# National Liability & Fire Insurance Co. v. Rick's Marine Corp.

> District Court, E.D. New York · March 11, 2020

URL: https://www.frixlaw.com/law-library/cases/10303875

## Case

- **Court:** District Court, E.D. New York
- **Decided:** March 11, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10303875

## Opinion text

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------X
NATIONAL LIABILITY AND FIRE
INSURANCE CO.,
Plaintiff, MEMORANDUM AND ORDER
15-CV-6352(DRH)
-against-
RICK'S MARINE CORP. AND ADAM
WEINSTEIN,
Defendants,
---------------------------------X
RICK'S MARINE CORP.,
Third-Party Plaintiff,
-against-
THE MOTOR VESSEL PELAGIC, its
Engines, Tackle, Appurtenances,
etc., in rem,
Third-Party Defendant.
---------------------------------X
A P P E A R A N C E S:
Attorneys for Plaintiff National Liability
& Fire Insur. Co.:
Nicoletti Hornig & Sweeney
88 Pine Street
Seventh Floor
New York, New York 10005
By: William M. Fennell, Esq.
Cali L. Chandiramani, Esq.
Guerric S.D.L. Russell, Esq.
Attorneys for Defendant/Third-Party Plaintiff Rick’s
Marine Corp.:
Kennedy, Lillis, Schmidt & English
75 Maiden Lane
Suite 402
New York, NY 10038-4816
By: Craig S. English, Esq.
Attorneys for Defendant Adam Weinstein:
Rosenberg & Pittinsky, LLP
232 Madison Avenue
Suite 906
New York, NY 10016
By: Laurence D. Pittinsky, Esq.
HURLEY, Senior District Judge
The purpose of this decision is to provide my Findings
of Fact and Conclusions of Law as required by Federal Rule of
Civil Procedure 52. The case was tried before me, non-jury, on
October 2, 3, 4 and November 13, 2018, with the post trial
memoranda of counsel being fully submitted by April 1, 2019.
Background
This action arises from the sinking of a marine
pleasure vessel, the Pelagic, which was owned by defendant Adam
Weinstein ("Weinstein"), and serviced, stored and launched by
Richard Dillworth ("Dillworth"), the owner and operator of
defendant Rick's Marine Corporation ("RMC"). Upon being launched
at the RMC boatyard on May 8, 2015 – after being stored at that
location for the winter of 2014-2015 – it sank within hours.
As a result of its sinking, the Pelagic was declared a
total loss, leading the insurer of the vessel, plaintiff National
Liability and Fire Insurance Co. ("National"), to pay the
$290,000 face amount of the policy to its insured Weinstein.
Weinstein then transferred Pelagic's title to the insurance
carrier as the subrogee of its perceived causes of action against
RMC for the sinking.
RMC maintains that it is the aggrieved party. In its
2
view, the boat was delivered to the marina in the Fall of 2014
for repairs, winter storage, and for launching in the Spring with
a causative latent defect, explained infra. Based on that
belief, RMC seeks, inter alia, to recover damages to the dock to
which the Pelagic was tethered at the time of its submersion. In
addition, RMC has refused to release the Pelagic, such as it is,
to National until it is paid certain sums predicated on an
asserted maritime lien.
Nature of the Affirmative Relief
Sought by the Parties
The parties' divergent positions as to the reasons
leading to the loss of the vessel and related issues have
produced multiple claims being leveled against one or more of the
captioned parties.
1. National's Claims Against RMC,
as Subrogee of Weinstein and Its
Contingent Claim Against Weinstein
The relief sought by National, as enumerated in the
"WHEREFORE" clause of its "FIRST AMENDED COMPLAINT" is as
follows:
(i) against Defendant Rick's
Marine Corp. declaring that the M/V PELAGIC
is not subject to any maritime lien,
mechanics lien, or other lien in favor of
Defendant Rick's Marine Corp;
(ii) in the alternative, to the
extent Defendant Rick's Marine Corp. has a
lien against the M/V PELAGIC, then judgment
against Defendant Adam Weinstein for breach
of his sales contract with Plaintiff National
3
warranting title to be free and clear of all
liens and encumbrances, awarding Plaintiff
National (1) general and consequential
damages including, but not limited to, the
impairment of the use and marketability of
the M/V PELAGIC, diminution in value, costs
and fees relating to the detention of the
vessel and in securing the release of the
vessel (including surveyor, salvage, and
attorneys' fees), the cost of satisfying the
lien, and all amounts Plaintiff National is
found to be owing to Defendant Rick's Marine
Corp. to clear title to the vessel, and (2)
that the M/V PELAGIC be released to Plaintiff
National while Defendant Rick's Marine Corp.
disputes its claim with Defendant Adam
Weinstein;
(iii) directing the marshal or
designated third-party to seize the M/V
PELAGIC on behalf of Plaintiff from the
unlawful possessor, Defendant Rick's Marine
Corp. and awarding Plaintiff possession of
the vessel together will all of Plaintiff's
damages, costs, and expenses arising from the
wrongful conversion of the vessel and arising
from effectuating the release of the vessel;
(iv) awarding to Plaintiff any
diminution in the vessel's value due to the
improper detainment or conversion of the
property, the equivalent daily charter hire
for a vessel comparable to the M/V PELAGIC,
any damage to the vessel, and loss of market
for the vessel since the time the M/V PELAGIC
was lawfully sold to Plaintiff National
through the date the vessel is released to
Plaintiff National's custody;
(v) awarding Plaintiff National its
general and consequential damages as a result
of Defendant Rick's Marine Corporation's
wrongful and/or unworkmanlike repairs,
services, winterizing, and/or launching of
the vessel resulting in its sinking and total
loss;
(vi) declaring that [the] marine
4
insurance policy issued by Plaintiff National
to Defendant Adam Weinstein [does not cover1]
breaches of contract, including in particular
Plaintiff National's breach of contract claim
in the original Complaint (and in this
Amended Complaint) and, consequently,
Plaintiff National has no duty to defend or
indemnify Defendant Adam Weinstein;
(vii) awarding to Plaintiff its
costs and attorney's fees; and
(viii) for such other and further
relief this Court may deem just [and]
equitable . . . .
First Amended Complaint (DE 9) at 14-15.2
2. Affirmative Relief Sought by
Weinstein in His Crossclaim
Against Defendant RMC as Set Forth
in His Answer to National's Complaint

