United States District Court, D. Connecticut
ORDER RE PENDING MOTIONS
Jeffrey Alker Meyer United States District Judge.
This is
a case about a boat deal gone bad. The boat is a yacht built
by an Australian company named Maritimo Offshore Pty Ltd. The
buyers of the boat were arguably Richard Dubois, Sheila
Dubois, and Capital Construction LLC, a company jointly owned
by Richard Dubois and his adult son Michael Flors. The boat
deal was brokered by Edwin Fairbanks and Fairbanks Yacht
Group LLC.
After
the sale was completed, disputes arose about the boat’s
alleged defects, failures to make requested upgrades and
repairs, and further damage sustained to the boat after its
purchase. Eventually, Richard Dubois, Sheila Dubois, and
Michael Flors joined together to file this lawsuit against
Maritimo Offshore Pty Ltd, Maritimo USA, Edwin Fairbanks, and
Fairbanks Yacht Group LLC, alleging breach of contract,
fraud, negligence, and related causes of action.
This
case has been before the Court since 2015. Like the boat it
concerns, it has taken on some water, as well as a
considerable number of legal barnacles. During its pendency,
Maritimo Offshore Pty Ltd sailed into and out of voluntary
administration in Australia, a form of bankruptcy protection.
Afterwards, two of the plaintiffs, Richard and Sheila Dubois,
were thrown overboard for failure to actively litigate this
action. Now only Flors remains at the helm, but without an
attorney to navigate for him and under a stormcloud of
questions about whether he alone has standing to maintain
this action.
The
Court’s current docket manifest stands as follows.
First, the Court must determine if Flors has standing.
Second, the Court must evaluate a trio of pending motions to
dismiss filed by one or more of the defendants. Lastly, the
Court must address a motion for attorney’s fees
stemming from Flors’ failure to comply with discovery.
Background
A.
The complaint
The
second amended complaint, Doc. #73, alleges the following
facts, which I accept as true for the purposes of these
motions to dismiss. In 2013, Sheila Dubois, her husband
Richard Dubois, and her son Michael Flors (“the
Dubois-Flors”) decided to buy a yacht. Doc. #73 at
¶ 16. Online research led them to defendant Maritimo
Offshore Pty Ltd (“Maritimo Australia”). Doc. #73
at ¶ 3. According to its website, Maritimo Australia
manufactures and sells “long range luxury yachts”
of “the most superior quality.” Id. at
¶ 18. Flors eventually expressed interest in a 44-foot
3-inch model that Maritimo Australia was offering and that
would be named the “Game Changer.”
Id. at ¶ 20. Flors also contacted defendant
Edwin Fairbanks at the beginning of September 2013. Doc. #73
at ¶ 19. Fairbanks is a yacht broker who sells Maritimo
boats in the United States, and he is the owner and operator
of defendant Fairbanks Yacht Group LLC (“FYG”), a
Connecticut company that outfits, repairs, and sells boats.
Doc. #73 at ¶ 10.
The
Dubois-Flors thereafter arranged to meet with Fairbanks, and
on or about September 20, 2013, the Dubois-Flors and
Fairbanks went on a sea trial of the boat. Id. at
¶ 21-22. That September, both before and after the sea
trial, one or all of the Dubois-Flors informed Fairbanks that
they would purchase the boat only if the boat was (1) fit for
recreational boat cruising, (2) performing its recreational
cruising tasks “satisfactorily, ” (3) safe and
seaworthy under any circumstances and (4) compliant with the
standards set forth by the American Yacht & Boat Council
(AYBC), applicable federal requirements for boat
manufacturers as set forth by the U.S. Coast Guard, and the
guidelines promulgated by the National Fire Protection
Association, among others. Id. at ¶ 23.
The
Dubois-Flors informed Fairbanks in September or October 2013
that they wanted to do business with a local authorized
dealer and agent of Maritimo, qualified to install certain
equipment and components, who would do finishing work on the
boat, store the boat and deliver it for launch in spring
2014, and who would take responsibility for repairing,
servicing, and performing other work on the boat under its
warranty. Id. at ¶ 24. Fairbanks directed the
Dubois-Flors to contact David Northrop, the president and
general manager of Maritimo USA. Id. at ¶ 25.
