Couple Sought Over $50k in Lawsuit Against Oceangate CEO Months Before Submersible Disappearance

THE LAWSUIT

In February of 2023, Marc and Sharon Hagle, a couple residing in Orange County, Florida, filed a 9-page lawsuit against Oceangate CEO, Richard Stockton Rush. The lawsuit against Oceangate sought damages in excess of $50,000. It stated that Rush is CEO of Argus Expeditions, Ltd doing business as Oceangate Expenditions.

The Hagels stated that they signed a contract with Oceangate on or about November 28, 2016 to participate in an expedition that would involve taking a submersible dive to the wreck of the RMS Titanc. They further stated that the expedition would take place aboard the Cyclops 2, a submersible, which at that time, was not fully ready for the expedition.

They paid a $20,000 “fully refundable” deposit of $10,000 each and were scheduled to make an additional payment of $40,000. This payment was referred to as the “Milestone Payment.” The final payment of $55,129 was due on February 1, 2018.

Once the Hagles believed that the expedition would not be ready by its anticipated date of they began to have concerns. This was especially the case when the excursion was cancelled on multiple occassions. The June excursion was cancelled because the company had not been able to “conduct the full series of tests and dives needed to certify the Titan to the depth necessary to reach the Titanic.” The excursion was then scheduled for July 2019. However, the “contracted support vessel refused to participate.” So, it was cancelled again. The new expected date was 2020.

By this point, the lawsuit states “they had paid for the full Expedition,” which was a total of $210,258.

The Hagles sued for fraudulent inducement, stating specifically that they were told “if Plaintiffs had any questions or concerns as to the integrity of Cyclops 2 and/or the timing of the Expedition if it were to be delayed, they could request, and would receive, a full refund of all monies paid with no questions asked, and (d) Plaintiffs' Deposits were, and any future payments by Plaintiffs would be, held in a dedicated client escrow account separate from his or OceanGate's funds.”

The lawsuit states that “when the Expedition was delayed for multiple years, Plaintiffs requested a refund in accordance with Rush's representations, but their refund requests were refused. Plaintiffs were also informed that their monies were not maintained in a separate escrow account.”

After it was determined that Rush had died in the failed June 2023 excursion, the Hagles dropped their lawsuit.

THE ESCROW ACCOUNT…A FEW THOUGHTS

According to this Investopedia article How Escrow Protects Parties in Financial Transactions by Caroline Banton, “escrow accounts are managed by the escrow agent. The agent releases the assets or funds only upon the fulfillment of predetermined contractual obligations (or upon receiving appropriate instructions). Money, securities, funds, and other assets can all be held in escrow.”

In such an arrangement, the parties will have a written contract that states, for instance, when the funds can be released, which parties have authority to release the funds, what happens if the parties don’t agree, and what happens if a party dies. In this case regarding the Hagles and rush, it appears that Rush may have stated that the funds would be placed in an escrow account, but that didn’t happen. Therefore, it’s important to remember that it’s not enough to state that the funds are going to be held in an escrow account, the transaction should be set up so that the escrow agent receives the funds, not the other party.

This is an important distinction to remember.

It appears that the funds were given to Rush and not the escrow agent. Had there been a written agreement and the funds been entrusted with an escrow agent, it would have been more likely that the Hagles would have had an easier time having their funds returned, depending on how the escrow agreement was written.