In its Answer to National's First Amended Complaint,
Weinstein denies the substance of National's claims, and lists an
1 The WHEREFORE clause in the FIRST AMENDED COMPLAINT,
subparagraph (vi), describes a maritime insurance policy being
issued to Weinstein "for breaches of contract." Reference to the
body of the insurance contract indicates that the quoted language
seemingly constitutes a scrivener's error. I took the liberty of
modifying the language used to reflect the message apparently
intended to be conveyed by National vis-a-vis its obligation to
defend and indemnify Weinstein with respect to RMC's claim "for
services rendered." First Amended Compl. ¶ 70; see also id. at ¶
71 ("Breaches of contract are clearly excluded from the Policy
and, therefore, there is no duty to defend or indemnify Defendant
Adam Weinstein with respect to such claims.").
2 Some of the above quoted items of relief sought by
National were not pursued at trial. By way of example, National
includes within its demand for damages a sum reflecting the
"daily charter hire for a vessel comparable to the M/V Pelagic"
absent any suggestion, no less evidence as to what that sum might
be. (First Amended Compl., WHEREFORE clause ¶ iv.)
5
array of affirmative defenses, followed by four crossclaims
against RMC. The first seeks damages for RMC's purported
negligence in sinking the Pelagic to the extent that the fair
market value of the vessel and its gear exceeded the $290,000
Weinstein received from National.
The second crossclaim asks for the same relief but
under a breach of contract theory, while the third asserted
cause of action is premised on the law of bailment.
Weinstein's final and fourth crossclaim against RMC is
contingent in nature: if National prevails against Weinstein on
its breach of warranty claim pertaining to the Pelagic being
transferred free and clear of any liens, then Weinstein "asks for
contribution and/or indemnification, in whole or in part, and
judgment over and against Rick's Marine, for any amount that
Weinstein is obliged to pay, together with the reasonable
attorneys' fees, expenses and costs that Weinstein incurs in the
defense and prosecution of this action." (Weinstein's Answer to
Amended Compl. with Crossclaims (DE 13) at 11.)
RMC denies any liability as to Weinstein’s crossclaims and
asserts thirteen affirmative defenses. (RMC’s Reply to Crossclaim
(DE 17).)
3. Affirmative Relief Sought by
RMC in Its Crossclaim Against
Defendant Weinstein as Set Forth
in Its Answer to National's Complaint

In its Answer to National's First Amended Complaint,
6
RMC asserts various affirmative defenses, followed by a
crossclaim against Weinstein for services provided. (RMC’s Answer
to Amended Complaint with Counterclaims (DE 10) at p. 13-18.)
Weinstein denied RMC’s crossclaim by an answer
containing twenty-three affirmative defenses invoking such
theories as the "doctrine of accord and satisfaction" (Second
Affirmative Defense), full payment of "all monies due" (Seventh
Affirmative Defense), and "Rick's Marine did not perform the
Repairs and Services for which Rick's Marine claims payment is
due" (Twenty-First Affirmative Defense). (Answer to Co-Defendant
Rick Marine Corp.’s Crossclaim (DE 14).)
4. RMC's Third-Party In Rem Complaint
Against the Pelagic3

