Opinion
C.A. No. 2:04-1684-23.
December 17, 2004
ORDER
This matter is before the court upon Defendant Tailwalker Marine Inc.'s ("Tailwalker") Motions to Dismiss pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6) on the grounds that jurisdiction is not proper under 28 U.S.C. § 1333 and Plaintiff AXA Re Property Casualty Insurance Company's ("AXA") Complaint failed to state a claim upon which relief can be granted. For the reasons set forth herein, Tailwalker's motions are denied.
I. BACKGROUND
Tailwalker is a South Carolina corporation that does business as a boat dealership and boat repair facility in Georgetown County, South Carolina. Sweet C., Inc. ("Sweet C") is a South Carolina business located in Horry County, South Carolina. Sweet C, also known as Mean C Fishing Team, owned a sportfishing vessel ("fishing vessel") powered by three Yamaha outboard engines. Sweet C purchased and used the fishing vessel in professional fishing tournaments throughout the Southeastern United States. Edward Hucks ("Hucks") was the owner and agent of Sweet C and a professional fisherman. The Yamaha Motor Corporation ("Yamaha") and Contender Boats ("Contender") sponsored Sweet C at these Southern Kingfish Association tournaments.
As its sponsors, Yamaha and Contender sold marine outboard engines and sportfishing vessels to Sweet C at a discounted price while Sweet C advertised and promoted Yamaha's and Contender's products. Tailwalker was an authorized dealer of Yamaha's and Contender's goods. As part of their agreement, Yamaha Motor and Contender required Sweet C to purchase their products from Tailwalker. As a result, Sweet C purchased the fishing vessel and Yamaha outboard engines from Tailwalker that are now in dispute. Based upon Sweet C and Hucks' relationship with Yamaha and Contender, Sweet C entered into a verbal agreement with Tailwalker concerning any future repairs to the fishing vessel. Tailwalker agreed to repair and maintain the fishing vessel, her engines, and other equipment on a VIP or expedited basis. In exchange, Sweet C agreed to promote Tailwalker and to give the company the right to repair the fishing vessel. In May of 2001, Sweet C delivered the fishing vessel to Tailwalker for repairs pursuant to their repair agreement. Soon after receiving the vessel, Tailwalker began its repairs. On the evening of May 29, 2001, however, the boat's engines were stolen from Tailwalker's premises. The stolen engines were never returned to Sweet C. AXA insured Sweet C for part of the damages and commenced this action as subrogee of Sweet C. In its Complaint filed on May 26, 2004, AXA asserted (1) breach of contract and (2) bailment claims. On September 9, 2004, Tailwalker filed Motions to Dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) on the grounds that jurisdiction is not proper under 28 U.S.C. § 1333 and that AXA failed to state a claim upon which relief can be granted.
II. STANDARD OF REVIEW
When evaluating a motion to dismiss pursuant to Rule 12(b)(1) on the grounds that the complaint fails to state facts upon which jurisdiction can be founded, "all the facts alleged in the complaint are assumed to be true and the plaintiff, in effect, is afforded the same procedural protection as he would receive under a Rule 12(b)(6) consideration." Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). The plaintiff has the burden of proving jurisdiction, and the court may go beyond the face of the complaint and consider evidence without converting the motion into one for summary judgment. Richmond, Fredericksburg Potomac R. Co. v. U.S., 945 F.2d 765, 768 (4th Cir. 1991).A Rule 12(b)(6) motion should be granted only if, after accepting all well-pleaded allegations in the complaint as true, it appears certain that the plaintiff cannot prove any set of facts in support of his claims that entitles him to relief. See Edwards v. City of Goldsboro, 178 F.3d 231, 244 (4th Cir. 1999). The complaint should not be dismissed unless it is certain that the plaintiff is not entitled to relief under any legal theory that might plausibly be suggested by the facts alleged. See Mylan Labs. Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993). Further, "[u]nder the liberal rules of federal pleading, a complaint should survive a motion to dismiss if it sets out facts sufficient for the court to infer that all the required elements of the cause of action are present." Wolman v. Tose, 467 F.2d 29, 33 n. 5 (4th Cir. 1972).
