Unjust Enrichment in Yachting: How Courts Fix Unfair Deals

A lot of yacht disputes don’t start with bad intent. They start with a rushed boatyard job, a handshake promise at a boat show, a wire sent to the wrong vendor, or an owner who accepts a benefit and later decides the bill “wasn’t in the scope.” That’s where unjust enrichment comes in, and it’s one of the most useful concepts in maritime law when the facts feel unfair and the contract language doesn’t neatly solve it.

We unpack how admiralty courts and maritime judges think about equity and restitution, and why unjust enrichment is often treated like a quasi-contract remedy. Using real yachting scenarios, we walk through parts supplied but not paid for, repairs performed without time for a work order, broker introductions that lead to a sale and then a commission fight, and the headaches that follow mistaken payments and missing funds. We also dig into change orders and scope creep, including why unsigned amendments are “playing with fire” for yards and managers when speed targets, delivery dates, or cost caps shift mid-project.

Then we get into the defenses, especially unclean hands. If the claimant’s own misconduct helped create the problem, courts may bar recovery, but the standard is high and the conduct has to relate to the dispute. We close with a vivid story about emergency help at sea in hurricane-force winds, the question of what a fair award looks like, and the practical reminder that collectability and time can matter as much as being right.

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Transcript

Boat Show Stories And Fast Settlements

Diane M. Byrne 0:01

Welcome everybody. Michael, good to see you. Good to see you last week in Palm Beach, too.

Michael Moore 0:06

Thanks, Diane. Always good to see you.

Diane M. Byrne 0:08

How was your show? Strong?

Michael Moore 0:11

It was a very beautiful show, very organized. Everyone seemed to be upbeat. The deals uh were coming in daily, not so much by SL transactions, but for example, on the first day of the show, there were collisions at sea that happened right in the process of putting the boats in their slips. As fate would have it, I was on the internet last night and I saw a video that someone made with an iPhone of the very collision that I had to negotiate earlier in the week.

Diane M. Byrne 0:41

Oh, wow.

Michael Moore 0:42

Entire video of the bigger vessel losing steerage and hitting the much smaller boat. And then you got the issue of what would the damages be, and finally collectability, and they exchanged the money run on the spot.

Diane M. Byrne 0:56

Oh wow.

Michael Moore 0:57

Settled their case. And I sent the client an email that said there's an adage in the in law that goes bad settlements are better than good lawsuits.

Diane M. Byrne 1:06

Yeah. Yeah. That is a very good phrase to keep in mind. That's a good philosophy to live by in general.

Michael Moore 1:13

Very good phrase to keep in mind. That reality of lawsuits, and the answer is you want to stay out of court. You want to mediate your own case. Use your good judgment to resolving your problems. Don't dig the hole deeper. I had a very unusual matter come in by-in where it had come out of a sale in the last boat show and a give back of a week's charter and the charter to the seller of the boat only a year ago. During that charter, there was an incident on board, which clearly the person did not know or wasn't even aware that they were pouring red wine on the beautiful white carpeting in the main salon. And it's a little Yacht World thing that says what would be the right thing to do here. It's a little bit like our subject for the day on just enrichment, but it goes more to the normal wear and tear. It is not normal to get a beautiful white pristine carpeting on day one of the charter and return it completely stained with red wine from front to back. So you get into what is normal wear and tear. And so then you go into the process of trying to clean it. Not going to happen. Now it's going to be a cost of replacement, a bit more expensive, perhaps. The boat show was full of activity. There was a lot going on. I loved it. I loved the fact that we were able to make some connections, make some introductions, create some happiness along the way. And it was a beautiful, it was just a beautiful week in Palm Beach. I don't know how it could have been better.

