Sharp v. Hylas Yachts, LLC
872 F.3d 31
1st Cir.2017Background
- Sharp contracted with Hylas in 2009 to buy a new 70-foot yacht ("Destiny"); Hylas contracted with vendors (GMT Composites and Forespar) for the boom and related components. Destiny Yachts LLC (Sharp’s company) took title at closing in December 2010.
- On the yacht’s maiden voyage and thereafter, Destiny experienced repeated failures (boom detachments/failures, hydraulic leaks, electrical and charging failures, generator and toilet problems). Repairs were performed intermittently by GMT, Island Rigging, and others; Hylas provided some assistance but plaintiffs contend it failed to cure defects.
- Plaintiffs sued Hylas (breach of contract, express and implied warranties, negligence, Chapter 93A); Hylas impleaded GMT and Forespar; GMT asserted claims against plaintiffs for unpaid bills.
- After an 11-day jury trial, the jury awarded plaintiffs $663,774 against Hylas for contract and warranty breaches; the jury also found GMT breached its contract and warranties to Hylas but awarded Hylas no damages from GMT. The district judge denied major post-trial motions and rejected plaintiffs’ Chapter 93A claim; both sides appealed.
- On appeal the First Circuit affirmed: it upheld the admission of plaintiffs’ "detention/demurrage" damages evidence, declined to impose spoliation sanctions or give an adverse inference for replacement of the boom, affirmed dismissal of Hylas’s implied indemnity claim against GMT, rejected jury-instruction and inconsistency challenges, and affirmed denial of Chapter 93A relief.
Issues
| Issue | Plaintiff's Argument (Sharp) | Defendant's Argument (Hylas) | Held |
|---|---|---|---|
| Admissibility of lost-charter/detention damages | Sharp: yacht was purchased with intent to charter; lost charter profits and related consequential losses are recoverable with reasonable certainty | Hylas: Destiny was a pleasure yacht; Conqueror bars lost-pleasure-use/detention damages absent commercial use history | Court: Evidence sufficed for jury to apply "reasonable certainty" standard; admission not abuse of discretion (multipurpose/charter intent supported) |
| Spoliation (boom replacement) / sanctions | Sharp: replacement was necessary for safety; plaintiffs gave notice and provided measurements/photos; no bad faith | Hylas: plaintiffs destroyed key evidence in bad faith and prejudiced Hylas; requested dismissal or adverse inference | Court: no bad-faith showing; district court’s lesser sanctions and refusal to give adverse inference or dismiss were not an abuse of discretion |
| Implied contractual indemnity (Hylas v. GMT) | Hylas: GMT’s extended involvement, repairs, and warranties created a special relationship implying indemnity | GMT: contract disclaims consequential damages and limits warranty; no express indemnity; ordinary vendor relationship | Court: Massachusetts law requires contract terms or recognized special relationship; GMT’s contract expressly disclaimed consequential liability—judgment as a matter of law for GMT affirmed |
| Verdict inconsistency (jury found Hylas liable to plaintiffs but awarded Hylas $0 from GMT despite finding GMT breached) | Hylas: volume of boom-related evidence makes results irreconcilable; requires new trial | Plaintiffs: jury could attribute consequential lost-use damages to Hylas’s broader warranty and find GMT’s warranty excluded such consequential losses; repairs by GMT often done at no charge | Court: reconciliable view exists (GMT’s warranty excluded consequential/detention damages; other systems and causes implicated); no reversible inconsistency; new trial not warranted |
| Chapter 93A claims (plaintiffs’ cross-appeal) | Sharp: breach of warranty is per se unfair/deceptive under Chapter 93A (or under AG regulation) entitling them to treble and fees | Hylas: actions were not unfair/deceptive in the statutory sense; district court found remedial but not deceptive conduct | Court: AG regulation cannot create per se 93A liability; plaintiffs failed to preserve Magnuson-Moss theory; district court’s factual findings supported denial of 93A relief; affirmed |
Key Cases Cited
- The Conqueror, 166 U.S. 110 (distinguishing lost-pleasure-use from recoverable commercial detention damages)
- Trans-Asiatic Oil Ltd. v. Apex Oil Co., 804 F.2d 773 (1st Cir.) (owner need not show direct bookings; circumstantial proof of opportunity to earn profits can suffice for detention damages)
- Astro-Med, Inc. v. Nihon Kohden Am., Inc., 591 F.3d 1 (1st Cir.) (adverse inference for spoliation requires stronger showing; applies where party failed to produce evidence within its control)
- United States v. Laurent, 607 F.3d 895 (1st Cir.) (adverse-inference instruction usually appropriate only on bad-faith destruction)
- McDermott v. Marcus, Errico, Emmer & Brooks, P.C., 775 F.3d 109 (1st Cir.) (Chapter 93A liability is typically case-specific; AG regulations cannot unilaterally convert all warranty breaches into per se 93A violations)