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Legal Perspective - Legal Issues Arising in Complex Warranty Cases

May 26, 2019

One of the nice things about a new boat is the high level of reliability. Although there can be teething problems with any pristine item, out-of-the-crate tends to mean peace of mind. You turn a key or flip a switch and the equipment runs. We owe this in part to good technology, and in part to warranties or other assurances that a manufacturer stands behind a product.
While marine warranties can be complex, the basic premise hasn’t changed dramatically from the days when a shipbuilder’s guarantee group would accompany a steamship on its maiden voyage to ensure that everything worked as promised. This highly skilled team of engineers, machinists, and draftsmen looked for vibrations, leaks, and improper installations… and either fixed things or saw to it that the shipyard addressed large issues during the next drydocking.
The RMS Titanic had such a guarantee group aboard during its tragic maiden voyage in April 1912. This esteemed group from Harland & Wolff’s shipyard included the ship’s naval architect, Thomas Andrews, who delivered the devastating news to Captain Smith about how long the ship would remain afloat after striking an iceberg. On smaller vessels today, dealerships, mechanics, and other service contractors han
dle what the old guarantee group would have done by standing behind manufacturer warranties.
But in practice, warranties can be prone to differences in the way they are interpreted, in part due to the fact that boats have so many complex systems and in part because the language can sometimes be picayune and subject to debate. Add to this the fact that some warranties are expressly spelled out while others are deemed to be implied, one can understand how vessel owners and vendors can find themselves in court over disputes.
A warranty case involving marine chilling units might illustrate that these matters can be expensive and technically difficult to resolve. The yacht at the heart of the lawsuit used a chilled water system to control onboard temperature. These chilling units contained evaporator heat exchangers that were connected to a water inlet hose and a water outlet hose. After water circulated throughout the vessel and picked up heat from living spaces, it returned to the evaporator coils where it was cooled.
Problems started after a chilling unit failed. Water in the evaporator had frozen, resulting in leakage throughout the vessel’s chilled water piping. Interests for the vessel filed a lawsuit. An expert was called in to determine the cause of failure. The expert testified that a low-pressure switch for controlling the temperature range of the evaporator had been installed with settings that were lower than those recommended by the compressor manufacturer.
Additionally, the expert testified that reversed water hoses resulted in chilled water reaching its coldest temperature at the top of the evaporator, causing a condition where the evaporator could freeze. While the actual record of the proceedings is filled with exhaustive technical detail, the bottom line is that the court did not rule in favor of the vessel interests because evidence established that the water hoses for the chilling unit were plumbed in reverse, resulting in outflowing cold water bypassing a freeze protection switch and causing the evaporator to freeze.
This might illustrate why warranty disputes can sometimes be costly. They could require technical experts to establish the root cause of equipment failure or malfunction. And if that equipment happens to be large diesel drive trains, gensets, refrigeration plants, or temperature control systems, the stakes are going to be high.
The tedious language of warranty fine print aside, thinking about that guarantee group on Titanic could give one a sense of frustration beyond the most contentious warranty dispute. For all their expertise in ship design, steam engines, and watertight bulkheads, the guarantee group was powerless to make the ill-fated liner reduce speed and heed ice warnings as it neared the Labrador Coast on the final leg of what could have otherwise been a happy maiden voyage.
Ref: Tri-Lady Marine, Ltd., a Marshall Island Company, Plaintiff-Appellant, v. Aqua-Air Manufacturing, Defendant - Appellee, Elite Marine Yacht Services, LLC, Defendant - Cross Claimant - Appellee, Bishop Mechanical Services, LLC, Defendant, in the United States Court of Appeals for the Eleventh Circuit, No. 18-12427 Non-Argument Calendar, D.C. Docket No. 0:16-cv-62467-CMM

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