Diane M. Byrne 2:58

Good. Very good. Yeah, we had a heck of a show ourselves. A lot of really good connections, some really good conversations about the American market and trying to break into it. There are more European builders and suppliers looking to make an entrance here. So we'll see what happens in the coming months, how they all, how everything shakes out. But speaking of the coming months, so like you said before, our subject for today is the matter of unjust enrichment. And I think it's pretty timely. It's this is both an evergreen subject and a timely subject. A situation can come up at any point in the year, but it is timely because of where we are in the year, meaning we're at a point where vessels are leaving the Caribbean. They're now making their plans to go to the Med for the summer, or say the Pacific Northwest, New England. And in between the these cruising periods, obviously, is when a lot of service gets scheduled, a lot of refit

What Unjust Enrichment Means

Diane M. Byrne 4:00

gets scheduled. So those are two potential scenarios in which unjust enrichment can arise. Yacht sales, new contracts being signed, those are other scenarios. So again, that makes it more of an evergreen subject. So let's unpack this and see if we can't help a couple of people better understand the scenarios and hopefully avoid them.

Michael Moore 4:23

Absolutely.

Diane M. Byrne 4:25

How would you define what it actually means? Because this can apply to a yacht owner, or it could apply to a scenario with a subcontractor working with a shipyard, a broker working with an owner, an owner working with a builder. Does it have the same definition no matter what?

Michael Moore 4:45

I think your starting point in terms of the yacht world is the fact that even admiralty judges or maritime judges are considered courts of equity. This is one of the wonderful aspects of maritime law is that these are judges that sit in equity, meaning they are going to find an answer that is rooted in principles of fairness and providing restitution to the wrong party. You can see judges light up when you explain to them that unlike the legal causes of action, that this will be different, Judge. You're not bound by the elements of the cause of action. You must prove a meeting of the minds. You must prove the consideration passed. You must prove that there was a breach, and you must identify the damages that flowed. This is the ultimate in law. It's the unjust nature of it. Sometimes it is referred to a quasi-contract, not a real contract, but it's a remedy that is, that does not depend on contracts. It does not depend on a formal contract. It's based in fairness. But in any of the examples you mentioned, if you have one party retaining a benefit at the expense of another, that wouldn't that would give rise, particularly if there's no legal contract in existence, when you have that feeling of this is not fair, this is wrong, this can't be correct, this guy screwed me. It's all comes down to this idea of the equitable remedy of unjust enrichment. It's a beautiful thing.

Diane M. Byrne 6:42

Yeah, yeah. Obviously, the courts are going to want to side with anybody who has not received their due literal payment, figurative benefit, what have you. It's pretty easy to figure out. Let's take a scenario with a subcontractor. It's pretty easy to figure out how an unjust enrichment scenario would arise. A subcontractor might supply a part. They might even manufacture the part. So in that case, they're not getting paid for their labor of making it or the labor of bringing it and installing it. But what are some of the other scenarios? Because I was trying to figure out in the case of a yacht owner and a broker, what would the benefit be that one is supplying and not being, say, properly compensated for?

Michael Moore 7:34

Okay. Let's take the example you gave. And that's a that's a good basis for the departure. So you have a you there's a part involved, okay? So in one scenario, one party receives the part, and the other party says, the party that receives the part says, but it's not on the contract. It was not in the list. See, here's an entire list of the things that are included in the contract. So therefore, I don't owe you anything. But the other, the aggrieved party says, but wait a second, you receive the part, you use the part, you're keeping the part, but

Classic Yacht Disputes And Mistaken Payments

Michael Moore 8:15

you're benefiting from the part, but you just don't want to pay for it. That would be a classic example of unjust enrichment. You received a benefit, you didn't compensate for the benefit, and you want to retain that benefit without compensation, it would be, I think, a very strong case of a just enrichment acclaim. Someone for that same part thinks he's getting a part and makes payment, transfers money from party A to party B. That would be unjust for the party B to keep the money. Mistaken payment. That's a common scenario. We had this recently on a Seakeeper uh stabilization unit, and the man intended to get a stabilizer. He decided to buy it from Quantum and had identified quantum as the unit he wanted, mistakenly sent the money to a vendor that had advertised that they had three or four C keeper units. And incredibly enough, the party who received the transfer of money by mistake refuses to return the money. We, of course, no, that seems so amazing, but you learn that the reason the guy's not returning the money is because he doesn't have it, he spent it. And so that's a real problem. That is collectability. We had one recently, it was just amazing. Um yacht owner receives a million dollars in advance of a charter, thinking that he will use those funds to fix the vessel, upgrade the vessel, remedy things that need to be dealt with. And in fact, he did all that. Okay. He spent the million on upgrading the boat, spent the money on the boat, all's good to go, right? Except that the boat then suffers a breakdown. So now the owner doesn't have the money, he spent all the money, the million bucks that he received, and the vessel owner can no longer reach the charter by the departure time of the deadline set. So where is the equity in that scenario? There is no contract per se, but is it just and morally right and fair? I think what you may have here is it is morally wrong and unfair for the one party to get all the benefit having spent the money, and for the other party just to be left holding the bag. There will be, I think, a ruling in the favor of the party that is wrong. The collectibility may become an issue, but that is another that's another matter. First, you gotta get the you gotta get the liability piece out of the way.

