); Hewlett v. Barge Bertie, 418
F.2d 654, 657 (4th Cir. 1969). The amount of recovery depends
on whether the vessel is considered a "constructive
total loss, " or whether it can be repaired. See,
e.g., The Baltimore, 75 U.S. (8 Wall) at
385-86; Gaines Towing & Transp., Inc. v.
Atlantis Tanker Corp.. 191 F.3d 633, 635 (5th Cir. 1999) (per
curiam); Self Towing. Inc. v. Brown Marine Servs.,
Inc., 837 F.2d 1501, 1506 (11th Cir.
1988). A "constructive total loss"
occurs when the cost of repairs is greater than the fair
market value of the vessel immediately before the damage
occurred. See Gaines Towing & Transp., Inc., 191
F.3d at 635; Self Towing. Inc., 837 F.2d at 1506;
Hewlett 418 F.2d at 657; Dann Marine Towing. LC
v. Gen. Ship Repair Corp, No. MJG-12-1610, 2017 WL
3916992, at *21 (D. Md. Sept. 7, 2017) (unpublished);
F.C. Wheat Maritime Corp. v. United States, 712
F.Supp.2d 471, 473 (E.D. Va. 2010), affd, 663 F.3d
714 (4th Cir. 2011). When a damaged vessel is a constructive
total loss, the measure of damages is the pre-casualty fair
market value of the vessel. See Standard Oil Co. v. S.
Pac. Co., 268 U.S. 146, 155-56 (1925); Hewlett,
418 F.2d at 657. However, "[w]here a damaged vessel is
not a total loss, the owner is entitled to recover the
reasonable cost of repairs necessary to restore it to its
pre-damage condition." F.C. Wheat Maritime
Corp., 712 F.Supp.2d at 473: see The Baltimore,
75 U.S. (8 Wall) at 386; Bunge Corp. v. Am,
Commercial Barge Line Co., 630 F.2d 1236, 1241 (7th
Cir. 1980); Hewlett, 418 F.2d at 657; Clear
Marine Ventures, 2010 WL 11504400, at *5.
complaint, NHIC requested damages for the constructive total
loss of the Vessel. Compl. ¶¶ 13, 15, 19. NHIC
reiterated its constructive total loss claim in the Rule
26(a) initial disclosures. See Def. Ex. F. [D.E. 23-6] 3. In
its motion for summary judgment, Bennett Brothers argues that
NHIC cannot recover damages for the constructive total loss
of the Vessel because the Vessel was repairable. See [D.E.
21] 2. In support, Bennett Brothers cites several pieces of
evidence, including a Marine Damage Report that Michael
Andrews, NHIC's expert, prepared shortly after the
incident. See Def. Ex. A [D.E. 23-1]; Pl. Ex. 10 [D.E.
29-10]. Andrews concluded that the Vessel could be repaired
with "no lasting effects from [the] damages." Pl.
Ex. 10 at 4. Andrews's report included repair estimates
from two vessel repair yards, Fosters Yacht Service and
Bradford Marine, Inc. See Id. at 3. Fosters Yacht
Service estimated that repairs would cost $328, 185. See
Id. Bradford Marine, Inc. estimated that repairs
would cost $820, 625. See Id. Bennett Brothers also
inspected the Vessel and estimated that repairs would cost
$246, 960. See Def. Ex. C [D.E. 23-3]. Bill Trenkle, Bennett
Brothers's expert, inspected the Vessel after Brimlow
purchased it. See Def. Ex. B [D.E. 23-2] 6. Trenkle concluded
that Brimlow repaired and restored the Vessel to its pre-loss
condition for approximately $40, 000. See Id. at 4.
supplemental disclosures and interrogatories, NHIC appears to
abandon its claim for damages for constructive total loss of
the Vessel. See Def. Ex. L [D.E. 23-12]; Def. Ex. M [D.E. 23-
13] 2 ("Plaintiff is not claiming as damages that [the
Vessel] was a constructive total loss"). In opposition
to Bennet Brothers's motion for summary judgment,
however, NHIC argues that the Vessel was a total constructive
loss. See [D.E. 28] 8. To support this position, NHIC relies
on the Vessel manufacturer's cancellation of the
five-year hull warranty and a letter from the Vessel's
architect. See Id. at 3; Pl. Ex. 6 [D.E. 29-6]; Pl.
Ex. 7 [D.E. 29-7]. The letter from the manufacturer stated
that it voided the warranty because a repaired hull would not
have the strength of the original hull. See Pl. Ex. 6. The
architect's letter stated that any repair would be
"remedial only." Pl. Ex. 7.
argues that it was "compelled to declare [the Vessel] a
constructive total loss" because the manufacturer voided
the warranty, and there were extensive damages and repair
costs. See [D.E. 28] 4. The court rejects the argument. When
repairs to a vessel are feasible, damages are calculated with
reference to cost of repairs. See The Baltimore, 75
U.S. (8 Wall) at 386; Bunge Corp., 630 F.2d at 1241:
Hewlett, 418 F.2d at 657; F.C. Wheat Maritime
Corp., 712 F.Supp.2d at 473. The record demonstrates
that the Vessel could be repaired, and the manufacturer's
cancellation of the hull warranty is not evidence to the
contrary. Indeed, NHIC's expert opined that the Vessel
could be repaired. See Pl. Ex. 10. Moreover, a vessel is a
constructive total loss when the cost of repairs exceeds the
fair market value of the vessel immediately before the damage
occurred. See Gaines Towing & Transp., Inc., 191
F.3d at 635; Self Towing. Inc., 837 F.2d at 1506;
Hewlett, 418 F.2d at 657; Dann Marine Towing.
LC. 2017 WL 3916992, at *21; F.C. Wheat Maritime
Corp., 712 F.Supp.2d at 473; In re Lebeouf Bros.
Towing Co., 588 F.Supp. at 131. NHIC ...