United States District Court, D. Connecticut
OMNIBUS RULING ON PENDING MOTIONS
CHARLES S. HAIGHT, JR. Senior United States District Judge.
the highest aim of a captain were to preserve his ship, he
would keep it in port forever." This aphorism is
attributed to St. Thomas Aquinas,  whose resume did not include
ocean yacht racing.
ship involved in this action, an ocean racing yacht, did not
remain in port. Rather, in August 2011, while participating
in a race off the coast of Ireland, the yacht capsized in
heavy seas and suffered severe damage. This litigation is
about who should pay for that damage. The parties are
yacht's insurer, her owner, and her operator at the time
of the casualty. The suit began as an action on a policy of
marine insurance, within the admiralty and maritime
jurisdiction of this Court. A number of motions are pending.
This Ruling resolves them all.
former plaintiff, Federal Insurance Company
("Federal" or "Plaintiff"), commenced the
action against its insured, Speedboat Racing Ltd.
("Speedboat"), by filing a "Complaint in
Admiralty" [Doc. 1], alleging that Federal has no duty
to pay Speedboat for damages that occurred to the mast, sails
and spars of Speedboat's racing yacht known as Rambler
100 (the "Yacht") on August 15, 2011. In its Complaint,
Federal asserted that the Court possessed both
"diversity of citizenship" subject matter
jurisdiction under 28 U.S.C. § 1332 and admiralty
jurisdiction pursuant to 28 U.S.C. § 1333. See Doc.
1, at 2 (¶¶ 4-5).
100, " the Yacht referred to in Federal's complaint,
was formerly named "Speedboat, " and was owned by
the corporate party also called Speedboat. The Yacht was
insured under a "Masterpiece Yacht insurance
policy" issued by Federal (Policy No. 0037009323) (the
"Policy") to the corporate Speedboat, as assured,
for up to $5, 000, 000 in damages to the Yacht. Id.,
at 2 (¶ 7). The policy term was October 14, 2010
through October 14, 2011. Id. The Yacht was leased
by Speedboat to a different entity, Rambler 100 LLC
("Rambler"), pursuant to a "Share Issuance and
Shareholder Agreement" (the "Agreement")
(dated October 14, 2010), which provided, inter
alia, that Rambler would have exclusive use of the Yacht
in the 2011 Atlantic Ocean Racing Series and would be
responsible to pay "all operating expenses, repair and
maintenance costs for the Yacht and its Equipment, including
minor maintenance or major equipment failure, incurred during
the Term and after redelivery." See Doc. 10-3
(Exhibit C, "Lease Agreement, dated October 14,
2010"), at 5 (§ 4.1(a)).
to its terms, the Agreement was to be "governed by and
construed in accordance with the laws of the State of
Connecticut." Id., at 10 (§ 5.4). The
Agreement provided Rambler with an ownership interest in
Speedboat ("one (1) redeemable share of a nominal par
value of U.S. $1.00"), id., at 2 (Preamble),
and exclusive use of the Yacht from October 14, 2010 to March
15, 2012, for the purpose of racing the Yacht in a series of
sailing races, id., at 4 (§ 4.1
(a)). Under the Agreement, Speedboat’s
captain, Chris Higgins, and a member of its former crew, Bill
Erkelens, were to be retained as members of Rambler's
crew. Id., at 5 (§ 4.1(b)). In addition,
Jackson and "one guest from a list provided by [Jackson]
to Rambler" were to be allowed to accompany the vessel
on all races and included as "uncompensated members of
[Rambler's] crew at their request." Id., at
8 (§ 4.1(n)(1)).
August 15, 2011, Rambler raced the Yacht in the 2011 Rolex
FastNet Race off the coast of Ireland. Doc. 20
(Speedboat's "Amended Third-Party Complaint"),
at 5 (¶ 21). But, as all sailors know, "[t]he sea
hath no king but God alone." So it was that during the
course of that race, "[f]acing 23-25 knot headwinds in
heavy seas, the Yacht's canting keel snapped off just
below the hull exit, whereupon the Yacht capsized, resulting
in millions of dollars of damage to the
Yacht." Id. As a result, Speedboat
claimed payment from Federal for damages to the Yacht's
"sails, mast, spars and rigging in the amount of $3,
130, 000.00." Doc. 1, at 3 (¶ 15).
Complaint, Federal requested declaratory judgment pursuant to
28 U.S.C. § 2201 that it has no duty to pay Speedboat
for the damages at issue to the "spars and sails"
of the Yacht which occurred on the occasion of the 2011 Rolex
Fastnet Race. Federal asserted that those damages were
explicitly excluded from coverage under the terms of the
Policy. In particular, Federal quoted the exclusion provision
in the Policy, as follows:
"Spars and Sails." We do not cover any loss to
spars running or standing rigging, sail, spinnakers or
gennakers that occurs while your yacht is being raced.