Diane M. Byrne 11:15

What you had just said contract a couple of times. Makes perfect sense. Contracts a contract makes it very clear who's obligated to do what. There have been a couple of scenarios that I have heard of in this industry, and it pains me to say this, but there have been a couple of scenarios where there's been the proverbial gentleman's agreement. Just, oh yeah, sure, we'll take care of it, kind of arrangement. Those can go sideways. So what happens in a case like that where there isn't a signed contract outlining party A is supplying X to party B? What what do you do?

Michael Moore 11:55

It often comes up in the maritime context where

No Contract Still Getting Paid

Michael Moore 12:00

things happen like a person in Florida anyway, having a brokerage license introduces a buyer to the listing broker and the deal goes through, but for whatever reason, the listing broker, and maybe the seller before the listing broker does not wish to compensate the securing cost broker by the simple defense of saying, we don't have a contract, we have nothing with you, we have no writing. You don't have to have a writing. If you take a boat to a boat yard and you arrive late in the day, and you need work done, there's not time to do an estimate, there's not time to do a quote, there's not time to even have a work order, but the boat needs work done. The hapless owner says, I must be in my next protocol. I don't have, you know, please will you take care of me? Then that yard doing the work will be entitled to get paid under the doctrine of unjust enrichment. The yacht owner did the work, and therefore it's going to be unjust to not get them paid. So these are the things that I think a couple of scenarios where you deliver services that it gets a little complicated. We've got situations where services were rendered in good faith, but for whatever reason there were other issues that came into play. How are you going to compensate the party who rendered those services? And again, it may be a collectability issue, but it's just a matter of looking at all the facts and circumstances and saying, what do we have here? Benefits conferred. We found you a buyer. You wanted a buyer. I found you a buyer. What do you mean you're not going to pay me for those services? I killed myself to find that buyer. We don't have a contract. You better, you really should have a contract. You really should have an understanding. And there's even a price point, otherwise, you go back to industry standard. But that that person who found the buyer will be entitled to be compensated.

Diane M. Byrne 14:31

Are there any circumstances under which a court could or would it be likely to reject a claim other than a situation where there's a written agreement? When the written agreement is there, an email, for example, outlining what needs to be done, who's responsible for what. Outside of failing to have something like that, what other circumstances would a court potentially reject a claim?

Michael Moore 15:03

I think you've touched on the one of the biggest problems is the fact that there is usually some type of contract. In many of these cases, whether it's uh broker's