Northrop and Fairbanks together made representations that the
boat would exceed the Dubois-Flors’ expectations for
quality and safety of construction, and that it would meet or
exceed the standards set forth by organizations that regulate
the manufacture and sale of boats in the United States.
Id. at ¶ 27. Northrop and Fairbanks further
represented to the Dubois-Flors that Fairbanks would install
all the equipment included in the purchase of the boat
“in a workmanlike manner” as an authorized dealer
and agent of Maritimo Australia. Id. at ¶ 28.
Fairbanks would receive a commission for the sale of the boat
and for installing the equipment that came with the boat, as
well as a commission for additional equipment purchased by
the plaintiffs. Id. at ¶ 29.
On
October 23, 2013, the first of two contracts for the purchase
of the boat was signed. This first contract, entitled
“Dealer Sales Agreement, ” lists the buyer of the
boat as Capital Cable Construction LLC, Doc. #73-1 at 2, a
Connecticut limited liability company co-owned by Flors and
Richard Dubois. Doc. #182 at 12, Doc. #182-1 at 2
(Connecticut Secretary of State filing).[1]The first and
third pages of the contract are signed only by Richard Dubois
and David Northrop, the former on behalf of Cable
Construction Company LLC, the latter (it appears) on behalf
of FYG. Doc. #73-1 at 2.
A
second contract was executed on November 25, 2013, entitled
“Sales Contract for New Boat.” In this contract,
the “buyer’s name” was declared to be
“Richard and Sheila Dubois, ” id. at 4,
a designation repeated on the attached Builder’s
Certification that declared, in Section V, that Sheila Dubois
and Richard Dubois were to be “tenants in common, each
owning an equal undivided interest” in the boat.
Id. at 9. The signatories on this contract are
difficult to make out, but appear to include an officer of
Maritimo Australia, Richard Dubois, and Sheila Dubois.
Id. at 5. Garth Corbitt, the Chief Executive Officer
of Maritimo Australia, signed the Builders Certification and
First Transfer of Title, and the Manufacturer’s
Statement of Origin to a Boat or Motor. Id. at
8–10.
The
November 2013 contract does not mention Capital Cable
Construction or Flors. Id. It does, however, include
in its terms and conditions a clause declaring that
“Dealer makes no warranties, express or implied,
including any warranties of merchantability, engine hours, or
fitness for a particular purpose, regarding any boat or item
purchased hereunder, whether new, used, or brokered. Any
warranty, if any, associated with the item(s) purchased
hereunder shall solely be the warranty given by the
manufacturer.” Id. at 7. Maritimo Australia
declared in the November 2013 contract that it provided a
“Factory Limited Warranty” whose “effective
start date begins upon transfer to Title and
ownership.” Id. at 5.
Title
to the boat transferred to Richard and Sheila Dubois when the
November 2013 contracts were executed. Doc. #73 at ¶ 37;
Doc. #73-1 at 5. However, there was work to be done on the
boat until it could be practically put in the
Dubois-Flors’ possession-mostly the installation of
equipment-and confusion about just who would be doing this
work. The Dubois-Flors thought Maritimo Australia or Maritimo
USA would finish the work on the boat; Maritimo Australia and
Maritimo USA each said (before the boat was sold) that
Fairbanks would do it and was qualified to do it,
see Doc. #73 at ¶¶ 24, 25, 29, and that
the work would be done by the spring. Id. at
¶¶ 29, 39. The Dubois-Flors expressed a clear
expectation that the work would get done in time for a spring
launch of the yacht.
It
wasn’t. In February 2014, Flors discovered that none of
the requested equipment was installed; although Fairbanks
promised to install the equipment immediately, nothing was
done by April 2014, at which point Flors lost patience and
directed Fairbanks to cease taking any further actions to
equip or board the boat. Id. at ¶¶ 39-40,
42.