Doc. 1, at 1 (¶ 1).
respect to the damages claimed by Speedboat, Federal asserted
that they occurred "[d]uring a race" when "the
keel failed and the Yacht immediately heeled over, "
causing the mast and sails to break off and suffer damage.
Id. Consequently, Federal sought "a declaratory
judgment claiming that it has no duty to pay the damages for
the mast and sails because they were damaged while the Yacht
was being raced[, ] which loss is excluded under the
answered the Complaint [Doc. 8] and filed a Third-Party
Complaint [Doc. 10] against Rambler, alleging that Rambler
had breached the Agreement. In its third-party complaint,
Speedboat specified that "[t]his Court has diversity
jurisdiction over this action pursuant to 28 U.S.C. §
1332 because Speedboat and Rambler are citizens of different
States and the amount in controversy exceeds $75, 000,
exclusive of interest and costs." Doc. 10, at 2 (¶
6). Speedboat also asserted that the Court "has
jurisdiction of this action pursuant to 28 U.S.C. § 1367
because the claims asserted in this Third-Party Complaint are
within the Court's supplemental jurisdiction, as the
claims in this Third-Party Complaint are so related to the
claims in the Complaint previously filed by the Plaintiff
[Federal] that they form part of the same case of
controversy." Id. at 3 (¶ 7).
thereafter filed an "Amended Third-Party Complaint"
[Doc. 20] pursuant to Federal Civil Rule 15(a)(1)(B), as a
"matter of course." In that pleading, Speedboat
asserted that if "Plaintiff [was] held to be not
responsible to pay Speedboat on its claim for damages to said
'spars and sails, ' this Court should enter a
judgment that Rambler is liable to and must pay Speedboat for
such damages pursuant to the terms of the Share Issuance and
Shareholder Agreement." Doc. 20, at 2 (¶ 2). Also,
in this amended pleading, Speedboat based the Court's
jurisdiction solely upon supplemental jurisdiction, no longer
citing diversity of citizenship between Speedboat and
Rambler. Id., at 2-3 (¶ 6). Speedboat simply
alleged that "the claims in this Third-Party Complaint
are so related to the claims in the Complaint previously
filed by the Plaintiff [Federal] that they form part of the
same case or controversy." Id.
filed counterclaims against Speedboat for breaches of the
Agreement and for failing to disclose to Rambler that the
keel fin was dangerously defective. In its pleading, Rambler,
like Speedboat, pled that the Court has supplemental
jurisdiction over its claims under 28 U.S.C. § 1367.
See Doc. 29 (Rambler's Answer to Amended Third
Party Complaint), at 15 (¶ 3). As pled by Speedboat and
Rambler, all claims between them ultimately became
"based only on the Court's section 1367 supplemental
jurisdiction" without citing an underlying
jurisdictional basis. See Doc. 45 (Speedboat's
brief), at 5.
the Court referred the action to Magistrate Judge Joan G.
Margolis for a settlement conference in January of 2013. That
conference occurred in March of 2013 and was followed by a
second conference in May of 2013. The entire case did not
settle. However, on June 7, 2013, Federal and Speedboat filed
a "Stipulation of Discontinuance, " which stated
that "plaintiff's action against the defendant
Speedboat Racing Ltd[.] is hereby discontinued with prejudice
and without cost to either party." Doc. 43, at 1.
Federal was terminated as Plaintiff in this action and, as
Speedboat asserts, "the only remaining, unsettled claims
in this suit are the claims between Speedboat and
Rambler." Doc. 45, at 5.
first motion the Court will resolve is Speedboat's motion
to dismiss for lack of subject matter jurisdiction. Speedboat
argues that due to changed circumstances - the termination of
Federal as Plaintiff in this action -the Court lacks subject
matter jurisdiction. Id. Specifically, "the
remaining parties in this case lack diversity of
citizenship." Doc. 45, at 4. Speedboat thus urges the
Court to dismiss the remaining claims, focusing on the
balance of the "traditional values of judicial economy,
convenience, fairness, and comity." Doc. 45, at 7
(citing Kolari v. New York-Presbyterian Hosp., 455
F.3d 118, 122 (2d Cir. 2006)). Because the Court "has
not expended significant resources on the case or addressed
any substantive dispositive motions, Speedboat respectfully
requests that the Court exercise its discretion, pursuant to
28 U.S.C. § 1367(c)(3), to dismiss Speedboat's
claims without prejudice and to dismiss the claims of the
Third-[P]arty Counterclaim Plaintiff, Rambler 100
LLC." Doc. 45, at 4.
"concedes that this Court has no diversity jurisdiction
over this case, " Doc. 48, at 5. However, Rambler
objects to Speedboat's "Motion to Dismiss" and
moves for leave to amend its pleadings to "clarify that
this Court has (a) admiralty jurisdiction pursuant to 28
U.S.C. § 1333 over all of Speedboat's claims and
over six of Rambler's counterclaims because they concern
a maritime contract and (b) supplemental jurisdiction
pursuant to 28 U.S.C. § 1367 over Rambler's two
additional counterclaims because they form part of the same
case or controversy." Doc. 48, at 4. In particular,
Rambler asserts that the parties' pleadings demonstrate
that the "Share Issuance and Shareholder Agreement"
is a maritime contract and that agreement's choice-of-law
provision does not defeat admiralty jurisdiction. In sum,
Rambler concludes that the Court has admiralty subject matter
jurisdiction and may move forward with this action.