Change Orders And Scope Creep Fights

Michael Moore 15:15

dispute or a repair situation, but you have a something come up of a factor, uh, and there's a cost overrun. There's an unforeseen circumstance, unforeseen event. Once they got into the inside of what they're undertaking to repair, they discovered much bigger problems. Hopefully, with the abiding and abetting of the person you're trying to get paid bone, who's misled you or not told you everything. But they would be unjustly enriched if the yard went on and continued to work and actually fixed the problem. It just would not be just to leave them holding the bag and for the owner to retain those benefits. You would go in the court and say, yes, it's true, Your Honor, we have a we do have a contract. We're going to ask the court to understand that the facts and circumstances of this case go beyond the contract. So we have a claim in the attorney from just enrichment. And it's beyond the original scope. The owner did accept the benefits of it. And there a lot of times it comes up in the change order context. Yards are not good about getting signed change orders. And you're really playing with fire because the change order is a is actually an amendment to an existing contract. If you don't have a change order, which is an amendment to an existing contract, you're stuck with the original contract. Now you have to convince the court that it would be inequitable to allow the owner. It's usually the one of the a lot of times it is the it's a funny thing. It will run to the detriment of the yard and to the benefit of the owner. For example, the change order will change the metric of the contract that says how fast the boat should go, or how or when the boat will be delivered, or the cost that it will be delivered at. All of these three things, just those three things, there's more, there can be more, need to be in a change order, an amendment to the contract to explain how to properly compensate the parties. Management contracts are notorious for being just hotbeds for disputes because they sign a contract is for services to be rendered, but the services were never rendered, or the services that were rendered were rendered at an inflated cost. So there's a lot of variables that come up in the context of a written, in this case, a written charter or management contract. So it's never completely easy, but I've had people will say this, and we don't that yet we read we know the ones that have worked for us, but someone comes in and they say this scenario, and they think, well, I guess I'm out of luck because I don't have it in writing. You hear that all the time. I got to have it in writing. No, that's not the way it works in the law. This is an exception to the writing rule. There are times when you have to have a writing. Usually it's a statute that says you must have a writing under certain circumstances. But generally speaking, you will still have the ability to raise this unjust enrichment type claim to go forward with a lawsuit that can be sued upon, that damages can be awarded and recovery can be made.

Diane M. Byrne 18:57

I was reading a recent ruling and trying to do a little bit of reading for this conversation today. And it was a ruling involving a commercial shipyard and one of its clients. And the client sued the shipyard for unjust enrichment. And the shipyard, in its defense, said that the client had unclean hands.

SPEAKER_01 19:27

Right.

Diane M. Byrne 19:28

What does that mean? And does that actually come up in any of uh any of the yachting scenarios?

Michael Moore 19:36

Well, it does all the time. I think that, first of all,

Unclean Hands And Proof Standards

Michael Moore 19:40

in law school, when you're just beginning to study law, you encounter these wonderful phrases. They're they're so uh descriptive. The unclean hands prevents the it's actually defensive the unjust enrichment claims. And it's exactly what it implies. Does the party asking for relief are they in some way liable? Are they in some way the reasons that that this happened? And that is the unclean hand doctrine because the nature of the beast, it has a fairly high level of burden of proof to put to plead it. You really do have to, you really do have to show there are a couple of standards you you hear about when you're trying to prove something. What do you think about most lawsuits on the civil side? Well, start with the criminal side. On the criminal side, you always hear this expression beyond a reasonable doubt. Okay now, but in the civil side of the laws of the courthouse, so to speak, you have wrongs that are compensable by money, they're monetary damages. And that's when the idea of unclean hands comes up. It's did the party on the other side have, are they, did their misconduct lead to the problem? Or is it just some unrelated behavior? That won't work, but it does need to be related to the subject matter of the current situation. Then there's also a little bit of a higher standing. It's not as high as beyond a reasonable doubt, it's but it's higher than the traditional standard of a more likely than not or 50% plus one. The scales of justice are slightly tilted. Some courts have said is that a feather weight. In other words, if you put a feather on the scale of justice, does it tip the scale of justice in one way or another? For some reason, unclean hands has always had the standard that is actually the standard of fraud, and that is clear and convincing evidence. So It's clear and convincing evidence of the other party's unethical or wrongful conduct. This is, Your Honor, it's it's true what the plaintiff is saying, but their hands are unclean. They created the situation that we're now being blamed for, and now we're going to have to show it to you, but we will show it to you by clear and convincing evidence. Unclean hands, that's a doozy, that's a first-year law school concept that everybody loves. But it's uh and all of these things have to be explained. They really do have these little how you explain it by arguing to the court what is meant by this and how it applies to your particular case. You're really getting into the areas of fraud or deceit and misrepresentation and uh financial manipulation. It's it's the it's that defense that comes out after when everything else looks great, when everything else looks normal and that you will be recovering, and this looks like a lot, the plaintiff's gonna win if the fan erases their hand and says, Oh no, he has unclean hands. This is why we did this the way we did it.

