Private Yachts and Loss of Use Damages
The general rule, particularly as applied by courts in the Ninth Circuit, is that loss of use of a private pleasure boat is not a compensable item of damages under the General Maritime Law of the United States. The rule is predicated upon the unremarkable principle that one seeking damages must show an actual loss and a reasonable proof of the amount. The seminal case is The Conqueror, 166 U.S. 110, 17 S. Ct. 510, 41 L. Ed. 937 (1897).
The seminal case is The Conqueror, 166 U.S. 110, 17 S. Ct. 510, 41 L. Ed. 937 (1897), wherein Frederick Vanderbilt sued the United States collector of customs for loss of use resulting from detention of Vanderbilt's yacht, which was designed for pleasure only and never put to any other use. The lower court awarded Vanderbilt damages at the rate of $100 per day for the 150-day detention. The United States Supreme Court reversed and denied such damages, holding that "demurrage will only be allowed when profits have actually been, or may be reasonably supposed to have been, lost, and the amount of such profits is proven with reasonable certainty." Id., 166 U.S. 125. Despite expert testimony setting a high market value for the charter of such a yacht, the Court vacated the loss of use damage award, emphasizing, "[T]here must be a pecuniary loss, or at least, a reasonable certainty of pecuniary loss, and not a mere inconvenience arising from an inability to use the vessel for the purposes of pleasure ...there must be actual loss and reasonable proof of the amount,'" Id., at 133, citation omitted. The Court further observed there was not "an atom of testimony tending to show that [Vanderbilt] bought her for hire, or would have leased her if he had been able to do so, even for the large sum of $100 per day." Accordingly, the Court concluded that Vanderbilt was not entitled to recover for the loss of use of the CONQUEROR Id. at 134, 136.The holding of The Conqueror, supra, has long stood for the principle that under Maritime Law, loss of use of a private pleasure boat is not a compensable item of damages. Oppen v. Aetna Ins. Co., 485 F.2d 252, 257 (9th Cir. 1973): "Under federal maritime law loss of use of a private pleasure boat is not a compensable item of damages."; Cont'l Ins. Co. v. Muradyan, 2003 U.S. Dist. LEXIS 18643, 2003 AMC 1536, (D. Cal. 2003), dismissing loss of use damage claim under Fed. R. Civ. P. 12, and noting, "As Supreme Court and Ninth Circuit law make clear ... loss of use damages are unavailable where, as here, a private pleasure boat is damaged".
Other Courts have similarly denied loss of use damages for destruction of a private yacht. Parrillo v. Commercial Union Ins. Co., 85 F.3d 1245, 1251 (7th Cir. 1996): (Absent evidence that, during ownership of the yacht destroyed in fire plaintiff actually had chartered it, loss of use damages dismissed on summary judgment); In re Palmer Johnson Savannah, Inc., 1 F. Supp. 2d 1386, 1389-1390 (D. Ga. 1997): (no loss of use damages in breach of workmanlike performance claim involving private yacht damaged by repair facility); Snavely v. Lang, 592 F.2d 296, 300 (6th Cir. 1979): ("It is precisely these types of claims for damages which render too 'highly speculative and immeasurable an award for demurrage in the case of a vessel used purely for recreation."); Nordasilla Corp. v. Norfolk Shipbuilding & Drydock Corp., 1982 A.M.C. 99 (E.D. Va. 1981): (denying loss of use damages when plaintiff was without the use of its vessel for a period of approximately 14 months as a direct result of a fire. The vessel "had no history of income and ... was never intended to be used for anything other than the pleasure of its owner's shareholders.").
To recover loss of use damages, "There must be a pecuniary loss, or at least, a reasonable certainty of pecuniary loss, and not a mere inconvenience arising from an inability to use the vessel for the purposes of pleasure ...there must be actual loss and reasonable proof of the amount," The Conqueror 166 U.S. 110, 133 (1897). This is a basic rule of damages and remains the rule even as to commercial vessels, which must prove damages arising from loss of use with sufficient certainty to allow calculation without resort to speculation. E.g., Mitsui O.S. K. Lines, K. K. v. Horton & Horton, Inc., 480 F.2d 1104 (5 Cir. 1973). So loss of use damages have been awarded (at least outside of the Ninth Circuit), when a yacht owner proved "with reasonable certainty" that its vessel "would have been available for commercial charter... but for a collision. Yachts, Inc. v. The Edward F. Farrington, 146 F. Supp. 754, 758 (D.N.C. 1956), emphasis added.
In the typical situation involving damage to, or the loss of, a private vessel, a claimant cannot come forward with evidence that the boat was under charter before or at the time of her loss; and generally there is scant evidence that there was a plan to put her under charter. The owner of a yacht or other private vessel usually claims that “loss of use” damages are based upon days that he or she missed from the cruising season, often citing use of the boat for trips with family and friends or for entertaining clients and business prospects. That does not amount to evidence showing pecuniary loss, or reasonable certainty of pecuniary loss.
As an illustration, see Snavely v. Lang, 592 F.2d 296, 300 (6th Cir. 1979), a case involving severe damage to a pleasure craft by fire and a claim for loss of use damages. There plaintiff Snavely testified that he used the vessel for about nineteen days per year, which use the court deemed "intermittent”. The problem with Snavely's claim, the court concluded, was a lack of certainty of proof of damages, observing:
[A]n award of damage for such a loss opens the courts to imagination and speculation in evaluation of damages. It is precisely these types of claims for damages which render too "highly speculative and immeasurable" an award for demurrage in the case of a vessel used purely for recreation. The Court does not herein decide whether pecuniary loss is an absolute requirement for recovery of demurrage. The facts of this case, showing loss of intermittent use of a vessel utilized solely for pleasure, certainly do not justify such an award. For the foregoing reasons, the award of damages for loss of use must be reversed. Snavely v. Lang, supra, at 300, (citations omitted).
On the other hand, it may be consistent with recognized law to allow recovery of the reasonable costs of chartering a replacement vessel for use by the owner for planned recreation where a replacement vessel is chartered”, Staples v. H & A Trading, 1994 A.M.C. 1729 (D.P.R. 1993). In that case, a plaintiff who lived on board a boat damaged in an accident was allowed to recover reasonable sums paid to lease another sailboat on which to live.
Further support for this position is perhaps found in dicta in Nordasilla Corp. v. Norfolk Shipbuilding & Drydock Corp., 1982 A.M.C. 99 (E.D. Va. 1981):
It strikes one as fundamentally unfair that a yacht owner can be deprived of the use of an asset of substantial value for a substantial period solely as a result of another's negligence and yet be wholly denied money damages for such loss of use simply because the asset was a pleasure craft. One wonders why the tortfeasor should benefit from the fact that an asset owner chose to forgo commercial operations when there is far less speculative nature or other question concerning ascertainable damages in these circumstances than there is concerning general damages in the run-of-the-mill personal injury case.
As a general proposition however, courts cannot award damages claimed for the loss of use of a pleasure craft, absent proof it was chartered, leased, rented or otherwise engaged in some commercial activity. Simply stated, a plaintiff must prove pecuniary damages arising from loss of use of a vessel with sufficient certainty to allow calculation without resort to speculation. In the absence of such evidence, a Court should dismiss a claim for loss of use damages.