Court will resolve Speedboat's "Motion to
Dismiss" [Doc. 44] by determining whether this
Court's admiralty jurisdiction extends to the remaining
disputes between the remaining parties, Speedboat and
Rambler. If the Court has subject matter jurisdiction on that
basis, the Court will also rule on Rambler's "Motion
for Leave to Amend" [Doc. 46] its Answer and
Counterclaims, Speedboat's "Motion to Stay
Discovery" [Doc. 52], and Rambler's "Motion to
Compel Discovery" [Doc. 57].
Speedboat's Motion to Dismiss for Lack of Subject
Subject Matter Jurisdiction
district courts are courts of limited jurisdiction under
Article III, Section 2 of the United States Constitution.
See, e.g., Chicot Cnty. Drainage Dist. v. Baxter State
Bank, 308 U.S. 371, 376 (1940), reh'g
denied, 309 U.S. 695 (1940). The question of subject
matter jurisdiction is fundamental so that a court must raise
the issue sua sponte, of its own accord, when the
issue is not addressed by the parties. Mansfield,
Coldwater & Lake Michigan Rwy. Co. v. Swan, 111 U.S.
379, 382 (1884). See also Joseph v. Leavitt, 465
F.3d 87, 89 (2d Cir. 2006) ("Although neither party has
suggested that we lack appellate jurisdiction, we have an
independent obligation to consider the presence or absence of
subject matter jurisdiction sua sponte."),
cert. denied, 549 U.S. 1282 (2007); Univ. of
South Alabama v. American Tobacco Co., 168 F.3d 405, 410
(11th Cir. 1999) ("a federal court is obligated to
inquire into subject matter jurisdiction sua sponte
whenever it may be lacking").
subject matter jurisdiction is lacking, the action must be
dismissed. See Fed. R. Civ. P. 12(h)(3) ("If
the court determines at any time that it lacks subject-matter
jurisdiction, the court must dismiss the action.").
See also Manway Constr. Co. v. Housing Auth. of
Hartford, 711 F.2d 501, 503 (2d Cir. 1983) ("It is
common ground that in our federal system of limited
jurisdiction any party or the court sua sponte, at
any stage of the proceedings, may raise the question of
whether the court has subject matter jurisdiction; and, if it
does not, dismissal is mandatory.") (citations omitted).
general, a federal district court may exercise subject matter
jurisdiction over an action if there is either: (1)
"federal question" jurisdiction, applicable to
"all civil actions arising under the Constitution, laws,
or treaties of the United States, " 28 U.S.C. §
1331; or (2) there exists "diversity of citizenship,
" complete diversity of citizenship between the
plaintiff and all defendants and the amount in controversy
"exceeds the sum or value of $75, 000, exclusive of
interest and costs, " 28 U.S.C. §
1332(a). See also Strawbridge v.
Curtiss, 3 Cranch 267, 1806 WL 1213, at *1 (February
Term 1806); Da Silva v. Kinsho Int'l Corp., 229
F.3d 358, 363 (2d Cir.2000) (delineating two categories of
subject matter jurisdiction).
case at bar, there are no pending federal claims. Moreover,
neither Speedboat nor Rambler has presented sufficient facts
to establish its citizenship for diversity purposes as either
a limited liability company or a corporation. See
n.12, supra. Therefore, if diversity of citizenship
were asserted as the only potential basis for subject matter
jurisdiction, the Court would be forced to inquire further of
the parties regarding their citizenship. However, the
Court has an additional, alternative basis for subject matter
jurisdiction: admiralty jurisdiction. As requested by
Speedboat, and in light of the parties' agreement that
there is no diversity jurisdiction, the Court will address
admiralty jurisdiction before investigating the citizenship
of the parties, if necessary.
to 28 U.S.C. § 1333(1), Congress granted district courts
"admiralty" jurisdiction over "[a]ny civil
case of admiralty or maritime jurisdiction." That
jurisdiction encompasses "all contracts . . . which
relate to the navigation, business, or commerce of the
sea." Atl. Mut. Ins. Co. v. Balfour Maclaine
Int'l Ltd., 968 F.2d 196, 199 (2d Cir. 1992)
(internal quotation marks and citations omitted),
aff'd, 968 F.2d 196 (2d Cir. 1992); accord
Garanti Finansal Kiralama A.S. v. Aqua Marine & Trading,
Inc., 697 F.3d 59, 65 (2d Cir. 2012) ("[T]he
delegation of cognizance of 'all civil cases of admiralty
and maritime jurisdiction' to the courts of the United
States . . . extends over all contracts, (wheresoever they
may be made or executed, or whatsoever may be the form of the
stipulations, ) which relate to the navigation, business
or commerce of the sea.") (quoting DeLovio v.
