We’ve all heard the expression, “Pandora’s Box.” While its mythological origins date back to 700 B.C., the story has come to mean that delving into something unknown can be like opening a can of worms. The expression might be apt for projects involving complex marine engines on large vessels. Everyone starts off with good intentions, but once cylinder heads come off and systems are examined closely, a project could sometimes turn into a legal “Pandora’s Box.” Here are two quick examples.
One involved an insurance carrier suing the engine installer and engine manufacturer after paying a yacht owner over $27,000 for engine breakdown and damages under an all-risk policy. The boat was a 47-foot Concorde, powered by a pair of GM 6-71s, a trusted six-cylinder workhorse that has powered everything from city buses to landing craft since the 1930s. The yacht owner found the speed and power too low and complained to the engine installer, who agreed to rebuild the engines, converting them to 6-71T1s. However, the owner agreed not to replace the six-inch exhaust system. The work came with a 500-hour warranty on the rebuilds.
Subsequent inspection showed that the existing exhaust system was inadequate for the more powerful engines, resulting in excessive backpressure. The owner sued and the installer agreed to install an eight-inch exhaust system. A year after the new exhaust system was installed, the starboard engine failed, after which both engines were extensively repaired. The following year, the insurance carrier paid $27,580 to the vessel owner for engine damage, which it pursued from the engine installer.
The basis of the insurance carrier’s claim was that the installer used substandard internal parts in the engine modification that could not withstand the higher pressures and temperatures. They sued for negligence, breach of implied warranty, breach of express warranty, products liability, and fraud. However, there was a snag in this chain of recovery that worked in favor of the engine installer. The yacht owner had signed a general release and stipulation of settlement when they were paid. The court deemed that this released the engine installer from all claims under contract, negligence, fraud, warranty or product liability law.
While this case ended in favor of the installer, the following lawsuit ended in favor of the vessel owner. It involved overhaul of a of Caterpillar 3304 gen sets. These straight four, 7.0-liter units weighing about a ton and a half each were installed aboard a 153-foot motor yacht. Following the overhaul, the yacht owner sued for failure to perform work in a workmanlike manner, engine damage, and overconsumption of oil, basing the lawsuit on breach of contract and negligence theories.
The lawsuit claimed damages to cylinder heads, piston liners, journal-bearing surfaces, and other mechanical components. The owner also included incidental damages for hindering the enjoyment of the vessel, travel expenses, dockage, electricity, and clean-up. Some of the specific claims of damage included parts not being assembled according to specification, improperly sealing of cylinder head gasket, and cast iron filings falling between journal and bearing surfaces.
It’s upsetting to see such lawsuits because for the most part, these projects often start with a handshake and high hopes for everyone involved – the owner loves the idea of improved speed or lowered fuel consumption… and the yard is happy about a large work order that can pay a few bills and keep the lights burning. However, such lawsuits can hurt cash flow and end relationships the way a seized bearing can bring an engine to a grinding halt.
There is no silver bullet to prevent all such scenarios. But some basic measures could lessen the odds for them. This includes well-written contracts, precise work specifications, notices that work scopes could expand once certain components are opened up, clear warranty terms and exclusions, and reasonable use of disclaimers or warnings. For instance, a yard facing a scenario similar to the 6-71s could provide warnings from the start that existing exhaust piping could be inadequate for the boosted performance.
And whether it’s replacement engines or household goods, please keep our local businesses in mind. Best wishes for a safe and happy Labor Day! Tim, Erol
Ref: Omaha Indemnity Company, subrogee of San Mar Associates et al v. Johnson & Towers, Inc. et al, 599 F. Supp. 215; Aviva, Ltd. v. Carter Machinery Company, Inc., 6:11-CV-00030, U.S. District Court, Western District of Virginia
Tim is a NY-based maritime attorney and has taught law at SUNY Maritime College. Erol is a graduate of CUNY School of Law and Farmingdale State College.