Broker not liable for boat's lack of muscle

Daily Record, The (Baltimore), Jul 12, 2004 by Elizabeth Rossi

The unhappy purchaser of a used yacht has lost his federal lawsuit against the Baltimore company that posted the 40-foot Sea Ray on its Web site.

U.S. District Judge William D. Quarles Jr. granted summary judgment last week in favor of Gilman Yacht Sales of Maryland Inc., which acted as the go-between for seller William Clair and buyer Ellsworth E.J. Wright III.

Summary judgment was also awarded to Annapolis-based G-B Marine Services Inc. and company employee Robert Gunther, the other two defendants in the case, whom Wright accused of negligent misrepresentation with regards to the vessel's features.

Wright claimed the 1997 Sea Ray Sedan Bridge lacked the powerful motors and many of the niceties that had been advertised.

However, the agreement established Gilman as a mere 'conduit' for information from the seller, Bill Clair, to the buyer, Wright, Quarles noted. Although some jurisdictions provide that a broker can be liable for relaying the false representations of a seller to a buyer, Maryland has rejected this 'strict liability' theory.

The judge also rejected Wright's other grounds for holding Gilman liable, including his claim that he had no way of knowing that Clair, not Gilman, was the seller.

The agreement defined Clair as seller, Wright as buyer, and Gilman as broker, Quarles wrote. Gilman could not be liable to Wright for breach of contract because it had no contractual relationship with him, the court concluded.

Gilman agreed to market Clair's yacht, the Clair, on its Web site in May 2002. The asking price was $205,000.

After negotiating with Gilman sales representative John Norton, Wright agreed to purchase the boat for $182,500.

The sales agreement made it the buyer's responsibility to confirm that the specifications were as advertised.

On Norton's recommendation, a presale survey was conducted by Gunther of G-B Marine.

The survey confirmed that the yacht possessed the listed amenities, including two 350-horsepower engines, a generator, an icemaker and a system for dockside dumping or discharge at sea, according to Wright.

After the purchase, however, the buyer cried foul and filed a $100 million lawsuit, claiming the survey was incomplete and at least partly false. The engines were only 310 horsepower and there was no generator, icemaker or system to allow dockside dumping or discharge at sea.

In addition to breach of contract claims, Wright's amended complaint included causes of action for breach of warranty, negligent misrepresentation and violations of Maryland's Consumer Protection Act.

Gilman, however, did not owe a contractual duty to Wright to examine the Clair and ensure that it comported with Clair's representations, according to the memorandum opinion.

Additionally, Gilman was not responsible for confirming the vessel's specifications; Gilman, as Clair's agent, did not know that the specifications were false. Therefore, the judge found no negligent misrepresentation and no violation of the state Consumer Protection Act.

Plaintiff's attorney Robert Dowling said he is currently deciding whether to file a motion for reconsideration within the next 10 days.

Defense attorney J. Stephen Simms did not return calls last week for comment.