Two causes of action are alleged in RMC's third-party
complaint against the vessel, to wit, one for sums allegedly due,
and unpaid by Pelagic's owner relating to "authorized and
necessary services, work and repairs . . . [done] to the said
vessel" (First Cause of Action), and the other for unpaid storage
incurred as a result of the Pelagic's stay at the boatyard. As
to each a maritime lien is asserted. (RMC’s Third-Party Complaint
3 Evidence pertaining to RMC's in rem action against the
Pelagic was not presented at trial and is, accordingly, deemed
abandoned. As a practical matter, however, this seemingly is of
no consequence because RMC has a lien on the vessel for unpaid
services rendered – as explained later in the text –, and the
Pelagic was valueless by the time of trial. (See, e.g., Trial
Tr. at 46:1-5.)
7
(DE 15) at pp. 6-9.)
Format
The event which gave rise to the multiple claims
outlined above was the sinking of the Pelagic. Accordingly that
will be the initial subject addressed.
Findings of Fact and Conclusions of Law
Regarding the Purchase of the Pelagic, its
Delivery to RMC in November 2014 and its
Sinking Upon Being Launched in May 2015
1. Weinstein purchased the 39 foot Pelagic in June
2014 for a sum "in excess of $300,000." (Trial Transcript
("Tr.") at 272:8.)
2. Immediately after purchase, Weinstein "with three
experienced captains" on board sailed the Pelagic from its point
of purchase, viz. in South Carolina, to New York, absent "any
instances of leakage" being experienced. (Id. at 97:22-98:5.)
3. Prior to taking that "three" or "four" day trip,
the Pelagic successfully completed a shake-down cruise in open
seas. (Id. at 98:9-24.)
4. Weinstein operated the vessel "through the summer"
of 2014 without incident, and delivered the boat to RMC in
"November of 2014." (Id. at 97:9-16.)
5. RMC operates Rick's Marine, which is a marina and
vessel repair facility located in Freeport, Nassau County, New
York. (Id. at 280:20-23.) RMC's "owner and operator" was and is
Dillworth. (Id. at 280:17-19.)
8
6. Weinstein delivered the Pelagic to Rick's Marine in
November 2014 for the purposes of (a) "winteriz[ation]," (b)
"stor[age]", (c) "for certain repairs" to be made and, finally
(d) to be "launch[ed] . . . back into the water in the [S]pring."
(Joint Post-Trial Order, [DE 45] Stipulated Facts (VIII); see
also Tr. 292:11-293:2.)
7. Weinstein had "no idea how to winterize a boat"
(id. at 115:3-13), and, accordingly RMC, agreed to, and did
perform that process (id. at 123:23-124:17; Nat’l Ex. 9).
8. The reported details of the winterization process
done by Dillworth and/or an assistant, (Tr. at 302), are recited
in the company's invoice. They include "drain[ing] SW [i.e. salt
water] washdown [and] run[ning] non-tox [antifreeze] through all
drains and strainers." (Nat'l Ex. 9.) Whether the invoiced non-
tox antifreeze was ever added to the SW washdown systems is
questionable. At Dillworth's pretrial deposition he testified
that it was not. (Tr. at 316:21-25.)
9. With respect to the Spring launching, that was done
by Dillworth and his "son's godfather, John Galvin” ("Galvin").
(Id. at 362:8-17.) They did not do "a full bow to stern
inspection of the vessel while it was on land before it went into
the water." (Tr. at 361:17-25.)
10. RMC did not check the bilge pumps to determine
whether they were operating properly before launching. (Tr. at

9
336:12-15.)
11. The Pelagic was launched somewhere between 1:00
and 1:30 p.m. on May 8, 2015. (Tr. at 336:24-337:2.) Dillworth
remained at the marina for four hours or less before catching a
5:08 p.m. train for a Rangers hockey game at Madison Square
Garden. (Id. at 336:20-337:1.) The Pelagic was one of seven or
eight boats he and his assistant launched that day yet he did not
assign anyone to keep an eye on any of the vessels during his
absence. (Id. at 337:8-11.) Dillworth returned to the marina at
around 1:30 a.m. on May 9 by which time the Pelagic had sunk.
(Id. at 337:25-338:10.)
RMC's Position as to Facts Bearing on
the Bailment Issue Discussed Infra

12. Before discussing the "certain repairs" RMC agreed
to perform and their relevance to the present dispute, it is
important to understand Dillworth's specific position as to the
cause of the sinking. In his view, "[t]he cause of the sinking
was the failure of a hose clamp, and a loose — fitting hose,
which were unrelated to any alleged act or omission of RMC."
(Post-Trial Memo of RMC (DE 71) at 12.) The referenced hose was
a part of an onboard saltwater washdown system, which device
permitted an operator to hose-down the decks of the Pelagic using
seawater obtained through a seacock.
Dillworth maintains that the evidence at trial
10
established that the subject hose "fit loosely on the seacock
valve" and came dislodged when the single clamp holding the hose
in place ruptured due to overtightening. (Id. at 13; see also
Tr. 423:21-24.) That, in turn, caused seawater to course through
the open, below waterline seacock directly into the hull.
The separation of the hose from the through-hull
seacock fitting, the argument continues, is said by RMC to have
occurred long after the winterization process was completed,
specifically in the brief interim between the vessel's launching
and its sinking several hours later while still at the marina and
under the exclusive control of RMC.
But why wasn't the hose problem detected and corrected
during the Fall winterization by RMC? That query brings us to
the repair issue advanced by Dillworth regarding the repairs the
marina agreed to undertake, and those Weinstein indicated he
would handle himself or otherwise address. In that regard, RMC
refers to several emails exchanged with Weinstein. The first
email is from Weinstein to Dillworth asking in essence for price
quotes for twelve listed repair "projects." Number 8 on the list
reads: "Fix raw water wash down." (RMC Ex. C at AW0194.) In
response, RMC's Dillworth estimated "[a]t most a few hundred,
could be only a minor wiring issue." (RMC Ex. D, third page,
item 8, black text.) Of note, no mention is made by him of a
singular overtightened clamp securing a loose tube to the seacock

11
apparatus. This suggests that Dillworth did not look at the
washdown before providing an estimate or, if he did, did not see
the supposed deficiency now cited.
In any event, Weinstein, after receiving repair cost
estimates from Dillworth, sought input from his friend, Stephen
Feinstein ("Feinstein") as to reasonableness of the estimated
charges. As to item 8, Feinstein told Weinstein that the raw
water washdown "works fine, issue is with quick connect hose to
fitting which activates the constant pressure pump, just needs a
different type of hose connection." (RMC Ex. C, third pg.,
numbered item 8, red text.) "So don't pay him [viz. Dillworth],
we will get another hose connector." (Tr. at 159:15 to 160:24.)
Feinstein contacted Dillworth directly consistent with that
conclusion whereupon Dillworth indicated item 8 would not be
addressed. (Tr. at 163:4-13.)
In sum, the gravamen of RMC's position disclaiming
responsibility for the sinking of the Pelagic is that the vessel
had a latent defect in its washdown system upon delivery to the
marina in November 2014, and that Dillworth was told at that time
not to address item 8 on Weinstein's list. Dillworth contends
that that communication eliminated the need for him to include
checking that part of the washdown system as part of the
launching protocol in May 2015 to assure it was then safe to
place the vessel in the water.

