HMY Loses 2 Million Dollar Lawsuit

^^THIS^^

Every dealer/broker I've dealt with (quietly) sought to seatrial in an area that shows the boat at its best. Calm water where they can show how fast it goes. I always caution my clients to push for the roughest conditions possible even if that means just hitting its own wake at bad angles. To sea trial a 66 in Lake Worth is rediculous and a waste of everyone's time.

"To sea trial a 66 in Lake Worth is rediculous and a waste of everyone's time"

esepcialy since lake worth is basically just off the inlet... most of it is pretty shallow outside the ICW, cant' imagine not going out the inlet on sea trial.

The best advice I've heard in a long time came from another industry professional today when we were discussing this suprising court decission. He told me he always advises clients to ask the selling broker for three surveyor recommendations and then to NOT use any of them!

I would love to give him credit for that as he deserves it but I don't want to cause problems as he runs his own marine consulting firm and I have a lot of respect for his ethics.

I was also suprised when we researched the builder and discovered the boat wasn't a shabbily built wooden custom job like we expected to find but was in fact a solid glass hull built in ex-Buddy Davis molds with Buddy's ex-foreman supervising. Several of these hulls have been afloat for some time with no reported problems.

Inlet Boatworks was founded by a gentleman I knew personally and he always was someone I respected for his work ethics and personal standards. He so loved boating and boatbuilding he sold his very successful business and started this company to live "the dream" that got all of us here in the first place. Unfortunately, and probably for several other reasons, it didn't work out for him and he took his own life before he completed hull number two. It was and is a terrible loss to our industry when someone who has all the right intentions fails.

While any Naval architect or surveyor could pick apart just about any boat, no matter the construction, there are a lot of details missing in what has been released so far. I'm sure there will be a lot more questions and answers forthcoming in the appeal process.

from HMY's yacht pics
Hopefully this link does not violate the polices here. If it does feel free to delete this post.
Sure is a good looking boat.

http://www.yachtpics.com/photos_page/66_inlet_boat_works_double_billed.pdf

Very nice looking boat in pics....... does anyone know why it was deemed "unseaworthy"? We also do prepurchase survey's, and "most" are not willing to pay for a thorough inspection. Usually by the time we get called to inspect the boat, the new potential owner has already made up thier mind that they want this boat, unless we find something really wrong with the boat, they usually rationalize that it's not a deal breaker. Of course we are talking much smaller, ie less expensive boats. Never the less I've done it myself, if I want something, I can see it through rose colored classes, as they say......... to bad we don't know someone involved with the case, to get some details that might shed some light on how the verdict came about.

To the newcomer the purchase of a used boat is full disclaimers. Sellers / brokers state "sales are as-is" up to buyer to have vessal inspected. Surveyors also have disclaimer as to only an opinion, not responsible for undiscovered faults. However survey required for insurance. Even the thought of having to consider a pre-purchase survey a brand new "TDMM YACHT" is scary. What can't they build them right?!!! I am not trying to slam the industry. However to someone who is considering their first large boat; the "RISK" involved can be overwelming. The lack of acceptance of responsibilty by the seller,broker, and surveyor can make one wonder. Insurance is it's own mess. Whether this case by itself will change things, I doubt it. In my experience in simaliar type transactions I find more people more concerned about their best interest than mine. Intregrity is a cool thing, it just can be hard to find.

[http://www.joffelaw.com/caselaw/2009/05/08/carolina-acquisition-llc-vs-double-billed-llc-case-no-07-61738-civ-zloch-may-8-2009/ This whole deal was on the shady side.

Any of us can tear almost any boat apart, no matter how well built, this was simply a case of the defendants getting out lawyered. The plaintiffs lawyer is a seasoned professional while the defendants lawyers leave a LOT to be desired to put it nicely.

Angles

The purchaser apparently, is a very wealthy and astute person, from what I have read elswhere. His resources have no doubt enabled him to use the very best legal minds and angles on this, as probably was the case for the broker and his employer.
BetNo doubt this will continue to appeal and more legal arguments.
As is too often the case, the person with the deepest pockets will ultimately prevail. Not neccasarily the RIGHT judgement, but it will take the path and sit on the lap of the one with the least fight left...read resources.
BTW, The previous owner, apparently, settled out of court. If that is the case, it says a lot.
Point is: pity the boat buyer WITHOUT the ability to fight, whether lack of funds, time, or place...as in another country. Scares the heck out of potential boat buyers looking on.

Are you saying that lawyers are going to get richer and that who wins and loses will be more the result of money and power than justice? I'm shocked.

Hi,

I read the info at the link posted here http://www.yachtforums.com/forums/103387-post28.html and have to wonder why the case was allowed to proceed when the Plaintiff got told to re submit their evidence so many times because it was presented incorrectly.

If there has been a precedent set where the clause "As is Where is" is now no longer accepted as being a means of negating any future claims to warranty etc then the whole sales world is due for a massive shake up.