Flors’
directive to Fairbanks triggered a series of demands,
counter-demands, and acrid exchanges between the
Dubois-Flors, Fairbanks, and various representatives of the
Maritimo entities. At first, Northrop represented that
Maritimo Australia would take charge of getting the boat
ship-shape, id. at ¶¶ 44-45, but hopes of
rapid resolution were dashed when Flors tried to navigate the
Game Changer to Rhode Island to allow Maritimo
Australia to perform the finishing work there, only to
discover that the Game Changer was taking on
significant quantities of water and had to be berthed at the
nearest port for repairs in Old Saybrook, Connecticut.
Id. at ¶¶ 48–52. The source of the
leak was traced to three hoses, ordinarily connected to the
heating and air conditioning unit, which were somehow cut
when the boat was in the possession of the Fairbanks
defendants. Id. at ¶¶ 53–54. The
leak represented only the most serious problem with the
Game Changer, heading a list that included
electrical problems, id. at ¶ 66, defective
shafts, id. at ¶ 70, botched paint jobs on the
hull, id. at ¶ 44, and much else besides,
id. at ¶¶ 70-73.
Maritimo
Australia refused to pay for repairs arising from the cut
hoses, arguing that these were Fairbanks defendants’
responsibility, id. at ¶ 68, and subsequently
refused to do any work at all, claiming that the boat was a
“demo” not covered under any warranty,
id. at ¶ 73. Fairbanks and Maritimo Australia
each rejected repeated demands by Flors made between August
and October 2014 for either party to conduct the requested
repairs, id. at ¶¶ 74-76, and the
Dubois-Flors ultimately sued Maritimo Australia, Maritimo
USA, FYG, and Edwin Fairbanks in this Court in July 2015.
Doc. #1.
The
complaint alleges eight counts: (1) breach of contract
against all defendants, (2) fraudulent misrepresentation by
Fairbanks, (3) negligent misrepresentation by Maritimo
Australia and Maritimo USA, (4) breach of express and implied
warranties by Maritimo Australia and Maritimo USA under state
common law and the Magnuson-Moss Act, 15 U.S.C. § 2301,
(5) negligence by Fairbanks, (6) negligence by Maritimo
Australia and Maritimo USA, (7) breach of warranty by all
defendants, and (8) violation of the Connecticut Unfair Trade
Practices Act (CUTPA), Conn. Gen. Stat. § 42-110a,
et seq. by all defendants.
B.
Subsequent developments
Edwin
Fairbanks and FYG (who I shall collectively refer to as
“the Fairbanks defendants”) filed a motion to
dismiss the Dubois-Flors’ complaint, Doc. #102, a
motion still pending before the Court. The Fairbanks
defendants also filed cross-claims against Maritimo Australia
in early 2016, Doc. #79 (initial cross-claim), #89 (amended
cross-claim), which Maritimo Australia moved to dismiss, Doc.
#95, which Fairbanks opposed, Doc. #103. Maritimo Australia
also filed cross-claims against Fairbanks later that year.
Doc. #126.
Before
the motions to dismiss the main action or the cross-claims
could be resolved in this Court, Maritimo Australia entered
voluntary administration in Australia, a form of bankruptcy
protection, under Australian law. Shortly after the voluntary
administration commenced overseas, Maritimo Australia
initiated a Chapter 15 proceeding in the U.S. Bankruptcy
Court for the District of Connecticut. In Re Maritimo
Offshore Pty Ltd, No. 16-bk-31613, Doc. #1 (Bankr. D.
Conn.). Chapter 15 of the Bankruptcy Code provides the legal
mechanisms for U.S. courts to recognize foreign insolvency
proceedings. See generally 11 U.S.C. § 1501.
Pursuant to the provisions of Chapter 15, Maritimo Australia
asked the U.S. Bankruptcy Court to recognize the Australian
voluntary proceeding as a “foreign main
proceeding” under the Bankruptcy Code, a filing that
triggered an automatic stay of the proceedings in this Court.
Doc. #140. In January 2017, the Bankruptcy Court recognized
the Australian voluntary administration as a foreign main
proceeding, which continued to stay this case. See
Doc. #142.