12
13. RMC's labeling of the defect as "latent"
constitutes a misnomer. A condition is latent if it is "present
and capable of becoming[], though not now visible, obvious,
active or symptomatic." Meriam-Webster's Collegiate Dictionary,
Eleventh Ed. pg. 702; see also Kane v. Pater M. Moore Const. Co.,
Inc., 145 A.D. 3d 864, 868, (2d Dep't 2016)("If a defect could
not have been discovered by a layman, even by inspection, it is
considered a latent defect.").
14. Here, Dillworth highlighted during his testimony
that the cause of the mishap was an obviously misfitted hose
improperly secured by a single overtightened clamp instead of two
properly tightened clamps. (See, e.g., Post Trial Reply of RMC
to the Post Trial Submission of Plaintiff (DE 82) at p. 1.)
15. RMC, as previously noted, not only launched the
Pelagic in May of 2014, but also winterized the vessel in the
Fall of 2014. In performing the latter function, Dillworth or
his assistant had "hands on" contact with the salt water washdown
system. (See Nat’l Ex. 9, p.2 listing services rendered to
Weinstein by RMC (". . . drain SW washdown, run non-tox through
all drains and strainers [and] winterize SW livewell circulating
pump . . . ."); see also Tr. at 451:6-23.) So in winterizing the
salt water washdown, Dillworth, again, or his assistant had
occasion to see, and, in all probability did see, the purported
defects now mistakenly labeled by RMC as "latent."

13
16. Central to RMC's argument is the contention that
the loose, overtightened hose and the manner in which it was
attached to the seacock barb constituted, in essence, an obvious
accident waiting to happen. (See, e.g., RMC Post-Trial Reply (DE
82) at 1.) Whether Dillworth's "latent defect" view as to the
cause of the loss is correct is at best problematic based on the
credible evidence adduced at trial. But more importantly for
present purposes, having been alerted to a problem with the
saltwater washdown system via Weinstein's request for a cost
estimate for its repair, and having been involved in the
winterization process of the system, why didn't Dillworth or his
assistant at least check to see if the needed repairs were done
before placing the vessel in the water? If such inspection
disclosed that the perceived hazard remained unaddressed,
Dillworth should have decided not to do the launch until the
defect was remedied.
17. Did the supposedly misshapen tubing become
dislodged due to a single overtightened clamp giving way as RMC
contends, or was the cause something else such as, e.g., the
freezing of the line attributable to improper winterization?
Without an answer to that question, the bailment presumption of
negligence by the bailee, discussed infra, comes into play.
18. Dillworth's related speculation about the tube
becoming dislodged sometime during the brief period separating

14
the Pelagic's launching and his return from the Rangers game is
not credible. Instead, it appears to be a misguided effort to
excuse his inadequate pre and post launch inspections needed to
assure the vessel was watertight. (See, e.g., Tr. at 361:16-25
(lack of bow to stern inspection before boat placed in water);
id. at 379:4-18 (hoses and seacocks [except those leading to
engine] not checked pre launch); id. at 381:6-382:15 (Dillworth
testified he did not check hoses, clamps, or all the seacocks
after Pelagic was launched)).
Moreover, his reliance on the testimony of Christopher
Squeiri, a fellow marina operator in Freeport, to suggest that
the boat was still floating high and dry hours after its
launching is unavailing. Mr. Squeiri testified that he saw the
Pelagic at "about 5:00 [p.m.]" on May 8, 2015 in the water absent
any list or other evidence that it was being flooded. He
explained he knew it was the Pelagic due to its "light blue
hull." (Tr. at 510:7-511:21; see also id. at 516:16-18 and
523:17-524:5.) Given that the subject vessel's hull was white,
not blue, (id. at 524:18 - 525:2), it is clear to me that the
boat he saw the afternoon of the sinking was not the Pelagic and,
as a result, his testimony is not germane.
19. Based on evidence presented at trial, I find it is
more probable than not that the Pelagic was delivered into the
exclusive custody and control of RMC in the Fall of 2014 in good,

