United States District Court, W.D. Kentucky, Louisville Division
COGAN IMPORTS, INC. PLAINTIFF
SUNIL DHAROD DEFENDANT
MEMORANDUM OPINION AND ORDER
N. STIVERS, CHIEF JUDGE UNITED STATES DISTRICT COURT.
matter is before the Court on Defendant's Motion for
Summary Judgment (DN 59), Plaintiff's Motion for Summary
Judgment (DN 53), Plaintiff's Motion to Exclude the
Defendant's Expert Witness (DN 52), Defendant's
Objection to Magistrate Judge's Order on Motion for
Sanctions (DN 82), and Defendant's Objection to
Plaintiff's Bill of Costs (DN 83). For the reasons set
forth below, Defendant's Motion for Summary Judgment is
GRANTED, Defendant's Objection to Magistrate Judge's
Order on Motion for Sanctions is OVERRULED, Defendant's
Objection to Plaintiff's Bill of Costs is SUSTAINED, and
the other motions are DENIED.
STATEMENT OF FACTS
Cogan (“Cogan”) collects luxury cars and
established Plaintiff Cogan Imports, Inc. (“Cogan
Imports”), a licensed motor vehicle dealer in
Louisville, Kentucky. (Cogan Aff. ¶ 3, DN 21-2; Cogan
Dep. 119:15-120:10, Sept. 27, 2017, DN 63-1; Def.'s Mot.
Summ. J. Ex. 2, at 3, DN 59-3). Cogan was seeking financing
for Cogan Imports' inventory and contacted Todd McNeill
(“McNeill”), a loan broker with whom Cogan had
dealt previously. (Cogan Aff. ¶ 4; McNeill Dep.
11:18-22, Jan. 24, 2018, DN 63-3). McNeill indirectly learned
of Defendant Sunil Dharod (“Dharod”), who himself
collected high-end cars, as a possible source of financing
for Cogan Imports. (McNeill Dep. 12:15-13:9).
February 26, 2016, Cogan, McNeill, and an associate of
Dharod's named John Fox (“Fox”) held a
conference call in which they discussed Cogan's
background and some of the cars in his collection. (McNeill
Dep. 27:15-28-6). At some point, Cogan disclosed that he
owned a 2003 Ferrari Enzo. (Fox Dep. 26:23-27:23, Nov. 2,
2017, DN 63-4). Fox later mentioned the Enzo to Dharod, and
Dharod asked Fox to find out if Cogan Imports was interested
in selling the vehicle. (Dharod Dep. 80:7-18, Dec. 7, 2017,
sent an email to Cogan asking whether he would be interested
in selling the Ferrari, stating: “We would like to
offer you $2.7 million for the Enzo.” (Def.'s Mot.
Summ. J. Ex. 9, at 4, DN 59-10 [hereafter Mar. 11 Emails]).
Fox further indicated that if that price were agreeable to
Cogan, Fox and Dharod would schedule a trip to Louisville
“to spend a day going over details on that vehicle and
other opportunities.” (Mar. 11 Emails, at 4). Cogan
responded, stating that he believed a meeting was important
and asking the earliest possible date for a visit to
Louisville. (Mar. 11 Emails, at 3-4). Cogan also inquired
whether the offer of $2.7 million was a “formal
offer” and provided an overview of the Enzo's
history. (Mar. 11 Emails, at 3-4). Fox replied to Cogan's
email, confirming that the prior email was a formal offer.
(Mar. 11 Emails, at 3). Cogan responded, “I am
accepting the offer. We have a deal.” (Mar. 11 Emails,
following day, Fox checked the history on the Enzo through
Carfax and learned the car had over 4300 miles on it,
while Fox and Dharod previously understood the car's
mileage to be only 444. (Fox Dep. 73:18-74:6; Def.'s Mot.
Summ. J. Ex. 8, at 2, DN 59-9; Def.'s Mot. Summ. J. Ex.
11, at 2-3). The source of Fox's misunderstanding is
unclear. In an email to McNeill, Fox blamed himself for the
miscommunication on his poor hearing but indicated his notes
from the teleconference reflected the lower mileage.
(Def.'s Mot. Summ. J. Ex. 12, at 2). Fox testified he was
confident Cogan had represented the lower mileage and that
Fox initially took responsibility for the misunderstanding
hoping to preserve good relations between Dharod and Cogan.
(Fox Dep. 75:3-21; Def.'s Mot. Summ. J. Ex. 11, at 2-3).
Dharod learned the Enzo's true mileage, Fox advised Cogan
Imports that Dharod was no longer interested in purchasing
the vehicle because of the mileage discrepancy. (Fox Dep.
74:7-12; Def.'s Mot. Summ. J. Ex. 10, at 2, DN 59-11).