Boit, 7 F.Cas. 418, 444 (C.C.D. Mass.1815) (No. 3, 776)
(Story, J.) (emphasis added)).
jurisdiction over contract claims is determined by reference
to the nature and subject of the contract." Ziegler
v. Rieff, 637 F.Supp. 675, 677 (S.D.N.Y.
1986). See also Commercial Union Ins. Co.
v. Blue Water Yacht Club Ass'n, 239 F.Supp.2d 316,
319 (E.D.N.Y. 2003). "The crucial question is whether
the relevant agreement has a 'maritime flavor.'"
Ziegler, 637 F.Supp. at 677 (citation omitted).
United States Supreme Court has articulated, "[t]he only
question is whether the transaction relates to ships and
vessels, masters and mariners, as agents of commerce.”
Kossick v. United Fruit Co., 365 U.S. 731, 736
(1961) (citation and quotation marks omitted). See also,
e.g., Omaha Indem. Co. v. Whaleneck Harbor Marina, Inc.,
610 F.Supp. at 154, 155-56 (E.D.N.Y. 1985) (When a contract
"relates to ships in their use as ships or to commerce
or transportation in navigable waters, there is admiralty
jurisdiction.") (citation, internal quotation marks, and
example, it is well established that contracts relating to
service or repair of a vessel are maritime in nature.
Ziegler, 637 F.Supp. at 677 (citation omitted).
Moreover, contracts providing for seasonal storage of a
vessel are maritime contracts. Id. See also Selame
Assoc., Inc. v. Holiday Inns, Inc., 451 F.Supp. 412, 418
(D.Mass.1978) ("A contract to provide wharfage or
storage is a maritime contract and a breach of this contract
is cognizable in admiralty.")(citations omitted)..
addition, an admiralty court generally has jurisdiction over
contracts to charter a boat or vessel. Armour & Co.
v. Ft. Morgan S.S. Co., 270 U.S. 253, 256 (1926) (a
"charter party" is a maritime contract and
"hence enforceable in a court of admiralty").
See also Fednav, Ltd. v. Isoramar, S.A., 925 F.2d
599, 601 (2d Cir. 1991) ("It is well-established that a
charter party agreement is a maritime contract.")
(citing, inter alia, Armour & Co., 270
U.S. at 259); Jack Neilson, Inc. v. Tug Peggy, 428
F.2d 54, 55 (5th Cir. 1970), cert. denied, 401 US.
955 (1971) ("We hold that the charter provisions of the
contract are maritime in nature, are severable, and within
the admiralty jurisdiction of the district court.").
See also, e.g., Compass Marine Corp. v. Calore
Rigging Co., 716 F.Supp. 176, 180 (E.D. Pa. 1989)
(dispute arising out of charter agreement of vessel in
service is cognizable under the admiralty and maritime
jurisdiction of the federal courts), aff'd sub nom.,
Appeal of Calore Rigging Corp., 891 F.2d 279 (3d Cir.
1989), and aff'd, 891 F.2d 280 (3d Cir. 1989);
Natasha, Inc. v. Evita Marine Charters, Inc., 763
F.2d 468, 468 (1st Cir. 1985) (holding "admiralty does
have jurisdiction if the charter portion of the sale contract
is readily 'separable' from the rest of the
other hand, in general, "[i]t is well settled that,
while a contract for the use or charter of a vessel is
maritime in nature, the contract for a sale of a vessel is
non-maritime." Sea Trade Mar. Corp. v.
Coutsodontis, No. 09-CV-488 (BSJ) (HBP), 2012 WL
3594288, at *4 (S.D.N.Y. Aug. 16, 2012) (citing, inter
alia, The Ada, 250 F. 194, 196 (2d Cir. 1918)).
See also Aggelikos Prostatis Corp. v. Shun Da Shipping
Grp. Ltd., 646 F.Supp.2d 330, 332 (S.D.N.Y. 2009)
("It is 'elementary hornbook law that a contract for
the sale of a vessel is not within the admiralty jurisdiction
of the district courts.'") (quoting Int'l
Shipping Co., S.A. v. Hydra Offshore, Inc., 675 F.Supp.
146, 150 (S.D.N.Y.1987), aff'd, 875 F.2d 388 (2d
Cir. 1989)); Kalafrana Shipping Ltd. v. Sea Gull Shipping
Co., 591 F.Supp.2d 505, 507 (S.D.N.Y. 2008) ("It
has long been the rule in the Second Circuit that a contract
for the sale of a vessel is not a maritime contract.").
