E-Alert Case Updates
United States District Court enters Summary Judgment for Defendant Marine Vessel Dealer because Plaintiff’s claims expired under the Statute of Limitations
Willox v. Ladas
In Willox v. Ladas, the United States District Court for the District of Maryland entered summary judgment in favor of a defendant marine vessel dealer and one of its members on a breach of contract claim, because the plaintiff filed his claims after the statute of limitation had expired. Writing for the Court, Judge Catherine C. Blake held the plaintiff’s interpretation of the parties’ contract was correct as a matter of law. The Court found, however, that the plaintiff was put on inquiry notice of his breach of contract claims four (4) years prior to his filing suit. Because the applicable statute of limitations for breach of contract claims is three (3) years, the Court granted the defendants’ motion for summary judgment.
Norman Willox (“Plaintiff”) entered into an agreement (the “Agreement”), under which Plaintiff obtained a one-third membership interest in Mid Atlantic Marine Group LLC (“MAMG”) in exchange for $300,000.00 in financing, to be used in MAMG’s purchase of a new yacht (the “Yacht”). Under the Agreement, Plaintiff was to execute a personal guarantee for the financing, and MAMG’s manager, Michael Ladas, was to provide Plaintiff with access to MAMG’s books and records. Though Plaintiff received a one-third membership interest in MAMG, the Agreement limited his economic interest to fifty percent of any net profits earned from the purchase of the Yacht, and one-hundred percent of any net losses. On September 22, 2008, MAMG purchased the Yacht for $2,268,835.00 with the financing from Plaintiff. MAMG eventually sold the Yacht on October 27, 2009 for a purchase price of $2,535,000.00, in the form of $1,485,000.00 in cash and a vessel, a Hatteras 55 Convertible (the “Hatteras”), with a trade allowance of $1,050,000.00. Mr. Ladas recorded the cash payment and the estimated sales value of the Hatteras — which was far less than the $1,050,000 trade allowance — in Plaintiff’s capital account. The Hatteras eventually sold for $630,000.00 in February 2011, and this amount was credited to Plaintiff’s capital account. Using the $630,000.00 sale price of the Hatteras, the Yacht ultimately sold at a loss of over $150,000.00, for which Plaintiff was responsible under the terms of the Agreement.
Plaintiff filed suit on May 13, 2013, alleging breach of contract, conversion, and fraudulent conveyance by MAMG. According to Plaintiff, Mr. Ladas improperly calculated the profits/losses from the sale of the Yacht by using the sale price of the Hatteras instead of the purchase price of the Yacht. MAGM and Mr. Ladas (collectively, “Defendants”) counterclaimed for breach of contract and unjust enrichment based on Plaintiff’s alleged failure to pay carrying costs and the losses suffered on the sale of the Yacht. Plaintiff filed a motion to dismiss Defendants’ counterclaims, and Defendants filed a Motion for Summary Judgment based on the expiration of the applicable statute of limitations.
The Court granted Plaintiff’s motion to dismiss Defendants’ counterclaims, but also granted Defendants’ motion for summary judgment. Interpreting the Agreement, the Court held that Defendants failed to state a claim for breach of contract against Plaintiff, as the Agreement required that the profits or losses on the sale of the Yacht were to be calculated on the purchase price of the Yacht, rather than the ultimate sale of the Hatteras. The Court ultimately entered summary judgment in favor of Defendants, however, because Plaintiffs’ claims were barred by the applicable three-year statute of limitations. The Court found that the Plaintiff’s claims accrued in October 2009, when MAMG sold the Yacht, rather than in February 2011, when the Hatteras was sold. The Court held that Plaintiff had access to sufficient information to be on inquiry notice of his claim at the time of the Yacht’s sale. Therefore, Plaintiff filed his claims more than one (1) year after the statute of limitations had expired.
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