III. ANALYSIS
In its suit, AXA alleges that Tailwalker breached Sweet C and Tailwalker's verbal contract by failing to return the fishing vessel in the same condition as when Sweet C delivered it. On its second cause of action, AXA argues that Tailwalker failed to exercise the ordinary care required to prevent the theft of the fishing vessel's engines. Tailwalker argues that it did not enter into a contract with Sweet C, and as a result, this court lacks jurisdiction over these claims because Tailwalker's alleged negligent act, the breaching of a duty of care owed to Sweet C, occurred on land, was not caused by a vessel on navigable water, and was not connected to a maritime activity. Tailwalker also contends that because no contract existed between the parties, AXA failed to state a claim for which relief can be granted on its breach of contract claim. The court first addresses Tailwalker's 12(b)(1) motion and then turns to its 12(b)(6) motion.
A. Jurisdiction
Courts recognize that contracts must be maritime in nature for the court to maintain admiralty jurisdiction. See Simon v. Intercontinental Transport B.V., 882 F.2d 1435, 1442 (9th Cir. 1989) ("[A] contract must be wholly maritime in nature to be cognizable in admiralty."); Home Ins. Co. v. Merchant's Transp. Co., 16 F.2d 372, 374 (9th Cir. 1926). A maritime contract relates to ships, to commerce or navigation on water, to transportation by sea, or to maritime employment. See, e.g., J.A.R., Inc. v. M/V Lady Lucille, 963 F.2d 96, 98 (5th Cir. 1992) ("A maritime contract is `[a] contract relating to a ship in its use as such, or to commerce or navigation on navigable waters, or to transportation by sea or to maritime employment.'") (citation omitted); Commercial Union Ins. Co. vs. Deteyns Shipyards, 147 F.Supp.2d 413, 419 (D.S.C. 2001).
General maritime law recognizes and enforces oral contracts. See, e.g., American Dredging Co. v. Miller, 510 U.S. 443, 451 (1994) (holding that admiralty law recognizes oral contracts); South Carolina State Ports Auth. v. Silver Anchor, S.A., (Panama), 23 F.3d 842, 847 n. 4 (4th Cir. 1994) ("Admiralty law has long recognized the validity of oral contracts."). In addition, the courts have held consistently that contracts to repair vessels are directly maritime in nature and invoke admiralty jurisdiction. See, e.g., New Bedford Dry Dock Co. v. Purdy, 258 U.S. 96, 99 (stating that a contract for repairs or supplies of a vessel is maritime); Diesel Repower, Inc. v. Islander Invs., Ltd., 271 F.3d 1318, 1322-23 (11th Cir. 2001) ("A contract to repair a vessel invokes admiralty jurisdiction."). Moreover, courts have gone on to hold that maritime contracts to be performed on land can be within the admiralty jurisdiction of the court. American Eastern Development Corp. v. Everglades Marine, Inc., 608 F.2d 123 (5th Cir. 1979) (finding admiralty jurisdiction over a vessel destroyed while on land pursuant to a maritime-related contract). As the court in Commercial Union Ins. Co. v. Used Boat Haven, 1996 U.S. Dist. LEXIS 5181, at *1 (S.D.N.Y. 1996) stated,
[c]ontracts to repair and store vessels fall within the Court's admiralty jurisdiction, whether the vessels are kept on land or in the water. The key to jurisdiction is not the location of the vessel, but whether the contract sought to be enforced impacts maritime commerce. Maritime jurisdiction exists over a dispute relating to coverage of insurance policy to vessel [sic] stolen from driveway because whether theft of a vessel occurs while it is afloat or ashore, the impact of the theft is on maritime commerce.
1996 U.S. Dist. LEXIS 5181 at *6 (citations omitted); see also Sirius Ins. Co. (UK) v. Collins, 16 F.3d 34, 36-37 (2d Cir. 1994) (finding maritime jurisdiction over dispute relating to coverage of insurance policy to vessel stolen while on land because the theft impacted maritime commerce).
A bailment is the delivery of goods by their owner (the bailor) to another (the bailee) for a specific purpose, and acceptance of those goods by the other, with the express or implied promise that the goods will be returned after the purpose of delivery has been fulfilled. When a vessel is placed at a wharf or marina for storage and repairs, a bailment results for the mutual benefit of the vessel owner and the operator of the marina. Buntin v. Fletchas, 257 F.2d 512, 513 (5th Cir. 1958). In such a bailment for mutual benefit, a bailee is responsible for exercising due care with respect to the vessel entrusted to him. Rodi Yachts, Inc. v. National Marine, Inc., 984 F.2d 880, 884 (7th Cir. 1993). "An action based on a bailment for mutual benefit can be raised either in contract or in tort: (1) a contract claim based upon breach of the bailment contract which incorporates a bailee's implied duty of non-negligence . . . with respect to the property while in its custody, or (2) in simple negligence." Reel Therapy Charters, Inc. v. Marina Management Inc., 2003 U.S. Dist. LEXIS 25155, at *1, *25 (N.D.Fla. 2003).