An
Australian voluntary administration is an expedited procedure
designed to allow for the speedy turnaround of an insolvent
or near-insolvent company. See generally In Re Maritimo
Offshore Pty Ltd, No. 16-bk-31613, Doc. #82 (Bankr. D.
Conn.) (affidavit and materials of voluntary administrator in
the Maritimo matter); see also Aust. Sec. & Inv.
Comm’n. Voluntary Administration: A Guide for
Creditors (Sept. 1, 2017),
https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-creditors/voluntary-administration-a-guide-for-creditors/.
In this voluntary administration, Maritimo Australia
appointed two independent administrators (Andrew Cummins and
Brian Silvia, of the specialist liquidation firm BRI
Ferrier), who then held a meeting of creditors functionally
approving their appointment. See Affidavit of Andrew
John Cummins As Agent/Foreign Representative Concerning
Voluntary Administration and Deed Administration and
Adjudication of Proof of Claim as Amended, In Re Maritimo
Offshore Pty Ltd, No. 16-bk-31613, Doc. #82 (Bankr. D.
Conn.). After a period of investigation, the administrators
ultimately presented the creditors with a Deed of Company
Administration (“DOCA”). A DOCA is a plan,
binding on all participating creditors, setting out how much
creditors would be paid and the quasi-judicial procedure
under which creditors’ claims would be evaluated (the
“DOCA Claims Process”). Id. The DOCA
Claims Process required creditors to submit a proof of claim
to the administrators, who would then adjudicate the claim
and issue a preliminary decision. Id. That decision
could be appealed to the Australian trial courts, which would
then review the claim in much the same way a U.S. court
would. Id.
The
Dubois-Flors attended the creditor meeting that approved the
DOCA (by proxy, through their Australian attorneys).
Id. They then fully participated in the DOCA Claims
Process, submitting a proof of claim, complete with 88
exhibits, to the appointed administrators of Maritimo
Australia’s bankruptcy estate. Maritimo
Australia’s administrators denied the
Dubois-Flors’ claim; the notice of claim denial
explained that the administrators’ decision could be
appealed to the Australian courts, but no such appeal was
made. Id. Having finally adjudicated all relevant
claims under the DOCA claims process, the administrators held
a final creditors meeting, which approved the final
disposition of Maritimo Australia’s assets and released
the company back to the control of its original directors.
Id. Maritimo Australia then sought and obtained
recognition of the DOCA and the DOCA Claims Process from the
U.S. Bankruptcy Court for the District of Connecticut, which
entered an order on February 14, 2019, docketed in this case,
recognizing the “Deed of Company Administration”
and “Claims Process” as “binding and
enforceable in the United States by Maritimo [Pty Ltd]
against its creditors.” Doc. #166. The Dubois-Flors did
not object to the substance of this order in the Bankruptcy
Court.[2]
With
both Australian and U.S. bankruptcy proceedings concluded,
the stay in this Court was lifted, and this litigation
resumed in March 2019. A month later, the Fairbanks
defendants moved to dismiss the case on the grounds that the
Dubois-Flors were refusing to participate in discovery. Doc.
#167. Maritimo Australia also moved to dismiss, arguing in
part that the action was precluded by the Bankruptcy
Court’s order. Doc. #170.
I
convened a hearing on the Fairbanks defendants’ motion,
Doc. #167, and ultimately dismissed Richard and Sheila Dubois
from the case for failing to prosecute the action, but denied
the motion to dismiss Flors. Doc. #171. Instead, I sanctioned
Flors for his willful failure to respond to the
defendants’ deposition notices by rendering him liable
for the Fairbanks defendants’ attorney’s fees
incurred in preparing and serving the deposition notices,
preparing their motion to dismiss, and in attending the
hearing on the motion. Id. The Fairbanks defendants
duly moved for attorney’s fees, a motion that remains
pending. Doc. #178. Flors has subsequently actively litigated
this action, objecting to Fairbanks’ fee request and
Maritimo Australia’s motion to dismiss, Doc. #170.
After
Richard and Sheila Dubois were dismissed as plaintiffs, the
Court determined that Flors may lack standing to press the
lawsuit alone, and issued an order to show cause asking Flors
to show why he has standing to maintain this action (Doc.
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