United States District Court, N.D. California
ORDER RE: CROSS-MOTIONS FOR SUMMARY JUDGMENT
Re: Dkt. Nos. 85, 89
SUSAN ILLSTON, District Judge.
This lawsuit is the latest in a series of legal proceedings involving the parties. The saga began in 2007 when plaintiffs entered into a contract with a company called Corsair Marine, Inc. for the construction of a custom-built sailboat. For reasons disputed by the parties, plaintiffs' sailboat was never completed, and over the years the parties have been involved in litigation and arbitration in Vietnam, Singapore, and this Court. Plaintiffs have obtained default judgments in Singapore, and both sides have initiated proceedings in Singapore that are currently stayed due, in part, to this litigation. At different times the parties have attempted to settle their disputes by entering into agreements such as the " Mareva agreement" and an August 2012 settlement agreement, but unfortunately those efforts subsequently fell apart and became the subject of further litigation, including this lawsuit.
As set forth in this order, the Court grants summary judgment in favor of defendants on all claims alleged in the first amended complaint. The Court finds that plaintiffs' claim for promissory fraud in executing the Mareva agreement is precluded by plaintiffs' failure to rescind that agreement. The Court also concludes that plaintiffs' claims for breach of the 2007 sales contract and breach of the implied covenant of good faith and fair dealing are precluded by the Mareva agreement, while plaintiffs' claims arising out of an alleged breach of the Mareva agreement must, pursuant to that agreement, proceed in Singapore. In addition, based upon the undisputed evidence, the Court concludes that defendants did not breach the parties' August 21, 2012 settlement agreement, and the Court finds that plaintiffs have not raised a triable issue of fact on their conversion claim.
I. Factual Background
Plaintiffs, a husband and wife, filed this lawsuit against defendants alleging a breach of contract for the construction of a custom-built sailboat. Defaulted defendant Paul Koch resides in Vietnam and is the former director of Corsair Marine, Inc. and defendant Corsair Marine Sales Pte Ltd. ("CMSPL"). First Amended Complaint ("FAC") ¶ 5. Defendant Richard Ward is a citizen of Australia, and is the sole shareholder of defendant Seawind Group Holdings ("SWGH"), an Australian corporation. Ward Decl. ¶ 6 (Dkt. 88). In 2010, Seawind Group Holdings became the sole shareholder of Corsair Marine International Pte Ltd. ("CMIPL"), a Singapore corporation that acts as a holding company. Id. ¶¶ 9, 12. CMIPL is the sole shareholder of Corsair Marine International Co. Ltd. ("CMICL"), a Vietnamese corporation that manufactures sailboats, and Corsair Marine Sales Pte Ltd. ("CMSPL"), a Singapore corporation that sells the boats that CMICL makes. Id. ¶ 9. Plaintiffs allege that Ward "conducts his personal business activities by and through a variety of entities, including but not limited to Seawind Catamarans Pty Ltd, Shipcove Pty Ltd, Seawind Group Holdings Pty Ltd, and Seawind Catamarans, which are his alter egos." FAC ¶ 4.
In June 2007, plaintiffs entered into a written Sales Contract with dismissed defendant Corsair Marine, Inc. to purchase a Corsair 50 catamaran sailboat (a "C50"). Kagay Decl. Ex. B (Dkt. 87-2). Plaintiffs deposited $520, 000 toward the purchase. Kagay Decl. Ex. C (Dkt. 87-3). The Sales Contract specified "[d]elivery foreseen as Aug 30th 2008, " but the boat was not completed by that date. Dkt. 87-2 ¶ 25. In November 2009, in an Addendum, several other corporate entities were added to the Sales Contract, including defendant CMSPL. Kagay Decl. Ex. D (Dkt. 87-4). Two other C50 sailboats were ordered, by Frank and Lisa Coale, and by Tony Fowler. Ward Decl. ¶ 27 (Dkt. 88).
