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Muller Boat Works, Inc. v. Unnamed 52' House Barge

October 6, 2006


The opinion of the court was delivered by: Matsumoto, United States Magistrate Judge


The parties in this case consented to a trial before the undersigned, pursuant to 28 U.S.C. § 636(c) (see doc. no. 3), and a bench trial was conducted on February 8-9, 2006.*fn1 After reviewing the submissions of the parties and having assessed the credibility of the witnesses, the Court makes the following findings of fact and conclusions of law as required by Rule 52 of the Federal Rules of Civil Procedure. For the reasons set forth below, plaintiff is awarded $17,127.40 in damages, and defendants are awarded $72,056.79 in damages, without costs, plus prejudgment interest as calculated in accordance with this order, and post-judgment interest as provided by law.


Plaintiff Muller Boat Works, Inc. ("plaintiff") filed this action against Michael Lesser ("Lesser") and Eve Fischer ("Fisher") (collectively, "defendants"), the owners of a vessel, in personam, and an Unnamed 52' House Barge, her generators, tackle and appurtenances, in rem (the "vessel"). Plaintiff claims that defendants refused to pay an amount due and owing on an oral contract with plaintiff for repair services that plaintiff claims to have completed, and for which plaintiff has not yet been compensated. (See Doc. No. 10, Joint Pretrial Order ("JPO") ¶ 4(a).) Plaintiff seeks $35,778.73, representing the unpaid invoice for work allegedly performed by plaintiff between December 14, 2004 and April 28, 2005, labor undertaken, materials supplied, sales taxes, and storage and provision of electricity to the vessel for the period of May 11, 2005 through August 30, 2005. (Id. ¶ 4(a).)

Defendants answered and filed a counterclaim alleging "poor workmanship and negligence" in plaintiff's repair and care of the vessel while the vessel was in plaintiff's custody. (Doc. No. 6, Answer ¶ 18.) Specifically, defendants allege that while working on the roof of the vessel, plaintiff caused the interior of the vessel to be exposed to rain and snow, and that plaintiff permitted the vessel's pipes to freeze and rupture, all of which resulted in extensive water damage. (Id. ¶ 4(b).) Defendants seek $81,869.29 in damages, representing the cost of labor and materials incurred as of the date of the trial, the estimated cost of future repairs, and storage and towing costs, plus interests and costs of this action. (See generally, Doc. No. 11, Statement of Damages.)


Plaintiff is a corporation organized and existing under the laws of the State of New York with its principal place of business located at 2214 East 69th Street, Brooklyn, New York. (See JPO ¶ 7.3.) Its president and forty percent shareholder is James Muller ("Muller"). (Transcript of Bench Trial on Feb. 8-9, 2006 ("Tr.") at 4.) Plaintiff performs repairs, modifications and alterations to boats measuring 40' to 130' in length, and weighing less than 300 tons, and has eight full-time employees. Plaintiff does not routinely service house barges. (See JPO ¶ 7.4.)

The defendant vessel is an unnamed 52', multi-level house barge built in 1987. (See generally Pl. Ex. 1, Olsen Marine Surveyors Co., Survey Report dated Nov. 3, 2004 (the "Olsen survey").) The vessel has no steering apparatus or propulsion machinery onboard. (Id. at 2.) Defendants Lesser and Fischer purchased the vessel (see JPO ¶ 7.2.) on or about November 26, 2004 (Defs. Ex. J, Closing Statement; see also Tr. at 77-78). Defendants purchased the vessel, believing it was an affordable alternative to a more traditional residence, with the intention of making it their permanent residence. (Tr. 66.)

Prior to purchasing the vessel, defendants inspected the vessel on several occasions, accompanied by William Vilkelis, a yacht broker familiar with the vessel and the sale of house barges. (Tr. 156-59.) Following the inspections, defendants made an offer to purchase the vessel, contingent upon a survey, and paid a deposit for the purchase price. Defendant Fischer retained Captain Henry Olsen of Olsen Marine Surveyors Company ("Captain Olsen") to survey the vessel. Ms. Fischer had retained Captain Olsen previously to survey a different barge. (Tr. 72.)

On or about October 28, 2004, while the vessel was still at a marina occupied by its then owners, Captain Olsen surveyed the vessel, accompanied by defendant Lesser. (Tr. 107-108.) Captain Olsen issued a report of the survey on November 3, 2004. (See generally Pl. Ex. 1, Olsen survey.) The Olsen survey indicates that the:

[p]urpose of this general inspection is to ascertain and otherwise determine this unit's general condition and value for purchase . . . . No testing of any sort was carried out. As vessel is presently occupied by ownership, systems are on line for the most part and examination of conditions shall be related herein. (Id. at 1.) The Olsen survey recommended certain repairs and modifications, among other things, including: "repair [roof] approximate midship location, evidence of leak . . . should be fully restored[;]" (id. at 6), caulking of seam at port side roof attachment; correct electrical systems by adding electric meter and approved shore receptacle to provide power to the vessel (id. at 3); converting propane heating system to heating oil system for safety reasons (id. at 5); installing approved sanitation system; and inspecting and correcting electrical wiring throughout the vessel. Captain Olsen valued the vessel at $75,000 to $80,000. (Id. at 6.)

