Free Trial Brief - District Court of California - California

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James P. Walsh, CSB. No. 184620 Gwen Fanger, CSB No. 191161 DAVIS WRIGHT TREMAINE LLP 505 Montgomery Street, Suite 800 San Francisco, California 94111-3611 Telephone: (415) 276-6500 Facsimile: (415) 276-6599 [email protected] Attorneys for Defendants and Claimant BARRY COHEN, CHRIS COHEN (aka CHRISTENE COHEN), the F/V POINT LOMA and Claimant, F/V POINT LOMA Fishing Company, Inc.

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION DEL MAR SEAFOODS, INC., Plaintiff, v. BARRY COHEN, CHRIS COHEN (aka CHRISTENE COHEN), in personam and, F/V POINT LOMA, Official Number 515298, a 1968 steel-hulled, 126-gross ton, 70.8 foot long fishing vessel, her engines, tackle, furniture apparel, etc., in rem, and Does 1-10, Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) No. C-07-2952-WHA DEFENDANTS' TRIAL BRIEF IN RESPONSE TO PLAINTIFF'S BRIEF ON THE APPLICATION OF THE CALIFORNIA STATUTE OF FRAUDS TO MARITIME CONTRACTS

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Trial Date: May 20, 2008 Time: 7:30 a.m. Place: Courtroom 9, 19th Floor

Defendants, Barry Cohen, Chris Cohen, F/V Point Loma, in rem, and Counterclaimant,

23 F/V Point Loma Fishing Company, Inc. (collectively, "Defendants"), submit this Trial Brief in 24 Response to Plaintiff's Trial Brief on the Application of Statue of Frauds to Maritime Contracts. 25 26 I. Introduction

Defendants contend that California's statute of frauds applies to any alleged oral promise

27 by Mr. Cohen to pay certain accounts receivables of his sons, Michael and Leonard Cohen, arising 28 out of the Avila Beach Joint Venture. Accordingly, any alleged promise pay the debts of his sons
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1 is invalid without a written agreement. Plaintiff contends that California law does not apply 2 because the Note and Mortgage are maritime contracts and governed by admiralty law. However, 3 as explained below, there is nothing inherently maritime about a promise to pay money, 4 particularly where the alleged debt itself does not arise in connection with the boat Mortgage, and 5 therefore local, California law applies. 6 7 II. Applicable Law

Contrary to Plaintiff's argument, the Court may apply California contract law to the

8 interpretation of any alleged agreement by Mr. Cohen to pay the debts of his sons. Defendants 9 agree that the Mortgage on the F/V Point Loma is a maritime contract that provides this Court 10 with admiralty jurisdiction, based on the Federal Ship Mortgage Act. The Thomas Barlum, 293

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11 U.S. 21, 33 (1934) (prior to enactment of Ship Mortgage Act 1920, the admiralty had no 12 jurisdiction of a suit to foreclose a mortgage on a ship); 46 U.S.C. §§ 31322, 31325, and 31329; 13 Schoenbaum, Admiralty and Maritime Law, 4th Ed., Vol. 1, § 3-10, 130-139 (2007). Generally 14 speaking, admiralty jurisdiction requires the application of substantive admiralty law. 15 Schoenbaum, Admiralty and Maritime Law, 4th Ed., Vol. 1, § 4-1, 157 (2007). However, one of 16 the sources of admiralty law is state law, "insofar as appropriate in the admiralty context." Id., at 17 158. Because admiralty law is not all-encompassing, this Court may fashion a rule by looking to 18 various appropriate sources, including state statutory law and common law which is then 19 borrowed and applied as the applicable federal rule. See generally, Schoenbaum, Admiralty and 20 Maritime Law, 4th Ed., Vol. 1, §4-2, 164-166 (excerpt attached as Appendix A). 21 Here, the application of state law is appropriate because there is nothing especially

22 maritime about a promissory note, although it contains the obligations Plaintiff seeks to enforce. 23 Plaintiff's reliance on Norfolk Southern Railway Co. v. James Kirby, Pty. Ltd., 543 U.S. 14 (2004) 24 is distinguishable. In that case, the Court held that bills of lading for transportation of cargo across 25 the ocean from Australia to the United States were maritime contracts because "their primary 26 objective is to accomplish the transportation of goods by sea...." Id. at 24. In contrast, the 27 primary objective of the Note in this case is to simply secure the repayment of a loan. Moreover, 28 the alleged agreement at issue is Mr. Cohen's promise to pay the debts of his sons. The repayment
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1 of money by Mr. Cohen raises no uniformity issues that could otherwise arise under true maritime 2 contracts that primarily involve maritime services or those that could have an effect on maritime 3 commerce. See id. at 25 ("[T]he] fundamental interest giving rise to maritime jurisdiction is the 4 `protection of maritime commerce.'") 5 Here, there is no maritime interest to protect where the repayment of an alleged, locally

