Can I Sue the Seller of a Boat with Hull Delamination for Fraud?

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Q: Earlier this year, I bought a sailing yacht that was advertised and rigged for offshore cruising. Six months after I bought it, some of the topside paint started to peel off, and it now appears that the boat has a serious fiberglass delamination problem that will cost thousands of dollars to repair. I have since learned that the previous owner had been under contract to sell the boat several months before I bought it, and the deal fell through because the buyer’s surveyor had identified the delamination problem. I also had the boat surveyed, but I believe that my surveyor missed the problem because it was concealed by the seller. The seller and the broker repeatedly stated that the boat was in seaworthy condition, but a delaminated hull is obviously not seaworthy for a bluewater cruising boat. Can I pursue legal action against the seller and broker for fraud?

A: The short answer to this question, as with most legal questions, is “it depends.” In this case, it depends mostly on whether the buyer can establish that the seller took substantial steps to conceal the problem for the sole purpose of selling the boat to an unsuspecting buyer, and whether the broker knew of the concealment.
We addressed the issue of seller disclosures in a previous installment of this column (“Ask a Maritime Attorney — Dealing with Disclosures,” The Log, Nov. 30, 2006). In that column, we pointed out that the law in California requiring various disclosures to be made in real estate transactions does not extend to boat sales. As such, it will be extremely difficult to hold a seller liable if he or she remains silent regarding any known faults with the vessel.

A broker may be held under a different standard. For example, the scenario described by our reader involved a prior transaction, where the prospective buyer rejected the vessel when the delamination problem was discovered. If our reader was represented by a broker who was involved in the prior transaction or who otherwise knew of the problem, that broker may be found liable for breaching the fiduciary duty owed by every broker to a client.

For several reasons, the representation by the broker and seller that the boat was “seaworthy” will probably not be deemed a fraudulent misrepresentation of the boat’s condition.

First, a person is liable for a fraudulent misrepresentation only if the victim of the fraud reasonably relied upon the false statement. Our reader indicated that the boat was inspected by his own surveyor, who apparently missed the delamination problem.

Leaving aside the question of why the surveyor failed to discover the problem, it is never reasonable for a buyer’s expert to rely upon the seller’s representations. The job of a buyer’s inspector is to perform an independent inspection, and any representations made by the seller should be disregarded during the inspection process.

Second, saying that a boat is “seaworthy” is like a used car salesman referring to a clunker as being “cherry” or saying it’s in “great condition.” In some contexts, such as a maritime personal injury claim, “seaworthiness” is a legal term that will be a significant factor in the case. However, in boat sales, it is a subjective term that has no particular legal significance. It’s known in the ad industry as “puffing.”

This is different than, for example, misrepresenting the length of the boat or the horsepower of the engine, which are objective facts. “Puffing” is subjective and it is not something you can hold someone liable for.

Finally, we should say something about our reader’s own surveyor. Our reader believes that his own surveyor missed the delamination because the problem was concealed by the seller. To prove this, the buyer would need to prove that work was performed on the boat after the problem was discovered by the previous buyer’s surveyor.

He would then need to establish that the work was not a legitimate repair, and that the only purpose for that work was to conceal the delamination problem. And, he would need to prove that the concealment was so effective that a qualified surveyor could not have discovered the underlying problem. A tall order indeed.

We have worked on a lot of “rotten boat” disputes over the years, and nobody ever wins these types of battles. The buyer generally wants to sue the seller, the broker or brokers and his own surveyor. These targets rarely have insurance, and in the end it is almost impossible for the buyer to be made whole.

The best approach is to avoid the dispute altogether by doing some homework before entering the market in the first place. Buying a used boat may be a complicated endeavor, but the process can be simplified enormously through a little preliminary research into the broker, the surveyor, and the make and model of the boat.

The broker and surveyor are the buyer’s best resources, and the success of the transaction may rely on the diligence, independence and integrity of these individuals.

David Weil is licensed to practice law in the state of California and as such, some of the information provided in this column may not be applicable in a jurisdiction outside of California. Please note also that no two legal situations are alike, and it is impossible to provide accurate legal advice without knowing all the facts of a particular situation. Therefore, the information provided in this column should not be regarded as individual legal advice, and readers should not act upon this information without seeking the opinion of an attorney in their home state.

