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LLC v. Great Lakes Towing Co.

United States District Court, N.D. Ohio, Eastern Division

June 14, 2018

FRANCO MARINE 1, LLC., Plaintiff,



         This matter is before the Court on a Motion to Dismiss by Defendant The Great Lakes Towing Company. (ECF # 5). For the following reasons, the Court grants Defendant's Motion and dismisses the above-captioned case.

         According to Plaintiff, the Parties entered into a valid contract for the sale of a tugboat, which Defendant breached when it refused to close on the sale. Plaintiff also claims Promissory Fraud for Defendant's statement that it would sell the boat for $3 million, which Plaintiff alleges was made with no intent of following through with the sale. Lastly, Plaintiff claims Promissory Estoppel because Plaintiff relied on Defendant's $3 million offer in sending representatives to inspect the boat.

         Background Facts

         Plaintiff's claims concern the sale of a tugboat to Plaintiff Franco Marine 1, LLC by Defendant The Great Lakes Towing Company. Harley Franco (“Mr. Franco”) is the Governor of Plaintiff Franco Marine 1, LLC and the Chairman and CEO of Harley Marine Services. Defendant's President Joseph Starck, Jr. (“Mr. Starck”) emailed Mr. Franco advertising the tugboat San Jose (the “Tugboat”) “available for immediate sale.” Compl. Ex. A. When Mr. Franco indicated his interest in the Tugboat, Mr. Starck replied, “$3MM and it's yours.” Compl. Ex. B. Mr. Franco responded by making arrangements to inspect the Tugboat. Later that day, Mr. Starck emailed Mr. Franco offering a charter arrangement:

With regard to sale, we would prefer to do a short term charter, with purchase at the end of the charter. We propose a 6-month charter, with one (1) payment of $600, 000 due on/before Delivery. Upon expiration of the charter, Harley will close on the purchase at a price of $2.50MM.

Compl. Ex. C. Mr. Franco sent employees to inspect the Tugboat, and about a week later, emailed Mr. Starck, purporting to accept Mr. Starck's offer:

This will confirm that we have accepted your $3, 000, 000 offer to sell Harley Marine Services or Harley Franco LLC. To purchase the above reference tugboat. This will further confirm the vessel comes with spares listed and that all certifications are current. This will further confirm you will send us a signed purchase and sale agreement immediately. We will schedule a closing immediately.

Compl. Ex. E. Mr. Starck replied, “I will have the Purchase and Sale to you tomorrow.” Compl. Ex. E. The next day, Mr. Starck emailed Mr. Franco with an unsigned copy of the Vessel Purchase and Sale Agreement, stating, “I have initialed each page, except the signature page. To be timely effectuated, we will require this agreement to be fully executed by 1700 Hours ET today. Upon receipt of your signed copy by return email, I will immediately sign and return the fully executed agreement to you.” Compl. Ex. F. Forty minutes later, Mr. Starck emailed Mr. Franco, “I have now been advised that acceptance of any Purchase and Sale Agreement by Great Lakes will be subject to prior review and approval by the Company's board of directors before I can sign.” Compl. Ex. G. Mr. Franco signed the Agreement and sent it back to Mr. Starck. The next day, Mr. Franco emailed Mr. Starck, “Joe need signed agreement.” Compl. Ex. J. Mr. Starck replied, “[t]his is to advise that our board did not approve the agreement to sell the tug to Harley Marine, and therefore we have no contract.” Compl. Ex. J. Mr. Franco replied, “[w]e believe we have a contract, and now have damages.” Compl. Ex. J. According to Plaintiff, Defendant sold the Tugboat to another party shortly after it refused to close on the deal with Plaintiff.

         Plaintiff's Complaint alleges Breach of Contract for Defendant's failure to sell the Tugboat for $3 million, Promissory Fraud for Mr. Starck offering to sell the Tugboat when Mr. Starck had no intention of following through on the offer, and Promissory Estoppel for Plaintiff's reliance on Defendant's offer in sending representatives to inspect the Tugboat.

         Defendant's Motion

         Defendant argues that Plaintiff's Breach of Contract claim fails because there was no $3 million offer on the table for Mr. Franco to accept. The initial $3 million offer was revoked by Mr. Starck's subsequent offer of a charter arrangement with a final purchase price of $3.1 million. If Mr. Franco's purported acceptance was a counteroffer, Defendant argues it would be unreasonable to construe Mr. Starck's statement that he would send a Purchase and Sale contract the next day as an acceptance. There was no meeting of the minds because both parties required a formal writing to be bound; Defendant stated that the contract would not be effectuated until it was signed, and Plaintiff refused to wire money until there was a signed, written contract. Furthermore, Defendant argues that the agreement was indefinite as to the essential terms of price ($3 million vs. $3.1 million), down payment (no down payment vs. $300, 000 vs. $600, 000) and party (Harley Marine Services vs. Franco Marine 1, LLC).

         Defendant also argues that Plaintiff has failed to state a claim for Promissory Fraud because Plaintiff has not adequately and plausibly stated that any promise made by Defendant was false when made. To the extent that Plaintiff argues that the false promise was Mr. Starck's initial offer to sell the Tugboat for $3 million, Defendant claims that this is not an actionable false promise because the offer was rescinded later that day and prior to Plaintiff's purported acceptance. According to Defendant, even if Mr. Starck's subsequent offer was not a revocation, Plaintiff still cannot claim reasonable reliance because the parties stated they would not be bound unless they signed a formal contract. Furthermore, any reliance on Mr. Starck's email statements by Plaintiff would be unreasonable per se because the parties are sophisticated businesses negotiating a multimillion dollar sale. Finally, Defendant argues that reliance on the offer would be unreasonable because Defendant could have withdrawn the offer at any time.

         Lastly, Defendant argues that Plaintiff's Promissory Estoppel claim also fails because it could not have reasonably relied on Mr. Starck's statements for the reasons discussed in the previous paragraph. Furthermore, Defendant argues that Plaintiff was not injured by its reliance because Plaintiff arranged for inspection of the Tugboat without any ...

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