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Pierside Boatworks, Inc. v. Owens

United States District Court, D. South Carolina, Charleston Division

December 19, 2017

PIERSIDE BOATWORKS, INC., Plaintiff,
v.
JUDITH A. OWENS, ADDISON W. CLOSSON, III, M/V FROLIC LLC AND MICKLE LLC in personam, and SAILING VESSEL FROLIC, her engines, bowspirit, anchor, cables, chains, rigging, tackle, apparel, sails, furniture and all accessories hereunto appertaining and belonging to her, in rem, Defendants.

          ORDER

          DAVID C. NORTON UNITED STATES DISTRICT JUDGE

         This matter is before the court on United States Magistrate Judge Marchant Bristow's report and recommendation ("R&R"), ECF No. 254, that the court grant in part and deny in part defendant Judith A. Owens's ("Owens") second renewed motion for summary judgment, ECF No. 205. For the reasons set forth below, the court adopts the R&R, and grants in part and denies in part Owens's second renewed motion for summary judgment. Additionally, the court adopts those portions of the R&R which are not inconsistent with this order.

         I. BACKGROUND

         This admiralty case arises out of the alleged breach of contract, default, and foreclosure of a maritime lien against defendant Sailing Vessel Frolic, her engines, bowspirit, anchor, cables, chains, rigging, tackle, apparel, sails, furniture and all accessories hereunto appertaining and belonging to her (the "Frolic"). The R&R ably recites the salient facts of this case, and it is unnecessary to review the details of the complaint, filings, depositions, and exhibits that constitute the factual record. The court notes a few relevant facts.

         A. Factual Background

         Defendants Owens and Addison W. Closson, III ("Closson"), who are husband and wife, used marital funds and joint insurance proceeds from the sinking of their previous vessel to purchase the Frolic in November 2010, and they planned to put her into service as a commercial passenger vessel in Rhode Island. R&R 2-3. Also in November 2010, Closson signed a charter agreement between the Frolic and Aquidneck Ferry & Charter, Inc. ("Aquidneck"), a company Closson created to run a ferry service in Rhode Island. R&R 3. The charter agreement provided that while Aquidneck chartered the Frolic, Closson was responsible for vessel storage, insurance, her crew, and other items. R&R 3.

         In August 2011, Closson hired Captain O. Bryan Harris ("Harris") for a hurricane haul, which entailed removing the Frolic from the water in South Carolina to protect her from an impending hurricane. R&R 3. Plaintiff Pierside Boatworks, Inc. ("Pierside") entered into the hurricane haul agreement with Closson and Owens through Harris as their agent. R&R 4. Harris navigated the Frolic to Pierside for storage where she has been located since August 2011. R&R 4. In October 2011, Closson signed a work order for Pierside to perform some repairs and maintenance on the Frolic. R&R 4. On February 9, 2012, Closson signed a storage agreement with Pierside, which was a prerequisite to anyone coming onto Pierside's premises to perform repairs. R&R 4-5. Up to this point, the Frolic had been stored at Pierside's facility for approximately six months with no payments made. R&R 5. All invoices had been addressed to Closson and sent to his email. R&R 5.

         On February 10, 2012, Closson used the debit card from his and Owens's joint bank account to make a payment to Pierside for the repairs it made to the Frolic. R&R 5. In June 2012, Closson emailed Pierside, stating that he and Owens had received their income tax refund check and would be able to make a payment on a settlement offer for the unpaid storage fees on the Frolic but not the full amount owed. R&R 5-6. John Brophy, president of Pierside, ("Brophy") responded by demanding payment for the full outstanding balance. R&R 6. Thereafter, no payment was made. R&R 6. On May 14, 2015, Closson emailed Pierside, with Owens copied, about the outstanding balance, stating that he and Owens had discussed the debt and were willing to transfer the Frolic's title to a qualified new owner, but they did not offer to pay the outstanding storage bill. R&R 6. On May 21, 2015, Closson sent another email with Owens copied, stating that they wanted to resolve their debt with a settlement amount but were prepared to litigate in federal court. R&R 6.

         In June 2015, Pierside filed a lawsuit in South Carolina magistrate's court to sell the Frolic; however, on July 2, 2015, both Closson and Owens signed a bill of sale transferring ownership of the Frolic to Mickle, LLC, a company with Closson listed as the registered agent on the its incorporation documents. R&R 6. Subsequently, Pierside voluntarily dismissed the magistrate's court action and filed this case in federal court on September 16, 2015. R&R 7.

         In November 2015, the M/V Frolic, LLC ("M/V Frolic") was formed, with Closson and Owens listed as the managing members on its incorporation documents.R&R 7. On December 8, 2015, Closson and Owens signed a bill of sale transferring ownership of the Frolic to M/V Frolic. R&R 7. Subsequently on December 10, 2015, Closson and Owens filed paperwork with the U.S. Coast Guard, requesting that the Frolic's ownership be transferred to M/V Frolic. R&R 7. Thereafter, Closson and Owens filed answers and amended answers, denying that they owned the Frolic. R&R 7. On April 1, 2016, Closson and Owens sent a letter to the U.S. Coast Guard, requesting it to disregard Mickle, LLC's application to list the Frolic as its property and instead to list it as M/V Frolic's property. R&R 7. On April 12, 2016, Closson sent an email to a vessel documentation service, requesting that it place the ownership transfer to M/V Frolic on hold. R&R 7-8. In May 2016, Closson and Owens stated in a federal court filing that a clerical error occurred when the bill of sale to M/V Frolic listed Closson and Owens as owners of the Frolic and that their counsel erroneously stated in the answers and amended answers that they transferred ownership of the Frolic to M/V Frolic. R&R 8.

         B. Procedural Background

         As previously stated, Pierside initiated this action on September 16, 2015, and on January 12, 2017, it filed the operative third amended complaint, ECF No. 178, alleging causes of action for: (1) enforcement of plaintiff s maritime lien; (2) breach of contract; (3) quantum meruit; (4) unjust enrichment; and (5) fraudulent conveyance. Third Am. Compl. ¶¶ 24-55. On May 4, 2017, with the court's leave, Owens filed the instant second renewed motion for summary judgment, incorporating her arguments from a previous renewed motion for summary judgment filed on March 22, 2017, ECF No. 198. Owens contends that she is entitled to summary judgment because it is indisputable that she is not liable for breach of contract, for a fraudulent conveyance, or under equitable principles. ECF No. 198. On May 18, 2017, Pierside filed a response in opposition to Owens's motion, ECF No. 208, and on May 25, 2017, Owens filed a reply thereto, ECF No. 214.

         On November 11, 2017, the magistrate judge issued the R&R, recommending that the court grant in part and deny in part Owens's second renewed motion for summary judgment, granting it with respect to Pierside's second cause of action for breach of contract solely to the extent its claim is based in partnership, but denying it with respect to the remaining claims. R&R 20-21. The R&R specifically advised the parties of the procedure for filing objections thereto and the consequences if they failed to do so. R&R 22. On December 1, 2017, Owens timely filed objections to the R&R, ECF No. 258. No other objections have been filed, nor has any party filed a responsive pleading to Owens's objections. The matter is now ripe for the court's review.

         II. ...


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