15
seaworthy condition.
20. I further find that had the appropriate launching
protocol been followed as convincingly explained by Captain John
Lowe ("Lowe") of Lowe's Marine Survey, the Pelagic would in all
probability not have sunk. (Tr. at 588:17-25.) But several of
the required steps in that protocol were bypassed by RMC.
21. For instance, one of the steps required by the
protocol was checking the vessel's bilge pumps to assure they
were operational. (Id. at 589:1-591:17.) However, Dillworth
acknowledged that he didn't "test whether the bilge pumps
operated." (Id. at 336:12-15.) That oversight is significant
because any one of the several pumps had the capacity to keep the
vessel afloat, i.e., to expel more water from the bilge than
entered the hull from the untethered open seacock. (Id. at
593:18-594:12.)
22. Since the Pelagic was delivered to RMC in
seaworthy condition and remained under its exclusive custody and
control up to and through its launching, there is a rebutable
presumption that RMC's negligence as the bailee of the vessel
caused its loss. As explained in Goudy & Stevens, Inc. v. Cable
Marine, Inc.:
[W]hen the bailor shows delivery to a bailee
and the bailee's failure to return the thing
bailed, he makes out a prima facie case of
negligence against the bailee, and it then
becomes the duty of the bailee to come
forward with the evidence to explain its
16
default by showing facts and circumstances
sufficient in law to exonerate it from
liability for the damage.
924 F.2d 16, 18 (1st Cir. 1991)(internal quotation marks and
citations omitted). See also Muller Boat Works, Inc. v. Unnamed
52' House Barge, 464 F. Supp. 2d 127, 146-47 (E.D.N.Y. 2006);
Nat'l Ex. 28, pp. 9-10 (Lowe's "Comments on launch protocol").
23. The presumption is rebutable. But RMC's effort to
accomplish that goal via reference to a latent defect supposedly
present upon delivery of the vessel to the marina, has proven to
be unavailing. Thus the presumption of negligence remains
unrebuted. See Johnson's Branford Boat Yard. Inc. v. Yacht
Altair, 260 F. Supp. 841, 844 (D. Conn. 1966). That alone
establishes that National has met its burden of proof as to RMC's
liability.
24. Parenthetically, even if, arguendo, the
presumption is culled from the analysis, the same result follows
given the negligent departures from the appropriate launching
protocol explained by Captain Lowe as previously referenced.
25. In sum, National has proven that RMC's negligence
- via the aid of the bailment presumption - was the reason the
Pelagic sank upon launching.
26. In reaching the above conclusion, I considered RMC
Exhibit G,4 the preliminary report prepared by marine surveyor
4 RMC Ex. G also appears in the record as A.W. Ex. X.
17
Anthony L. Fazio ("Fazio"). The report, dated May 14, 2015, was
prepared at the request of National and offered into evidence by
RMC at which time it was received subject to connection under
Federal Rule of Evidence 104(b). (Tr. 88:17-23.) One of the
links required consisted of a proper foundation for its
consideration as a business record under Rule 803(6). (See
generally Memorandum & Order, dated October 19, 2018 (DE 65).)
In any event, the parties eventually agreed that the exhibit was
a business record thereby obviating the need to call a
foundational witness. [But its trustworthiness was disputed by
National, coupled with the unconvincing argument that such
claimed deficiency barred its admission.] I find that the
specifics of National's argument goes to the weight to be
afforded to RMC Ex. G, not to its admissibility. Accordingly the
exhibit has been considered by the Court as evidence. However,
given that Fazio's report is predicated in substantial measure on
questionable information provided solely by an interested
principal of RMC, viz. Dillworth, it does not give cause to alter
my conclusion regarding RMC's liability for the loss of the
Pelagic. Simply put, although the exhibit survives the
trustworthiness hurdle to its admission, its weight, given the
attendant circumstances, is de minimis.
27. By way of an example of the problematic nature of
Fazio's conclusion – offered in support of RMC's "latent defect"