Diane M. Byrne 23:11

It's a beautiful get the entire case thrown out, or would it just reduce whatever damages might be owed?

Michael Moore 23:20

I think that in a contract situation, it'll get it completely, it'll be a complete bar. And one of the things that's come up in the art world is you have a hold-the-song patent, a very important one for patents on hold its own. There's evidence that will come out and it's not been prevented, you're allowed to erase it. That there was a an earlier design of the same or substantially similar nature. That would be an example of an intellectual property argument. Because when the examiner goes in initially, I don't know what a whole design looks like. Does it look like a WALL-E or does it look like an oxbow or does it look like a D V Hull, like on a magnum or something? Or is it something entirely new? The guy sitting in Washington examining the application has no clue. You can come in later and show this is a design I created five years earlier. We have reason to believe that the person who filed the misleading patent actually stole this design from us. You can still do that, even though file is not conclusive.

Diane M. Byrne 24:27

Sounds like there are a lot of intricacies and a lot of scenarios within scenarios that can impact any given argument, the defense or the plaintiff with these types of lawsuits.

Michael Moore 24:42

That's true. I think that your moral compass is gonna be your best friend. When you know you when you or I or anyone else goes into that, you go to pistache and you're there at the bar and someone tells you their story, you say to yourself, is this fair? Is it unfair? If you believe that it's unfair, and you're the party or you're talking to the party that's aggrieved, chances are the law will deal with it in some way. I mean, it it usually comes up in the yacht world, you know.

Good Samaritan Rescues And Fair Awards

Michael Moore 25:20

And I I heard this this past week in Palm Beach on more than one occasion. I brought that buyer to the table. I'm the reason that 164 newly constructed vessel was sold to that buyer. I introduced that buyer to the broker or the listing agent or the seller. I am entitled to a commission. And that will be the ruling. If the court finds that all of that is true, that broker it's a long unclear if it's not a licensed broker, then you have to get into things like bonders' fees and other equitable remedies. But there will still be a remedy. There will still be a way to receive compensation for just contributions to the whole sales effort. I do recommend a proper contract, but without that, you go with what you got.

Diane M. Byrne 26:19

Yep, word to the wise, that's for sure. Well, I am keeping my fingers crossed that some of the deals that went down during the show and that will be coming out in the next couple of months will steer clear of unjust enrichment, and we'll have some happy owners, happy brokers, happy suppliers, and happy builders. That's what we need more of, that's for sure.

Michael Moore 26:48

I tend to ascribe to that field of thought. And it's uh there's an always a little bit of unhappiness associated with someone who's aggrieved, as they say. And your comment earlier, I saw your reaction to this idea of bad settlements are better than good lawsuits. Something happened coming in for the boat show and berthing you the boats in the right. That's a that can be a comparative fault situation. Everybody has a little bit of the unfairness. But what you don't want is the guy that sees a boat, for example, this is last, this is the last example I'll give. You have a boat that's clearly lost steerage, someone springs into action with their tender that they have on scene, they corral the boat, they keep it out of harm's way, it doesn't collide with any boats. Services were rendered, and now the owner who has a short memory doesn't think the person who rendered the services in the first place should be compensated. And a lot of times they don't want to be compensated. They just say, no, it's just part of my deal. I'm happy to do it. The circumstances are such that they really need to be compensated, they need the money, what have you. That would be a case of unjust enrichment. They you rendered the service, the other side accepted the service, the other side has refused to compensate on any level. Yeah, in a court of equity, one federal judge comes to mind. He called me in that scenario and said, What do you think about my award? I could tell he was troubled. I know the man I've known here since before he was the judge. And I said, I think it was low. He said, Why would you say that? And I said, It was 72 mile an hour winds, hurricane force. That guy risked his life, his limb, and his boat to literally corral the runaway boat, to keep it under control, to maneuver it under those conditions to a berth. It was like a multi-million dollar asset. And you gave him $75,000. In my mind, it's low. I'm not a federal judge. But I'm just saying, if that boat had not been corraled, every single boat in that marina would have been impacted with that boat until by magic it found a resting place. It could have killed people, it could have sunk boats, it could have done a lot of things. And by one person's heroic nature, and maybe never expecting compensation at that point in time, but clearly being entitled to an equitable award, you did the right thing by giving him an award. I'm sorry, but in my world that was too small. We want to encourage people to do things that help others, not always with the expectation of getting paid, but uh you don't have time to, oh, would you mind signing this contract? It's blowing 72, the winds are up, the boat is already broken free, it's now craneing out of control, clearly going to come down on something, and you got a guy that's the happy, good Samaritan, and he succeeds against all odds. He's lucky that he can get a line around a cleat, and his little boat is strong enough to render that service. It's classic unjust enrichment. It's classic, a classic scenario, not the one you see every day. But on that day, and the judges, $75,000 seemed like a lot of money to me. And I see the other boat was like $7 million or something, brand new. $7,000. I guarantee you that owner would have paid that in a heartbeat.