See also generally 12 Am. Jur. 2d Admiralty §
60 ("A contract for the sale of a vessel is generally
not within a federal court's admiralty jurisdiction
because such a contract is not maritime in nature.").
if the maritime part of a contract is the primary objective
of the contract and/or separable from the nonmaritime part,
then admiralty jurisdiction exists. See, e.g.,
Compagnie Francaise De Navigation a Vapeur v
Bonnasse, 19 F.2d 777, 779-80 (2d Cir. 1927) (Hand,
J.), cert. denied, 275 U.S. 551 (1927);
Atl. Mut. Ins. Co., 775 F.Supp. at 104. See also
Sirius Ins. Co. (UK) v. Collins, 16 F.3d 34, 36 (2d Cir.
1994) ("The test [for determining a maritime contract]
has . . . been loosened considerably so that admiralty
jurisdiction is held to cover also contracts whose
nonmaritime elements are 'incidental' to a primarily
maritime purpose, as well as the separable maritime portions
of mixed contracts that are not primarily maritime, if these
can be separately litigated without prejudice.")
(citations omitted); Tradhol Int'l, S.A. v. Colony
Sugar Mills Ltd., No. 1:09-CV-00081 (RJH), 2009 WL
2381296, at *5 (S.D.N.Y. Aug. 4, 2009) ("The premise of
the severability doctrine is that a court may divide a
contract into its component parts and pronounce some but not
all of them 'salty.'"), aff'd, 354
F.App'x 463 (2d Cir. 2009); Jack Neilson, Inc. v. Tug
Peggy, 428 F.2d 54, 60 (5th Cir. 1970) ("it has
long been recognized that where the maritime elements of a
contract are susceptible to separate adjudication admiralty
jurisdiction may be exercised to that extent") (citation
and internal quotation marks omitted), cert. denied,
401 U.S. 955 (1971) . See also generally 29 A.L.R.
Fed. 325, II. § 6[a] (captioned "Mixed
contracts") ("where a contract contains both
maritime and nonmaritime covenants, . . . admiralty may
assume jurisdiction of a claim based upon the maritime part
of the contract").
courts have blurred the bright line between the sale of a
vessel and certain maritime provisions to find that
"when determining whether a contract is a maritime
contract, one should focus on whether the principal objective
of the contract is maritime commerce, rather than on whether
the non-maritime components are properly characterized as
more than 'incidental' or 'merely incidental'
to the contract." Kalafrana Shipping Ltd. v. Sea
Gull Shipping Co. Ltd., 591 F.Supp.2d 505, 509 (S.D.N.Y.
2008). As Justice O'Connor articulated on
behalf of a unanimous Supreme Court in Norfolk S. Ry. Co.
v. Kirby, 543 U.S. 14, 14 (2004), "the fundamental
interest giving rise to maritime jurisdiction is the
protection of maritime commerce. . . . [and] [t]he conceptual
approach vindicates that interest by focusing the Court's
inquiry on whether the principal objective of a contract is
maritime commerce." See also Sirius Ins. Co. (UK) v.
Collins, 16 F.3d 34, 36 (2d Cir. 1994) ("the court
should consider 'whether an issue related to maritime
interests has been raised, ' 968 F.2d at 199, bearing in
mind that the 'fundamental interest giving rise to
maritime jurisdiction is the protection of maritime
commerce.'") (citing and quoting Atlantic Mutual
Ins. Co. v. Balfour Maclaine Int'l, Ltd., 968 F.2d
196, 200 (2d Cir. 1992)(some internal quotation marks
this "conceptual" or "principal
objective" approach, endorsed by the Second Circuit,
"if the maritime elements of a contract are the
principal or primary objective of the contract, " there
is admiralty jurisdiction. F.H. Bertling Holding KG v.
Ranhill Engineers & Constructors Sdn. Bhd., 591
F.Supp.2d 377, 383 (S.D.N.Y. 2008) (citing, inter
alia, Folksamerica Reinsurance Co. v. Clean Water of
New York, Inc., 413 F.3d 307, 314-15 (2d Cir. 2005)).
Alternatively, employing the "severability"
exception, if "the claim [at issue] arises from a breach
of maritime obligations that are severable from the
non-maritime obligations of the contract, " there is
"federal maritime jurisdiction." F.H. Bertling
Holding KG, 591 F.Supp.2d at 383 (citation omitted).
the conceptual approach to determine whether there is
admiralty jurisdiction, the Court must focus its inquiry on
whether the nature of the contract or transaction includes
maritime elements: whether provisions relate to the
navigation, business or commerce of the sea. If the Court
finds that the primary objective of the contract is maritime
in nature, there is admiralty jurisdiction. Otherwise, under
the severability test, if certain components of the contract
are maritime, while others are not, the Court must determine
whether the maritime provisions are separable from the
non-maritime ones. If the maritime provisions are separable,
there is admiralty jurisdiction over the claims arising under
of the Agreement: Co-Ownership and/or Lease
rules for the construction and interpretation of maritime
contracts are essentially the same as those delineated in the
non-maritime caselaw." Sea Hunters, LP v. S.S. PORT
NICHOLSON, No. 2:08-CV-272 (GZS), 2015 WL 1206487, at
*10 (D. Me. Mar. 17, 2015). The Court thus turns to the terms
of the Agreement to determine their intended meaning.
