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Western Challenger, LLC v. DNV GL Group

United States District Court, W.D. Washington, Seattle

August 2, 2017

WESTERN CHALLENGER, LLC, Plaintiff,
v.
DNV GL GROUP, et al., Defendants.

          ORDER

          JOHN C. COUGHENOUR UNITED STATES DISTRICT JUDGE.

         This matter comes before the Court on Defendants' motion for partial summary judgment (Dkt. No. 40). Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and hereby GRANTS IN PART and DENIES IN PART Defendants' motion for the reasons explained herein.

         I. BACKGROUND

         This case arises out of the purchase of the boat, the WESTERN CHALLENGER (the Vessel), by Plaintiff, and the associated advice, consulting, and other services provided by Defendants. (Dkt. No. 17.) The WESTERN CHALLENGER was originally built as a United States Navy minesweeper. (Dkt. No. 41-1 at 12.) At some point, it was sold into Canada and converted into a fish tendering vessel. (Id.) The parties are unaware when or where that conversion took place. (Id.)

         Plaintiff purchased the WESTERN CHALLENGER in 2013 with plans to repair it, redocument it in the United States, and use it as a fishing tender. (Id. at 12, 63.) Prior to purchasing the Vessel, Plaintiff consulted with Defendants, who assured Plaintiff that there would be “no problem” getting the boat documented with the United States Coast Guard (USCG) so that it could be used as a fishing tender. (Dkt. No. 45 at 2.) After purchase, Plaintiff brought the boat to Anacortes, Washington, and immediately began work on it. (Dkt. No. 41-1 at 23, 25.)

         In anticipation of the Vessel being documented and ready to work, Plaintiff signed a tendering charter with Trident Seafoods in May 2013. (Dkt. No. 45 at 5.) The contract was for 60 days, beginning in July 2013. (Id.)

         Around this time, Plaintiff also hired Defendants to admeasure the Vessel and provide a tonnage certificate to the USCG in order to obtain a coastwise endorsement. (Dkt. No. 41-1 at 25-37.) Defendants sent three tonnage certificates to the USCG. (Dkt. Nos. 45-5, 45-8, and 45-9.) The first certificate, dated June 10, 2013, stated a tonnage of 227 tons and included remarks indicating alterations to the hull and superstructure of the Vessel. (Dkt. No. 45-5.)

         Plaintiff knew an admeasurement over 200 tons would make the Vessel ineligible for a coastwise endorsement and contacted Defendants. (Dkt. Nos. 45-6 and 45-7.) Defendants responded that they could revise the tonnage certificate, although Plaintiff did not want to do so if it meant falsifying information. (Id.) Defendants then issued another tonnage certificate, dated the same day as the first, listing the tonnage at 191 tons, and included no remarks. (Dkt. No. 45-8.) In August 2013, Defendants sent a third tonnage certificate-unbeknownst to Plaintiff- listing the Vessel's tonnage at 227 tons. (Dkt. No. 45-9.) The remarks stated that the certificate was reissued “to reflect modifications to the hull.” (Id.) The USCG refused to grant Plaintiff a coastwise endorsement because it was over the 200-ton limit. (Id.) In 2014, Plaintiff obtained special legislation in Congress to enable it to receive a coastwise endorsement. (Id. at 3-4.)

         However, Plaintiff could not begin using the Vessel because it also needed to obtain a fishery endorsement. Before one may operate a commercial fishing vessel in the United States, she must obtain a fishing endorsement from the National Vessel Documentation Center (NVDC), a division of the USCG which has exclusive responsibility for issuing such endorsements. 46 U.S.C. § 12102; 46 C.F.R. § 67.21; Dkt. No. 42 at ¶ 10. A fishery endorsement may be issued for a vessel that is United States built and owned, and measuring five net tons or more. 46 C.F.R. §§ 67.5-67.9(a). However, “[a] vessel otherwise eligible for a fishery endorsement . . . permanently loses that eligibility if it undergoes rebuilding as defined in [46 C.F.R.] § 67.177 outside of the United States.” 46 C.F.R. § 67.21(c). Under 46 C.F.R. 67.177, a “vessel is deemed rebuilt foreign when any considerable part of its hull or superstructure is built upon or substantially altered outside of the United States.” In other words, if the WESTERN CHALLENGER was converted from a minesweeper to a fishing tender in Canada, it would be permanently ineligible for a fishing endorsement.

         In October 2014, Plaintiff applied for a fishery endorsement with the NVDC. (Dkt. No. 42 at ¶ 10.) Four days later, the NVDC sent Plaintiff's documentation agent a letter asking for “evidence of all alterations made and city, state & country where the alterations were made.” (Dkt. No. 41-1 at 52.) Plaintiff understood this as a request for information on when and where the boat was converted to a fish tender. (Id.) Because Plaintiff did not have that information, it did not send anything to the NVDC. (Id.)

         One year later, in October 2015, the NVDC again requested this information. (Id.) In November 2015, Plaintiff responded that the Vessel had “not been converted nor [had] any structural changes as alleged in the NVDC letter dated [October 24, 2014].” (Id. at 57.)

         The tonnage division (separate from the NVDC) contacted Plaintiff via letter in June 2016. In the letter, the tonnage division stated that “other alterations were made prior to [Plaintiff's] purchase, although we lack the necessary evidence to establish specifically when they were made.” (Id. at 58.) The NVDC also wrote to Plaintiff's documentation agent in June 2016, and stated that “[b]ecause the NVDC has not received any evidence to establish when and where the alterations were performed [it is] unable to determine if the vessel qualifies as United States built and, thus, eligible for a fishery endorsement.” (Id. at 60-62.) Plaintiff confirmed that the USCG denied the fishery endorsement because it could not determine whether the conversion to a fish tender constituted a foreign rebuild. (Id. at 60.)

         Plaintiff initiated this lawsuit in June 2016, alleging a breach of contract claim and a tort claim for negligent misrepresentation. (Dkt. No. 17 at 4-6.) As part of the relief requested, Plaintiff asked for loss-of-use damages totaling over $500, 000-for each claim-for the time the WESTERN CHALLENGER could have been operating as a fishing tender but for Defendants' conduct. (Dkt. No. 33 at 5, 6.) Defendants now move for partial summary judgment on those damages, arguing that the reason the WESTERN CHALLENGER did not receive a fishery endorsement had nothing to do with Defendants' conduct. (Dkt. No. 40 at 3.) Defendants also move for partial summary judgment because Plaintiff failed to mitigate its damages. (Dkt. No. 40 at 9-10.)

         II. ...


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