Sweetwater Marine, LLC v. Am. Commercial Barge Line, LLC

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SWEETWATER MARINE, LLC f/k/a ASHTON MARINE, LLC Michigan Limited Liability Company, Plaintiff, v. AMERICAN COMMERCIAL BARGE LINE, LLC Delaware Limited Liability Company, OLD JB LLC f/k/a JEFFBOAT, LLC Delaware Limited Liability Company, Defendants.

No. 4:23-cv-00001-TWP-KMB

United States District Court, S.D. Indiana, New Albany Division

September 18, 2023

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR PARTIAL DISMISSAL OF PLAINTIFF'S AMENDED COMPLAINT

HON TANYA WALTON PRATT, CHIEF JUDGE UNITED STATES DISTRICT COURT.

This matter is before the Court on Defendants' Motion for Partial Dismissal of Amended Complaint, filed pursuant to Federal Rule of Civil Procedure ("Rule") 12(b)(6) (Filing No. 16).^[1]Plaintiff Sweetwater Marine, LLC f/k/a Ashton Marine, LLC ("Ashton") initiated this lawsuit against Defendants American Commercial Barge Line LLC ("ACBL") and Old JB LLC f/k/a Jeffboat LLC ("Jeffboat") (collectively, "Defendants") alleging six claims, including breach of contract, breach of warranties, fraud, constructive fraud, negligent misrepresentation, and unjust enrichment; based on Defendants' failure to satisfactorily construct two steel bulk cargo barges ("Barge" or collectively "Barges") pursuant to the parties amended contract. (Filing No. 1-1; Filing No. 16-2). Defendants seek dismissal of all claims except for Ashton's breach of express warranty claim against Jeffboat (Count II) (Filing No. 16). For the reasons explained below Defendants' partial motion to dismiss is granted in part and denied in part. Counts III, IV, and V of Ashton's Amended Complaint are dismissed as to both Defendants and Count VI is dismissed as to only Jeffboat.

I. FACTUAL BACKGROUND

Because the Defendants moved for partial dismissal under Rule 12(b)(6), the Court accepts and recites "the well-pleaded facts in the complaint as true." McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011).

A. The Barge Contract

On May 30, 2017, Ashton and Jeffboat entered into Construction Contract No. 9271 (the "Barge Contract") in which Jeffboat promised to construct two Barges for Ashton's marine transportation business, and Ashton promised to pay $1,219,099.00 per Barge to Jeffboat (Filing No. 8 at ¶¶ 10-11). Under the Barge Contract, the parties were allowed to alter the specifications, delivery date, and contract price and were bound by a "Warranty and Limitation of Liability" clause (Filing No. 1-1). Article X-Completion and Delivery-of the Barge Contract provides that "[t]he Vessels shall be delivered to [Ashton],. .with an estimated Delivery Date on or before August 15, 2017." Id. at 6. As relevant here, Article III-Contract Price-of the Barge Contract provides that the price "for each Vessel will be adjusted by reason of: (1) Change Orders pursuant to Article V hereof...." Id. at 2. Lastly, Article XI-Warranty and Limitation of Liability-of the Barge Contract provides for a twelve (12) months warranty period following Delivery of the Barges, whereby, [Jeffboat] warrants to [Ashton] that each Vessel to be constructed under this Contract shall at the time of Delivery:

(1) Conform to the requirements of the Contract, the Specifications and Drawing;

(2) Be free from defects of design, to the extent the design was prepared by [Jeffboat]; (3) Be constructed using good workmanship and quality in accordance with industry standards for work of like nature;

(4) Include only materials, parts, and equipment that are new; and

(5) Be free of any liens, claims, encumbrances

[Jeffboat] warrants each Vessel from defects in materials or workmanship in the Vessel under normal conditions of use and service, other than those defects which are due to normal wear and tear, accident or damage due to misuse or neglect, or [Ashton's] failure to provide proper maintenance, for a period of twelve (12) months after Delivery of the Vessel. Such warranted defects shall be corrected or the defective parts shall be replaced by [Jeffboat] at [Jeffboat's] expense, at a place mutually agreed to by [Ashton] and [Jeffboat]. If the parties cannot agree upon an appropriate place for the repairs to be made, [Ashton] may have such repairs or replacements made at a location of its choosing, and it is expressly understood by [Ashton] that [Jeffboat] will be responsible only for the retail costs (without overtime) which [Jeffboat] would have charged had [Jeffboat] done the repair or replacement. It is also understood and agreed that the limited warranty hereunder shall be rendered null and void as to the Vessel if it has been modified by [Ashton] or a third party or the Vessel travels or is moved outside the continuous, navigable waterways of the United States.

For any and all warranty work completed by a vendor at a location other than [Jeffboat's] shipyard, [Ashton] is solely responsible for all associated transportation costs or cleaning and [Jeffboat] has the right to inspect and approve of the agreed upon vendor, location and the work completed.