basic principles of contract interpretation under Connecticut
law, which governs, are well established: "(1) [t]he
intention of the parties is controlling and must be gathered
from the language of the [contract] in the light of the
circumstances surrounding the parties at the execution of the
instrument; (2) the language must be given its ordinary
meaning unless a technical or special meaning is clearly
intended; [and] (3) the [contract] must be construed as a
whole and in such manner as to give effect to every
provision, if reasonably possible." Sartor v. Town
of Manchester, 312 F.Supp.2d 238, 242-43 (D. Conn. 2004)
(quoting Peter-Michael, Inc. v. Sea Shell Assoc, 244
Conn. 269, 275 (1998)). The parties' "intention is
to be determined from the language used, the circumstances,
the motives of the parties and the purposes which they sought
to accomplish." Sartor, 312 F.Supp.2d at 243
(citing Peter-Michael, 244 Conn. at 276). Where the
language of a contract is clear and unambiguous, the
court's determination of contractual intent becomes a
question of law for the court. See, e.g., Tallmadge
Bros., Inc. v. Iroquois Gas Transmission Sys., L.P., 252
Conn. 479, 495 (2000) ("the interpretation and
construction of a written contract present only questions of
law, within the province of the court . . . so long as the
contract is unambiguous and the intent of the parties can be
determined from the agreement's face") (quoting 11
S.Williston, Contracts, at 77-83 (§ 30:6)
(4th ed. 1999)).
language is unambiguous when it has a definite and precise
meaning, unattended by danger of misconception in the purport
of the [contract] itself, and concerning which there is no
reasonable basis for a difference of opinion."
Brunoli v. Brunoli & Sons, 993 F.Supp. 66, 73
(D.Conn.1997) (quoting Care Travel Co. v. Pan Am. World
Airways, 944 F.2d 983, 988 (2d Cir. 1991)). Moreover,
"the mere fact that the parties advance different
interpretations of the language in question does not
necessitate a conclusion that the language is
ambiguous." Levine v. Massey, 232 Conn. 272,
279 (1995). Rather, the court must give the terms "their
natural and ordinary meaning, " Kelly v.
Figueiredo, 223 Conn. at 31, 35 (1992), and interpret
them "with each provision read in light of the other
provisions, " United Illuminating Co. v.
Wisvest-Connecticut, LLC, 259 Conn. 665, 670 (2002).
case at bar, the Agreement's terms are clear and
unambiguous and should be given their natural and ordinary
meaning. Their interpretation by the Court thus presents a
question of law.
Agreement, entitled "Share Issuance and Shareholder
Agreement, " states that 49, 999 out of 50, 000 shares
of Speedboat - "a Cayman Islands exempted company
limited by shares" - each valued at one dollar ($ 1.00),
are owned by one Alexander Jackson. Doc. 10-3, at 2. The
remaining individual share ("New Share") was to be
issued to Rambler for the purchase price of "One Dollar,
" and become "redeemable by [Speedboat] upon the
terms set forth" in the Agreement, which included, if no
prior terminating event occurred, automatically upon
termination of the Agreement (i.e., after the
conclusion of the races for which the Yacht was
leased). Id. During the entire term of
the Agreement, the sole Director of Speedboat was and would
continue to be "Alexander E. Jackson, "
id., at 4 (§ 3.1); and Speedboat was and would
remain "the record owner of the Yacht, "
id., at 9 (§ 4.2(b)).
importantly to Rambler, under the Agreement, Rambler obtained
"[e]xclusive use of the Yacht" to participate in
the series of "eight races in the Atlantic Ocean Racing
Series in 2011." Id., at 4-5 (§ 4.1). In
return, Rambler was required to pay all operating expenses,
repair and maintenance costs, racing fees, crew employee
salaries and benefits, and all ancillary costs of such
races. Id., at 5 (§ 4.1(a)).
during the races, Speedboat retained certain control over the
Yacht by requiring Rambler to hire Speedboat's captain,
Chris Higgins, on a full-time basis "through the last
race sailed under this Agreement, " and hire crew member
Bill Erkelens to serve "as a crew member in each
sailboat race in which the Yacht
participates." Id., at 5 (§ 4.1(b)).
Furthermore, Speedboat placed "Use Restrictions" on
Rambler's use of the yacht, limiting operation "to
the navigational limits as set forth in the Yacht's
insurance policy, " mandating use "for
pleasure" purposes only, and banning drugs and weapons
on board. Id., at 6 (§ 4.1(e)). Speedboat also
banned "any permanent modifications to the Yacht"
unless listed in the Agreement and/or after "prior
written express consent of [Jackson]." Id., at
8 (§ 4.1(m)). Furthermore, Rambler could not rename the
Yacht or change "associated graphics" unless
"all such changes shall be reversed at the end of the
[Agreement's] Term at the expense of Rambler."