Notwithstanding the need for repairs and modifications (the "work"), Captain Olsen did not recommend to defendants that they decline to purchase the vessel. Instead, Captain Olsen advised that should defendants "go forward with the purchase of [the vessel], that it would be wise to consult with a shipyard that is capable of doing this type of work . . . ." (Tr. 61.) When asked by Ms. Fischer whether he could estimate the cost of the work, Captain Olsen indicated that he could not, and advised Ms. Fischer that she should consult with a shipyard regarding the cost of the work. Captain Olsen suggested that Ms. Fischer contact Mr. Muller. (Tr. 73.)

On or about November 1, 2004, Ms. Fischer, upon the recommendation of Captain Olsen, telephoned Mr. Muller regarding the work to be performed on the vessel, as specified by Captain Olsen's survey of the vessel. (Tr. 73-74.) Ms. Fischer gave Mr. Muller a copy of the Olsen survey (Tr. 30), and Mr. Muller inspected the vessel (Tr. 7). Following their initial meeting, Ms. Fischer advised Mr. Muller that defendants' budget for the work was "$20,000, and that was all we had . . . . I was very emphatic about it because that was really all we had, and I wanted him to know that if it was going to be more than that, that we wouldn't be able to buy the boat . . . ." (Tr. 74.) Ms. Fischer further told Mr. Muller that she required an estimate that was "very precise and . . . generous . . ., allowing for unforeseen problems that might occur," given defendants' limited budget, and the need to factor the cost of repairs into defendants' decision whether to purchase the vessel. (Tr. 74.)

On November 10, 2004, following his inspection of the vessel, Mr. Muller made handwritten notes of the items inspected, and told Ms. Fisher that he estimated the cost of the work set forth in the Olsen survey to be between $20,000 to $22,000. (Tr. 10, 75-76; Defs. Ex. D, handwritten notes of James Muller dated Nov. 10, 2004.) Mr. Muller's handwritten notes correspond to the work noted in the Olsen survey. The final page of Mr. Muller's notes, entitled "Master Sheet," enumerates each repair and modification, and lists the estimated cost of each item of work. The estimate totals $21,700.75. Mr. Muller reviewed each item of work and the estimated cost with Ms. Fisher on the telephone and he conveyed the total estimated amount to her. (Tr. 79-80.) It was defendants' understanding that all of the work in the survey, including the hauling of the vessel, was factored into Mr. Muller's estimate, and would not exceed $22,000. (Tr. 76-77.)

Following receipt of Mr. Muller's estimate, defendants purchased the vessel on November 26, 2004, and had it hauled to plaintiff's shipyard.

The next day, defendants met with Mr. Muller to discuss the work required by the Olsen survey and plaintiff's estimated cost for completing those repairs. Defendants were advised that the repairs would be completed by the spring of 2005. (See Tr. 93.) Mr. Muller testified that he advised defendants that they would be charged $60 per hour for labor (Tr. 11-12), however, defendants dispute ever having been so advised (Tr. 80, 137). The Court finds that the parties agreed that plaintiff would perform the work set forth in the Olsen survey at the estimated price of between $20,000 and $22,000, and credits Ms. Fischer's testimony that the parties had not reached an agreement that labor would be charged at $60 per hour.

According to plaintiff's sole invoice dated August 25, 2005, plaintiff commenced work on the vessel on December 21, 2004, following the vessel's arrival at plaintiff's shipyard. (Defs. Ex. E, Muller Boats Works Invoice dated Aug. 26, 2005 ("Invoice").) Plaintiff maintained time records, by employee, of the work performed on the vessel, materials used, and hours of labor expended. (Defs. Ex. U, Time Records.)

It is undisputed that, following a discussion in August 2005 between Mr. Muller and Mr. Lesser regarding plaintiff's invoice, defendants removed the vessel from plaintiff's shipyard without plaintiff's consent. (Tr. 130, 136-137.) Mr. Muller testified that he understood that the removal of the vessel from his custody divested plaintiff of a security interest in the vessel. (See Tr. 209-210.)