Diane M. Byrne 30:32

Yeah, I agree with you. $75,000 seems just a little bit light.

Michael Moore 30:35

So you're in the yacht world, and so you see it more like the way I do. I think a federal judge has probably never been on a yacht necessarily and says, I say you're on just the 72 mile an hour wind is a key. That's a that is actually a stage one. That's a stage of a hurricane force.

Diane M. Byrne 30:53

Yeah, well, and even if it was a even if it was a commercial port, if there were vessels in port, same thing. It could have been millions in damage to the vessels. It could have been cargo that could have fallen into the water.

Michael Moore 31:08

Yeah. Someone said this at the Palm Beach Boat Show last week, and I have to tell you, my blood, my heart palpitated a little bit. Someone predicted 40 mile an hour winds coming in, 40 knot winds. You remember one of the nights?

Diane M. Byrne 31:23

Yep.

Michael Moore 31:23

And I'm looking at the yacht code tent, and I'm looking at the stakes and the lines that put up barriers, and at that very moment, two or three of them blew over. They looked really substantial because they were gold in color and they had a little rope between them, but they're not the heavy-duty, really heavy metal thing. So they're all blowing over. And I'm thinking, oh boy, this could be a real problem. Do I sound some kind of alarm? Do I say something? The wind never came, as far as I know, but that's the way it comes up in the yachty world. It's the boats moving around. They all blow. They have lines. Were they properly moored? Were they not properly moored? That's the unclean hands aspect when the yacht are trying to blame somebody and somebody says, Yeah, Your Honor, look at the lines that he used. They're like way under sized for that boat. It had lines forward, port, and starboard, after port and starboard, and spring lines on both sides. And yeah, damage occurred. Significant damage occurred, but who's at fault here? This plaintiff has unclean hands. And that's that is the nature of our subject. It's the unjust aspect of the situation, and it's the unjust enrichment of someone who received the benefits who now says, I don't want to pay for it. Because over the wins have passed, everything's returned to normal. I get the call. I feel wronged here. And that was literally the one who I said, no, you need to settle it. If you don't settle, we're gonna have a lawsuit. We'll be here four years from now. And I sent him my adage. Bad settlements are better than good lawsuits. And I said, look, you may not have gotten every dollar you think is in your entitled to, but you got it done and you got it behind you. And as I'd pay, wired the money.

Diane M. Byrne 33:12

Good, good. Yeah, at the end of the day, getting it done and off the plate and being able to move on, that's the best for everybody.

Michael Moore 33:20

I agree.

Diane M. Byrne 33:21

Everybody, we got to leave it there, but thank you as always for listening. If you have a question or a topic that you would like us to cover on an upcoming episode of the Yacht Law podcast, you can reach out to Michael or me. Our contact information is in the show notes for the episode. Until next time, I'm Diane Byrne. Michael, as always, I will give you the last word.

Michael Moore 33:45

As unused as I am to receiving the last word and being given to me, I appreciate it, Diane, and I look forward to our next conversation. All of that.