Jurisdiction over the Pending Claims
are essentially two components to the "Share Issuance
and Shareholder Agreement" (herein
"Agreement") with respect to the Yacht: (1) a sale
of one share of ownership ("one (1) redeemable share of
a nominal par value of U.S. $1.00") in Speedboat, Doc.
10-3, at 2; and (2) a charter or lease for the use of the
Yacht for a set period to sail in the 2011 season of the
Atlantic Ocean Racing Series, id., at 4-5 (§
4.1). The first contract component of a sale is non-maritime
in nature. See, e.g., The Ada, 250 F. at
196. However, the second portion of the Agreement, the lease
or charter of the Yacht for the specified racing season, is
maritime by its terms. See, e.g., Armour & Co.,
270 U.S. at 256.
core, this was an agreement for Rambler to sail a world-class
yacht in a series of international races in the hopes of
securing victory. The Agreement's maritime charter
provisions contain what was manifestly the primary objective
of the contract: to provide Rambler with the exclusive use of
the Yacht in the 2011 Atlantic Ocean Racing Series. The sale
of one share of Speedboat to Rambler was incidental to the
charter (in this case, according to Speedboat to ensure that
the charter was legal). Therefore, under the Second
Circuit's "conceptual" test, the Agreement is
maritime in nature, giving rise to admiralty jurisdiction.
even if the charter were not the primary objective of the
Agreement, the charter provisions are separable from the
stated sale of the Speedboat share. Therefore, employing
"severability, " even if the primary objective of
the Agreement were not the charter, there is admiralty
jurisdiction over the claims at bar under the "separable
the terms giving rise to the charter, Section 4.1(a) of the
Agreement provides Rambler with "[e]xclusive use of the
Yacht" from October 14, 2010 to March 15, 2012 for
racing purposes. Doc. 10-3, at 4 (§ 4.1). The
intended races of the Yacht are described as "eight
races in the Atlantic Ocean Racing Series in 2011 . . . with
the objective of winning the Atlantic Ocean Racing Series
overall, winning a majority of the races entered, and setting
records." Id., at 4-5 (§ 4.1(a)).
a condition to Rambler's exclusive use of the Yacht,
" Rambler agreed to "pay all operating expenses,
repair and maintenance costs for the Yacht and its
Equipment." Id., at 5 (§ 4.1(a)). In
addition, pursuant to Section 4.1(b), Rambler agreed to
retain two former Speedboat crew members. Specifically,
Rambler was bound to retain the "current captain of the
Yacht, " Chris Higgins, on a full time basis and with
"a competitive salary consistent with the other senior
members of the Yacht's crew;" and Rambler was
required to hire Bill Erkelens as a crew member in each
sailboat race in which the Yacht would
Section 4.1(c), Jackson and Speedboat agreed to "deliver
the Yacht . . . to Rambler at Newport Shipyard, Newport,
Rhode Island, " or at another agreed upon location, in
"ship shape, sailable racing condition" and to
inform Rambler of any "conditions, flaws, damages, or
defects (latent or otherwise) of the Yacht which would render
or cause the Yacht not to be in ship shape, sailable racing
condition." Id., at 5 (§4.1(c)). Section
4.1(d) outlined the terms for redelivery of the Yacht by
Rambler to Jackson and Speedboat at the conclusion of the
Agreement's term; and Section 4.1(e) defined restrictions
on the use of the Yacht, including the navigational limits of
the Yacht's operation. Id., at 6 (§4.1(e)).
provisions are typical of those found in maritime contracts
of charter party. By the same token, the claims Speedboat
asserts against Rambler in its Third Party Complaint, and
Rambler asserts in its counterclaims to that pleading, are
typical of the sort traditionally charged as breaches of a
maritime charter. For example, Count One alleges that Rambler
"fail[ed] to return the Yacht in as good a condition as
when delivery was taken . . . pursuant to the Lease
Agreement." Doc. 20, at 6 (¶ 26) (relating to
§ 4.1(d)). Count Two seeks declaratory judgment that
Rambler failed to secure adequate insurance coverage of the
Yacht pursuant to the terms of the Lease Agreement.
Id., at 6 (¶ 29) (relating to § 4.1(f)).
Count Three alleges that "as a condition to
Rambler's exclusive use of the Yacht, " Rambler was
obligated to pay "all operating expenses, repair and
maintenance costs for the Yacht, " and Rambler
"fail[ed] to maintain and repair the Yacht, including
repairs resulting in major equipment failures."
