Gunboat International, a North Carolina builder of luxury carbon fiber sailing catamarans, is suing a yard in China that it had contracted to build its largest models, saying some work was never done and that the yard refused to pay warranty claims on other poorly constructed yachts it had built — allegedly costing the company about $10 million.
Following shoddy or incomplete work, Gunboat sought to terminate the contract with Taiwan-based Hudson Yachts and Marine Industries, or HYM, but the builder refused to return molds and tooling, Gunboat founder Peter Johnstone told Trade Only Today.
In addition, the company and its owner, Hudson Wang, launched a “knockoff brand” of carbon fiber catamarans despite having signed a non-compete contract, Johnstone said.
Not having the molds and tooling has caused Gunboat to lose the ability to manufacture one of its models, causing the company to lose contracts and profits in excess of $4 million, said documents filed in U.S. District Court in Rhode Island.
“I’m guessing it has probably cost us in the neighborhood of $10 million in the past five years, if not more,” Johnstone said, considering the warranty work Gunboat has performed. That total did not include damage to the company’s reputation.
Hudson Wang and HYM did not respond to emailed requests for comment.
The complaint accused Hudson of breach of contract, fraudulent inducement, interference with contractual relations, unjust enrichment, breach of non-compete and misappropriation of trade secrets.
It also said Hudson “deliberately, willfully and maliciously obtained Gunboat’s trade secrets with the intention of utilizing said trade secrets in connection with, and incorporating them into, the competing HH Catamaran 55 and 66 series, and HYM and Wang did in fact appropriate and utilize said trade secrets for their own benefit and profit.”
As of April 2014, HYM had completed the manufacture of five of eight vessels for Gunboat, court documents said. Two vessels were in process and one had not been started.
“Almost immediately after delivery of each of the completed vessels to Gunboat’s customers, Gunboat began receiving complaints from said customers regarding the integrity of the vessels and/or components manufactured by HYM,” said the amended complaint, which was filed in August.
“They sent out boats knowingly with a lot of items incomplete, with issues, and wouldn’t stand behind them, fix them, visit them, inspect them,” Johnstone said. “They wouldn’t engage with us in any way to sort out the boat and were demanding payments in full.”
Wang also has companies that make products ranging from grills to protective sports equipment, Johnstone said.
“He’s trying to sell boats here, and he’s got his 25 other companies in primary markets all over the United States,” Johnstone told Told Trade Only. “I think if publicity on the federal complaint gets out, it will have to have some impact on other business. What they’ve done to us would scare the hell out of any American customer. They’re not standing behind the warranty and [are ignoring] the real cost there and real issues that need to get sorted out.”