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Bear, LLC v. Marine Group Boat Works, LLC

United States District Court, S.D. California

May 5, 2017

BEAR, LLC, a Minnesota limited liability company, Plaintiff,
v.
MARINE GROUP BOAT WORKS, LLC, a California limited liability company; UNIVERSAL STEEL FABRICATION, INC., a California corporation, Defendant.

          ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT [ECF NO. 90.]

          Barry Ted Moskowitz, Chief Judge

         On November 4, 2016, Defendant Marine Group Boat Works, LLC (“MGBW”) filed a motion for summary judgment. (MGBW Mot. Summ. J. (“MGBW's MSJ”), ECF No. 90.) For the reasons discussed below, the motion is denied.

         I. FACTUAL BACKGROUND

         In April 2014, Captain Roger M. Trafton (“Trafton”) of Plaintiff Bear, LLC's (“Bear”) 102-foot motor vessel (“the Polar Bear”) scheduled a maintenance visit for the Polar Bear at MGBW. (Decl. of Scott Sokul, in Supp. of MGBW's MSJ Ex. (“MGBW's Ex.”) 3, ECF No. 90-8, 164:8-165:16.) On May 6, 2014, while on its way to San Diego, the Polar Bear struck the submerged Zuniga Jetty at the entrance to the San Diego Harbor, damaging the bottom of the hull and causing water to leak in. (Id. at 153:16-19; 169:10-21.) Trafton navigated the Polar Bear under its own power to the San Diego U.S. Customs dock where two divers inspected the hull of the boat and determined that a stabilizer had been damaged. (Id. at 174:1-177:10.) The divers packed the stabilizer opening, which stopped the ingress of water into the hull. (Id. at 177:11-178:15.)

         Under its own power, the Polar Bear traveled from the U.S. Customs dock to MGBW's shipyard. (Id. at 179:16-19.) As a safety measure, the Polar Bear was accompanied by two small towboats. (Id. at 179:16-23.) The Polar Bear arrived at MGBW on May 7, 2014. Upon arriving at MGBW, the Polar Bear was placed in lifting slings and positioned to be lifted out. (MGBW's Ex. 5, ECF No. 90-10, 707:20-711:4.) Trafton disembarked the Polar Bear and went to the MGBW office while Larry Jodsaas, Bear's sole member, remained on the vessel. (MBGW's Ex. 3 191:5-7; 196:15-18.) Once at the office, a MGBW receptionist handed Trafton a standard MGBW work order contract (“Contract”) to sign on a clipboard. (Id. at 192:1-193:17.) The front side of the Contract listed the work that MGBW was to perform, while the back side contained the terms and conditions. (MGBW's Ex. 16, ECF No. 90-21.) Trafton read the front side of the Contract and signed it on behalf of Jodsaas. (MGBW's Ex. 3 130:14-24.) Trafton did not read the back side that detailed the terms and conditions. (Id. 131:1-4.) The Contract describes the scope of the work as: “Haul Out, Block & Launch” and “Lay days charged at $2.00 per ft./per day. No charge for day of haul and day of launch.” (MGBW's Ex. 16, 2.) Just above the signature line, the front side of the Contract states: “I hereby authorize the above repair work to be performed. I acknowledge that I have received a copy of, and have read, understood and agree to the terms and conditions of this Contract, including those on the reverse side hereof.” (MGBW's Ex. 16, 2.) The back side contains several provisions limiting MGBW's liability that state in relevant part:

