Defective Yacht Litigation
Yachts are complex vessels with numerous highly technical and sophisticated systems that can fail and endanger both lives and property. Manufacturers and sellers should also honorably stand by their warranty and other obligations to quickly address and correct problems.
Do You Have a Defective Yacht, a Lemon on the High Seas?Regardless whether a yacht is intended for pleasure or commercial use (such as occasional charters), yacht manufacturers and sellers need to be cognizant of the many ways in which things can go awry in the construction, outfitting, sale and servicing of yachts.
Many areas of yacht acquisition may give rise to seller or manufacturer legal liability, as well as potential legal fee shifting to the defendant. Careful review of the governing factual and legal situation (including assessment of the applicable law for forum selection considerations) are essential components of making a sufficiently compelling pre-litigation claim and enhancing the prospects for a speedy, efficient and fair resolution of claims at minimal economic outlay.
A Case StudyIn the summer of 2015, Stefan Jouret led a team of lawyers that won a $1,063,071 judgment against a major yacht manufacturer following a two-week federal jury trial in the United States District Court for the District of Massachusetts. The case involved a multi-million dollar luxury yacht owned by Stefan*s client.
Winning the case required navigating a complex litigation path that included multiple parties from different states, numerous expert witnesses, many depositions and substantial pre- and post-trial motion practice. At trial, Stefan*s team used the latest in computerized graphics technology and employed high-tech trial consultants to help tell the client*s story in a compelling way.
Potentially Actionable AreasDisconnects between seller/manufacturer promises and actual performance of the vessel in marine conditions.
Warranties, express and implied (including warranties of merchantability and fitness for a particular purpose), and state and federal statutes barring unfair or deceptive acts or practices, which may allow for multiple damages and legal fee-shifting to the defendant.
Inducements and promises about performance or characteristics such as construction quality or servicing, including re-sale value, workmanship, construction, materials, seaworthiness, outfitting, rigging and commissioning to industry standards, timeliness of the commissioning process, use of the vessel for extended ocean or blue-water cruising, or ease of handling.
Seller performance or vessel characteristic promises can include those made at boat shows, other sales-oriented events or in dunning communications, promotional or inducement literature.
Inadequate oversight and coordination between builder and suppliers.
Defective or otherwise deficient design in any area of the yacht, which can, of course, cover every part from stem to stern, including:
Mast and boom systems, including hydraulically-operated in*boom roller furling systems, vangs, rigging, spars, stays, lines, sails, sail feeders, fabricated or machined parts, componentry and fittings (gooseneck, wrap plates clevis, wrap plate, bolted joints and fasteners of all types), pawl assemblies, rachets and many other assemblies that can experience failure.
Propulsion systems, including issues related to thrust-making capability and efficiency, power reserve margins for heavy weather scenarios, gearbox and propeller mismatches, gearbox reduction ratio problems, propeller selection, propeller cavitation and loss of thrust-making efficiency. Other issues include assessments about whether a system is operating in an overloaded state, with a reduced power margin against conditions of added drag (such as running in heavy weather).
Electronics and hydraulic systems, mechanical and electromechanical components of all types.
Claims Assessment QuestionsWhether commissioning, test sailing and shakedown of the vessel were conducted to industry standards; whether any departure from industry standards contributed to subsequent breakdown and failures; whether the commissioning process was understaffed and abbreviated.
Whether the seller/manufacturer was short on technical staff (including naval architects and professional engineers), whether seller/manufacturer lacked sufficient technical expertise. Whether the project management was suitable for the vessel at issue.
Whether the yacht itself was poorly designed and under-specified from an engineering perspective. Relevant here is a close analysis of design specifications, design intent, design coordination with manufacturing and outfitting, and the oversight and management process generally.
Whether there was effective communication between manufacturer, subcontractors, suppliers (sometimes quite numerous) and riggers and whether failures of process, plan development or oversight contributed to errors or omissions giving rise to claims for damages. A lack of proactive project management can lead to seller/manufacturer liability.
Whether issues giving rise to failures or warranty claims could have been addressed prior to delivery or at commissioning and during sea trials, test sails, and the *shakedown* process generally if adequate oversight had been in place.
Other Claims-related InquiriesWhen you're contemplating litigation, you must be prepared to play chess, not checkers. Among the considerations you and your counsel must undertake are the following:
Analyzing forum selection questions, choice of law and governing contractual issues. Anticipating defense arguments is a key part of this. These may include arguments that owners or their crew caused or contributed to failures through operator error or failure to maintain proper maintenance, or that weather or other force majeure events on the high seas or elsewhere operate to terminate or reduce seller, manufacturer or supplier liability.
Determining whether one or more experts should be retained (and if so, which ones) in the pre-claim and demand phases in order to articulate the most persuasive arguments on liability and damages issues with the goal of obtaining a fast and fair settlement.
Assessing what damages may be recoverable, including the following categories of potential damages:
Lost profits, crew salaries and consequential damages including vessel downtime for repairs, needless travel, lost opportunities to enjoy the vessel or to earn chartering income to defray maintenance costs, and loss of practical use of the vessel for periods of time for pleasure or charter use.
Lost commercial opportunities and reduced confidence by prospective charters or brokers, owners and crews in the safe operation of the yacht.
Reimbursement of servicing costs paid by owners to third party services, including offshore providers in remote locations.
An owners and crew*s lost time spent addressing required repairs and remedial design improvements, as well as out-of-pocket expenses for any such repairs.
Damages to the vessel itself, or costs the owner incurred, such as unreimbursed expense to replace damaged and insufficiently engineered equipment.
General Litigation ConsiderationsThe litigation process typically begins with a pre-claim investigation and preparation and service of any appropriate demand letters that may be statutory prerequisites to recovery for unfair or deceptive acts or practices. These steps include assessment of potential litigation venues and commencement of suit if the matter fails to resolve on acceptable terms.
Among the earliest steps is to carefully preserve and gather evidence, including documentary, photographic and video evidence. Email communications are often essential to proving claims and disproving counterclaims in litigation. Parties frequently make admissions or statements in such communications that can be used later. These include many of the defendant*s relevant emails and other communications (voicemails, text, instant messaging systems and the like) with third parties.
Careful and strategic planning must be done carefully and early in the process. This includes forming a litigation plan that sets forth tactical measures that can help achieve the objective. Litigation resembles a military campaign in important respects. A litigator needs to be prepared to try the case and must prepare early in the process. Organization and review of documentation is essential for efficient claim analysis and presentation of evidence at the pre-claim and subsequent claim and (if necessary) litigation process. Effective marshaling of documentary evidence is essential and can make the difference in the success or failure of claims. Acting quickly to preserve claims that may become time-barred is another key early consideration.
Another area that must be assessed is the potential for multiparty claims, cross-claims, counterclaims by and against target defendants.
Selection of the most compelling experts to aid resolution at the demand, litigation or mediation stage is also key to the successful resolution of legal disputes. This typically includes both liability and damages experts and using animation, graphics and visual presentation specialists present evidence in a compelling and understandable way to a lay jury and judge. In many cases, telling a story through easily understood visual timelines underscores the plaintiff*s theme of the case and helps to cement the plaintiff*s version of the factual narrative, sequence and timing of key events underlying and supporting the claims.