18
theory – is his "finding" that "the hose detached from the
fitting allowing raw water to flood in according to Rick
Dillworth." (RMC Ex. G (emphasis added).) In addition, given
the nature of the break, Dillworth's testimony that he found the
broken single clamp in the bilge totally separated from the
tubing rather than still attached to it, was seriously questioned
by Fazio as well as Lowe. (See Nat'l Ex. 8, NAT0594 (as to
Fazio); Tr. at 637:13-638:3; Nat'l's Proposed Findings of Fact
and Conclusions of Law at p. 5, n. 5(as to Lowe).) Indeed, the
likelihood of the clamp being totally dislodged from the tubing
was viewed by Fazio as "seem[ingly] impossible." (Nat'l Ex. 8,
NATO594.)
And incidentally, Fazio in his report opines that
"[r]esponsibility" for the loss "[m]ay lie, with the marina
facility that launched the vessel in the owners [sic] absence
that may not have provided due diligence in ensuring the vessel’s
watertight integrity. (Fazio's May 14, 2015 Preliminary Report
1, at 7, NATO141.)
RMC's Claim Against Weinstein for Damage
to Marina's Dock and Travel-lift Sling is
Found to be Without Merit
28. Since a preponderance of the credible evidence
establishes that Weinstein delivered the Pelagic to the marina in
sound condition, and RMC has failed to rebut the resulting
presumption that its negligence as bailee caused the loss of the
19
vessel, it necessarily follows, and I so find, that Weinstein
bears no responsibility for the captioned damages.
Findings of Fact and Conclusions of
Law as to Weinstein's Claim Against
RMC for an Amount in Damages Equal
to the Alleged Difference Between
the Fair Market Value of the Pelagic
Immediately Prior to Its Loss and
and the $290,000 Received From
National in Insurance Proceeds
29. Weinstein called Frank Abbey ("Abbey"), a marine
surveyor, to evaluate and assign a pre-casualty market value to
the Pelagic. (See Weinstein Ex. K-2, Abbey's resume.)
Abbey never "inspected" the Pelagic. (Tr. at 496:4-6.)
Instead, he referenced a source entitled "BUC Used Boat Price
Guide" and like publications said to be used by marine surveyors
to provide valuation figures to, inter alia, insurance companies.
(See Weinstein Ex. K-1 and Tr. at 496:7-497:25.) Based on that
process, he opined that "the boat could have had a value range
[of] $312,950 to $370,150" [or from] "$327,175 to . . . $386,975"
(emphasis added). (Id. at 498:10-17.)
The actual condition of a boat is an important factor
in its evaluation. (Id. at 504:3-5.) Abbey assumed that the
vessel was in so-called BUC condition, that is "in good average
condition, typical age type and ready for sale." (Id. at 501:8-
14.) But not only did he never see, no less inspect the vessel,
he never spoke to the owner about its condition. As a result,
Abbey was unaware of its problems such as with its "engine
20
mounts" which, he conceded, would affect its value. (Id. at
501:20-24.) Similarly unknown to Abbey is what Weinstein paid
for the vessel in "the [S]pring of 2014" before insuring it for
$290,000. (Id. at 502:7-9.)
In sum, Abbey's testimony — which is essentially the
lone predicate for this claim by Weinstein against RMC — falls
far short of being convincing.
Accordingly, this crossclaim by Weinstein against RMC
is rejected as unproven.
Findings of Fact and Conclusions of
Law as to Pre-sinking Repairs to the
Pelagic and Resulting Lien Pending
Payment by Weinstein
30. RMC furnished Weinstein with an invoice dated
December 31, 2015 for pre-sinking repairs rendered in the amount
of $21,045.95, later reduced to $17,602. (See RMC Ex. N and Tr.
at 443:9-445:6; id. at 701:1-9.) Accordingly, RMC seeks to be
awarded the reduced amount for the repairs he did to the Pelagic
prior to its loss. (See Post-Trial Memo of RMC (DE 71) at 22.)
Dillworth testified that the invoiced tasks were
performed and the associated cost remains unpaid (Tr. at 443:9-
445:6); Weinstein has not offered evidence to the contrary.
But does the obligation for payment rest with Weinstein
or National? Title to the Pelagic was transferred from Weinstein
to National on May 30, 2015. (See RMC Ex. Y (first Bill of Sale)
and Nat'l Ex. 3 (second Bill of Sale, dated June 23, 2015 which,
21
unlike its predecessor, lists the name of the transferee).)
Reference to the December 31, 2015 invoice indicates
that the services rendered by their very nature all occurred
before the May 8 casualty and while Weinstein owned the Pelagic.
(RMC Ex. N.) Thus payment of the outstanding invoice is
Weinstein's obligation.5
In sum, Weinstein is responsible to RMC for the $17,602
in repair costs.
Post-Sinking Storage Fees for the
Pelagic are National's Responsibility
but National is Entitled to
Indemnification From Weinstein
31. In RMC's "PRE-TRIAL STATEMENT WITH REGARD TO
DAMAGES" (DE 52-1) filed on September 18, 2018, Dillworth, via
RMC's crossclaim against Weinstein, lists the damages sought.
With respect to then unpaid storage charges, the figure of
$53,032.28 is provided with a supporting cite to invoice number
1086B. (RMC Ex. T.) The storage charges listed on that invoice
all pertain to storage services provided after ownership of the
Pelagic was transferred from Weinstein to National.6 That
5 Absent from the bills of sale is anything remotely
suggesting that Weinstein's indebtedness to RMC somehow became
National's responsibility upon transfer. In fact, a fair reading
of the language in the sales instruments excludes that
possibility.
6 By implication, it appears that all storage fees for the
Pelagic incurred prior to the transfer from Weinstein to National
were satisfied pre-litigation.
22
scenario certainly suggests that satisfaction of the subject
storage charges are National's responsibility at least in the
first instance.
National insists that the responsibility does not rest
with it. Its primary argument in support of that position goes
as follows: "[f]or a lien (if such is asserted by Rick's
Marine)[7] to cover storage fees, the storage fees ‘must be
specifically authorized to be included as part of a
garagekeeper's lien on a vehicle,'" (Reply by Plaintiff (DE 83)
at ¶ 36 (quoting Grant St. Constr., Inc. v. Cortland Paving
Co., 55 A.D.3d 1106, 1107, 865 N.Y.S.2d 762, 764 (3rd Dep't
2008).)
Here, National argues that it never agreed to pay for
the post-transfer storage fees while the remains of Pelagic
languished at the marina. However, that position is belied by
the fact that it did pay storage charges to RMC for a significant
portion of that period. (See Tr. at 34:19-35:12; id. at 347:21-
25; and Nat'l Ex. 8.6 at NAT 0509.) By that act, it impliedly
acknowledged its consent and corresponding obligation to pay the
post-transfer storage fees as the titled owner of the vessel.

7 RMC is asserting a maritime lien for its unpaid services
performed on the Pelagic, and legitimately so, under 46 U.S.C. §
31342(a) and N.Y. Lien Law § 1841). See generally Memorandum &
Order, dated May 17, 2017, (DE 65), denying summary judgment to
National on its conversion claim for RMC's refusal to release
possession of the vessel due to outstanding invoices.
23
32. As to the issue of indemnification, National
contends that if it owes storage fees to RMC, it is entitled to
indemnification from Weinstein. That is so, we are told, given
the terms of the two bills of sale.
Weinstein warranted in the May 30 bill of sale that the
vessel was being "sold free and clear of all liens, mortgages or
encumbrances of any kind" (RMC Ex. Y at 1), while the June 23
instrument recites "the seller(s) warrants that the vessel is
free and clear of all liens, bills, mortgages, taxes or
encumbrances of any nature or kind" (Natl's Ex. 3).
The above quoted language created an express warranty
of a material fact, which warranty Weinstein clearly breached
with respect to the repair services provided by RMC. See
generally Metro. Coal Co. v. Howard, 155 F.2d 780, 784 (2d Cir.
1946); Trodale Holdings LLC v. Bristol Healthcare Inv'rs., L.P.,
2019 WL 1300335, at *5 (S.D.N.Y. Mar. 21, 2019). That Weinstein
had not received an invoice for the repairs until well after both
the loss and the transfer of title had occurred does not alter
that result.
The lien came into existence at the time the services
were provided. See Odyssea Marine, Inc. v. Siem Spearfish M/V,
2016 WL 4259083, *3 (E.D. La. Aug. 10, 2016)(" A maritime lien
attaches when the necessary good or service is provided, but the
lien typically will remain inchoate and may not be enforced

