HMY Loses 2 Million Dollar Lawsuit

I definitely consider myself a romantic and my wife is always calling me a cynic (Just cause you're paranoid doesn't mean they're not out to get you). I like your definition. I also agree about how core samples are generally used as examples of the process, not the individual boat and that there is much more wheeling and dealing involved in this case than the final judgement shows.
Cynic

"two piece" hull, "joined at the centerline" ??

Sounds more like a common misconception when a hull is made from two moulds, "joined at the centerline".

One of the allegations is that the boat was not built to the designers specifications. I can't tell from the opinion if that means it doesn't have the proper scantlings, hull thickness, etc. That's what I mean by mock-up. If the hull structure is lacking it may not be repairable for a reasonable cost.
We've seen this happen occasionally in real estate. Usually in renovation projects. Also usually a contractor and a developer in collusion. Contractor will bill for replacing all the floor joists. Then covers them up. Developer gets draw against construction loan to pay contractor. Problem is the joists weren't replaced and the developer gets a kickback from the contractor. Nobody finds out until years later when the floor collapses. And all the companies are out of business. Now if the real estate broker selling the place knows the joists weren't replaced as required...

The allegations indicate that the boat was completed and sold for the sole purpose of loaning most of the money back to the buyer. That the boat was not properly built and that the broker knew this.

I too am blown away the surveyor slipped away without any liability at all. Isnt it the surveyor we all put our trust into to find issues that certainly had to be present on this boat prior to taking delivery. Due diligence is our resposibility but certainly some buyers wouldnt know an early stage of delamination from simple cloth transferring and need these certified marine surveyors to look out for our interest. I was in contract on a 54 hatteras that had rudder post bearing issues that I had to find where the surveyor completely missed it so I know surveyors arent perfect but judging from the problems this boat had..............come on! He should have shared considerably in the liability. If HMY recommended him too...............WOW!

Just a small something from "the opposite side", guys. I can understand how it may be natural from maritime professionals to question the judgement at hand and keep referring to "as is" and "buyer beware", but consider this. In an average boat sale:
- Previous owner will rid of the boat he wants to sell sooner or later, 15% plus off some arbitrary "fair" or 15% minus.
- The broker will get his comission (10% tops, right?) or not.
- The surveyer will have his pay at any rate (question is, "which exactly surveyer"

- And the buyer will spend 100% of boat cost or not, and then it's either a fine buoy-proof boat or not, so he's up to any amount of loss up to 100%.

Now, your typical liabilities are, like
- The owner sells the boat in "as is" condition, e.g. none whatsoever.
- The broker ensures... provides... discloses... and "as is", too.
- The surveyer is presenting his "opinion" and, again, guarantees nothing.

- And the buyer? Well, the buyer should beware.

With all due respect to members of this community, this is not exactly a very healthy or client-oriented situation, is it? I guess some of you may personally know people who would have otherwise be among boat owners...

Personally, I'm still uncomfortable with the surveyor walking away from this free & clear. I understand the theory that the owner must do his due dilligence, but let's face it, most owners don't have a clue and those that do are still looking through rose colored specticles. The previous owner and the broker are trying to get rid of the boat. They're not looking for reasons to kill the sale. It's the surveyor that the new owner is counting on.

And I'll quietly jump back in this thread [quickly] to say, I couldn't agree more.
I'd love to read each parties respective opening and closing arguments.

The surveyor can only report what he sees. If the buyer had asked the survey to be conducted in open water at high speeds the surveyor might have seen something different. Do brokers or sellers allow the surveyor to pick and choose the location and conditions for sea trials? Are buyers willing to pay for a naval architect to accompany the surveyor on a sea trial conducted at the far corner of the vessel's operational envelope? How many buyers want to wait until weather matches the boat's limits? How many sellers want to let their boat go out on a seatrial in those conditions?

I am not blindly defending the plastic hammer crowd but they are severely limited by sellers, brokers, and buyers in what they can look at and ask to observe. You get what you pay for in a small boat survey and the paragraphs of exclusions and exceptions explain all of that very clearly.

The transcript of the trial is available now at the Pacer terminal at the courthouse in Fort Lauderdale. It will be available online soon, get a Pacer account and your love will be requited.

Yet the surveyor remains the buyers best and possibly only protection. A bit frightening. Maybe it's time for mandatory disclosure statements.

I got a clear understanding on how "the surveyor walked away from this free & clear" from back the time I've had a chance to examine several surveyer's typical contracts. ImHo, there exist a severe industry-wise misconception, or should I say misrepresentation (because ultimately it's buyer's money paying for all that) of a surveyer's work. By the way people talk about it and deals are structured, it is implied heavily that survey is somehow an objective, decisive description of vessel's condition. However, if you look at "the fine print" in papers, it actually is not. All the contracts I've seen only talked about surveyer presenting his most qualified opinion, even that only "given the circumstances and conditions of the survey", and not an inch more.

