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Spoth v. M/Y Sandi Beaches

July 7, 2010


The opinion of the court was delivered by: Leslie G. Foschio United States Magistrate Judge



This action was referred to the undersigned by Honorable William M. Skretny, on October 2, 2009, for pretrial matters including disposition of non-dispositive motions.

The matter is presently before the court on Plaintiff's motion for sanctions (Doc. No. 24), filed February 25, 2010.


Plaintiff Richard G. Spoth ("Spoth"), doing business as Lake Erie Towing and Salvage ("LETS"), a professional marine salvor, commenced this action on July 17, 2009, seeking a monetary award for salvage services rendered with regard to M/Y Sandi Beaches, bearing hull identification number ("HIN") SERY0449D899-500DA901, its engines, gear, generators, electronics, tackle, interior appointments, tenders, appurtenances, etc., ("Defendant Vessel"), and Defendant Vessel's owner William J. Walters, Jr. ("Walters") (together, "Defendants"). On August 18, 2009, Plaintiff filed, as a matter of course, an Amended Complaint (Doc. No. 3) ("Amended Complaint"). Answers to the Amended Complaint were filed by Walters on September 29, 2009 (Doc. No. 6), and by Defendant Vessel on November 23, 2009 (Doc. No. 14).

Plaintiff alleges it rendered salvor services to the Defendant Vessel which, on September 17, 2008, having run aground in the vicinity of Motor Island, located in the Niagara River, in New York, was in peril with its hull integrity threatened and at risk of great loss of value in the absence of any other resources willing or capable of rendering services to Defendant Vessel. Plaintiff maintains that LETS rendered, at Walters's request, salvor services that were "wholly successfully and preserved significant vessel value," Amended Complaint ¶ 16, including "preventing the discharge of bunker fuel, lube oils, hydraulic oils, gray water, etc.," id. ¶ 18, thus entitling Plaintiff to a salvors award, whereas Defendants maintain that the Defendant vessel was never in imminent peril and that Plaintiff failed to exercise reasonable care in extricating Defendant Vessel, causing significant damage to Defendant Vessel, resulting in either diminution or total forfeiture of any salvor award.

At a December 10, 2009 scheduling conference before the undersigned, the parties agreed to provide discovery pursuant to discovery requests that had already been served and mandatory disclosures pursuant to Fed.R.Civ.P. 26(a)(1), but to otherwise forgo pursuing additional discovery pending mediation. December 10, 2009 Minute Entry (Doc. No. 19). Pursuant to this court's December 15, 2009 scheduling order (Doc. No. 20) ("December 15, 2009 Scheduling Order"), the matter was referred to mediation in accordance with § 2.1A of this court's Plan for Alternative Dispute Resolution ("ADR Plan"), and the parties were directed to confer and select a mediator by January 11, 2010, with the initial mediation session to be held by February 26, 2010. Counsel's attention was further "directed to Fed.R.Civ.P. 16(f) calling for sanctions in the event of failure to comply with any direction of this court." December 15, 2009 Order.

On January 11, 2010, the parties filed a Stipulation (Doc. No. 21), selecting Michael A. Brady, Esq. ("Brady"), as mediator, with an initial mediation session scheduled for February 10, 2010. A conflict with the mediator's schedule later required rescheduling the initial mediation session for February 17, 2010.

On January 19, 2010, Defendants served a subpoena duces tecum on the Boat Owners' Association of the United States ("Boat US"), an entity of which Walters is a member and with which Spoth is also affiliated, seeking production by February 18, 2010, of a contract between Walters and Boat US regarding the Defendant Vessel's September 17, 2008 grounding.

Plaintiff maintains that despite repeatedly stating Plaintiff's desire that Walters attend the mediation session, it was not until just prior to the commencement of the February 17, 2010 mediation session that Plaintiff, while waiting in Brady's office, was informed by Defendants' counsel, that Walters would not be attending the mediation session in person. Although the mediation session proceeded with defense counsel and Defendants' insurance representative present, and with Walters allegedly available by telephone, the mediation was unsuccessful, allegedly as a result of Walters's failure to attend in person.*fn2

By letter dated February 18, 2010 (Doc. No. 26-2) ("February 18, 2010 Letter"), Plaintiff advised the undersigned of Walters's failure to attend the mediation session, without providing notice that Walters would not be attending, and that it was Plaintiff's belief that Walters's failure to attend the mediation session rendered the session unsuccessful. Plaintiff further advised that although Plaintiff did not at that time intend to seek sanctions based on Walters's failure to attend the mediation session, Plaintiff believed such failure to attend was in bad faith and requested guidance as to how to proceed, including the possible scheduling of a settlement conference with the undersigned. Plaintiff also noted that Defendants' January 19, 2010 service of the subpoena duces tecum on Boat US indicates Defendants never intended to mediate in good faith.

In a letter to the undersigned dated February 22, 2010 (Doc. No. 26-3) ("February 22, 2010 Letter"), Defendants' attorney Matthew E. French, Esq. ("French"), responded to the assertions in Plaintiff's February 18, 2010 Letter, explaining that French did not learn until late on February 16, 2010, that Walters would be unable to attend the February 17, 2010 mediation session because Walters was in Maryland participating in emergency snow removal operations, but that Walters had been available by telephone during the mediation session, and one Keith Brady ("Keith Brady"), a representative with Defendant's insurance carrier with settlement authority did appear. French also disclosed to the undersigned confidential information discussed during mediation, for which Plaintiff denies ever consenting to the disclosure. Finally, Defendants maintain the fact that the subpoena duces tecum served on Boat US requested production of documents after the mediation establishes that it was served in good faith because had the case been settled at mediation, the there would have been no need for such discovery. Defendants also point to the fact that following the December 10, 2009 scheduling conference, at which the parties agreed to forgo further discovery pending mediation, Plaintiff sought to enforce an earlier subpoena served on Defendants' insurance carrier, Travelers.

On February 25, 2010, Plaintiff filed the instant motion (Doc. No. 24) ("Plaintiff's motion") seeking the scheduling of a settlement conference, and monetary sanctions consisting of the costs and attorneys' fees incurred in connection with the instant motion, as well as the costs and attorneys fees to be incurred in connection with the requested settlement conference. Plaintiff also filed the Memorandum of Law in Support of Plaintiff's Motion for Sanctions (Doc. No. 25) ("Plaintiff's Memorandum"), and the Declaration of John K. Fulweiler, Esq. in Support of Plaintiff's Motion for Sanctions (Doc. No. 26) ("Fulweiler Declaration"), with attached exhibits A (Doc. No. 26-2) and B (Doc. No. 26-3) ("Fulweiler Declaration Exh(s). __").*fn3 On March 5, 2010, Defendants filed the Declaration of Matthew French, Esq., in Opposition to Plaintiff's Motion for Sanctions (Doc. No. 31) ("French Declaration"), with attached exhibits A through D ("French Declaration Exh(s). __"), the Affidavit of William J. Walters, Jr. (Doc. No. 32) ("Walters Affidavit"), with attached exhibit A ("Walters Affidavit Exh. A"), and the Memorandum of Law in Opposition to Plaintiff's Motion for Sanctions (Doc. No. 33) ("Defendants' Memorandum"). On March 19, 2010, Plaintiff ...

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