Ocean Beauty Seafoods LLC v. Captain Alaska

603 F.Supp.3d 1005

OCEAN BEAUTY SEAFOODS LLC, Plaintiff,

v.CAPTAIN ALASKA, O.N. 1299298, its Engines, Machinery, Appurtenances, etc., in rem; Captain Alaska Fish Co. LLC, and Robert Foster, in personam; Mike Hogan, in personam; and Majestic Acres LLC, in personam, Defendants.

CASE NO. 3:19-cv-06173 BHS

United States District Court, W.D. Washington, at Tacoma.

Signed May 16, 2022

Eric D. Siebert, John E. Casperson, Lafcadio H. Darling, Holmes Weddle & Barcott, Seattle, WA, for Plaintiff.

Steven V. Gibbons, Gibbons & Associates, Seattle, WA, for Defendants Captain Alaska, Captain Alaska Fish Co. LLC, Robert Foster.

Brittany Shaw Arnold, Cross Sound Law Group PLLC, Poulsbo, WA, Shane R. Seaman, Knauss & Seaman, Port Hadlock, WA, for Defendant Majestic Acres LLC.

Mike Hogan, Chimacum, WA, Pro Se.

AMENDED ORDER GRANTING IN PART AND DENYING IN PART MAJESTIC ACRES LLC'S MOTION TO DISMISS

BENJAMIN H. SETTLE, United States District Judge

This matter comes before the Court on Third Party Defendant Majestic Acres LLC's ("Majestic") Motion to Dismiss. Dkt. 66. The Court has considered the briefing filed in support of and in opposition to the motion and the file herein, and the matter is now ripe for consideration.

In the pending motion, Majestic, a shipyard, moves to dismiss all claims brought against it by Defendant and third-party plaintiff Captain Alaska Fish Co. LLC ("Captain Alaska"), a fishing business with a fishing vessel at Majestic's shipyard. Captain Alaska opposes Majestic's motion but requests the opportunity to amend its claims if the Court agrees that it has failed to state a claim against Majestic. For the reasons below, Majestic's motion to dismiss should be granted in part and denied in part. Though some of Captain Alaska's claims should be dismissed, dismissal should be without prejudice to give Captain Alaska the opportunity to plausibly state its claims.

I. PROCEDURAL AND FACTUAL HISTORY

A. PROCEDURAL HISTORY

Plaintiff Ocean Beauty Seafoods, LLC, ("Ocean Beauty"), who is not a party to this motion, sued Defendants Captain Alaska, its manager, Robert Foster, and its vessel, the F/V CAPTAIN ALASKA, O.N. 1299298 ("the Vessel"), in rem , to foreclose a preferred ship mortgage based on Captain Alaska's alleged failure to repay a loan secured by the business and the Vessel. Ocean Beauty alleges its loan to Captain Alaska was evidenced by two promissory notes totaling $650,000, plus interest. Dkt. 1. The loan was part of a larger agreement under which Ocean Beauty would have the first opportunity to purchase all seafood caught or sold by Captain Alaska. Ocean Beauty alleges that Captain Alaska defaulted on the notes.

The Vessel is a 78-foot steel purpose-built "salmon tender," a vessel designed to receive, refrigerate, and transport salmon caught and delivered by other vessels to shore-side or floating processing facilities. Dkt. 67 at 2. In response to Ocean Beauty's complaint seeking mortgage foreclosure and a declaration of its rights, Captain Alaska asserted cross-claims against Mike Hogan ("Hogan"), a welder it hired to perform work on the Vessel, and Majestic, where the Vessel was drydocked. Dkt. 45. Captain Alaska argues that Hogan breached his agreement to perform the work, despite being paid, and that Majestic is wrongfully denying it access to its Vessel. Majestic now seeks dismissal of Captain Alaska's claims against it. Dkt. 66.

B. FACTS

The following allegations of fact are taken from Captain Alaska's Answer and Cross-Claim, Dkt. 45, and are accepted as true for purposes of this motion. On May 1, 2017, Captain Alaska hired Hogan to perform welding work on the Vessel while it was located at the Majestic shipyard. Id. ¶ 5. Captain Alaska paid Hogan in advance, and the work was to be completed by the end of fall 2017. Id. Hogan, however, did not perform the work as agreed. Id. ¶ 6. He worked on the Vessel sporadically during 2018 and demanded more advanced payment, though he used that money for unrelated projects and personal purchases. Id. Ultimately, Captain Alaska paid Hogan at least $1,026,597.43 for welding work that he did not complete. Id. ¶ 7. Majestic was "aware of the Agreement [with Hogan] and assented thereto, id. ¶ 5, and "was aware of Hogan's conduct and [Captain Alaska]’s unwitting trust, and willingly benefitted therefrom," id. ¶ 6.

In April 2019, Captain Alaska paid Hogan an additional $22,100 for two weeks of welding work, which he failed to complete.