David Weil is the managing attorney at Weil & Associates (www.weilmaritime.com) in Long Beach. He is an adjunct professor of Admiralty Law at Loyola University Law School, a member of the Maritime Law Association of the United States and is former legal counsel to the California Yacht Brokers Association. If you have a maritime law question for Weil, he can be contacted at (562) 438-8149 or at dweil@weilmaritime.com

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A look at the 10 best fishing products of the last 75 years. Used Boat Sales

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Last year, the American Sportfishing Association, the voice for the sportfishing industry, celebrated its 75th anniversary. Recently, they partnered with the Recreational Boating and Fishing Foundation to survey thousands of this country's most avid anglers to find out which products they feel have been the most instrumental in shaping the sport over the past seven and a half decades.

Sorted by the date of introduction, these are the top 10 fishing products which span six categories: accessories, electronics, lines, lures, reels and rods:

Original Rapala Floater Minnow (1936). This hard body lure is one of the most successful and widely used lures in fishing history. It is still the "go to" lure of many of today's bass and trout anglers.

Nibble, Nabber Springloaded Bobber (1947). This red and white bobber replaced the cork as an indicator of a strike. In those days many anglers fished with live bait and the bobber made suspending them at a desired depth simpler and easier.

Mitchell 3000 (1949). This was the first commercially successful spinning reel and is one of the most common reels used today. Costing $18.95 in the 1950's, that was a good sum of money and out of reach for many of us. But it was the best spinning reel on the market. My first one was purchases overseas through a serviceman's rod and gun club and was shipped home, awaiting my discharge. It was a tough workhorse of a reel and millions
of casts were made with it. The only thing that ever went wrong with it was the bail spring, and fortunately, Dick Moon's Sporting Goods Store in Pittsfield had the capability of making and replacing them.
n Crème Plastic Worm (1949). It changed the sport forever as the first, and still famous, long lasting artificial worm that both looked and felt real. (It changed my tackle box forever, too because it interacted with the plastic tackle box and actually melted into and ruined it).

Zero Bomb Company Closed Face Spincast Reel (1949). Costing only $3 or $4, it made fishing easy and affordable to everyone, regardless of age, gender or expertise. I had a lot of entanglements with mine which contributed greatly to my vocabulary of profanity. It finally ended up on the bottom of one of our lakes, (accidentally dropped overboard of course). They have greatly improved since then and are currently manufactured by ZEBCO Brands.

Lowrance Fish Lo-k-Tor (1957). The Little Green Box introduced anglers to the use of sonar in locating individual fish.

DuPont Stren Monofilament Line (1958). Improved the durability, affordability and casting ability of fishing line while reducing its visibility to fish.

Minn Kota Trolling Motor (1958). This was the first electric gear-driven trolling motor that gave anglers the ability to quietly maneuver and position their boats. Originally manufactured by Minn Kota, it is now manufactured by Johnson Outdoors.

Fenwick High Modulus Graphite Rod (1972). Its super-sensitive carbon (graphite) fibers revolutionized the method of making fishing rods and how anglers fished. I never owned a Fenwick graphite but I owned and still fish with their excellent fiberglass rods.

The Shakespeare Ugly Stick (1976). With its special construction, it created an affordable, unbreakable and dynamic fishing rod still in use today. I like this rod so much that I own two of them in different sizes.

I'll bet some of you gray haired anglers owned and enjoyed many of these products and wonder if you, like me, still have them and dig them out of the closet or cellar from time to time. It is fun dusting them off and thinking back to the good old days, cherishing memories of lunker fish that were (or weren't) landed, where we were fishing at the time and with whom.

The Lake Garfield Association will be sponsoring a fishing derby for children 12 and under next Saturday (Aug. 8) at the Berkshire National Fish Hatchery Lower Pond on Hatchery Road in Mill River. The derby, which is free and open to the public, runs from 9-11 a.m.