I would also hazard a guess that Insurance Fraud would rise as those who own boats that are not 100% perfect ( show me one that is) reduce the risk of getting sued by a dis satisfied Owner and sink/burn/destroy their boats instead of risking a long costly legal jousting match.

I do agree that if the broker deliberately mislead the client with the use of core samples off another boat then he/she has a case to answer, as to the wording of the advert - Take a look in any magazine and you will see the same fluff and BS alongside many boats and other things for sale.

I think the judge was looking for a very specific filing intentionally to avoid a wide ranging precedent. Still it should have a very chilling effect on puffing. Wouldn't worry too much about insurance fraud though as the insurance companies have been getting very serious about it in recent years and being sued still beats 5 or 10 years in prison plus legal costs. It will probably have an effect on sales and selling practices though. We've all known of people who negotiate a fair deal and then try to make it better for themselves afterward by threatening the cost of litigation or such. They look on the words ethical and foolish as interchangeable. Their lot did just get a bit easier.

How about the looking at it as the other 99 percent of buyers just got a little bit more protection against the small minority of brokers who have been getting away with this sort of thing for years.

Regardless of what you might think about the buyer and his legal resources, the guy was sold a lemon because he didn't know any better and his broker didn't care as long as the deal closed. The surveyor only saw what he could see and his report probably stated clearly that the sea trial was conducted in sheltered waters at low speeds. The very opposite of conditions that the boat was advertised as capable. If all the owner did was run up and down the ICW then he would probably have never had a problem, but that is not what he bought the boat for or what the broker claimed it was fit for.

Why all the energy to blame the victim here? As one who often sees the costs of less than ethical sales of less than advertised boats, I think this case might bring some sunlight into this aspect of the industry and that is good for all of us.

Briefly reading the federal law opinions link, which has some of the allegations listed, it sounds like the boat was built and sold under some very questionable circumstances. The boat was sold and the proceeds from the sale were loaned back to the buyer for a real estate investment. Which would imply that the real estate investment was too shaky to get financed.

Since the buyers never intended to use the boat it may not have been built properly. Only well enough to get a loan but not well enough to operate - at least outside the ICW.

If these were the circumstances and the broker was aware of them then the case makes sense. They built a mock-up boat to get the money from the bank and later tried to sell it as a real boat. The broker was aware of this at the time of sale. On the other hand a surveyor would not be able to tell that the boat was not built to the designer's specifications. Only the condition of the boat. An offshore trial may have revealed these problems. Again if the broker dissuaded the buyer from an offshore trial this would indicate knowledge of the problem.

A naval architect could look at the boat's construction and determine that there just wasn't enough structure for that size boat.

I'd like to see the complete filing as the opinion mentioned only discusses the faults in the plaintiff's filing.

If those photos were of the actual boat, then it certainly does not seem like they built a "mock up" of a boat. They may have err'd horribly when building the hull and fixing that might cost incredible money and still never be quite right. So, the boat may have no more than salvage value. As far as having no real sea trial?? Seems odd that the buyer wouldn't have been more careful in this regard.

I purchased my Bertram 54 after a quick run in the bay and a complete marine survey and engine survey by separate parties. One of the reasons I didn't feel a need to go for a big seas ocean trial is because I was buying a proven design with a long track record of success during those years. I also looked the boat over carefully myself but I am not qualified to find many issues. I was also NOT plunking down $2.5 million! Which raises the stakes dramatically. Also, the seller financed the boat for me which further comforted me that they had some "skin in the game".

I suppose that if my boat turned out to be a hurricane damaged, sunken rebuild and that had not been disclosed to me, I might have been interested in suing everybody involved. Broker, surveyor, previous owner. Fortunately, I have never had to sue anybody for anything.

I would like to know more about what was actually wrong with the subject boat of the lawsuit and what is going to come of it now?

Mike

The Boat in Question was made by Inlet Boat Works in Murrells Inlet S.C. and they are out of bussiness. The hull was two peice, joined at the centerline.
This will obviously be going back to court on appeal.
What ever is wrong with this boat it should be able to be repaired.

Slightly off topic but, what representation are made in the listing contract between the seller and the broker? What is the usual commission fee? It didn't sound like they made a "mock" boat. The builder gave the boat to the lender to settle a debt. Then lender made it a part of the "loan package"

I read somewhere that a cynic is a romantic who went through the school of life. I think we shared the same classroom!

Not so much bashing the victim as not jumping to attack on either party when there seems to be a LOT more to the story than a simple misrepresentation. For example: How was a core sample presented? I remember when I was looking at a custom built boat and wanted to know how it was built, the salesman presented me with a core sample that he used to show clients that illustrated the method, but not necessarily a specific sample of that boat. Not saying this was the case, but we do not know. My point in regards to the angles was just that, muddy the waters using the best minds and come in on different angles that best suit your purpose. Sure you have met that kind in your life, as have many of us...unfortunately.