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In re Complaint of Creative Yacht Management, Inc.

United States District Court, Northern District of Illinois, Eastern Division

April 8, 2015

IN THE MATTER OF THE COMPLAINT OF CREATIVE YACHT MANAGEMENT, INC., d/b/a SAILTIME CHICAGO, PETITIONING FOR EXONERATION FROM OR LIMITATION OF LIABILITY

MEMORANDUM OPINION

SAMUEL DER-YEGHIAYAN, UNITED STATES DISTRICT COURT JUDGE.

This matter is before the court on Claimant Peggy M. Blenner’s (Blenner), Claimant Sharon Haws’ (Haws), Claimant Shai Wolkowicki’s (Wolkowicki), and Claimant Tamara Sopka’s (Sopka) (collectively referred to as “Claimants”) motion to dismiss. For the reasons stated below, the motion to dismiss is granted.

BACKGROUND

Plaintiff in Limitation Creative Yacht Management, Inc. d/b/a SailTime Chicago (SailTime) allegedly entered into a Boat Management Agreement (Management Agreement) with Axess Holding Company, LLC (AHC) on January 26, 2013. The Agreement concerned the motorboat AXESS (Boat), a 2012 Rinker 310 Express Model, bearing serial number RNK00001D112, which was owned by AHC. SailTime alleges that under the Management Agreement, AHC placed the Boat into the SailTime Company Program (Program). On May 31, 2014, Orest Sopka, a member under the Program, used the boat, departing from New Buffalo, Michigan. Also on board were Megan Blenner, Wolkowicki, and Ashley Haws. The Boat allegedly lost power and began to take on water, causing the Claimants to abandon the boat into the waters of Lake Michigan. Only Wolkowicki survived. SailTime contends that there was no fault on its part, and that any claims are not due to any neglect or want of care on its part. SailTime brought the instant action and includes in its complaint an admiralty and maritime claim seeking exoneration from or limitation of liability pursuant to 28 U.S.C. § 13333, the Shipowner’s Limitation of Liability Act (Limitation Act), 46 U.S.C. § 30501, et seq., Federal Rule of Civil Procedure 9(h), and Supplemental Rule F of the Federal Rules of Civil Procedure. Blenner has filed a motion to dismiss, and Sopka, Haws, and Wolkowicki have joined in the motion to dismiss.

LEGAL STANDARD

In ruling on a motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6) (Rule 12(b)(6)), the court must draw all reasonable inferences that favor the plaintiff, construe the allegations of the complaint in the light most favorable to the plaintiff, and accept as true all well-pleaded facts and allegations in the complaint. Appert v. Morgan Stanley Dean Witter, Inc., 673 F.3d 609, 622 (7th Cir. 2012); Thompson v. Ill. Dep’t of Prof’l Regulation, 300 F.3d 750, 753 (7th Cir. 2002). A plaintiff is required to include allegations in the complaint that “plausibly suggest that the plaintiff has a right to relief, raising that possibility above a ‘speculative level’” and “if they do not, the plaintiff pleads itself out of court.” E.E.O.C. v. Concentra Health Services, Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting in part Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 545 (2007)); see also Morgan Stanley Dean Witter, Inc., 673 F.3d at 622 (stating that “[t]o survive a motion to dismiss, the complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face, ” and that “[a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged”)(quoting Ashcroft v. Iqbal, 556 U.S. 662 (2009))(internal quotations omitted).

DISCUSSION

I. Proper Legal Standard

The court first notes that SailTime, in arguing that the court should not dismiss the instant action, is relying on a now defunct and much broader notice pleading standard. SailTime argues that a motion to dismiss should only be granted when the plaintiff can prove no set of facts that would entitle him to relief, citing in support of its arguments Conley v. Gibson, 355 U.S. 41, 45-46 (1957). (Ans. 4). However, the notice pleading standard set forth in Conley was done away with in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). See Id. at 541 (rejecting from Conley the “accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief”)(internal quotations omitted); see also Iqbal, 556 U.S. at 669-70 (2009)(stating that “Twombly retired the Conley no-set-of-facts test”); E.E.O.C. v. Concentra Health Services, Inc., 496 F.3d 773, 777 (7th Cir. 2007)(referencing the Supreme Court’s “rejection of the famous remark in Conley v. Gibson” that “a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief”)(internal quotations omitted). As explained above, the pertinent inquiry under the current law relates mainly to the plausibility of the facts alleged in the complaint. SailTime’s arguments against dismissal of the instant action are thus premised on a more lenient pleading standard that is no longer applicable.

II. Availability of Act

Claimants argue that SailTime cannot seek relief under the Limitation Act. The owner of a boat or ship may apply to a federal court to seek limitation of liability under the Limitation Act. See Complaint of McCarthy Bros. Company/Clark Bridge, 83 F.3d 821, 826 (7th Cir. 1996)(explaining that the “Limitation Act vests in federal courts exclusive jurisdiction, pursuant to their admiralty jurisdiction under 28 U.S.C. § 1333(1), to decide whether a shipowner’s liability should be limited in certain circumstances”).

A. Owner of Boat

Claimants contend that SailTime was not the owner of the Boat and therefore cannot seek a limitation of liability under the Limitation Act. SailTime has attached to its complaint a copy of the Management Agreement, which can be considered for the purposes of ruling on the motion to dismiss. See Federal Rule of Civil Procedure 10(c)(stating that “[a] copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all purposes”). The Management Agreement specifically defines AHC as the “Owner” and SailTime as the “Manager.” (Ex. A:1). The Management Agreement also provides the following:

7.3 Ownership of the Boat. This Agreement is not a lease, sale, or the creation of a security interest. The Owner shall at all times retain sole ownership and title of the Boat, and the Manager shall not have or at any time acquire any right, title, equity, or other interest in the Boat, except the right to possession and use as provided for in this Agreement. However, Manager shall have the right ...

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