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Alaska Marine Highway System Claims Fast Ferries Have Defective Engines-AMHS v. Derecktor and MTU Friedrichshafen

Moving vessels Fairweather and Chenega are Alaska Marine Highway System’s (AMHS) first “fast” ferries. They are 235-foot long aluminum-hulled catamarans with standard service speeds of 32 knots. These ferries carry up to 250 passengers and 36 vehicles at a time. Their interior spaces have a combination of reclining airline-style seats, tables, video games, and full service snack bars. The Juneau-based Fairweather and the Cordova-based Chenega shuttle passengers through Alaska’s frigid waters. Both vessels were delivered as part of a $68 million contract with Robert Derecktor, the east coast shipyard that built the ferries, and MTU Friedrichshafen, the German manufacturer of the engines. Now, AMHS is suing Derecktor and MTU for breach of contract, warranty, and service obligations. Claiming both ferries have defective engines, AMHS asked the Alaska Legislature for $22 million, which would replace the engine of only one ship.

In March of last year, AMHS filed suit against the ferries’ builder and engine manufacturer, alleging the vessels had flawed engines. Ferry officials claim there are defects in the engine blocks, cylinder liners, gear reduction units, and other vessel components. They say the extensive engine damage was “inherent” in their poor design. MTU has denied the allegations and Derecktor filed a counter-claim, contending AMHS improperly refused to release the warranty bond on Chenega and still owes over $820,000 in contract retentions and repair work. Parties on both sides are setting production deadlines for discovery and AMHS is actively seeking proposals for legal counsel to immediately begin assisting the Attorney General in preparing for trial. The 21-day trial, venued in Juneau Superior Court, is scheduled to begin on September 10, 2012.

A “latent defect,” as alleged in this case, has a different meaning in maritime law. Unlike in common law, a latent defect in marine vessels is an “unknown defect not discoverable by reasonable and prudent inspection.” Marine insurance policies often provide coverage for loss and damage caused to the vessel as a result of a latent defect. Latent defects include faulty material and faulty workmanship, and damage caused by faulty design. Here, AMHS alleges that patent defects in the Fairweather and Chenega’s engine blocks were not discoverable by reasonable inspection. Even if the defect has not yet manifested itself, Direcktor and MTU can still be held liable for faulty material or components that “eventually become apparent as time goes on and parts begin to fail.” This may apply to the Chenega because it was built after the Fairweather and has experienced fewer engine problems.

The Fairweather has recently undergone short-term engine repairs in Ketchikan while the Chenega operates in Prince William Sound. The engines on both vessels started showing signs of excessive wear that could eventually stop them from sailing in a few years. State officials previously sought a preliminary injunction forcing the builders to provide replacement engines, but the judge has not yet ruled on the motion. Trial has also been postponed in hopes that the parties can reach a negotiated settlement in this case.

The experienced maritime attorneys of Anderson Connell & Carey have successfully handled hundreds of maritime plainfiffs’ cases Loss and damage to the vessel may be covered under a marine insurance policy despite the latent defect clause. We provide initial consultations without charge. For legal assistance, call (800) 262-8529 or contact us online.

Web Resources:

RFP: Legal Services in Support of State, Alaska Marine Highway System’s Lawsuit Regarding “Fast Ferry” Vessels, State of Alaska Public Notice

Marine Highway Plans to Replace Fast Ferry Engines, Coast Alaska News

More Blog Posts:

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Swanland Mirrors Alaska Shipwreck Cases, Washington Maritime Injury Lawyer Blog

Senators Maria Cantwell and Olympia Snowe can make fishing-vessel safety a priority, Washington Maritime Injury Lawyer Blog

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