Damages for Diminution in Value of a Yacht for Stigma
The U.S. District Court for the Northern District of Florida has recently determined that, in the context of allision damage to a luxury yacht that was fully repaired, damages for diminution in value of yacht due to the stigma of having been involved in a casualty are not recoverable. Hatt 65 LLC v. Kreitzberg, 2009 AMC 1678 (N.D. Fl. 2009). As the court and the parties were unable to offer existing maritime precedence for the recovery of such damages, the court was unwilling to allow such damages on the grounds that doing so would interfere with the uniformity desired of federal admiralty law. The holding of the Florida court may be inconsistent with the general principal of damages for partial loss damage to a vessel, i.e. that the damaged party be fully compensated for his loss, and be put into the same pecuniary position that would have been enjoyed had the casualty not occurred. Recovery of damages for diminution in value, even when the vessel is fully repaired, also finds support in the Restatement of the Law, Second, Torts, Section 928, which provides:
When one is entitled to a judgment for harm to chattels not amounting to a total destruction in value, the damages include compensation for
(a) the difference between the value of the chattel before the harm and the value after the harm or, at his election in an appropriate case, the reasonable cost of repair or restoration, with due allowance for any difference between the original value and the value after repairs, and
(b) the loss of use.
Restatement of the Law, Second, Torts, Section 928, is frequently cited in Admiralty decisions as providing the basic measure of compensable damages for partial loss claims. See, e.g. Stevens v. F/V BONNIE DOON, 531 F. 2nd 1433, 1985 AMC 363 (9th Cir, 1984). Many yacht brokers would probably confirm that as between two otherwise identical yachts, one that has been damaged and extensively repaired, and the other having no history of damage, the former will command a considerably lesser price.