24
(i.e., the vessel may not be arrested) until the debt has matured
per the terms of the agreement (if any).").
National, following the vessel's transfer of title,
sought its possession unsuccessfully. (See Tr. at 353:4-355:5.)
In rejecting such requests, Dillworth relied on his "mechanic's
lien." (Id. at 349:18-21.) Because of that lien, National was
unable to accomplish its goal of obtaining possession of the
vessel and, in the process, stopping the ever mounting storage
fees. Had the vessel been free of liens as warranted by
Weinstein, the post-transfer storage costs now sought by RMC to
be recovered from National would have been presumably non-
existent.
Under the circumstance, it is Weinstein's obligation to
indemnify National for whatever sum it owes RMC for the post-
transfer storage fees. Even though an invoice for the repairs
had not yet been issued before National acquired title to the
Pelagic, Weinstein should have settled that known open item with
RMC instead of falsely representing to National the absence of
any outstanding bills, liens or other encumbrances.
Amount Owed to RMC by National for
Post-Transfer Storage at the Marina,
and Ultimately by Weinstein Based on
His Breach of Warranty
33. The next question is how much does National owe to
RMC for storage? Is it the amount sought by RMC, to wit
25
$53,032.28, or some lesser sum?8 Whatever it is, that is the
figure to be awarded to National pursuant to its indemnification
claim against Weinstein.
34. Is the $53,032.28 sought by RMC unconscionable and
thus unenforceable given that the sum sought considerably exceeds
the post May 8-9 value of the vessel? National posits that the
answer to that question should be in the affirmative. (See
Natl's Reply (DE 83) to Proposed Findings of Fact and Conclusions
of Law of RMC and Weinstein at p. 17.) In support of that
proposition, two lower court state cases are cited, viz. C.J.T.
Corp. v. Solomon, 273 N.Y.S. 563 (Manhattan Mun. Ct. 1934) and
Pollina v. Bergh, 346 N.Y.S.2d 318 (2d Dist. Ct. 1973)(citing
C.J.T. Corp.). I have read both and find neither helpful for
present purposes. All Weinstein had to do to eradicate the lien
was to settle-up with RMC as to the authorized repairs done. The
notion that Weinstein may strip the marina of its lien by simply
declining to recognize its obligation to make payment until
storage costs exceed the value of the vessel is a proposition I
decline to adopt on the authority provided.
35. However, an alternate argument advanced in
National's Reply is helpful. That argument is as follows:
Rick's Marine's claim for storage fees is

8 See RMC Post-Trial Findings of Fact (DE 72) at p. 23,
para. 158; see also RMC Ex. T (a 9-01-18 invoice for post-
casualty on-land storage).
26
also unconscionable in light of the fact that
Rick's Marine charged Weinstein $1,482 for
five months of winter storage prior to the
incident (Nat'l Ex. 9), which is $296.40 per
month. However, Rick's Marine now seeks
$1,302.00 per month for storage (RMC Ex. T).
If the Court awards any amount, it should be
based upon the rate that existed prior to the
casualty (i.e., $296.40 per month).

(Nat'l's Reply (DE 83) at 17.)
National's alternate argument has merit to the extent
(a) that the record is devoid of evidence to suggest, no less
establish, that National or Weinstein ever agreed, by conduct or
otherwise, to pay the $1,302 per month now sought by RMC, and (b)
RMC has not otherwise contradicted or challenged National's
alterative suggestion for satisfying the outstanding storage
fees. (See Nat's Ex. 9.)
Accordingly, National is responsible for payment of
storage fees to RMC in the amount of $296.40 per month for post
transfer storage fees through the entry of judgment. Further,
National is entitled to judgment against Weinstein in like sum on
its claim for indemnification.
The Insurance Policy Issued by
National to Weinstein Does Not Provide
Coverage for Breaches of Warranty
or Other Contract-based Claims
36. The Yacht Policy issued to Weinstein by BoatU.S.,
the marine insurance arm of National, covers the vessel and
appurtenances thereto (Nat'l Ex. 2, p.2 of Policy), as well as
27
claims for "bodily injury or property damage for which the
insured becomes legally liable through [the] ownership,
maintenance or use of the insured boat" (id. at p. 10). By its
terms, the policy does not cover contract-based claims, such as
National's claim against Weinstein for breach of warranty, unpaid
repair bills, or storage fees.
Parenthetically, with respect to RMC's cause of action
against Weinstein for harm to the marina's dock and sling caused
by the sinking, National had a duty to defend pursuant to the
coverage provision quoted in the last paragraph. However
Weinstein never asserted a counterclaim against National charging
a failure to defend as to this matter9 nor was the subject
pursued by him during trial either by way of proof or argument.
For the above stated reasons, National's request for a
declaration that it has "no duty to defend Defendant Adam
Weinstein for National's cause of action for breach of contract"
or otherwise is granted.
Amount Owed by RMC to National
as Subrogee of Weinstein
37. National paid the $290,000 face amount of the
insurance policy it issued to Weinstein following the Pelagic's

