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SMITH v. MITLOF

April 17, 2002

NANCY LEE SMITH, INDIVIDUALLY AND ON HER OWN BEHALF AND ON BEHALF OF: JOSHUA OSBORNE, JONATHAN OSBORNE AND THOMAS OSBORNE, MINORS BY THEIR PARENT AND GUARDIAN NANCY LEE SMITH, KEVIN MCGINN, INDIVIDUALLY AND ON HIS OWN BEHALF AND ON BEHALF OF: WEST PAGE 493 ERIN MCGINN, CONNOR MCGINN AND REBECCA MCGINN, MINORS BY THEIR PARENT AND GUARDIAN KEVIN MCGINN, DAWN HACKETT, JOSEPH PECOPARO, LINDA PECORARO AND MICHAEL HUREWITZ, PLAINTIFFS,
V.
JOSEPH MITLOF, ET AL., DEFENDANTS/THIRD-PARTY, PLAINTIFF, V. THE MARITIME AQUARIUM AT NORWALK, INC., THIRD-PARTY DEFENDANT. SUSAN THORSON, WILLIAM L. THORSON, DENNY JACOBSON, ELEANOR BUDOFF, HELEN GURVITCH, JOHN L. RUSSO AND FRANCIS O'BRIEN, PLAINTIFFS, V. THE MARITIME AQUARIUM AT NORWALK, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: William Conner, Senior United States District Judge

    OPINION AND ORDER

The instant opinion involves two related actions brought bypassengers who suffered injuries when the pontoon boat Conservator capsized on August 23, 1998. In the first action, plaintiffs Nancy Lee Smith, Joshua Osborne, Jonathan Osborne, Thomas Osborne, Kevin McGinn, Erin McGinn, Connor McGinn, Rebecca McGinn, Dawn Hackett, Joseph Pecoraro, Linda Pecoraro and Michael Hurewitz (collectively the "Smith plaintiffs") amended the original Complaint in their personal injury action (the "Smith action") to include as a defendant*fn1 the Maritime Aquarium at Norwalk, Inc. ("Norwalk Maritime"). In the second action, plaintiffs Susan Thorson, William L. Thorson, Denny Jacobson, Eleanor Budoff, Helen Gurvitch, John L. Russo and Francis O'Brien (collectively the "Thorson plaintiffs") bring a related personal injury action (the "Thorson action") naming, among others,*fn2 Norwalk Maritime*fn3 as a defendant. Norwalk Maritime now moves to dismiss the claims brought against it in both the Smith and Thorson actions pursuant to FED. R. CIV. P. 12(b)(1) and 12(b)(6). For the reasons that follow, Norwalk Maritime's motion is granted in part and denied in part.

BACKGROUND*fn4

Joseph Mitlof purchased the pontoon boat Conservator in 1998 from Norwalk Maritime. (Smith Complt. ¶ 148.) Norwalk Maritime had obtained the Conservator in 1990 through a donation from the vessel's prior owner, Saugatuck Valley Audubon Society. Smith II, 148 F. Supp. 2d at 282. In its endeavor to sell the Conservator, Norwalk Maritime publicly advertised that the vessel was in excellent condition with a valid Coast Guard certificate of inspection ("COP"). (Id. ¶ 147.) However, plaintiffs allege that, contrary to this representation, Norwalk Maritime was aware that the Conservator was dangerous and non-compliant with the Code of Federal Regulations, including regulations regarding stability and hull integrity. (Id. ¶ 150.) On at least two prior occasions during Norwalk Maritime's ownership of the Conservator, the vessel, due to structural defects, experienced problems so severe that passengers needed to be rescued. (Id. ¶ 160.) This information was not disclosed to Mitlof when he purchased the Conservator. (Id. ¶¶ 152-53.) Furthermore, Norwalk Maritime was aware that the COI for the Conservator was limited and conditioned on use in restricted waters which did not include the area of the Hudson River where Mitlof planned to use it. Although Mitlof had stated his intent to carry passengers on waters not covered by the COI, Norwalk Maritime allegedly failed to inform him of the restriction. (Id. ¶¶ 149-50.)

While carrying passengers on August 23, 1998, the Conservator capsized on the Hudson River north of the Tappan Zee Bridge causing serious injuries to all plaintiffs. (Thorson Complt. ¶ 26; Smith Complt. ¶ 56.) Plaintiffs*fn5 allege that the wrongful acts of Norwalk Maritime, including negligent misrepresentation, fraud, breach of contract, breach of express and implied warranties and negligent repair and maintenance, proximately caused their injuries.*fn6

