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Commonwealth Motorcycles, Inc. v. Ducati North America, Inc.

United States District Court, E.D. Kentucky, Central Division, Frankfort

August 25, 2017

COMMONWEALTH MOTORCYCLES, INC, Plaintiff,
v.
DUCATI NORTH AMERICA, INC., Defendant.

          MEMORANDUM OPINION & ORDER

          Gregory F. Van Tatenhove, United States District Judge.

         This is before the Court on Defendant's Motion for Summary Judgment. [R. 71.] Defendants seek Summary Judgment against Plaintiffs for failing to comply with Federal Rules of Civil Procedure Rule 26 by not calculating their damages. This Court agrees that Plaintiffs failed to timely comply with Rule 26, but has chosen to issue sanctions in this case rather than grant Summary Judgment. Accordingly, summary judgment will be DENIED. [R. 71.]

         I

         A

         Commonwealth is a licensed dealer for Ducati Motorcycles and Ducati is a motor vehicle distributor who distributes Ducati motorcycles throughout the United States, including to Commonwealth. [See R. 1-2 at 4.] Commonwealth brings this action against Ducati in a single count for violation of the Kentucky Motor Vehicle Sales Act, specifically KRS 190.046, alleging that Ducati did not properly compensate them for various warranty services. [R. 1-2 at 3, 7.]

         As a dealer of Ducati motorcycles, Commonwealth is required to perform repairs and services that fall under the Ducati “Normal Warranty.” [See R. 72 at 3.] Ducati compensates Commonwealth for the parts and labor Commonwealth uses in order to complete repairs made under the Warranty. [See R. 72 at 3.] According to Ducati, labor costs in general are paid at the rate specified in the Ducati Flat Rate Manual and parts are paid according to Kentucky law. [See R. 72 at 3.] Ducati also reimburses for repairs on motorcycles damaged in transit. [R. 72 at 4.]

         In Plaintiff's Amended Rule 26 disclosures, Commonwealth stated that they “anticipated making a claim for damages in the following categories:

a. Underpayment of time for performing warranty work, improper payment of administrative and clerical costs in relation to warranty work, improper payment for good will and shipping damages on warranty work estimated at $40, 000.
b. Reduction of pricing to minimize dealer parts profits estimated at $90, 000.
c. Discrimination on performance payments, estimated at $60, 000.
d. Improper payment for warranty work estimated at $45, 000.

[R. 72-9.] This amended disclosure did not include any explanation as to how these numbers were estimated or any details on their calculation. [R. 72 at 7.]

         On April 26, 2016, Ducati served its first set of Interrogatories requesting information on Plaintiff's damages claim, including the amount of damages claimed and how those damages were calculated. [R. 72 at 8; See R. 72-12.] Commonwealth responded that they could not calculate damages because they did not have the “Warranty Credit Memos” that were in possession of Ducati. [R. 72-13 at 5-6.] Ducati alleges that Commonwealth admitted repeatedly that they did in fact have those memos and Commonwealth does not dispute this in their Response. Indeed, Commonwealth did eventually calculate its damages, though at a much later date. [R. 72 at 8, R. 82 at 15-22, R. 79-18.] Prior to this eventual calculation, damages claimed by Commonwealth noticeably lacked specific computations and instead were limited mainly to “estimates.” [See e.g., R. 72-4 at 34-35.] Such estimates were based upon files that were randomly selected, many of which Mr. Staloff did not retain to show how such estimates were reached. [See e.g., 72-4 at 41.] Mr. Staloff indicated throughout litigation that to engage in more detailed analysis would be a particularly onerous task, simply stating that “[w]e will have … an exact number . . . by the time July comes around.” [R. 90 at 3.] In fact, upon being pressed in his deposition on whether Commonwealth had completed an “entire calculation, ” Mr. Staloff stated that to make such a calculation was not “impossible, ” but “difficult, onerous.” [R. 72-4 at 40.]

         Plaintiffs finally provided a thorough calculation and analysis of their damages in their Response to Ducati's Summary Judgment Motion on May 5, 2017 [R. 82], barely two months before trial was to begin and well past the February 24, 2017, deadline for disclosure of evidence as required by the Scheduling Order. [R. 17.] This final approximation shows how both the categories and amount of damages claimed by Commonwealth throughout litigation changed significantly. [See e.g., R. 72-9 at 1-2; R. 79-18 at 7.] In particular, the approximated total damages decreased over $74, 000, from $175, 000 in ...


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