A. Roof Repairs

Plaintiff's invoice, dated August 25, 2005, notes that eight months earlier, on December 22, 2004, plaintiff's inspection of the interior of the vessel's stateroom "found interior . . . extremely wet," and the mattress "saturated." (Invoice at 1.) Defendants dispute the presence of moisture in the stateroom on December 22, 2004, and claim that various inspections of the vessel, including those by the vessel's broker, Mr. Vilkelis, and by Captain Olsen, only revealed a leak from the skylight above the staircase leading to the stateroom. At trial, Mr. Muller conceded that plaintiff's employees' time records do not reflect that the stateroom or mattress was wet. (Tr. 36.) Nor is there any contemporaneous recording as of December 22, 2004, of the presence of moisture in the stateroom to the degree claimed by plaintiff. Defendant Lesser testified that when he inspected the stateroom of the vessel at some point between December 22 and 25, 2004, there was no sign of water leakage. (Tr. 110-111.)

The Court finds that the presence of moisture in the stateroom to the degree claimed by plaintiff is not consistent with the weight of the evidence in the record. For example, Mr. Vilkelis, the broker who facilitated the sale of the vessel, testified that he inspected the vessel not more than six times. (Tr. 159.) On his first visit, in the summer of 2004, Mr. Vilkelis inspected and photographed the vessel, and subsequently re-inspected it with defendants on the day of the closing. Mr. Vilkelis credibly testified that he did not observe any moisture or signs thereof in the stateroom during his inspections. The photographs taken by Mr. Vilkelis during his inspection of the vessel, admitted into evidence as defendants' exhibits G1-G5, confirm that the stateroom appeared dry. (See Defs. Exs. G1-G5; see also Tr. 157-59.)

Mr. Vilkelis did, however, find evidence of moisture originating from the skylight above the staircase leading to the stateroom. Following a rain storm, Mr. Vilkelis noticed a "slow drip" over the staircase leading to the stateroom, but not above the mattress. (Tr. 157-58.) Other than this leak, Mr. Vilkelis stated that the stateroom was "pretty dry." (Tr. 158.) He further noted that two people and their pets resided in the vessel at the time of the inspections. (Tr. 158.)

Captain Olsen's survey and testimony also noted the existence of a leak from the skylight above the staircase leading to the stateroom, and also noted that a roof patch above the stateroom (the "forward roof") required repair. The Olsen survey does not note the presence of moisture in the stateroom to the degree claimed by plaintiff.

Due to the alleged wetness in the stateroom, Mr. Muller determined that the roof above that room, the forward roof, was rotten and, therefore, on December 22, 2004, commenced repairing the forward roof. Although Mr. Muller's estimate for the work included repairing the roof patch on the forward roof (see Defs. Ex. D, Handwritten notes of James Muller dated Nov. 10, 2004), his estimate did not include the cost of repairing that roof (Tr.

18). The Court credits Ms. Fischer's testimony that, before commencing the roof repairs, Mr. Muller did not tell her that the roof repair was not included in the estimate, nor discuss the extent of the repairs with defendants (Tr. 79-81), even though defendants had communicated to Mr. Muller their budgetary constraints, and despite the fact that the specific repairs to the roof were not indicated in the Olsen survey.

When repairing the roof, plaintiff first removed the protective fiberglass coating from the roof. (Tr. 37; Invoice entry at 12/22/04.) That fiberglass coating, Mr. Muller concedes, was in place to maintain the "water tight integrity of the roof . . . ." (See Tr. 37.) According to Mr. Muller, while removing this fiberglass coating, plaintiff's employees discovered rotten wood underneath the fiberglass coating. It is undisputed that the rotten wood was removed, as discovered, piece by piece, after plaintiff's employees removed the protective fiberglass coating. (Tr. 38; see also Invoice entries at 12/22/04, 12/28/04-12/29/04.) It is also undisputed that approximately 66 square feet of the wood under the fiberglass coating was removed, and that the exposed portion of the roof was covered by tarpaulins. (Id.; see also Invoice entry at 4/6/05.) It is further undisputed that the tarpaulins often did not withstand stormy weather, and that due to winter weather conditions, plaintiff did not continue to repair the roof between January 11 and February 8, 2005. (Tr. 38-39; see Invoice entry at 1/11/05.) Plaintiff's invoice confirms that the tarpaulins were constantly replaced and adjusted due to weather conditions. (See, e.g., Invoice entries at 2/3, 2/8-2/9, 2/15, 2/23/05.) Plaintiff's invoice indicates that plaintiff charged $13,440 for labor in connection with repairing the roof above the stateroom, including labor required to cover the exposed vessel with tarpaulins. (See Invoice entries at 12/22-23, 12/28/04, 12/29/04, 1/3/05, 1/4/05, 1/7/05, 1/10/05, 1/11/05, 2/3/05, 2/8/05, 2/9/05, 2/15/05, 2/16/05, 2/23/05, 4/6/05 and 4/18/05.)

