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Western Challenger, LLC v. DNV GL Group

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

December 27, 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 summary judgment (Dkt. No. 59). Having thoroughly considered the parties' briefing and the relevant record, the Court hereby GRANTS IN PART Defendants' motion and DENIES IN PART Defendants' motion for the reasons explained herein.

         I. BACKGROUND

         This case arises from the purchase of the vessel, the WESTERN CHALLENGER (the “Vessel”), and the associated advice, consulting, and admeasurement services Don Seymour, the Moorsom Consulting Group, LLC and its owner Phil Essex, and Germanischer Lloyd (USA), Inc. (“GL”) (collectively “Defendants”) provided before and after the purchase. (Dkt. No. 33.) Owners Tony Moran and Jon Franklin formed the Western Challenger, LLC (“Plaintiff”) to purchase the Vessel for $85, 000 in 2013 with plans to it as a U.S. fishing tender. (Dkt. Nos. 59 at 4, 9; 69 at 3.) This would require both a U.S. fisheries endorsement and a coastwise endorsement, which are issued by the National Vessel Documentation Center (“NVDC”), a division of the U.S. Coast Guard (“USCG”). (Dkt. Nos. 33 at 2, 59 at 4.)

         To obtain a coastwise endorsement, absent legislative relief, a vessel may not exceed 200 tons, as measured using the International Tonnage Convention (“ITC”). 46 U.S.C. § 12132(a); see 46 C.F.R. § 69, Subpart B. A vessel's ITC can only change through expansion or removal of sections of the hull or superstructure. See 46 C.F.R. § 69.57; (Dkt. No. 60-3 at 6-8). In contrast, a vessel's Gross Register Tonnage (“regulatory tonnage”) can change without exterior modification, through the addition or removal of deep framing or tonnage openings. See 46 C.F.R. § 69.103, 107; (Dkt. No. 60-3 at 6-8).[1] The measurement of a vessel, if not prepared by USCG, must be done by a member of the International Association of Classification Societies. 46 C.F.R. § 69.27.

         Prior to purchasing the Vessel, Plaintiff's documentation consultant, Mr. Kim of Kim Marine Documentation, instructed Plaintiff to seek out advice regarding whether it could obtain the necessary coastwise endorsement for the Vessel. (Dkt. Nos. 59 at 4, 69 at 4). Moran and Franklin contacted Seymour, who they thought could “help the vessel comply with any and all tonnage requirements that applied to the situation.” (Dkt. No. 69 at 4.) A series of conversations with Seymour followed, primarily involving Moran.[2] According to Plaintiff, Seymour “assured them that he would be able to get the vessel the necessary certificates to get redocumented.” (Id.) Defendants disagree. They allege Seymour only indicated that he “could assist in getting the boat's regulatory tonnage (not ITC) under 200 gross tons.” (Dkt No. 59 at 4.) Plaintiff purchased the Vessel shortly after Moran's and Franklin's preliminary discussions with Seymour. (Id.)

         Plaintiff signed a tonnage consulting agreement with Seymour a few weeks after purchase. (Dkt. Nos. 59 at 4-5, 69 at 4-5); (see Dkt. No. 60-8 at 2) (consultation agreement). Seymour recommended deep framing and tonnage openings be added to the Vessel to reduce its regulatory tonnage, which Plaintiff did, incurring approximately $50, 000 in costs. (Dkt. Nos. 33 at 5; 59 at 4-5; 69 at 4-5.) Seymour also assisted Plaintiff in arranging for the preparation of a tonnage certificate by GL. (Dkt. Nos. 59 at 5, 69 at 5.) GL, in turn, engaged Moorsom to provide admeasurement services to support the certificate. (Dkt. No. 59 at 11.) Moorsom's owner Essex did the admeasurement work, with Seymour's assistance on the regulatory portion. (Id.); (see Dkt. No. 60-7 at 6.)

