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Blue Dolphin Charters, Ltd v. Knight & Carver Yachtcenter

November 3, 2011


The opinion of the court was delivered by: M. James Lorenz United States District Court Judge


On March 22, 2011, Plaintiff Blue Dolphin Charters, LTD., a Hawaii corporation, commenced this breach-of-contract and tort action against Defendant Knight & Carver Yachtcenter, Inc., a California corporation. Plaintiff's complaint is based on the allegation that the underwing of a the catamaran ("Vessel") constructed by Defendant was not built to the specifications required by the terms of the Vessel Construction Agreement. Defendant now moves to dismiss Plaintiff's First, Second, Fourth, and Sixth Causes of Action. Plaintiff opposes.

The Court found this motion suitable for determination on the papers submitted and without oral argument. See Civ. L.R. 7.1(d.1). (Doc. 13.) For the following reasons, the Court GRANTS Defendant's motion to dismiss.


Plaintiff offers sightseeing, scuba diving, and snorkel tours to tourists from its two sailing catamarans off of the Na Pali Coast in the Hawaiian Island of Kauai. (Compl. ¶ 6 [Doc. 1].) Defendant is a full-service marine facility that specializes in the repair and refit of "megayachts" and advertises itself as a "premier luxury yacht builder." (Id. ¶ 7.) Plaintiff alleges that it chose Defendant to build the Vessel based in large part on Defendant's reputation as having "an experienced staff of master craftsmen in all marine trades, as well as on-site marine engineering professionals and naval architects." (Id.)

In 1998, it was agreed that Defendant would co-design the Vessel with a design-and-engineering company. (Compl. ¶ 8.) Thereafter, Plaintiff and Defendant entered into a written "Vessel Construction Agreement" in which Defendant was to build for Plaintiff "one 62' x 25' Twin Diesel, 49-passenger, U.S. Coast Guard Inspected, Excursion Motorsailer Catamaran" that would be designed to withstand "the perils of the open ocean off the Na Pali Coast" for $385,000.00. (Id. ¶ 9.) Among the terms agreed upon by the parties was that Defendant would "construct the Vessel in accordance with plans and specifications as agreed to by the parties."

The agreement also expressly warranted that "construction will be in accordance with the designs and specifications" designated by the parties, and that "sound shipbuilding practices will be followed throughout construction and that workmanship will be free from defects for a period of twelve (12) months from commencement of the warranty period for the Vessel." (Id. ¶ 10.)

On or about December 8, 1999, Plaintiff took possession of the Vessel, which was commissioned as the Blue Dolphin, and transported it to Kauai. (Compl. ¶ 11.)

Leading up to and during 2010, Plaintiff learned of "an alarming number of demastings of sailing vessels in the Hawaiian Islands resulting in injuries and/or deaths to passengers." (Compl. ¶ 12.) As a result, the United States Coast Guard began inspecting sailing vessels in Hawaii. (Id.) In anticipation of the inspection, Plaintiff retained a marine surveyor to pre-inspect its Vessel. (Id.)

On or about April 10, 2010, the marine surveyor discovered that "the underwing beneath the [Vessel's] mast step was flexing and causing her entire sail rig to move in a dangerous manner." (Id. ¶ 13.) To investigate the problem, "the [Vessel's] mast was removed by crane whereupon it was discovered that the underwing was not built to the specifications called for by the terms of the Vessel Construction Agreement." (Id.) As a result, Plaintiff alleges that the Vessel was taken out of service and will be forced to make over $160,000.00 in repairs. (Id.) It also alleges that "[d]ue to the latency of the defect, [Plaintiff] was blamelessly ignorant of its rights and could not have discovered the facts giving rise to the claims set forth herein until the vessel was dismantled and inspected." (Id. ¶ 14.)

On March 22, 2011, Plaintiff filed a complaint in this Court asserting six causes of action:

(1) breach of contract; (2) fraud; (3) negligence; (4) negligent interference with prospective business advantage; (5) negligent misrepresentation; and (6) breach of warranty. On May 31, 2011, Defendant moved to dismiss Plaintiff's First (breach of contract), Second (fraud), Fourth (negligent interference with prospective business advantage), and Sixth (breach of warranty) Causes of Action. (Doc. 6.) Plaintiff opposes. (Doc. 10.)


The court must dismiss a cause of action for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the complaint's sufficiency. See N. Star Int'l v. Ariz. Corp. Comm'n., 720 F.2d 578, 581 (9th Cir. 1983). All material allegations in the complaint, "even if doubtful in fact," are assumed to be Id. The court must assume the truth of all factual allegations and must "construe them in light most favorable to the nonmoving party." Gompper v. ...

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