Reuters/Tim ChongRussian billionaire Andrei Melnichenko’s 394-foot mega-yacht “A.”
Andrei Melnichenko has extra reason to be concerned about the sunlight — and we aren’t talking financial transparency. The owner of Eurochem, a large Russian producer of fertilizers, says he has evidence that sunlight on his surfaces reveals rash, blotches, separations, lines, starring and sagging. He says he’s paid to see his face reflected on the surfaces, but because the job has been botched, he can’t. The damage he is estimating at $100 million.
That’s not Melnichenko’s person we are talking about, but the surfaces of his boat, a motor yacht named A, after his wife Alexandra, and owned by the two of them through a succession of offshore companies, starting with Niedes Ltd. of British Virgin Islands, A Yacht Charter Co. of Isle of Man, and currently Bermuda Yachts Ltd of Bermuda.
Since July of 2010 Melnichenko’s New York lawyer, Patrick Salisbury, has been suing the international paints and coatings corporation, the Dutch-registered Akzo Nobel through three of its paint subsidiaries for covering the yacht with paint which failed to reflect and failed to stick. Akzo Nobel’s shares are listed over the counter in the US, and it has a current market capitalization of almost $18 billion. One of the subsidiaries does business in New Jersey, where it calls itself “one of the most reliable marine coatings suppliers in the world.”
The case docket, No. L002634-10, in the Superior Court of New Jersey commenced with Melnichenko’s claim dated July 8, 2010. By late last month, it was running to 116 filings. Altogether, the file holds 260,000 pages, including 300 exhibits, 27 witness depositions, and dozens of contracts. So far it has cost both sides several million dollars. It is the biggest product liability claim ever made by a Russian against an international supplier.
A boat-painting expert has reportedly testified that there were no serious surface defects in the paint job causing the poor reflectivity which is the nub of the Melnichenkos’ complaint. Akzo Nobel argues that “as the only harm alleged is the subjective lack of reflectivity in the paint, Plaintiff essentially argues that paint damaged itself.”
AP Photo/Sergey PonomarevAndrei Melnichenko is pictured on the left.
More detail on the Awlgrip-brand paint, and on what Mr and Mrs Melnichenko have claimed about themselves in the court papers, were sealed this past July by the presiding judge, Kenneth Grispin, on the ground that they may contain trade and commercial secrets for the paint company, and privacy issues for the Melnichenkos.
That sum, the complaint alleges, has been calculated from “ascertainable losses of at least $100 million plus attorney’s fees and costs… These ascertainable costs include those required to correct the paint and coatings defects and repaint the entire Vessel, which will take at least 18 months. Further, these costs include the loss of use of the yacht and cost of a replacement yacht during the repair period.”
The shipbuilder, Blohm & Voss, is being sued separately and elsewhere for €13 million.
According to International Paint LLC, the New Jersey company which is immediate target of the court action, the Melnichenko claim is misdirected. If the paint job turned out to be as non-reflective as the Melnichenkos are claiming, the alleged damages “if any, were not the result of any act or omission on the part of International Paint LLC, but exist by reason of operation of nature over which International Paint LLC had no control.” In short, Mother Nature is to blame. Or to be specific, Aeolus, God of the sea winds, Briareus, God of the sea storms, Oeolyca, in charge of sea waves, the Harpies (gusts and water spouts), not to mention Poseidon, God of all the sea.
According to a source close to the case, “independent inspection concluded there was nothing wrong with the paint job. They [Mr & Mrs Melnichenko] were happy with the job. They signed off their acceptance. A normal paint (ship) job would last four to five years. But that depends on the weather and sea.”
The court record reveals an uncharacteristic reluctance on the part of Melnichenko’s wife Alexandra to put her mouth where her husband’s er, lawsuit is. In September of this year, according to one of the filings by lawyers for the Akzo Nobel group, the court was told that Mrs Melnichenko had been notified that she should appear for a deposition in the spring of 2012. It then took the paint group almost a year to compel her to appear.
Akzo Nobel is also accusing the Melnichenkos’ lawyers of withholding another dozen witnesses whose testimony, the company says, is required for the court to adjudicate the claims, including Philippe Starck, the designer of the exterior shape and interior decoration of the boat.