Zebra mussels: It is encouraging to see the Lakes and Ponds Assn (LAPA), the Berkshire County League of Sportsmen (BCLS) and representatives from the bass fishing clubs meeting and attempting to establish a dialog on how to address the zebra mussel issue. Obviously, there is some common ground, that being that they all want to see the mussels contained and not spread to neighboring waters. They also agree that ramp monitoring is a good idea and issue a call to the fishing community to volunteer as monitors. They agree to work together to help increase the public's awareness to the perils of the mussels.

Other than Laurel Lake, many sportsmen do not agree on the closing of boat ramps. LAPA would like to see them all temporarily closed (45 days) to help curtail the mussel spread while experts figure out a course of action. Most fishermen that I know disagree. Their position is that Laurel Lake is the only local lake confirmed as having the mussels. If people are cleaning their boats and there are ramp monitors inspecting them, then why exclude the general public from using the other public waters. Besides, the ramp barriers have no effect on those who use canoes and kayaks anyways for they can just be carried anywhere and launched, which is currently happening in a lot of places.

Fort Lauderdale Boat Show dealers hope for rising tide. Used Boat Sales.

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There is cautious optimism that the giant Fort Lauderdale boat show will see an increase in sales.

With the stock market gaining momentum and luxury buyers beginning to emerge from their shells, area boating businesses are hoping this year's Fort Lauderdale International Boat show will be a boon for sales -- and not just a spectacle for frugal spectators.

The 50th installment of the world's largest boat show -- running Thursday through Monday in Fort Lauderdale -- comes after several trying months in South Florida's maritime industries, which have been hit particularly hard during the global recession.

But the recent stock market rally and an upswing in traffic at boat shops in the past few months has the show's organizers and some vendors feeling optimistic that consumers are once again confident enough to put down boatloads of cash on fancy yachts.

``Boats are purchased when people have a certain comfort level in terms of job security and their stock market portfolios,'' said Frank Herhold, executive director of the Marine Industries Association of South Florida, which owns the show. ``We've seen some very economically significant increases in consumer confidence and an increase in the stock market. These are good bellwethers.''

Luxury spending jumped 29 percent in the third quarter of 2009 compared with the previous three months, according to a survey by Unity Marketing. And, since an average sized yacht can cost $1 million or more, boat show exhibitors are looking to luxury buyers to show up in full force with checkbooks in hand.

But unemployment and economic uncertainty remain high, and organizers admit they won't know whether the boat show will meet expectations until the numbers are tallied after the event.

Jay Reynolds, who chairs the boat show committee for the Marine Industries Association of South Florida, said that while sales were originally expected to be down by as much as 20 percent, the last three months have showed encouraging signs. For example, advance ticket sales are up 16 percent over last year and vendor registrations have rallied recently, although they are still down 17 percent, said Skip Zimbalist, CEO of the show's producer, Show Management.

PRICING UNCERTAIN

Because the market has been so turbulent, many dealers aren't sure how to price their yachts in order to attract buyers during a boat show that can account for as much as 40 percent of annual sales.

``We have conversations almost every day with other brokers and no one really knows what the price of most boats are,'' said Loren Schweizer, a consultant with Wood Marines Group, a Fort Lauderdale boat vendor. ``Generally, it's what people are willing to pay. It's a really crazy market right now.''

To convince cautious window shoppers to make a purchase, dealers are offering deep discounts and free extras like iPods, TVs and expense-paid vacations.

At Fort Lauderdale-based Anchor Yacht Sales, consultant Forest Roberts is offering a free satellite television, tender or water maker with the purchase of a yacht. He said these perks, ranging from $7,000 to $11,000 in value, could help him seal the deal on the sale of a $2 million boat.

Roberts said that because most of his clients are multi-millionaires, his business hasn't been as troubled by the downturn as most of his industry colleagues.

``The difference is, the people who have $2 or $3 million of net worth are going out to buy a $300,000 or $500,000 boat -- those are the people that the economy has bothered,'' he said. ``The people that we're dealing with have $10 or $15 or $100 million of net worth. The economy has bothered them, but not to a great extent.''

Roberts plans to exhibit two new 58-foot yachts at the weekend show, a decision he made after quickly selling the single 58-footer he showed at the Miami boat show in February. He had to turn two potential buyers away during that show, he said. The boats, which come completely furnished and wired, are each listed at just under $2 million.