         GL issued its first tonnage certificate for the Vessel in June 10, 2013, reflecting an ITC of 227 tons and regulatory tonnage of 196 tons. (Dkt. Nos. 59 at 11, 69 at 6.) Plaintiff knew that an ITC over 200 would pose a problem and spoke with Essex to understand why the ITC came in as high as it did, given Plaintiff's modifications to the Vessel. (Id.) Essex agreed to work with GL to issue an updated tonnage certificate reflecting reductions for areas Essex felt could be excluded while work on the Vessel was ongoing. (Dkt. Nos. 59 at 12, 69 at 6.) This “interim” tonnage certificate reflected an ITC of 191. (Id.) GL submitted the original and the “interim” certificates to USCG. (Id.) After the work on the Vessel was complete, GL issued a third and final tonnage certificate. (Dkt. Nos. 59 at 12, 69 at 7.) The certificate again reflected an ITC of 227 tons. (Id.)

         Because the final ITC exceeded 200 tons, USCG did not grant Plaintiff a coastwise endorsement. (Dkt. Nos. 59 at 13, 69 at 2.) Plaintiff sought legislative relief in 2014, eventually receiving a coastwise endorsement in 2015. (Dkt. Nos. 59 at 5, 69 at 15 n. 46.)

         To obtain a fisheries endorsement, the Vessel must have been built in the U.S. See 46 C.F.R. §§ 67.21(c), 67.177. While the Vessel was originally built in the U.S., as a Navy minesweeper, it was converted to a fish tender and reflagged in Canada. (Dkt. Nos. 59 at 4, 69 at 3.) It is unclear where and when the conversion took place. (Id.) If the conversion occurred in Canada, the Vessel would not qualify under USGS regulations for a fisheries endorsement. 46 C.F.R. §§ 67.21(c), 67.177.

         Plaintiff applied for a fisheries endorsement in October 2014. (Dkt. No. 59 at 14.) NVDC sent Kim a letter asking for “evidence of all alterations made and city, state & country where the alterations were made.” (Id.) Plaintiff did not respond. (Id.) NVDC again requested this information. (Id. at 15.) Kim prepared a response on Plaintiff's behalf indicating that the Vessel had “not been converted nor [had] any structural changes . . . .” (Id.) But this was not consistent with information on file with the USCG's tonnage division. (Id. at 16.) The tonnage division had information indicating that alterations had been made to the Vessel, but it lacked evidence to establish the extent, timing, and location. (Id.) As a result, NVDC issued another letter to Plaintiff, indicating that “[b]ecause the NVDC has not received any evidence to establish when and where the alterations [on file with the tonnage division] were performed [it is] unable to determine if the vessel qualifies as United States built and, thus, eligible for a fishery endorsement.” (Id.) To date, NVDC has refused to issue a fishery endorsement for the Vessel and Plaintiff has been unable to utilize the Vessel for its intended purpose. (Dkt. Nos. 33 at 4-6, 59 at 16.)

         Plaintiff brings suit against Defendants for negligent misrepresentation[3] and breach of contract. (Dkt. No. 33 at 4-6.) Plaintiff alleges Defendants are jointly liable because Seymour acted as Moorsom's and GL's agent throughout Plaintiff's dealings with Seymour, Moorsom, and GL. (Id. at 2, 5.) Plaintiff seeks recovery for loss-of-use damages, amounts it incurred to seek legislative relief for a coastwise endorsement, and the amounts it paid to unnecessarily reduce the Vessel's regulatory tonnage, based on Seymour's advice. (Id.) Defendants previously moved for partial summary judgment on Plaintiffs' loss-of-use claims, as limited solely to the issue of proximate cause. (Dkt. No. 40.) The Court granted the motion in part, holding that Plaintiff could bring a claim for loss-of-use damages based on a theory of negligent misrepresentation, but not on breach of contract. (Dkt. No. 52 at 6-7.) Defendants now move for summary judgment on all claims, asserting Plaintiff fails to bring sufficient evidence to survive summary judgment on any of its claims. (Dkt. No. 59 at 15-26.)

         II. DISCUSSION

         A. ...


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