Moreover, a bailment relationship may arise from an underlying oral contract to repair, and the law imposes a duty of care upon the bailee to protect the bailor's goods. T.N.T. Marine Serv., Inc. v. Weaver Shipyards Dry Docks, Inc., 702 F.2d 585, 588 (5th Cir. 1983) (holding that a bailment may arise from an oral contract); Buntin, 257 F.2d at 513 ("The law of bailment is applicable in suits for damages to a ship that has been left with another for the purpose of repairs."); Goudy Stevens, Inc. v. Cable Marine, Inc., 924 F.2d 16, 18 (1st Cir. 1991) ("It has long been established that the law of bailment is applicable to suits for damages to or loss of a vessel that has been left with another for purposes of repair."); Commercial Union Ins. Co. v. Bohemia River Assocs., 855 F. Supp. 802, 805 (D. Md. 1991) ("A contract for the storage or repair of a boat constitutes a bailment agreement.").
Here, Hucks states in his affidavit that Sweet C entered into a verbal agreement with Tailwalker to repair its fishing vessels on an expedited basis. (Hucks Aff. ¶ 10.) While Tailwalker contends that there was no contract, the Fourth Circuit has clearly stated that in disputes as to the existence of a contract, the trial courts should assume jurisdiction and allow the parties to proceed to determine the merits of the claims. South Carolina State Ports, 23 F.3d at 847 ("Where the plaintiff sues for breach of an oral maritime contract and the defendant denies the existence of any such agreement, the district court should assume that admiralty jurisdiction exists and proceed to determine the merits of the claim."); Rivanna Trawlers Unlimited v. Thompson Trawlers, Inc., 840 F.2d 236, 239 (4th Cir. 1988) ("[T]he proper course of action is for the district court to accept jurisdiction and address the objection as an attack on the merits."). Moreover, this contract to repair Sweet C's fishing vessel was maritime in nature, and despite the fact that Tailwalker's duty as a bailee occurred on land, the court may assume jurisdiction over the claims on the contract and any bailment claim that AXA may have against Tailwalker. Buntin, 257 F.2d at 513 (assuming jurisdiction of a bailment claim arising from an underlying repair agreement); Goudy, 924 F.2d at 18 (assuming jurisdiction of a bailment claim). Accordingly, this court finds admiralty jurisdiction concerning both of AXA's causes of action.
AXA contends that its second cause of action is a bailment contract claim arising from the maritime contract to repair. Tailwalker, however, argues that this claim is one for negligence that occurred on land, and as a result, the court cannot assume jurisdiction. Regardless of whether the action is for negligence or a bailment contract claim, this court maintains admiralty jurisdiction over the cause of action. Courts have assumed admiralty jurisdiction of negligence claims arising from a contract to repair or bailment agreement. See Commercial Union Ins. Co. v. Bohemia River Assocs., 855 F. Supp. 802, 805 (D. Md. 1991) (assuming jurisdiction of a negligence claim and stating "[a] contract for . . . repair of a boat constitutes a bailment agreement."). Courts may also assume admiralty jurisdiction over bailment claims arising in contract. See Hicks v. Tolchester Marina, Inc., 1984 AMC 2027 (D.Md. 1983) (assuming admiralty jurisdiction over a breach of a marine contract of bailment for destruction of vessel on land).
B. 12(b)(6) Motion
Tailwalker does not challenge the merits of AXA's breach of contract claim; they only argue that a contract did not exist and any negligence action based on a bailment claim occurred on land and was allegedly not connected to a maritime activity. Because the court finds that a contract exists for purposes of assuming jurisdiction and that a bailment claim may arise from a contract to repair, which is maritime in nature, the court also finds that AXA may be entitled to relief under their breach of contract and bailment claims. See South Carolina State Ports, 23 F.3d at 847 (assuming jurisdiction over a dispute concerning the existence of a maritime contract); Commercial Union Ins., 855 F. Supp. at 805 (contract to repair constitutes a bailment agreement); Purdy, 258 U.S. at 99 (contract for repairs of a vessel is maritime in nature). Accordingly, the court also denies Tailwalker's 12(b)(6) motion.
IV. CONCLUSION
It is, therefore,
ORDERED, for the foregoing reasons that Defendants' Motions to Dismiss are hereby DENIED.