Notwithstanding any other provision herein, [Jeffboat] shall not be required to guarantee the chemical make-up or performance level of any coating. It shall be the sole responsibility of [Ashton] to select a coating of its choosing in accordance with [Jeffboat's] requirements. [Jeffboat] warrants that it will apply the coating selected by [Ashton] in accordance with the manufacturer's data sheet.

[Ashton] shall notify [Jeffboat] in writing during the Warranty Period of any alleged defect found in the Vessel. Upon such notification, [Jeffboat] shall have the right, at its own expense, to make an investigation of the reported alleged defect before corrective work is undertaken.

All warranties on equipment obtained from vendors by [Jeffboat] shall pass through to [Ashton].

THE WARRANTY IN THIS ARTICLE XI SHALL BE [ASHTON'S] SOLE REMEDY FOR CLAIMED DEFECTS IN MATERIAL OR WORKMANSHIP AND [JEFFBOAT], ITS PRINCIPALS, AGENTS, EMPLOYEES AND/OR SUBCONTRACTORS SHALL IN NO EVENT BE LIABLE TO [ASHTON] FOR ANY CLAIMS FOR LOSS OR DAMAGE FOR ANY REASON WHATSOEVER, INCLUDING FOR BREACH OF WARRANTY, OR FOR NEGLIGENCE OF ANY KIND OR STRICT

LIABILITY IN TORT, FOR ANY INCIDENTAL, CONTINGENT, SPECIAL, CONSEQUENTIAL OR COMMERCIAL DAMAGES OF [ASHTON], INCLUDING LOSS OF USE AND/OR OF PROFITS.... FROM WHATEVER CAUSE, WHETHER ARISING FROM NEGLIGENCE OR BREACH OF THIS CONTRACT.

THE LIMITED EXPRESS WARRANTY HEREUNDER HAS BEEN BARGAINED FOR AND IS THE SOLE WARRANTY PROVIDED TO [ASHTON] BY [JEFFBOAT]. [JEFFBOAT] SPECIFICALLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTY OF MERCHANTABILITY AND ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.

WARRANTY REPAIRS AND REPLACEMENTS DO NOT EXTEND THE WARRANTY PERIOD.

(Filing No. 1-1 at 6-7) (emphasis in original).

B. The Change Order^[2]

Jeffboat was unable to deliver on certain contractual obligations and the parties amended the Barge Contract (the "Change Order"). In particular, Jeffboat was allowed to change the vessel type from 'International Unrestricted barges' to 'Great Lakes ABS' barges (Filing No. 8 at ¶ 12; Filing No. 16-2 at 2-3). The exterior coating of both Barges was changed from "Black and Grey Sherwin Williams Seaguard 6000 epoxy" to "Black/Grey PRP metal treatment." (Filing No. 16-2 at 2, 3.) This "lowered the price for the Barges to $820,000.00." (Filing No. 8 at ¶ 12.) Jeffboat did not guarantee the "chemical make-up or performance of any coating" and they were "not be responsible for warranty of PRP metal treatment." (Filing No. 16-2 at 3.) But Jeffboat did warrant "that a PRP representative would be present at the facilities during application of the PRP product...." (Filing No. 8 at ¶ 15.) Soon after, Jeffboat retained a subcontractor, McGinnis, Inc. ("McGinnis"), to perform the work. Id. ¶ 14. While a "PRP representative was allegedly on-site during McGinnis's application of the PRP product to the first Barge, [Jeffboat] and McGinnis proceeded to coat the second Barge without a PRP representative present...." Id. at ¶ 16 (emphasis omitted).

C. Ashton's Post Delivery Concerns

Although "the Barges were intended to be constructed over the course of a few days, [] it ended up taking [Jeffboat] nearly a year to complete the project." Id. at ¶ 20. Sometime after delivery, Ashton learned that "the Barges and their component parts, i.e., raw metal, sat outside, unpainted" making them "much more susceptible to rust." Id. Upon delivery, the Barges" had [] covers on them [] so Ashton had no way of knowing the burgeoning rust issues that the Barges would soon fall victim to." Id. Ashton also (1) noticed that "the cover holes on the Barges. did not line up properly"; (2) "discovered broken index pins"; (3) noticed the "top cover latches on the Barges began breaking off," and they did not "align with their respective holes"; (4) noticed "the bolts underneath were stripped"; and (5) noticed "numerous [] issues with rubber gaskets falling out on the Barges." Id. at ¶¶ 21-22.

During the parties' contractual dispute, Jeffboat closed and "the former Jeffboat employees dealing with Ashton became employees of ACBL acting as Jeffboat's agents to fulfill Jeffboat's obligations under the parties' agreements.." (Filing No. 16-1 at 15.) Ashton was in communication with Mike Draughn ("Mr Draughn") and Mike Poindexter ("Mr. Poindexter") of ACBL. (Filing No. 8 at ¶¶ 27-28.) While Defendants addressed certain issues, they failed to address others,

[Jeffboat] and ACBL did address the gasket issue, and they swapped out the top cover latches with a chain-binder system. However, when [Jeffboat] and ACBL installed the chain-binder system, it did not do anything with respect to the holes where the pins (from the previous latch system) used

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