This weekend's show will feature boats that are much cheaper and others much more expensive than those 58-footers, including kayaks, powerboats and megayachts. More than 1,500 floating vessels will be on display at six locations in Fort Lauderdale, covering 3 million square feet, about the same as in years past.

VARIETY AFLOAT

Herhold expects the show's diverse array of boat types and price points to help it reach a wide swath of consumers -- from the budget-conscious first timer to the billionaire enthusiast.

``Attendees will see everything from kayaks to megayachts, with a boat to fit everybody's pocket books and boating agenda,'' he said.

At last year's show, frugality ruled the day, with most show-goers either opting for lower-priced boats or deciding to postpone their purchases until their portfolios were in better shape.

A year later, with many economists saying that the worst has passed, there's a cautious optimism at some boat dealers that this year might be better.

Schweizer said he's seen an uptick in sales in the last couple months, even selling a $2 million boat for close to the asking price -- more than he expected to get for it.

Roberts already has orders for two $2 million boats from buyers in other parts of the state. There's a possibility that he might sell all five of the boats that he's taking to the show and maybe even get orders for more, a result that would be ``dynamo,'' he said.

Based on website traffic, Herhold expects a large contingent of international consumers to attend the show this year -- meaning foreign high rollers from countries unaffected by the global downturn could prop up sales.

Usually about half of the attendees -- estimated at more than 100,000 this year -- come from outside South Florida and about a third come from other states.

A little more than 10 percent come from international locations, Herhold said.

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Brunswick Public Foundation donates $74,000 to FdL, Oshkosh United Way - Used Boat Sales

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Brunswick Corporation, parent company of Mercury Marine is donating $74,000 in support of the Fond du Lac and Oshkosh area United Way 2009 fundraising campaigns.



The donation brings to $389,300 the total funds contributed by the Brunswick Public Foundation to the Fond du Lac and Oshkosh Area United Way since 2005.



"The Brunswick Public Foundation has always supported the Fond du Lac community through United Way contributions, and we are extremely appreciative of that support," said Tina Potter, executive director of the Fond du Lac Area United Way.



Mercury Marine and its employees have traditionally shown strong support for the local United Way campaigns.



"Mercury and Brunswick have always felt compelled to do their part to assist Fond du Lac and surrounding communities, but that is especially true today with so many people struggling against these challenging economic times," said Mark Schwabero, president of Mercury Marine. "Obviously, this is a difficult year for most families, and we understand we need to support the many important programs funded by the United Way.



"It's not only the right thing to do — our employees are sometimes the beneficiaries of the services and assistance offered by United Way. We are grateful that, through the Brunswick Public Foundation, we are able to make this very worthwhile contribution."



Potter acknowledged that corporate donations are more critical this year than in the past.



"This funding comes at a crucial time for our 17 partner agencies and the communities they serve," she said. "In 2008, 31,775 local men, women and children were served by United Way funding. As of Sept. 30, 2009, our partner agencies had already served 35,345 individuals, a 25 percent increase over year-to-date 2008. And we expect that number to increase over the next three months."



Potter thanked Mercury Marine employees, who recently launched a United Way fundraising campaign.



"The Fond du Lac Area United Way has established a $1 million goal for its current fundraising efforts," she said. "We knew there would be immense need this year given the economic climate, and we're deeply grateful for the giving campaign in which Mercury employees are currently involved to help us achieve that goal."



Between 2005 and 2009, Mercury employees raised $435,550 for the Fond du Lac and Oshkosh Area United Way funds.



The Foundation also donated $53,000 to the Stillwater, Okla., Area United Way.

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Used Boat Sales Globe Wireless Distributes Satlink Fleet Broadband

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Globe Wireless and Satlink announced the signing of a Marketing and Distribution Agreement which appoints Globe Wireless as a distributor of Satlink’s Inmarsat FleetBroadband 150 and 250 equipment. Globe Wireless has also made an initial substantial order of FleetBroadband units.

The Marketing and Distribution Agreement allows Globe Wireless to promote, sell, install, service and support Satlink FleetBroadband equipment. Globe Wireless will use its worldwide team employee technicians to install and service the Satlink equipment aboard customer ships.

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