Id. ¶ 8. According to the cross-claim, "Hogan and Majestic received the referenced $22,100 for the next two weeks of welding ... [but] failed to perform any welding[.]" Id. Hogan then demanded, "acting both for his own account and on behalf of Majestic," a storage fee of $3,000 per month beginning from the time the Vessel arrived at Majestic and over $10,000 to re-start welding work. Id. Hogan, "and through him Majestic," threatened to publish false and misleading statements about Captain Alaska, and then made such statements after Captain Alaska refused demands for more money. Id. ¶ 9. Captain Alaska alleges that those statements intentionally interfered with its contractual relationships and business expectancies, including with Ocean Beauty, to whom Hogan and Majestic knew Captain Alaska owed money. Id. ¶¶ 9–10. Captain Alaska alleges that it could only repay Ocean Beauty after the welding work was complete and the Vessel became seaworthy, and could process salmon. Id. ¶ 10. After Hogan's repeated failures to finish the welding work, Captain Alaska sought to remove the Vessel, her equipment, appurtenances, and other related property from Majestic's premises, but both Hogan and Majestic refused. Id. ¶ 11.

II. DISCUSSION

A. STANDARD FOR MOTION TO DISMISS

Fed. R. Civ. P. 12(b) motions to dismiss may be based on either "the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't , 901 F.2d 696, 699 (9th Cir. 1988). Material allegations are taken as admitted and the complaint is construed in the plaintiff's favor. Keniston v. Roberts , 717 F.2d 1295, 1300 (9th Cir. 1983). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal quotations and citations omitted). "Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. The complaint must allege "enough facts to state a claim to relief that is plausible on its face." Id. at 570, 127 S.Ct. 1955.

A plaintiff who fails to state a claim, however, shall freely be granted leave to amend "when justice so requires." Balistreri , 901 F.2d at 701 (quoting Fed. R. Civ. P. 15(a) ). This generous standard requires leave to amend "if it appears at all possible that the plaintiff can correct the defect." Id. (internal quotation omitted).

B. BREACH OF CONTRACT

The Parties agree that maritime law governs Captain Alaska's breach of contract claim. See Dkts. 45, 66. Under maritime law, the same "basic principles in the common law of contracts" apply to maritime contracts. Clevo Co. v. Hecny Transp., Inc. , 715 F.3d 1189, 1194 (9th Cir. 2013). To state a claim for breach of contract under maritime law, the plaintiff must plausibly allege "(1) the existence of an agreement, (2) adequate performance of the contract by the plaintiff, (3) breach of contract by the defendant, and (4) damages." W. Towboat Co. v. Vigor Marine, LLC , 544 F. Supp. 3d 1100, 1116 (W.D. Wash. 2021) (quoting Eternity Glob. Master Fund Ltd. v. Morgan Guar. Tr. Co. of N.Y. , 375 F.3d 168, 177 (2nd Cir. 2004) ).

The first factor, the existence of an agreement, depends on mutual assent, meaning an offer and acceptance between the contracting parties. Wilson v. Huuuge, Inc. , 944 F.3d 1212, 1219 (9th Cir. 2019) (citing Weiss v. Lonnquist , 153 Wash. App. 502, 511, 224 P.3d 787 (2009) ). A party may indirectly assent to a contract through an agent. See Wilcox v. Basehore , 187 Wash.2d 772, 789, 389 P.3d 531 (2017). However, an agency relationship only exists if "the principal [party] had the right to control the details of the agent's performance." Id.

Captain Alaska fails to plead that it had an agreement with Majestic. It argues that it had an agreement with Hogan for welding services and that Hogan failed to perform those services. Notably, the Complaint states that "the facts as alleged above constitute breach of the agreement between [Captain Alaska] and Hogan." Dkt. 45, ¶ 12. It does not allege an agreement between itself and Majestic. Nonetheless, Captain Alaska makes clear through its pleadings that it intends to bring a breach of contract claim against both Hogan and Majestic. To support its claim against Majestic, Captain Alaska states repeatedly that Hogan made assurances "on behalf of himself and Majestic," and that "Majestic was aware of Hogan's conduct and [Captain Alaska]’s unwitting trust, and willingly benefitted therefrom. Dkt. 45, ¶¶ 6–7; Dkt. 67 at 7–8. In opposition to the motion to dismiss, Captain Alaska states that Hogan was Majestic's agent and that he had authority to speak on behalf of Majestic. Dkt. 67 at 7, 8, 12. Nonetheless, Captain Alaska does not plausibly allege that Hogan was Majestic's agent or that his actions could otherwise bind Majestic into a contract for welding services or anything else with Captain Alaska.

Captain Alaska is correct that it is reasonable to infer that some type of agreement existed between Hogan and Majestic. Hogan works on ships at Majestic, though not as Majestic's employee, and Majestic presumably provides services necessary...