Defendants claim that as a result of the water entry into the vessel after plaintiff opened the roof, the vessel required substantial additional repairs, specifically, to the vessel's ceiling, floors and walls, which were cracked and water damaged. (See Tr. 89-91, 122; Defs. Exs. O, S1-S12.) Mr. Muller acknowledged that photographs of the vessel, admitted into evidence as defendants' exhibits P and Q, depict the condition of the stateroom on or about February 22, 2005 and March 28, 2005, after plaintiff opened the roof. The photographs show a film of water on the floor and buckets partially filled with water, which were placed by Mr. Lesser to catch incoming rain. (Tr. 39-40, 112-113; Defs. Exs. P, Q.) Defendants contend that the repairs to the roof were performed in an "unworkman-like and negligent manner," causing damage for which plaintiff should compensate defendants. (See JPO at § 4(b).) Defendants claim that the forward roof above the stateroom still leaked after it was allegedly repaired by plaintiff. (Tr. 98.) When Ms. Fischer informed Mr. Muller that the roof was still leaking in April 2005, Mr. Muller told her to hire her own contractor.*fn2 (Tr. 98.)

At trial, defendants presented the testimony of Jason Davey, a contractor, who was retained by defendants to perform certain repairs on the vessel. Mr. Davey, a carpenter with ten years of experience, testified that he began working on the vessel in early April 2005 while the vessel remained at plaintiff's shipyard. (Tr. 144.) Mr. Davey testified that he first began working on the forward roof above the stateroom, which is the portion of the roof allegedly repaired by plaintiff. (See Tr. 144-45.) Mr. Davey further testified that the roof appeared to have recently been worked on. (Tr. 145.)

The Court credits Mr. Davey's testimony that when he and his assistant first commenced work on the forward roof, portions of the roof were still rotten and soft, and that Mr. Davey's assistant almost fell through the roof. (Tr. 145.) The Court also credits the testimony of Mr. Davey and Ms. Fischer concerning Mr. Davey's repairs to the roof, specifically, that Mr. Davey and his assistant resheathed the roof by giving it a new layer of plywood, and covering the roof with a protective rubber membrane. (Tr. 146.) Mr. Davey and his assistant were able to resheath the roof above the stateroom in approximately three to four days, working eight hours per day,*fn3 at a cost of less than $3,000, inclusive of labor and materials. (Tr. 85-86; 145-48.) The Court also credits Ms. Fisher's testimony that, following Mr. Davey's work on the forward roof, the roof no longer leaked.

B. Ruptured Piping

Defendants further contend that plaintiff was negligent by permitting the vessel's water pipes to freeze and rupture while the vessel was in plaintiff's custody. (JPO ¶ 4(b).) At the time the vessel arrived at plaintiff's shipyard, Mr. Muller knew that the vessel had a toilet, shower, sauna, hot tub, sinks and piping to carry fresh water. (Tr. 43-44.) Mr. Muller testified that freezing weather between December and March in New York is not unusual, and that pipes carrying fresh water could "positively" freeze and rupture. (Tr. 44.) Despite his awareness of the likelihood that pipes carrying fresh water throughout the vessel could freeze during the winter months, Mr. Muller testified that he did not take any measures to prevent the pipes from freezing and rupturing, nor advise defendants of this possibility. (Tr. 44.) Notably, plaintiff's estimate reflects that it anticipated repairs to the vessel's piping and plumbing systems, as necessary to repair the vessel's heating and sanitation systems and the hot tub. (See generally Defs. Ex. D.)

The Court finds that the vessel's pipes froze and ruptured, damaging the piping system, plumbing facilities, fixtures serviced by pipes, and insulation and walls in which the piping was enclosed. The Court further finds that the aforementioned damages to the pipes and plumbing occurred while the vessel was in plaintiff's custody, and as a direct result of plaintiff's failure to protect the pipes from freezing by arranging for the introduction of antifreeze into the plumbing system. The Court bases its findings, inter alia, on the testimony of Christos Gotsis, an expert witness in the field of general contracting, who inspected the vessel in late November or early December, 2005. (See Tr. 186.) Mr. Gotsis had been contacted by defendants to provide an estimate on the cost of repairing the vessel's electrical, heating and plumbing systems, walls, and ceilings. Mr. Gotsis credibly testified that when he inspected the vessel, he observed ruptured pipes, wet insulation, damaged plumbing fixtures, and damaged walls, and ceilings.

Mr. Gotsis testified that the pipes ruptured due to freezing, ruling out any other possibilities, and that the ruptured pipes damaged the plumbing system, fixtures serviced by pipes, the water heater, walls, ceiling, and floors. (Tr. 187-89.) He also opined that this damage was easily preventable by retaining a plumber to introduce antifreeze into the plumbing system at a cost of $300 to $400. (Tr. 190-91.) This antifreeze would run ...

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