9 See RMC's Answer to Natl's First Amended Complaint with
Crossclaim, DE 10; see also Nat'l's Proposed Findings of Fact and
Conclusions of Law, DE 74, at p. 24 ("At no time has Defendant
Weinstein asserted a counterclaim in this action against
National.").
28
loss. That amount is some evidence of the vessel's value.
Commercial Union Ins. Co. v. M/V Bill Andrews, 624 F.2d 643, 649
(5th Cir. 1980). No evidence was forthcoming suggesting a lesser
amount, while Weinstein's expert opined a value considerably in
excess of that number. The Court thus concludes that the
Pelagic's value in May of 2015 was $290,000.00. As subrogee,
National succeeds to Weinstein's rights to recover that amount
from RMC.
38. National also seeks to recover sums in excess of
the $290,000 it paid to Weinstein. (National's Proposed Findings
of Fact and Conclusions of Law (DE 74) at p. 19-20.) For
example, it requests an award of $6,794.49, that being the amount
it "paid to Rick's Marine to assist in the salvage of the vessel
and flushing of the engine and similar activities described in
the invoice after the sinking." (Id. at p. 19.) However, the
insurance policy issued to Weinstein (Nat'l Ex. 2), provides,
under the caption "Our Right to Recover," that "[y]ou may have
the right to recover from another party who is responsible for
your loss or loss to the insured boat. If we pay your loss under
this policy, this right of recovery will belong to us up to the
amount that we have paid you." (Nat'l Ex. 2 (DE 9-1) at 6.) So
that $6,794.49 charge, and the other like expenditures National
moves to recoup from RMC, would seem barred as a result of the
above quoted provision unless there is some predicate other than

29
subrogation at play. But what that other predicate might be
remains wholly unaddressed in National's submissions. For that
reason, the items of relief requested in paragraphs 50, 51, 52,
53 and 54 (see Nat'l's Proposed Findings of Fact and Conclusions
of Law (DE 74) at pp. 19-20) are denied.
39. With respect to paragraph 55, (id. at p. 20,)
there National asks to recover the salvage value of the vessel as
it existed shortly after the sinking, which opportunity was
purportedly lost due to "Rick's Marine's wrongful detention of
the vessel." (Id.) As explained earlier, RMC had the right to
detain the vessel based on its lien for unpaid repair services.
Thus this claim necessarily fails.
Conclusion Regarding Findings of Fact
and Conclusions of Law, Together
With Damage Awards
For the reasons given above:
1. National has proven that RMC's negligence — via
the aid of the bailment presumption – caused the loss of the
Pelagic; accordingly, National is entitled to judgment against
RMC in the amount of $290,000.00.
2. Since RMC bears sole responsibility for the
sinking, RMC's claims against Weinstein for damage to the
marina's dock and sling are found to be without merit;
accordingly, Weinstein is entitled to judgment dismissing this
counterclaim.
30
3. Weinstein has not proven that the Pelagic's
market value immediately prior to its sinking exceeded its
insured value of $290,000; accordingly his crossclaim against RMC
for the unproven differential is rejected and RMC is entitled to
judgment dismissing this counterclaim.
4. RMC's crossclaim against Weinstein for pre-
sinking repairs in the amount of $17,602.00 has been established
as has the legitimacy of its concomitant lien on the Pelagic due
to nonpayment; accordingly, RMC is entitled to judgment against
Weinstein on this crossclaim in the amount of $17,602.00.
5. Post-transfer storage fees for the Pelagic at
RMC's — at the rate of $296.40 per month as earlier explained —
are National's responsibility. However, because of Weinstein's
breach of warranty via his representation to National that the
vessel was being transferred free of any liens, bills or other
encumbrances, National is entitled to indemnification from
Weinstein for the storage fees it is required to pay to RMC up to
the date of this judgment; accordingly, RMC is entitled to
judgment against National in the amount of $16,894.80 (57 months
through February 2020) plus $9.88 per day from March 1, 2020 to
the entry of judgment and National is entitled to judgment
against Weinstein in like sum on its claim for indemnification.
6. Upon satisfaction of the judgment for the
outstanding repair bill and the outstanding storage fees,

31
National is entitled to possession of the Pelagic and
accordingly, upon such payment RMC shall immediately make the
Pelagic available for removal from the marina at National's
expense.
7. National's request for a judgment declaring
that it had no obligation under the marine insurance policy
issued to Weinstein to defend and, if necessary, indemnify him
with respect to National's breach of warranty and other contract-
based claims is granted.
8. National's request to recover sums from RMC in
excess of the $290,000 it paid to Weinstein is denied.
9. The claims asserted by the parties not
specifically addressed above have been considered by the Court
and determined to be devoid of merit and therefore are dismissed.
10. The Clerk of Court is directed to enter
judgment in accordance with the foregoing together with post
judgment interest pursuant to 28 U.S.C. § 1961 and to close this
case.
Dated: Central Islip, New York
March 11, 2020
/s Denis R. Hurley
Denis R. Hurley
United States District Judge

32

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10303875. Public record. Not legal advice.