which states: "Next required hull inspection for TMA is 1999
September. Check with USCG to see if they require hull inspection
when vessel ownership changes." (See id., Ex. 17; Pls. Mem.
Opp. Summ. J., Ex. E.) It is unclear whether Norwalk Maritime
ever made such inquiry to the USCG or relayed the required
inspection date to Mitlof.
Mitlof purchased Conservator from Norwalk Maritime on July 1,
1998 for $12,000. (See NM Rule 56.1 Stmt., Exs. J, K.) Sometime
thereafter, Mitlof contacted the USCG's New York district to
inquire about having the boat reinspected. He received verbal
assurance that this would be unnecessary, but he never sought or
secured this assurance in writing;*fn7 a reinspection was thus
never performed. On August 13, 1998, Schneider sent
Conservator's COI to the USCG, apparently at the USCG's
request. (See id., Ex. L.)
Mitlof claims that Norwalk Maritime fraudulently misrepresented
Conservator's seaworthiness in the advertisement and created an
express warranty by stating that the boat held a "current COI."
(See 3d-Party Complt. ¶ 11.) He further claims that by selling
the boat in its allegedly unseaworthy condition, Norwalk Maritime
breached this express warranty in violation of U.C.C. § 2-313.
(See id. ¶ 14.) He also alleges that Norwalk Maritime sold
Conservator to him knowing that he intended to use it on the
Hudson River, but failed to inform him that the boat was
unsuitable for such use (see id. ¶ 15), and instead gave him a
"documented certified marine survey" that purported to confirm
such use (see id. ¶¶ 12, 15-16), both which violated U.C.C. §
2-315. Finally, he claims that Norwalk Maritime negligently
failed to inform the USCG of the boat's sale and transfer in
violation of 46 C.F.R. § 176.120. (See id. ¶ 13.)
I. Summary Judgment Standard
Under FED. R. CIV. P. 56, summary judgment may be granted where
there are no genuine issues of material fact and the movant is
entitled to judgment as a matter of law. See FED. R. CIV. P.
56(c); Anderson, 477 U.S. at 247-50, 106 S.Ct. 2505. The burden
rests on the movant to demonstrate the absence of a genuine issue
of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322,
106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine factual issue
exists if there is sufficient evidence favoring the nonmovant for
a reasonable jury to return a verdict in his favor. Anderson,
477 U.S. at 248, 106 S.Ct. 2505. In deciding whether summary
judgment is appropriate, the court should resolve all ambiguities
and draws all permissible factual inferences against the movant.
See id. at 255, 106 S.Ct. 2505. To defeat summary judgment, the
nonmovant must go beyond the pleadings and "must do more than
simply show that there is some metaphysical doubt as to the
material facts." Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).
The court's role at this stage of the litigation is not to decide
issues of material fact, but to discern
whether any exist. See Gallo v. Prudential Residential Servs.,
L.P., 22 F.3d 1219, 1224 (2d Cir. 1994). Summary judgment may
not be granted simply because the court believes the nonmovant
will not be able to meet the burden of persuasion at trial.
Danzer v. Norden Sys., 151 F.3d 50, 54 (2d Cir. 1998).
II. Choice of Law
Mitlof's claims create a choice of law issue, for although this
Court has admiralty jurisdiction over the accident and applied
New York law thereto in Smith I, see 130 F. Supp.2d at 582-83,
at the times when the ad ran and when the sale was made,
Conservator was dry docked at Norwalk Maritime in Connecticut,
but Mitlof resided in New York. "`The first step in any case
presenting a potential choice of law issue is to determine
whether there is an actual conflict between the laws of the
jurisdictions involved.' Where no [such] conflict exists . . .
there is no reason to engage in a choice of law analysis." Elson
v. Defren, 726 N.Y.S.2d 407, 411 (1st Dep't 2001) (internal
citations omitted). Mitlof claims that Norwalk Maritime violated
U.C.C. §§ 2-313 and 2-315, which both New York and Connecticut
have adopted verbatim by statute. See N.Y.U.C.C. §§ 2-313,
2-315; CONN. GEN. STAT. ANN. §§ 42a-2-313, 42a-2-315.
Furthermore, in New York, "[t]o constitute fraud, a
misrepresentation must have been knowingly and intentionally made
to the plaintiff, whose damages follow from reasonable reliance
upon the misstatement." Mayes v. UVI Holdings, Inc., 280 A.D.2d 153,
723 N.Y.S.2d 151, 157 (1st Dep't 2001); in Connecticut, to
prevail on a fraudulent misrepresentation claim, plaintiffs must
prove "by clear and convincing evidence (1) that the defendants
made [a] false representation of fact; (2) that they knew the
representation was false; (3) that they made the representation
to induce plaintiffs to buy the [product]; and (4) that the
plaintiffs acted upon the false representation to their injury."
Jarsen v. Gunther, No. CV0071986S, 2001 WL 438822, at *3
(Conn. Sup.er.Ct. April 12, 2001). Comparing the two states' laws,
we find no conflict.
