Pierce v. Catalina Yachts, Inc.

Facts

In June 1992, Plaintiffs purchased a forty-two-foot sailboat by Catalina with a limited warranty promising to repair or pay for the repair of any below-waterline blisters that might appear in the gel coat on the boat’s hull. The warranty expressly disclaimed Catalina’s responsibility for consequential damages. In June 1994, Plaintiffs discovered gel-coat blisters and submitted a repair estimate to Catalina. Catalina disputed the estimate and insisted that only minor repairs were necessary. After months of repeated attempts to convince Catalina to pay for more serious repairs, Plaintiffs sued the company in tort and contract. The trial court ruled that contract between the parties barred any consequential damages claims, restricting Plaintiffs’ recovery at trial to the reasonable cost of repair for their sailboat. The jury specifically found that Catalina breached its gel-coat warranty, that it acted in bad faith in failing to honor its warrant obligations, and that Plaintiffs could not have avoided any of their losses. Plaintiffs appealed, contending that the trial court erred in striking their claim for consequential damages.