Dealer ordered to pay $2.4 million

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MarineMax of Ohio allegedly sold a 51-foot Sea Ray without disclosing it had been damaged

MarineMax of Ohio allegedly sold a 51-foot Sea Ray without disclosing it had been damaged

An Ohio judge has ordered MarineMax of Ohio to pay a boater nearly $2.5 million in a case alleging fraud and deceptive practices because the dealer failed to tell him the boat he bought had been badly damaged in a grounding.

In his decision, Ottawa County Judge Paul C. Moon said MarineMax’s Port Clinton, Ohio, dealership engaged in fraud and deception when it sold a 51-foot Sea Ray with a previously damaged hull to Douglas Borror, president and CEO of Dominion Homes Inc., a Dublin, Ohio-based builder.

The judge characterized the fraud as “particularly gross and egregious,” and said it “constituted a pattern of conduct that was designed to sell a vessel to an unsuspecting buyer, regardless of its defects.” Moon said MarineMax had shown “reckless disregard” for the health and safety of Borror, his family and passengers when it withheld information about serious structural damage and repairs to the hull.

Borror had been having problems with his old boat and was eager to buy a new one to finish out the boating season when he purchased the 2001 Sea Ray 510 Sundancer for $784,151.83 Aug. 9, 2002, according to court testimony. He had asked the salesman why a new 2001 model was still for sale in the summer of 2002, and the salesman told him it had “hit a can [a buoy].” Borror was left with the impression that the yacht had suffered just cosmetic damage to its starboard side, according to the ruling.

In fact, a technician had run the yacht hard aground at 20 to 30 mph on West Harbor Reef during a sea trial on Lake Erie in June 2001, according to testimony. The yacht’s strut pads were fractured and delaminated, both rudders and the prop shafts were bent and — most seriously — several stringers had fractured at a bulkhead, the judge wrote in his opinion. The yacht went back to the factory for repairs, and after it was returned to the dealership the stringer damage had to be repaired again by a contractor when gelcoat on the earlier repairs began to peel. Total cost: $98,667.28.

The judge noted that the boat was in the water when Borror bought it, so he couldn’t have seen the bottom repairs, which were evident enough that at least one prospective buyer had noticed them and decided not to purchase the boat. Borror, an experienced boater, didn’t hire a surveyor to look the yacht over, but he sea-trialed it and talked to the service manager, with whom he had dealt before and trusted.

The service manager told Borror the boat had been hit “pretty hard” near the reef going to a boat show and had been repaired at Sea Ray. But he didn’t mention the grounding or the structural damage, and said the yacht “was perfect, it was in great shape,” according to the judge. Asked why he didn’t reveal the extent or cause of damage, the service manager said Borror “didn’t ask the right questions,” the judge said.

Borror bought the boat, used it for the rest of the season, and put it in dry storage for the winter. The judge said Borror began to suspect there might be “issues” with his Sea Ray, so that winter he called in a marine surveyor who inspected the boat, unearthed its history, and concluded that based on the quality of the exterior repair — fiberglass had been applied over bottom paint — he suspected the stringers weren’t properly repaired. He said he thought there might be structural damage forward of the engine room bulkhead, which was inaccessible. He concluded that the boat wasn’t seaworthy.

A surveyor for MarineMax testified that although damage from the grounding was significant and not just cosmetic, and the original Sea Ray repairs in the engine compartment were substandard, he couldn’t find any defects now. Yet, he told the judge, he couldn’t guarantee there was no stringer damage forward of the engine-room bulkhead.

The judge said Borror testified that he was an experienced Great Lakes boater “and would not take his family out on a boat that had been so badly damaged. Plaintiff also testified that he would never have bought the vessel if he had known the structural damage it had sustained.”

That March, Borror asked MarineMax to take the boat back and return his money, a redress permitted in serious cases of deception under Ohio’s Consumer Sales Practices Act. MarineMax refused but offered to do any necessary warranty repairs. While the case was in litigation, Borror sold the boat for $350,000. Moon issued his opinion last September, finding MarineMax in violation of the CSPA and state fraud laws, and awarding Borror $1,938,365 in damages. In February the judge ordered MarineMax to pay another $484,727 in attorney fees and expenses, and to pay Borror interest on the damage award.

Neither Borror nor his attorneys returned phone calls for comment. MarineMax attorney Rod Cooper of Toledo, Ohio, says the company has appealed the decision.

“From MarineMax’s perspective, we believe the decision was erroneous and that our employees acted properly and responsibly in regard to this situation,” he says. “We disagree with the judge’s determination.”