Moreover, under New York's "interest analysis" test,
"`significant contacts are, almost exclusively, the parties'
domiciles and the locus of the tort.'" Elson, 726 N.Y.S.2d 407,
412 (quoting Schultz v. Boy Scouts of America, Inc., 65 N.Y.2d 189,
491 N.Y.S.2d 90, 95, 480 N.E.2d 679 (1985)). Norwalk
Maritime is located in Connecticut, and the sale of the boat —
which resulted in part, at least, upon the advertisement —
occurred in Connecticut; New York's sole connection to the case
was Mitlof's residence at the time he bought Conservator. On
balance then, the totality of circumstances favors applying
Connecticut law to the case.
III. Fraudulent Misrepresentation
Mitlof claims that Norwalk Maritime committed fraudulent
misrepresentation by advertising that Conservator held a valid
USCG COI, "notwithstanding said vessel's absolute unsuitability
and inherent unseaworthiness for any commercial passenger
service." (3d-Party Complt. ¶ 11 (emphasis in original).) Norwalk
Maritime counters by relying on both Precision's and the USCG's
positive inspection reports, stating that "clearly, the
Conservator had no dangerous propensities known to the aquarium."
(NM Mem. Supp. Summ. J. at 2.) Plaintiffs add that Norwalk
Maritime "knew of a variety of problems with the vessel, and
failed to disclose same." (Pls. Mem. Opp. Summ. J. at 6.) Norwalk
Maritime disputes plaintiffs' assertion, and states that "the
fact that one of the pontoons once took on some water is
an innocuous and immaterial fact, as evidenced by the [USCG's]
finding that the Conservator was `in all respects in conformity
with the applicable vessel inspection laws.'" (NM Reply to Pls.
Mem. Opp. Summ. J. at 4 (citing May 21, 1997 USCG COI).)
Although nothing Norwalk Maritime stated in the ad was false on
its face, its assertion that Conservator was in "excellent
condition" is questionable in view of the boat's having taken on
water, as admitted by Norwalk Maritime. (See id.)*fn8 The ad
correctly stated that the boat contained a "current C.O.I." and
accurately listed its limitations ("USCG 20 passengers"), but
this statement only told half the story. It is unclear whether
Norwalk Maritime informed the USCG or Precision of the pontoon
incident, and whether this information would have adversely
affected both inspectors' reports. Such knowledge may have led
the USCG to perform a stability test on the boat, and may have
prompted Precision to conduct a sea trial on it. These questions
cannot be resolved without testimony from USCG and Precision
personnel. Thus, a material question of fact exists, because,
based upon the evidence presented, a jury reasonably could
conclude that Norwalk Maritime intentionally withheld the pontoon
incident from the marine inspectors. Therefore, we must deny
Norwalk Maritime's motion for summary judgment as to the
fraudulent misrepresentation claim.
IV. Breach of Express Warranty
Mitlof also claims that Norwalk Maritime breached an express
warranty by "negligently, willfully and recklessly consummat[ing]
the sale of [Conservator] in violation of UCC Article 2, 313,
1(a)."*fn9 (3d-Party Complt. ¶ 14.) Norwalk Maritime argues that
"the only express warranty made by [it] was in the classified
advertisement in which it affirmed that it held a current [COI]
for the Conservator," and that since such a COI was issued, "it
cannot be disputed that when this express warranty was made,
prior to the sale of the vessel, [NM] indeed held a current [COI]
for the Conservator." (NM Mem. Supp. Summ. J. at 8.) The U.C.C.
applies to the sale of boats and vessels, see Delta Marine,
813 F. Supp. at 419, and provides that
[e]xpress warranties by the seller are created as
follows: (a) Any affirmation of fact or promise made
by the seller to the buyer which relates to the goods
and becomes part of the basis of the bargain creates
an express warranty that the goods shall conform to
the affirmation or promise.
CONN. GEN. STAT. ANN. § 42a-2-313(1)(a).
Although it is undisputed that Conservator held a COI at the
time of sale, as stated supra in section II., Norwalk
Maritime's potential non-disclosure of a material fact to the
USCG — i.e., the pontoon taking on water — reasonably could
have affected whether the COI would have been issued, thus
potentially rendering it void
ab initio. Cf. Pacific Resources, Inc. v. Oswego Shipping
Corp., No. 79 Civ. 1606, 1984 WL 928, at *7 (S.D.N.Y. Sept. 26,
1984) (regarding marine insurance contracts, failure of insured
to disclose to insurer fact "that is material to the risk . . .
allows the insurer to have the contract declared void ab
initio"); see also King v. Aetna, 54 F.2d 253 (2d Cir. 1931)
(same). In Pacific Resources, the court stated that
[s]hipowners have a duty to disclose to the
classification society any condition which would
affect the seaworthiness of the vessel. . . . It
follows, then, that when the owner/operator
discharges its duty to the classification society it
also fulfills its duty to disclose any fact material
to the risk which the insurers have agreed to
undertake. Any condition which would affect
seaworthiness of the vessel would presumably be
material to that risk, affecting both the value of
the ship and the probability that a casualty might
1984 WL 928, at *8; see also Delta Marine, 813 F. Supp. at 417.