6 incurred debt is the subject of the agreement. The debts at issue are accounts receivable incurred 7 by Mr. Cohen's sons in connection with the Avila Beach Joint Venture (a California business 8 venture). Even if the Note is deemed a "maritime contract," local concerns predominate with 9 respect to the construction and purported amendment of the Note; and the uniformity principle is 10 not critical as to these issues. See e.g., Ham Marine, Inc. v. Dresser Industries, Inc., 72 F.3d 454,

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11 459 (5th Cir. 1995) (to the extent not inconsistent with admiralty principles, state contract law may 12 be applied to maritime contracts). 13 Union Fish Co. v. Erickson is also distinguishable. In Union Fish Co., the Court held that

14 the California statute of frauds did not apply to an oral contract to serve as a master of a vessel. 15 248 U.S. 308, 311 (1919). The Court explained that the California statute of frauds did not apply 16 because the contract of the master was of a "maritime character" because it was for "services to be 17 performed principally on the sea." Id. at 312. The Court found that maritime law applied in this 18 specific instance because "[i]n entering into [the master contract] the parties contemplated no 19 services in California. They were making an engagement for services of the master of the vessel, 20 the duties to be performed in the waters of Alaska, mainly upon the sea." Id. at 313. In contrast, 21 the alleged promise to pay the debts of Mr. Cohen's sons does not involve any maritime interests 22 or services that necessitate the application of maritime law to address concerns of uniformity. The 23 application of local contract law to Mr. Cohen's alleged repayment obligations would not 24 implicate any maritime concerns. Thus, the repayment of debts is local in nature and the Court 25 may therefore borrow from state law and apply California's statute of frauds. 26 27 28 III. Statute of Frauds

The agreement at issue is the alleged promise by Mr. Cohen to pay the debts of his sons. As Defendants explained in their Trial Brief, there is no written agreement between Mr. Cohen
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1 and Del Mar to pay the debts of his sons and therefore the statute of fraud applies. Cal. Civ. Code 2 1624(a)(2). Mr. Cohen's alleged agreement to include his sons' accounts receivable under the 3 Note is covered by the statute of frauds and not enforceable without a writing where he allegedly 4 agreed to pay the debts on his sons' behalf and did not assume the debt as a new, principal debtor. 5 See e.g., Parrish v. Greco (1953) 118 Cal. App. 2d 556, 561. Even if Mr. Cohen promised to be 6 responsible for the accounts receivable, such a promise is nevertheless an oral promise he made as 7 a father to be responsible for existing debts of his sons. Mr. Cohen cannot be characterized as a 8 new, principal debtor for these amounts particularly because the Cohens never received any sort of 9 direct benefit from such an agreement. Thus, the statute of frauds applies and any alleged 10 agreement to pay the debts of his sons or otherwise include their debts under the Note is invalid

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11 without a written agreement. 12 Moreover, any such oral agreement has never been executed. Plaintiff argues that Mr.

13 Cohen's apparent obligation to pay the debts of his sons is memorialized in the spreadsheet 14 prepared by Mr. Roggio (Trial Ex. 37) and that his subsequent payments after receipt of the 15 spreadsheet served to execute the agreement to pay his sons' debts. The mere fact that Mr. Cohen 16 made payments to Plaintiff after receipt of the spreadsheet does not support a finding that any 17 alleged oral agreement to modify the terms of the Note and include the debts of his sons. 18 Importantly, Mr. Cohen believed he was making a payment on the Note and not on any other 19 unsecured debts he might owe. In addition, Mr. Cohen did not acknowledge and accept the 20 spreadsheet as a contract and he in fact contends that he never agreed to include the amounts in the 21 spreadsheet under the Note. Accordingly, there was no effective oral modification of the Note by 22 execution under Cal. Civ. Code 1698. 23 24 IV. Conclusion

The issues with respect to the payment of debts incurred by Mr. Cohen's sons are local in

25 nature and do not raise any issues of uniformity that would preclude the application of California 26 law. There, the Court may borrow from California law and apply the statute of frauds which 27 invalidates any alleged oral promise made by Mr. Cohen to pay or include the debts of his sons 28 under the Note absent a writing.
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DATED this 22nd day of May, 2008. Respectfully submitted, DAVIS WRIGHT TREMAINE LLP By: /s/ Gwen Fanger James P. Walsh Gwen Fanger Attorneys for Defendants BARRY COHEN, CHRIS COHEN (aka CHRISTENE COHEN), the F/V POINT LOMA and Claimant, F/V POINT LOMA FISHING COMPANY, INC

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