HMY Yacht Sales to appeal against 'negligent misrepresentation' judgment
by Malcolm MacLean
Earlier this month a Florida court found HMY Yacht Sales guilty of 'negligent misrepresentation' in a civil case brought by a disappointed owner of a 66' sportsfisherman. Now HMY is preparing an appeal but, until it's lodged, cannot comment.
Ironically enough, a prescient editorial in the October 2008 issue of Boat International USA warned of the likelihood of just such an event.
As soon as the judgment was announced an experienced owner wrote to me, "This is a really dangerous precedent for the yacht brokerage industry. I have suggested to my friends in the industry that if this was a standard FYBA contract that FYBA should get involved in the appeal and get this over turned in a higher court. The contracts clearly are designed to absolve the brokers from liability on representations and buyers are told to rely on their own surveyors (as it should be) but this ruling basically attacks the brokers for their basic advertising claims, as fluffy as they are. This is a very bad thing for the industry and has wide ranging ramifications. I don't know anyone at HMY, but my prayers are with them and hope they have the fortitude (and the cash) to fight this one to the death. This may be too deep a topic for your section, but someone needs to take this VERY seriously."
We asked John Leonida, an expert in maritime law at Clyde & Co. for his opinion on the judgment and he writes, “Without knowing the precise details of the case, it is difficult to speculate on what actually happened and what led to this particular judgment, but what it does remind all professionals in the industry is the danger of of saying stuff without caring or knowing if what they say is true or not. If there is chance that a person will rely on what a broker says, the broker needs to be careful not to mix the "puff" of advertising and the hard facts on which a buying decision could be based. If a broker delivers a message to someone to whom he owes a duty of care, without really caring whether what he says he true or not, it opens the broker to a claim for negligent misstatement.”
Asked for a comment, Bob Saxon, CEO of FYBA states that, "Reportedly the closing argument to the jury included in part an indictment of brokers along the lines of 'Send a message to this industry...' or words to that effect."
I'm sure the entire brokerage community will await the result of the appeal with keen interest. Meanwhile, it's probably time to watch your advertising copy carefully. Remember, there's only a keystroke difference between a 'turkey' and a 'turnkey' yacht.
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