Aries v. Palmer Johnson, Inc.

Frank Aries (plaintiff) purchased a yacht from Palmer Johnson, Inc. (PJ) (defendant). PJ contracted to deliver the yacht on June 25, 1983. Aries was assured that delivery would be timely. However, PJ did not deliver the yacht until November 23, 1983, and Aries consequently could not use the yacht during the summer and fall of that year. After delivery, the yacht immediately broke down and was discovered to have severe defects. Aries sued for damages, including loss-of-use damages. At trial, Aries testified that he would have used the yacht significantly during the summer and fall, presented evidence that this use was compatible with how he had used his prior yacht, and presented evidence that PJ knew of his intended use. Aries further testified that chartering a comparable yacht would normally cost $1,500 a day, and that he would have charged $2,000 a day to charter the boat purchased from PJ had he received the boat. Aries’s expert testified that $1,500 a day was reasonable. PJ’s executive testified that the reasonable value was $1,200 a day. Evidence was presented of the rental expenses to be set against the rental rates. Aries’s expert and PJ’s executive both testified that, out of the 168 post-delivery days spent repairing the yacht, at least 50 were excessive. The trial court, adopting a figure of $1,000 a day for the value of the use of the yacht, awarded Aries loss-of-use damages for two-thirds of the five-month pre-delivery delay, amounting to $100,000. The trial court further awarded Aries loss-of-use damages for 20 of the 168 post-delivery days spent repairing the yacht, amounting to $20,000. PJ appealed, arguing that (1) the loss-of-use damages were speculative, (2) PJ did not know Aries’s intended use of the yacht when PJ entered the contract, (3) no substitute vessel was rented, and (4) the rental value used to compute the loss-of-use damages failed to take into account necessary expenses of renting.