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Dubois v. Maritimo Offshore Pty Ltd.

United States District Court, D. Connecticut

September 26, 2019

RICHARD DUBOIS, SHEILA DUBOIS, and MICHAEL FLORS, Plaintiffs,
v.
MARITIMO OFFSHORE PTY LTD., et al., Defendants.

          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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