Ask A Maritime Attorney: I purchased a “lemon.” Can I sue them to enforce the warranty after they contended my repurchase request?

Question:

I bought a new boat early last year and I’m having a dispute with the dealer and manufacturer regarding repairs that should have been performed under the boat’s warranty.  The boat has been out of service for an extended period of time, and I have asked them to repurchase the boat as required under the California Lemon Law, but they contend that the Lemon Law does not apply because I purchased the boat through an “offshore delivery” to avoid sales tax.  Can I sue them to enforce the warranty?  If they can’t be forced to repurchase the boat, can I sue them to unwind the purchase, or at least to reimburse me for my loss of use of the boat?

 

Answer

Boat warranties vary considerably between manufacturers, but regardless of the features of your warranty, the laws that govern a boat warranty differ considerably from a car warranty.  Our reader will have a fight on his hands because he did not buy the boat in California, and even if he did, the “California Lemon Law” won’t help him because it is designed generally to protect car buyers rather than boat buyers.

Unlike a car warranty, the warranty for your boat will cover only the components that the manufacturer was directly responsible for designing and building. In many cases this will be limited to the structural integrity of the hull and deck and certain other parts that are actually manufactured by the boat builder.  Important equipment such as engines, generators, navigation electronics and galley appliances are likely to be covered separately by the manufacturers of those items.  Our reader was not specific as to the repairs that have put his boat out of service, but this is definitely something that would be examined in a legal context.

As the buyer of a “consumer good,” a boat buyer in California is protected by a body of law known as the Song-Beverly Consumer Warranty Act (California Civil Code sec. 1790), and by a federal law known as the Magnuson-Moss Warranty Act (15 U.S. Code sec. 2301).  The body of law that is known as the “Lemon Law” is technically called the “Tanner Consumer Protection Act.” It is contained within the California Song-Beverly Act, and the remedies available may include a repurchase by the manufacturer after the product has been out of service for a period of time.  Those remedies, however, are expressly limited to cars.  The Tanner Act does not cover boats or any form of personal property that is not a car.

The remainder of the Song-Beverly Act enforces manufacturer’s warranties on all consumer goods sold in California.  But it still has one glaring problem for the buyer of a new boat: It fails to consider that a boat is a complicated machine, with a long list of complex systems that may be subject to failure.  A manufacturer will be in compliance with the Song-Beverly Act if it repairs each of those failed systems within a “reasonable time,” notwithstanding that it may have deprived the owner of the use of the boat for many months of accumulated down time during the repairs.  In our reader’s case, none of this matters because he did not purchase his boat in California.

In this case, the boat was purchased through an “offshore delivery.” Many of our readers are familiar with this procedure in the context of a boat purchase transaction.  It calls for a boat to be delivered to the buyer more than three miles offshore from the California coast, and therefore outside of the state of California, as a strategy to avoid California sales or use tax.  Our reader apparently complied with this requirement (together with a long list of other tax-related requirements) and, as such, avoided the assessment of sales tax on his boat purchase.  That’s great for him, but a side-effect of this strategy is that the most purchases that are not completed in California are not subject to California law.  Our reader is therefore not protected by the California Song-Beverly Act, or by any other California law.

Even without the protections offered under California law, our reader is protected by the federal Magnuson-Moss Warranty Act.  This may help him somewhat, but unfortunately, state law in this case would have been more helpful than federal law.  Among other differences, a manufacturer under the federal Magnuson-Moss Act is not required to maintain a local repair facility, double civil penalties cannot be imposed against the manufacturer, and the manufacturer may not be compelled to repurchase the vessel.

Our reader indicated that he will consider litigation if he is not satisfied with the warranty service provided by the manufacturer.  I’m afraid I don’t really have good news for him on this issue either.  He would like to sue to unwind the purchase, or to at least recover for his loss of use of the boat.  He will face an uphill climb for either of those remedies.

A lawsuit to unwind a transaction is known as a claim for “rescission.”  The goal of a rescission claim is to return the parties to their respective positions prior to the transaction.  This is possible in the context of a boat purchase only where a short time has passed and the boat is still in “showroom” condition, with very little use.  Our reader indicated that he has owned and used the boat for over a year.  He will not be able to return the boat to the manufacturer in the condition that it was in before the purchase, and rescission is therefore not an option.

And finally, he wants to be reimbursed for his loss of use of the boat.  We can’t help him there either!  The U.S. Supreme Court held, in a case called The Conqueror, that loss of use damages are never recoverable by the owner of a pleasure vessel.  The Court ruled that the mere inconvenience of not being able to use one’s yacht is not compensable.  That case was heard in 1897, but it is still good law a century later.

Warranty disputes can be complicated, in part because of the different laws that may be involved.  Contact a maritime attorney with experience in warranty disputes if you find yourself in our reader’s shoes.

 

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 Seal Beach. He is certified as a Specialist in Admiralty and Maritime Law by the State Bar of California Board of Legal Specialization and a “Proctor in Admiralty” Member of the Maritime Law Association of the United States, an adjunct professor of Admiralty Law, and former legal counsel to the California Yacht Brokers Association. If you have a maritime law question for Weil, he can be contacted at 562-799-5508, through his website at www.weilmaritime.com,  or via email at dweil@weilmaritime.com.