DISCUSSION

I. Standard on Motion to Dismiss

On a motion to dismiss, the Court must accept as true all of the well pleaded facts and consider those facts in the light most favorable to plaintiffs. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), overruled on other grounds, Davis v. Scherer, 468 U.S. 183 (1984); Hertz Corp. v. City of New York, 1 F.3d 121, 125 (2d Cir. 1993); In re AES Corp. Sec. Litig., 825 F. Supp. 578, 583 (S.D.N.Y. 1993) (Conner, J.). On such a motion, the issue is "whether the claimant is entitled to offer evidence to support the claims." Scheuer, 416 U.S. at 236. A complaint should not be dismissed for failure to state a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief" Padavan v. United States, 82 F.3d 23, 26 (2d Cir. 1996) (quoting Hughes v. Rowe, 449 U.S. 5, 10 (1980)). Generally, "[c]onclusory allegations or legal conclusions masquerading as factual conclusions will not suffice to prevent a motion to dismiss." 2 JAMES WM. MOORE ET AL., MOORE'S FEDERAL PRACTICE § 12.34 [1][b](3d ed. 1997); see also Hirsch v. Arthur Andersen & Co., 72 F.3d 1085, 1088 (2d Cir. 1995). Allegations that are so conclusory that they fail to give notice of the basic events and circumstances of which the plaintiff complains, are insufficient as a matter of law. See Martin v. New York State Dep't of Mental Hygiene, 588 F.2d 371, 372 (2d Cir. 1978). In addition, "when the question to be considered is one involving the jurisdiction of a federal court, jurisdiction must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it." Shipping Financial Serv. Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir. 1998).

II. Admiralty Jurisdiction

Plaintiffs maintain that their claims are brought pursuant to this Court's admiralty jurisdiction over both maritime contracts and maritime torts, 28 U.S.C. § 1333(1),*fn7 as well as this Court's supplemental jurisdiction, 28 U.S.C. § 1367(a).*fn8 Norwalk Maritime, on the other hand, argues that the claims brought against them do not fall under the admiralty jurisdiction of this Court and that the Smith plaintiffs' claims should thus be dismissed under FED. R. CIV. P. 12(b)(1) for lack of subject matter jurisdiction.

A. Admiralty Contract Jurisdiction

In determining whether a contract falls under the federal courts' admiralty jurisdiction, "the nature and subject matter of the contract at issue is the crucial consideration." Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 109 (2d Cir. 1997) (quoting Exxon Corp. v. Central Gulf Lines, Inc., 500 U.S. 603, 611 (1991) (internal quotations omitted). A contract is considered maritime if it "relates to a ship in its use as such, or to commerce or to navigation on navigable waters, or to transportation by sea or to maritime employment." Sundance Cruises Corp., SCI v. American Bureau of Shipping, 7 F.3d 1077, 1080 (2d Cir. 1993) (citations and quotation omitted). According to the general rule governing admiralty jurisdiction in a contract case, "admiralty jurisdiction arises only when the subject-matter of the contract is `purely' or `wholly' maritime in nature." Transatlantic Marine, 109 F.3d at 109. Thus "mixed" contracts, involving both sea and land obligations, do not generally fall under admiralty jurisdiction. Hartford Fire Ins. v. Orient Overseas Containers Lines Ltd., 230 F.3d 549, 555 (2d Cir. 2000). However, the Second Circuit has held that a federal court can exercise jurisdiction over a "mixed" contract under either of two conditions: (1) the claim arises from a breach of maritime obligations that are severable from the non-maritime obligations of the contract; or (2) the land-based portion of the contract is "merely incidental" to the sea-based portion. Id.; see also Transatlantic Marine, 109 F.3d at 109.

For almost a century, it has been "elementary hornbook law" that a contract for the sale of a vessel does not come within the federal courts' admiralty jurisdiction. International Shipping Co., S.A. v. Hydra Offshore, Inc., 675 F. Supp. 146, 150 (S.D.N.Y. 1987) (citing cases and treatises); see also The Ada, 250 F. 194, 198 (2d Cir. 1918) (Rogers, J., concurring) ("The rule is settled that contracts for building a ship, or contracts for selling a ship, are not maritime contracts. . . ."). Plaintiffs concede as much. However, plaintiffs argue that Norwalk Maritime's representation that the vessel had a COI "for the carriage of 20 persons"*fn9 brings that portion of the contract within this Court's admiralty jurisdiction. According to plaintiffs' reasoning, this statement involves "the fitment of [the] vessel for navigation" which, under Second Circuit precedent, constitutes a maritime contract. See Sundance Cruises, 7 F.3d at 1080. Plaintiffs argument is flawed. Norwalk Maritime's statement on which plaintiffs rely, even if found to have been integrated into the contract to sell the Conservator, relates to only one aspect of the contract for sale. As explained above, a "mixed" contract does not generally come within admiralty jurisdiction unless the maritime portion is severable from the rest of the contract or the non-maritime aspects of the contract are merely incidental. Clearly, neither of these conditions is met with respect to the instant contract which is unequivocally one for the sale of a vessel. Therefore, plaintiffs' breach of contract claims against Norwalk Maritime do not come within this Court's admiralty contract jurisdiction. In addition, although claims sounding in breach of express and implied warranties have been recognized in admiralty, see, e.g., Seguros Illimani S.A. v. M/V Popi P, 929 F.2d 89 (2d Cir. 1991), plaintiffs' breach of warranty claims arise out of ...


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