Id., at 7 (¶¶ 34-35) (relating to §
4.1(a)). Finally, Count Four seeks attorneys' fees
pursuant to Section 5.5 of the Lease Agreement. Id.,
at 8 (¶ 38) (relating to "Miscellaneous
Provisions" in § 5, pertaining to the entire
addition, as Rambler asserts, four of its proposed
counterclaims, "as set forth in its proposed amended
pleadings, concern Jackson's and Speedboat's breaches
of Sections 4.1, 4.1(a), and 4.1(c) of the Agreement, "
and therefore also relate to the charter or lease of the
Yacht. Doc. 48 (Rambler's Brief), at 8
(citing Doc. 48-1, Counts I-IV, at 21-24). In addition, as
Rambler states, another of its causes of action
"concerns Jackson's and Speedboat's breach of
the Agreement's implied covenant of good faith and fair
dealing for, among other things, refusing to allow Rambler to
repair the Yacht so that it could continue to use the Yacht
through the end of the term of the Agreement." Doc. 48,
at 8 (citing Doc. 48-1, Count VI, at 25-27). That cause
relates to the repair provisions of the charter portion of
the Agreement (§ 4.1(a)). Yet another cause of action,
Rambler alleges, "is based on Speedboat's breach of
the Agreement's implied warranty of seaworthiness."
Doc. 48, at 8 (citing Doc. 48-1, Count V, at 24-25) (relating
to "Delivery of the Yacht" in "ship shape,
sailable racing condition, " pursuant to § 4.1(c)).
In sum, according to Rambler, each of these "foregoing
causes of action is based explicitly upon the breach of the
Agreement, a maritime contract that concerns the use of a
ship as a ship and that directly relates to the
ship's operation, navigation, and management
afloat." Doc. 48, at 8 (emphasis added).
these circumstances, there is no substance to Speedboat's
contention that the Agreement is not maritime in nature, but
rather "a shareholders' agreement by which Jackson
and Defendant became co-owners of [the] Speedboat entity,
provided for its governance, provided that Rambler would
finance the maintenance and operation of the Yacht . . ., and
provided Rambler as a co-owner with temporary use of the
Yacht, subject to certain conditions." Doc. 50, at 7.
asserts that "a contract under which co-owners provide
for the management and operation of a vessel is entirely
non-maritime in character, and is distinguishable for
purposes of admiralty jurisdiction from a third-party
charter." Id., at 7-8 (citing, inter
alia, Ward v. Thompson (The Detroit), 63 U.S.
330, 333 (1859)). This argument fails because Speedboat's
interpretation of the Agreement as a "co-owners'
management agreement" for operation of a vessel misses
the mark. It exalts form (such as the caption, "Share
Issuance and Shareholder Agreement") over substance.
This is clearly not a case where, as Speedboat asserts, Doc.
50, at 8, mutual co-owners agreed to purchase and operate a
vessel together, as opposed to "one where an owner of a
vessel engages another to manage or operate her."
Cf. Economu v. Bates, 222 F.Supp. 988, 990 (S.D.N.Y.
1963) ("The parties . . . have agreed to purchase a
vessel and thereafter to operate her for their mutual
benefit; the profits were to be shared whether the operation
was in the name of one or more individuals or through a
corporate entity" and "[t]his is the essence of
essence of the contract at bar was not a joint enterprise.
Rather, examining the terms of the contract as a whole and
interpreting all terms to give them their full meaning, the
contract was primarily designed to provide Rambler with use
of the Yacht "in ship shape, sailable racing
condition" to participate in the Atlantic Ocean Racing
Series. Rambler's nominal, one-share ownership interest
expressly and automatically terminated "upon completion
of the [Agreement's] Term" and for the price of
"One Dollar ($1.00)." Doc. 10-3, at 7 (§
4.1(j)). Thus, upon expiration of the contract, Speedboat
resumed full ownership rights; and by January 1, 2012,
Speedboat and Jackson could even elect to "market or
otherwise advertise the Yacht for sale." Id.,
at 7-8 (§§ 4.1(i), (j), (n)(2), (o)).
accuses Rambler of using "far too simplistic a reading
of the legal precedent governing the distinction between
maritime and non-maritime contracts" and concluding that
"[t]he mere fact that a ship is involved will not bring
the cause within the jurisdiction of the admiralty
court." Doc. 50, at 8 (citations omitted). Speedboat
sets up a straw man and energetically knocks it down, but the
argument disregards reality. Admiralty jurisdiction does not
depend upon "the mere fact that a ship is involved"
in the transaction between the parties. On the contrary: for
the reasons stated, the Court interprets the Agreement to
contain both a nominal sale and a lease (or charter) of the
Yacht for the 2011 Atlantic Ocean Racing Series. The pending
claims between Speedboat and Rambler relate to the
Agreement's primary and/or separable maritime provisions
pertaining to that lease, and consequently fall within
the main and severable purpose of the Agreement was to lease
or charter to Rambler the Yacht to participate in races.
"Without doubt a contract for hire either of a ship or
of the sailors and officers to man her is within the
admiralty jurisdiction." Kossick v. United Fruit
Co., 365 U.S. 731, 735 (1961) (citing 1 Benedict,
Admiralty, 366). Accordingly, the charter terms
of the Agreement support admiralty jurisdiction in the