Team Effort Leads to Appellate Victory in $30 Million Commercial Case February 2013
William T. O’Connell led a team effort to victory in a Court of Appeals decision in a potential $30 million case arising out of the sale of a mega-yacht in Florida.
We represented a manufacturer of luxury yachts in the case, one that involved a lengthy back story. During the construction process of one particular yacht, the hull was being towed by a tug boat to another shipyard when the ship got caught in a storm. As the storm raged, the hull struck some rocks and was damaged. The hull was repaired by the manufacturer and all repairs were approved by the American Bureau of Shipping, a ship-building monitoring agency. After full disclosure to its dealer, the yacht was sold when construction was complete. The dealer sold it to a customer, who used the yacht without incident for seven years. This customer then sold it to the plaintiff.
The plaintiff alleged that the yacht manufacturer, its exclusive U.S. dealer, and other defendants conspired to conceal a 10-year warranty provided by the manufacturer to its dealer, the damage to the hull, and the subsequent repairs. The plaintiff filed a federal complaint in U.S. District Court for the Southern District of Florida alleging violations of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), breach of express warranty under the Florida Uniform Commercial Code and the Magnuson-Moss Warranty Act, and fraud and misrepresentation. Significantly, because attorneys’ fees and treble damages are recoverable under the FDUTPA statute, our client faced a potential adverse judgment of more than $30 million; the boat was valued at over $9 million when sold in 2008, and plaintiffs were seeking millions in repair costs.
After an involved and contentious process, the yacht manufacturer filed a motion to dismiss and a motion for summary judgment. After lengthy briefing and thousands of pages of exhibits, the district court granted summary judgment to the manufacturer and its U.S. dealer on the eve of trial.
However, the plaintiff filed a notice of appeal to the 11th Circuit. After Bill obtained dismissal of the initial appeal due to lack of finality, the plaintiff then filed a 50-page appellant’s brief, arguing primarily that an issue of fact exists as to whether the 10-year warranty was intended to extend to remote purchasers, and that the district court erred in dismissing the conspiracy allegations for failure to properly plead them. In response, Bill filed an appellee’s brief, answering each of the appellant’s arguments, dissecting distracting “smoke screens,” and providing a winning analysis of the law of express warranty, Magnuson-Moss, FDUTPA, and conspiracy.
During the oral argument of the appeal, Bill was able to rebut several questions from the judge about the Magnuson-Moss Act, and whether our interpretation of the warranty rendered it “illusory,” eventually turning the discussion back to the core argument that the 10-year warranty was not a “basis of the bargain” in the sale to the plaintiff. The court rejected all of the plaintiff’s claims, consistent with the argument raised in Bill’s brief and in oral argument.
The victory came out of true collaborative effort across our offices, with Bill and Brian T. Stapleton from White Plains, Matthew S. Lerner from Albany, Brendan T. Fitzpatrick from Garden City, Frank J. Ciano from New York, and members of our non-lawyer staff all contributing.