In 2010, the Australian Seawind group of companies, which manufactures and sells sailboats, became interested in acquiring the Corsair companies' business. Id. ¶¶ 12, 27. However, in September 2010, plaintiffs filed a legal action in Singapore to enforce the 2007 Sales Contract against CMIPL, CMSPL, and CMICL, seeking damages and a worldwide " Mareva " injunction to keep these corporations from alienating their assets. FAC ¶ 35, Kagay Decl. Ex. C (Dkt. 87-3). On September 17, 2010, the Singapore court issued the Mareva injunction. Kagay Decl. Ex. E (Dkt. 87-5). On October 1, 2010, the Singapore court entered a default judgment against CMIPL and CMSPL in the amount of $969, 195. Kagay Decl. Ex. F (Dkt. 87-6).
The Singapore Mareva injunction would have prevented the Seawind group from acquiring the Corsair companies. Plaintiffs and the Australian corporation Seawind Catamarans Pty Ltd. (a subsidiary of SWGH), entered into a contract known as the Mareva Agreement, dated October 6, 2010, addressing the Singapore legal action. Kagay Decl. Ex. G (Dkt. 87-7). This contract provided that plaintiffs "will stand down the Singapore Court substantive action and advise the Singapore Court to release the worldwide Mareva injunction" on certain conditions, including the following:
(a) The sale of the Corsair Group of Companies to Seawind shall proceed as soon as possible....
(b) The original sales contract for [plaintiffs]... (as amended by the addendum therefor) shall remain in full force and effect. Seawind shall assume full responsibility for the completion of the catamaran of Goldman....
(h) Seawind agrees to pay... the amount of $US50, 000 to Fowler, Goldman and Coale collectively....
(k) Any dispute hereunder shall be dealt with by way of arbitration in Singapore....
(l) On completion of the agreement, ... Goldman agree[s] that [he] will not pursue any other legal action, or make any further claims, against Seawind or the Corsair Group of Companies... except in so far as such legal claims arise from the non performance by any party under this agreement.
The Mareva Agreement contemplated that Seawind Catamarans Pty Ltd., SWGH's subsidiary, would acquire the assets of the Corsair companies. Id. ¶ 5. An Addendum to the Agreement, also dated October 6, 2010, raised the payment to plaintiffs and the other C50 purchasers from $50, 000 to $90, 000. Dkt. 87-8 ¶ 2. Seawind Catamarans made this payment. Goldman Depo. 62:16-23, Kagay Decl. Ex. I (Dkt. 87-9). After the lifting of the Mareva injunction, SWGH acquired all of the stock of CMIPL and became the indirect owner of CMSPL and CMICL. Ward Decl. ¶ 26 (Dkt. 88).
The October 2010 Mareva Agreement provided that Seawind would complete the boats of plaintiffs and Mr. Fowler "within a reasonable time of 6 to 9 months, " or by July 2011. Dkt. 87-7 ¶ 9(c). Plaintiffs' boat was not completed by July 2011 for reasons disputed by the parties. On October 25, 2011, plaintiffs' solicitor sent Seawind Catamarans a notice terminating the Mareva Agreement and the Sales Contract. Ward Decl. ¶ 41, Ex. M (Dkt. 88-13).
In February 2012, plaintiffs initiated arbitration in Singapore against Seawind Catamarans Pty Ltd., pursuant to the Mareva agreement. Ward Decl. ¶ 44 (Dkt. 88). Plaintiffs sought to have Ward and Seawind Group Holdings Pty made parties to the arbitration, but the arbitrator ruled that neither could be added as parties because they were not signatories to the underlying agreement. Id. 
In August 2012, SWGH entered into administration under Australian law. Administration is a form of bankruptcy under which a company's debts are settled so that it can continue in business. Id. ¶¶ 20-21. SWGH's manufacturing subsidiary Seawind Catamarans Pty Ltd., then known as Shipcove Pty Ltd., went into liquidation. Id.
In August and September 2012, plaintiffs entered into a Settlement Agreement and Clarification Addendum with defendants CMICL, CMIPL, and CMSPL. Kagay Decl. Ex. J and K (Dkt. 87-10, 87-11). Those agreements, dated August 21, 2012 and September 5, 2012, provided that the Corsair companies would prepare plaintiffs' partially completed boat for pickup in Vietnam, where it was being built; that plaintiffs would arrange for a barge to pick it up; that "all actions and disputes" between the parties, including the Singapore default judgments and then-pending arbitration, would be settled when the boat left Vietnam waters; and that time was of the essence. Id.
