Nautimill S.A. v. Legacy Marine Transportation, 15-1065, 2016 WL 4137231 (E.D. La. Aug.4, 2016)
Facts: Nautimill, a company based in Uruguay, was looking for a pushboat and contacted a vessel broker telling the broker their specific needs. The vessel broker found a pushboat that fit Nautimill's needs. After an inspection of the pushboat Nautimill bought the boat. Once the boat got to Uruguay the authorities inspecting the boat noticed that the engines did not have identification plates. Nautimill found out that the engines were not each 1,000 horsepower engines, as the broker lead Nautimill to believe they were, but both had a lower hoursepower than 1,000.
Nautimill met with the vessel broker to try to work out the dispute, but those meetings were unsuccessful and Nautimill filed a suit against Legacy. The court analyzed whether Legacy mischaracterized the product being sold, and found that Nautimill did not meet their burden of proof to show Legacy did mislead them. Then the court analyzed whether the defect with the engines could be considered a redhibitory defect.
Result: Judgment for the buyer.
Rationale: La. Civ. Code art. 2520. A defect is redhibitory when it either (1) "renders the thing useless, or its use so inconvenient that it must be presumed that a buyer would not have bought the thing had he known of the defect"; or (2) "diminishes its usefulness or its value so that it must be presumed that a buyer would still have bought it but for a lesser price." Id.
The former entitles the buyer to recission of the sale, while the latter gives rise only to a claim for reduction of the purchase price. Id. The existence of a redhibitory defect is a question of fact. Hatten v. Estes Cadillac, Inc., 625 F. Supp. 913, 916 (E.D. La. 1986) (citing Newman v. Dixie Sales & Service, 387 So. 2d 1333, 1339 (La. App. 1 Cir. 1980)).
The Court found that the defects present have not rendered the vessel useless. A thing is generally not useless under redhibition if the buyer has been able to put it to productive, trouble-free use. See, e.g., Pardue v. Ryan Chevrolet, Inc., 719 So. 2d623, 627 (La. App. 2 Cir. 1998), wr it denied, 734 So. 2d 639 (La. 1998)(upholding trial court's holding "that since the plaintiff continued to drive the vehicle on a regular basis, the defect in the vehicle did not merit a recission of the sale"). As noted above, the pushboat has been in service as a pushboat for two years, earning Nautimill $4,000 per day.
The plaintiff testified that the pushboat has required only minor repairs and that the vessel's engines have suffered only routine problems. Furthermore, the Court cannot say on the evidence before it that Nautimill would not have purchased the vessel had the defect been disclosed.
The Court found that, given the evident importance of engine power, it is a reasonable inference that a buyer would pay less for a vessel producing only 75 percent of its advertised horsepower. Accordingly, the pushboat possessed a redhibitory defect at the time of sale. The defects were not discoverable by simple inspection and the Court finds that, even considering Nautimill's relative commercial sophistication, Legacy has failed to meet its burden to show that any warranty waiver was "clear and unambiguous." Therefore the court found that the defect did not render the vessel useless but it did diminish its value where it is presumed that the buyer would have paid a lower price. The court awards damages to Nautimill.
As in the case above, the vast majority of redhibition cases in Louisiana do not end with a reversal of the sale, but with a reduction in the purchase price