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SelectSun GmbH v. Porter, Inc.

United States Court of Appeals, Seventh Circuit

June 25, 2019

SelectSun GmbH, Plaintiff-Appellant,
Porter, Inc., d/b/a Thunderbird Products, Defendant-Appellee.

          Argued April 2, 2019

          Appeal from the United States District Court for the Northern District of Indiana, Fort Wayne Division. No. l:14-cv-215 - Theresa L. Springmann, Chief Judge.

          Before Hamilton, Barrett, and Scudder, Circuit Judges.

          Scudder, Circuit Judge.

         Contractual disputes can be messy and present many tangled knots. A year ago in a similar contractual dispute under Indiana law we observed that sometimes the harder questions can be avoided where the evidentiary record shows that the plaintiff "failed to prove its damages with anything close to reasonable certainty." Entertainment USA, Inc. v. Moorehead Communications, Inc., 897 F.3d 786, 797 (7th Cir. 2018). This same observation and evidentiary shortcoming resolves this appeal and leads us to affirm the district court's judgment against SelectSun GmbH in this contract and warranty dispute over whether the exhaust system on a $1 million yacht manufactured by Porter, Inc. complied with particular regulatory requirements imposed by the European Union.



         Porter is an Indiana company that manufactures boats under the Formula and Thunderbird trade names. At the center of this dispute is a 40-foot Formula yacht custom manufactured by Porter for a German businessman and boat enthusiast, Erich Schwaiger. Only a general understanding of how the sale and underlying contract came about is necessary here.

         In September 2012, Schwaiger attended a boat show in Friedrichshafen, Germany, and met Alfred Zurhausen, the owner of Poker-Run-Boats, one of Porter's international dealers of Formula boats. Impressed with a Formula display model, Schwaiger expressed interest in ordering a Formula yacht with supercharged engines and high-end accessories and furnishings. Shortly thereafter Zurhausen met Schwaiger in Munich to discuss these options and pricing in more detail. Those discussions culminated in Schwaiger, through one of his companies, executing a contract with Poker-Run-Boats on October 1, 2012. The yacht and a custom-built lift cost Schwaiger approximately $1 million. Porter, as the manufacturer, was not a party to the contract. The only parties were Poker-Run-Boats and (following a substitution) Schwaiger's company, SelectSun.

         By its terms, the contract required the boat to be "CE certified/' meaning authorized for operation in the European Union. Porter did not manufacture the boat to meet this specification, and the reason seems to be because of communications during the ordering process that Porter had with one of its domestic dealers, International Nautic. Based in Florida, International Nautic had worked with Poker-Run-Boats (the German dealer) to receive Schwaiger's order and, in turn, to transmit that order to Porter. The order conveyed by International Nautic called for the yacht to come with a switchable exhaust system, one that would allow the operator to choose to divert exhaust either above or below the water line. Exhaust diversion above the water line results in a boat operating with more noise. EU regulations, however, require exhaust expulsion below the water line. Porter caught this conflict and explained to International Nautic that the boat could not be both equipped with the switchable exhaust system specified in the original order and CE certified. In the end, and following dialogue on the issue, International Nautic authorized Porter to proceed with manufacturing the boat with the originally designed exhaust system. Apparently Schwaiger knew nothing of International Nautic's decision and therefore believed the yacht would come CE certified.

         Schwaiger took delivery of the yacht in Germany in May 2013. He used the boat throughout much of the 2013 season in Europe. (It is not clear whether he did so believing the boat was CE certified or knowing that it was not.) During these first few months, Porter covered a series of minor warranty repairs at no charge to Schwaiger. By the end of August, however, Schwaiger appeared fed up with the yacht, complaining to Poker-Run-Boats of problems with the boat's engines, steering column, exterior gel coating, and interior furnishings. Rather than seek repairs, Schwaiger returned the yacht to Poker-Run-Boats with instructions to sell it. When the boat did not immediately sell, Schwaiger resorted to litigation.


         In January 2014, Schwaiger's company SelectSun, the party to the contract with the German dealer Poker-Run-Boats, filed a complaint against Porter in federal court in New York. SelectSun amended its complaint a month later to add International Nautic, Porter's Florida dealer, as a defendant. On Porter's motion, the district court in New York then transferred venue to the Northern District of Indiana, where Porter is headquartered.

         SelectSun's claims against International Nautic ended in a default judgment. This resulted from International Nautic shuttering its business in January 2015, and from there forward failing to participate in the litigation. Equally noteworthy is that Porter's German dealer, Poker-Run-Boats, ceased operations sometime after this litigation commenced. ...

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