After the parties executed the September 5, 2012 Clarification Addendum, the parties exchanged a series of e-mails. On September 6, 2012, Paul Koch, on behalf of defendants, wrote to plaintiffs' solicitor stating, "I have been advised by the Administrator of the Seawind Group that I must withdraw the agreement that I signed" unless he received a letter or addendum making certain statements regarding the pending Singapore arbitration. Matz Decl. Ex. 32 at JS0248 (Dkt. 95-4). After an exchange of several e-mails, on September 7, 2012, plaintiffs' solicitor wrote to Mr. Koch and informed him that "I am instructed by Wayne Goldman to confirm that provided performance of the settlement agreement signed (amended by addendum) proceeds then the Claimant will suspend the application to join Richard Ward and Seawind Group Holdings to the Goldman v[.] Shipcove arbitration.... Kindly confirm by return... that this is an end to exchanges and that focus is now entirely on arranging departure of the vessels from Vietnam." Matz Decl. Ex. 34 (Dkt. 95-4). Mr. Koch responded the same day, "I am happy to confirm that we will move forward as fast as possible to ship the boat. Please advise when and where the ship will be available to load the boat onto it." Id.
The parties continued to exchange e-mails regarding implementing the settlement agreement. In an e-mail dated September 12, 2012, Mr. Ward stated it was "Corsair's intention to immediately fulfill the requirements of the Agreements pending... instructions from Goldman regarding the availability of a barge, " and that in turn, defendants required confirmation that the Singapore arbitration was suspended and that upon fulfillment of the settlement agreement, all litigation against defendants would be withdrawn and ceased. Matz Decl. Ex. 35 (Dkt. 95-4). That same day, Mr. Goldman e-mailed Mr. Koch and CMICL's factory manager James Sganzerla and wrote:
Hi Paul and James;
Thank you both for facilitating the agreement to have my boat shipped from Vietnam. Although I understand that there [are] still some issues to be resolved with Richard, I am hoping that we can progress on shipping my boat in a timely manner and appreciate your help during these trying and difficult times with Richard.
I have been working on my end to try to arrange shipping and have been having difficulties arranging reasonably pr[i]ced shipping. Is it possible for you to check on your end to see about having my boat shipped to Phuket? Also, it seems advantageous to place all of the loose equipment into a container, rather than into the boat. Could you also check on having a container dropped at your location for loading?
Since it appears that the cost of shipping may be extremely high, I would like to explore the possibility of having you install the engines and steering, windows and doing the bottom paint. That way, I could motor the boat to Phuket and put the money into the engines and steering rather than shipping. I would only want to do what is absolutely necessary to make the boat seaworthy and propel the boat. I would arrange to have the engines and steering shipped to you as soon as possible. Could you give me an estimate of time and cost to do these things?
Again, I greatly appreciate your help and assistance with all of this. Please let me know your thoughts.
Kagay Decl. Ex. K (Dkt. 93-11).
The next day, September 13, 2012, Mr. Sganzerla responded:
I have had some quotes on shipping and I cannot get the boat shipped from here to Phuket directly the nearest port is Songkhla in Thailand which is on the opposite side of the peninsula. I am not familiar with the port there but I would imagine it could be trucked from there to Phuket. It does not look far on the map. The prices I have gotten to this port are about $23, 000.
As far as putting the remaining things into a container is no problem.
As far as making the boat ready to motor away I would need some information first to know where to start. To make the boat motorable we would need engines; batteries; fuel filters; props; engine controls; cabling; all steering parts; thru hulls and filters for engines; windows; bottom paint.
To motor the boat away, the boat needs to be registered and will need a minimal amount of safety equipment for the authorities to allow the boat to leave. Also I do not know how they will feel about the boat being incomplete so I don't know what they might say but suspect with a little cash money in their pocket they will cooperate.
Can you please indicate what you are providing and what we are to provide other than the labor. The steering I would have thought was better for us to supply as we ...