THIS AGREEMENT, consisting of this Work Order (“Order”), is entered into between Marine Group Boat Works, LLC, (“Contractor”) a California limited liability company, the Owner identified on the reverse thereof, (“Owner”), and the therein named vessel (“the Vessel”), on the following terms and conditions.
1. STATEMENT OF WORK.
Contractor agrees to furnish materials, parts, supplies, and labor to perform the work described in the Order (hereinafter “Work”). Owner has specifically requested the Work set forth in the Order, shall inspect the progress of the Work from time to time as he deems necessary, and has satisfied himself as to the suitability for his intended purposes of all machinery, parts, equipment, supplies and accessories to be installed pursuant to this Agreement.
3. WARRANTY EXCLUSIONS.
THE WARRANTIES SET FORTH IN PARAGRAPH 2 ARE GIVEN IN LIEU OF ALL OTHER WARRANTIES, WHETHER EXPRESSED, IMPLIED OR STATUTORY, CONTRACTOR DISCLAIMS ANY WARRANTY, EXPRESS OR IMPLIED, THAT THE MATERIALS ARE MERCHANTABLE OR FIT FOR ANY PARTICULAR USE OR PURPOSE.
8. OWNERS ASSUMPTION OF RISK.
(a) Except as provided in paragraphs 2 and 6 above, Owner accepts the risk of all losses hereafter occasioned by the acts or omissions of the Contractor in the performance of the Work, whether in the nature of negligence, strict liability, or otherwise, and agrees to purchase and maintain such insurance against such risks as Owner deems prudent and shall look only to said insurance for compensation or damages related to any such loss regardless of the legal or physical responsibility thereof, subrogation against Contractor is hereby waived.
(b) Owner accepts the risk of, and Contractor shall have no legal liability whatsoever, under any circumstances for, the tortuous or criminal acts of any third party, included but not limited to theft, conversion, and malicious mischief.
9. FINANCIAL LIMITATION.
In no event shall Contractor's aggregate liability to all parties in interest arising under this Agreement or the Work for all damages, including, but not limited to, any tort damages, exceed $25, 000 or the sum received by Contractor under this Agreement, whichever is less.
10. INDEMNITY, INSURANCE AND WAIVER OF SUBROGATION.
(a) Owner shall indemnify and hold Contractor harmless of any claim, loss, cost, liability or expense, including reasonable attorney's fees incurred in defense thereof, arising from the intentional or negligent acts or omissions or Owner or his agents, employees or independent contractors, or the failure of Owner of his agents, employees or independent contractors to comply with the provisions of this Agreement. Said indemnification shall encompass and include any and all claims by third parties arising under this Agreement or the Work performed hereunder, except claims by employees, subcontractors or vendors of Contractor for goods, services or employee benefits, as the case may be.
(b) During the period the Vessel is present in Contractor's boatyard or other place or repair agreed to between Contractor and Owner, Owner shall purchase and maintain such types and amounts of insurance as Owner deems reasonable and prudent to protect against risks assumed by Owner under this Agreement. As to all such policies or insurance and all claims made thereon, for himself and his insurers, Owner specifically waives all right of subrogation against Contractor, its subsidiaries, affiliates, agents, officers, directors and employees.

(Id. at 3.) (typographical errors in original)

         After Trafton signed the Contract, the Polar Bear was hauled out of the water and set on blocks in the yard where it remained until the fire. (Decl. of Eric Lundeen, in Supp. of MGBW's MSJ, ECF No. 90-2, ¶ 7.) From May 22, 2014 through early June, 2014, Trafton executed numerous separate work change orders for repairs to the Polar Bear, including a May 22, 2014 order (“Change Order 1002”) for the removal of lead ballast and foam in the work space and hot work repairs to the hull. (MGBW's Ex. 11-13, ECF Nos. 16-18.) Each change order specified that it was in addition to the original Contract, which would remain otherwise unchanged and in full force and effect. (MGBW's Ex. 11, 2.)

         On June 18, 2014, MGBW obtained a hot work permit authorizing hot work to be performed on June 19, 2014. (MGBW's Ex. 29, 62:19-64:6.) On June 19, 2014, the Polar Bear caught fire while welders of Universal Steel Fabrication, Inc. (“USF”), a subcontractor hired by MGBW, were performing hot work. (Decl. of Todd Roberts, in Supp. of MGBW's MSJ, ECF No. 90-4, ¶¶ 9-10.) The fire resulted in the destruction of the Polar Bear. (Id.)

         On December 16, 2014, Bear filed this action against MGBW, alleging six causes of action: (1) Breach of Contract; (2) Negligence; (3) Gross Negligence; (4) Breach of Implied Warranty of Workmanlike Performance; (5) Breach of Bailment; and (6) Fraud. (Compl. ECF No. 1.)

         II. STANDARD

         Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil Procedure if the moving party demonstrates the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact is material when, under the governing substantive law, it could affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). A dispute as to a material fact ...


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