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Zimmerman Marine, Inc. v. M/V Rotten Kids

United States District Court, D. Maryland

June 12, 2017

M/V ROTTEN KIDS, et al., Defendants


          J. Frederick Motz United States District Judge

         Plaintiff Zimmerman Marine, Inc. ("ZMI") filed this action in rem to foreclose two maritime liens against a defendant vessel, M/V "Rotten Kids, " owned by Defendant John Verde, Sr. ("Verde, Sr."). [ECF No. 1]. ZMI also asserts contractual and quasi-contractual claims against Verde, Sr. and his son, John Verde, Jr. (collectively "Defendants" with M/V "Rotten Kids"). Id. Verde, Sr. filed a counterclaim against ZMI, alleging breach of contract, breach of warranty of workmanlike performance, negligence/bailment, and wrongful arrest. [ECF No. 19]. Presently pending before the Court are Defendants' Motion for Summary Judgment [ECF No. 39] and ZMI's Cross-Motion for Partial Summary Judgment [ECF No. 41]. The motions are fully briefed, and no hearing is necessary. See Loc. R. 105.6 (D. Md. 2016). For the reasons set forth below, both motions will be DENIED.

         I. BACKGROUND

         Verde, Sr. owns M/V Rotten Kids, a 2005 52' Ocean Yachts Super Sport ("the vessel"). See Verde, Sr. Aff., [ECF No. 39-4 at ¶1]. In late 2012, the vessel sustained damage while in dry storage at a marina. Id. In March, 2013, Eric Greene, a naval architect, provided a report outlining the damage and the scope of needed repairs. Verde, Sr. Dep., [ECF No. 39-5 at 15, 31]. After obtaining estimates from multiple facilities, Verde Sr. chose ZMI to repair the vessel. Id. at 29-31.

         ZMI prepared a proposal ("Proposal") containing an itemized list of the work to be performed and the price per line item. Verde, Sr. Dep., [ECF No. 39-5 at 38-41, 74]; Zimmerman Dep., [ECF No. 39-6 at 23, 37]. The parties negotiated some changes to the Proposal, and also exchanged and negotiated a two page "Agreement for Repairs to Vessel" ("the Agreement"). Verde, Sr. Dep., [ECF No. 39-5 at 38-41]; Zimmerman Dep., [ECF No. 39-6 at 23]; [ECF No. 39-7, 2-3]. On April 11, 2014, Steve Zimmerman, the president of ZMI, (''Zimmerman"), and Verde, Sr. accepted and signed the Proposal and the Agreement. [ECF No. 39-7]. The parties agree that those two documents constituted the contract for repairs of the vessel ("the Contract").

         Several provisions of the Contract are especially relevant to the instant dispute. First, the parties agreed on a quote of $136, 450.00 for the itemized work in the Proposal. [ECF No. 39-7, 1]. Second, the parties agreed that:

Invoices for respective repairs completed will be sent and payments required only at 50% repair completion and at 100% (repair completed). . . . Zimmerman Marine shall provide a lien release and waiver at each progressive and final payment. At no point may Zimmerman Marine or Zimmerman Marine's agents confiscate, hold, not allow launching of Customer's vessel, or not allow access within reasonable business hours to Customer's vessel.

Id. at 2-3. However, the contract also provides that, "All invoices must be paid in full prior to departure of vessel." Id. at 1. The parties further acknowledged that, when ZMI began work on the vessel, it would likely discover additional damage requiring repair. The parties agreed on a procedure to handle such findings. "Given the extent of the damage and the limitations of nondestructive testing, it is assumed that there will be additional findings not included in the scope of this estimate. Where such findings are discovered, ZMI will notify the [sic] Mr. Verde before proceeding. Such work, when approved, will be identified as 'supplemental' and will be invoicd (sic) separately." Id. at 1.

         Verde, Sr. paid the agreed deposit, and ZMI commenced the itemized repairs to the vessel. On September 30, 2014, Zimmerman emailed Verde, Sr. and asserted that the project was over 50% complete, since the estimate was for 650 man hours of labor and ZMI had expended 401 man hours. [ECF No. 39-9]. In an email on October 3, 2014, Verde contested ZMI's method of calculating completion, and instead asserted that "the totaling of the line item completions (reasonable percentage completed times the total cost of that line item) divided by the complete project total cost will be used to determine the percentage of repair completion. Using this method it's been determined that the project is at 36% repair completion." [ECF No. 39-6, 22]. To resolve the dispute, Verde, Sr. agreed to modify the terms of the Contract to add progress payments at 36% and 75% completion. Id. Zimmerman responded in an email stating,

We are in agreement with the revised payment schedule of 36%/50%/75%/100%. . . For the record, I do not agree that we are only 36% complete, but did not see that as a reason to withhold the release. By my calculations we are more than 50% complete, and I agreed to your calculation in exchange for your offer to add a payment at 75%.

Id. at 21.

         On October 3, 2014, Zimmerman signed a document entitled, "Partial Release of lien - Material and Labor" ("Partial Release of Lien") providing:

As described in this partial release of lien Zimmerman Marine has for the consideration of the payment of $52, 709.00 completed all the requirements up to the 36% stage of completion . . . The undersigned hereby releases, waives, indemnifies and discharges Owner from all claims, demands, all present and/or future liens, rights of lien and lien and/or payment or performance bond claims of any kind whatsoever undersigned has, or might have, under any present or future law, for any work done or labor or materials furnished in connection with the Owner or Owner's Property.

Id. at 24. In exchange for the Partial Release of Lien, Verde, Sr. paid ZMI 36% of the Contract price, minus the amount of the deposit already paid. [ECF No. 39-6, 22].

         Following the October modification to the Contract and the partial payment, ZMI provided Verde, Sr. with a proposal for the supplemental work that would be required to complete the repairs to the vessel ("the Supplemental Proposal"). [ECF No. 39-10, 12-18]. Verde, Sr. did not approve the Supplemental Proposal because he did not agree with the new proposed payment terms, but he did approve a few line items of supplemental work. Verde, Sr. Dep., [ECF Nos. 39-5 at 75; 41-9 at 72-73; 41-14 at 68-69]; Zimmerman Dep., [ECF No. 39-6 at 58, 82]. While the parties negotiated the Supplemental Proposal, ZMI continued to repair the vessel under the original Contract. The project manager at ZMI, Kip Koolage, sent Verde, Sr. a spreadsheet on or about December 3, 2014, with what Koolage determined to be the status of completed Contract work. [ECF No. 39-6, 33-37]. On that ...

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