Now, I can see reasons for it (obviously, attaching warranties to survey result will not only raise the price significantly, it will also unconvinience the typical goings by far, because no surveyer will agree to work under any but ideal conditions. Besides, I've got enough common sense to realise just how hard it is to, for example, responsibly judge condition of fiberglass/core without extensive invasive analysis). I can also see many buyers being a little dumber/less qualified then they should, hasty/lazy, cheapass, or combination of the above.

But it is their money that keeps the industry afloat, and there are only so much people interested/financed enough to ever consider. The way it works now, people may get fooled once, but the industry problem is that they won't like being fooled again and one good way to avoid it is to abstain from participating, and bringing your money to the table, completely. So, less money on the table meaning... well, little good.

I don't know what an ideal solution could be (you're welcome to hire me to figure out, tho ).
But looking at other industries, normally, if you have a seller, and you bring your expert with you, and you end up with piece of junk, the majority of responsibility will be on the seller. You can always sue your expert, sure, but ultimately it's seller's duty to sell you either an adequate good or warn you beforehand throughly that the good is in some ways unadequate. In this sense, the outcome of lawsuit in question looks quite reasonable and coherent to me.

Only, they are not As I said, they are presented as if they are, but actually, I seriously doubt you will find a surveyer who signs a warranty of his survey without the "disclaimer" part so convoluted that it's impossible to hold him liable for anything in court. Neither me nor my collegue weren't able to. So there is no protection at all.

E.g. "the goodwill and good name of a surveyer remains the buyer's only hope of being impartially and adequately informed. There is no protection beyond that whatsoever."

Maybe buyers need insist on disclosure documents.

i said many years ago........if a buyer walked down the dock at 4;30 with a wheelbarrow full of ice and beer w/ a bottle of jack on top,he would be able to get more honest info about a boat,than going to a broker or surveyor.....unfortunately , there are not many people on the dock nowadays...

In relation to the surveyor, perhaps he flipped on the broker/brokerage house in order to gain not being held liable by the boat buyer. In order not to pass on hearsay I will leave this as a theory.

Ten years ago we sold a house in Port Jeff, a great big old restored Italianate Victorian high upon the bluff above the yacht club. All the buyers were willing to pay for was a termite inspection, not a full home inspection. They didn't want to ask questions, and didn't want to listen to gentle suggestions we had regarding what would not be in their best interest to change.

Long story short, the ancient rotting windows in the tower (the last unrestored part of the house) became a significant problem after they decided to take the insulated trap door out of the top of the stairwell, in order to "get more light" despite repeated pre-sale statements that this would be unwise at best, and a foolhardy money pit in all likelihood.

The house's oil consumption went up about 500% as the heat went through the roof, quite literally. They chose to go with a new oil service whose first delivery driver to the house then proceeded to fill the basement with oil rather than the outside tanks that were 6' to his right, painted green to blend in with the foundation. The old fill that went to nowhere was painted bright red with an X above it.

We got sued by the new owners of the house because they claimed we had misrepresented the house, in terms of cost to own and operate. They claimed that we had failed to replace windows which now was costing them an arm and a leg in fuel which led to the spill in the basement, and they then tried to claim that there must have been a prior undisclosed spill (there was none). They sued everyone and everything they could - their attorney, our attorney, us, and the inspector...

The inspector's defense? Only hired to look for termites. The suit against him was dismissed before the first court date as soon as he submitted his inspection contract to the filing clerk. We eventually settled for a nominal amount just to make the nuisance go away, on the advice of our attorney and former insurer that litigation would be more costly.

Was the surveyor of this boat "only hired to look for termites?"

It would be interesting to find out the details of his trip home where he noticed the boat was coming apart.......or felt like it was.. perhaps he ran into 40 foot sea.s @ 10 seconds with a Northerly @ 50 kts. Somehow, I doubt it was all that bad but who knows. My thinking is the sea trial parameters were simply improper or everyone on board was so busy drinking and celebrating that they forgot to truly feel the boat ride. Hard to imagine as the extent of the repairs dictate some serious defects that most certainly would have been noticed to some degree had someone been looking. Or perhaps the surveyor did state the defects to some degree but the owner accepted them or overlooked them. Speculation at this point. Man......we need the facts!

Agree, plus today we can "lurk" on Yacht Forums and in many ways get the same chat about particular boats. Certainly the ugly sides of certain brands can be found in the threads.

First let me preface that I am not a lawyer so my legal suppositions may be faulty. When I look at what is written here, I believe this is a fairly straight forward case of contract law. The broker has the due diligence to represent the boat accurately because they are responsible for the claims they make about it. The buyer has the due diligence to ensure that they can provide renumeration for the boat within the time frames established by the contract. The buyer has no legal responsibility to verify the claims of the broker/seller. It all comes down to very simple concept, if either party lies/breaks the contract (i.e. the vessel is not as described or the money not delivered timely) then the other can sue for breach of contract. In the real world, we as buyers or whatever type of contract verify the claims of the other party to protect ourselves from having to go to litigation not to meet any requirements of litigation.