Cogan Imports subsequently took the position that the email
correspondence with Fox represented a binding contract with
no additional conditions. (Def.'s Mot. Summ. J. Ex. 13,
at 2-4, DN 59-14). Dharod ultimately declined to purchase the
Ferrari, and this litigation followed.
the course of this action, the parties attempted to resolve
the dispute and entered into a “Final Settlement
Agreement” on July 15, 2016 (“Settlement
Agreement”). (2d Am. Compl. ¶¶ 11-12, DN 16;
Pl.'s Resp. Def.'s Mot. Summ. J. Ex. M, DN 67-14).
The Settlement Agreement provided for an inspection of the
vehicle on July 18, 2016, following which Dharod was to elect
whether to proceed to close on the purchase or to terminate
the Settlement Agreement “in which event the Parties
shall resume the positions they held immediately before the
Agreement was executed.” (Pl.'s Resp. Def.'s
Mot. Summ. J. Ex. M, at 2). Dharod allegedly objected to some
minor repairs costing approximately $1300. (2d Am. Compl.
¶¶ 14-15). Cogan Imports declined to make the
repairs and Dharod terminated the Settlement Agreement. (2d
Am. Compl. ¶¶ 15-16; Pl.'s Resp. Def.'s
Mot. Summ. J. Ex. N, at 2, DN 67-15). Cogan Imports then
relented and agreed to make the repairs, but Dharod declined
to rescind his election to terminate the Settlement
Agreement. (2d Am. Compl. ¶¶ 18-19). Cogan Imports
subsequently amended its Complaint to assert a breach by
Dharod of the Settlement Agreement. (2d Am. Compl.
Court has subject-matter jurisdiction of this matter based
upon diversity jurisdiction. See 28 U.S.C. § 1332.
Motions for Summary Judgment (DN 53, 59)
parties have filed competing motions for summary judgment. In
ruling on a motion for summary judgment, the Court must
determine whether there is any genuine issue of material fact
that would preclude entry of judgment for the moving party as
a matter of law. See Fed.R.Civ.P. 56(a). The moving party
bears the initial burden of stating the basis for the motion
and identifying evidence in the record that demonstrates an
absence of a genuine dispute of material fact. See
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
If the moving party satisfies its burden, the non-moving
party must then produce specific evidence proving the
existence of a genuine dispute of fact for trial. See
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
the Court must view the evidence in the light most favorable
to the non-moving party, the non-moving party must do more
than merely show the existence of some “metaphysical
doubt as to the material facts.” Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986) (citation omitted). Rather, the non-moving party must
present specific facts proving that a genuine factual dispute
exists by “citing to particular parts of the materials
in the record” or by “showing that the materials
cited do not establish the absence . . . of a genuine dispute
. . . .” Fed.R.Civ.P. 56(c)(1). “The mere
existence of a scintilla of evidence in support of the
[non-moving party's] position will be insufficient”
to overcome summary judgment. Anderson, 477 U.S. at
Breach of Contract to Purchase the Enzo
Imports asserts that Dharod breached the parties'
contract, which consists entirely of the March 11 Emails.
“To prove a breach of contract, the complainant must
establish three things: 1) existence of a contract; 2) breach
of that contract; and 3) damages flowing from the breach of
contract.” Metro Louisville/Jefferson Cty.
Gov't v. Abma, 326 S.W.3d 1, 8 (Ky. App. 2009)
(citing Barnett v. Mercy Health Partners-Lourdes,
Inc., 233 S.W.3d 723, 727 (Ky. App. 2007)).
disputed contract involves the sale of goods, so the
transaction is governed by Kentucky's enactment of
Article 2 of the Uniform Commercial Code (“UCC”),
KRS 355.2-101 to 355.2-725. See Princesse D'Isenbourg
Et Cie Ltd. v. Kinder Caviar, Inc., No. 3:09-29-DCR,
2011 WL 720194, at *4 (E.D. Ky. Feb. 22, 2011); A&A
Mech., Inc. v. Thermal Equip. Sales, Inc., 998
S.W.2d 505, 509 (Ky. App. 1999). Under the UCC, “[a]
contract for sale of goods may be made in any manner
sufficient to show agreement, including conduct by both
parties which recognizes the existence of such a
contract.” KRS 355.2-204(1).
fundamental elements of a valid contract are ‘offer and
acceptance, full and complete terms, and
consideration.'” Energy Home, Div. of S. Energy
Homes, Inc. v. Peay, 406 S.W.3d 828, 834 (Ky. 2013)
(quoting Commonwealth v. Morseman, 379
S.W.3d 144, 149 (Ky. 2012)). Ordinarily, a valid contract
must describe the parties' obligations in sufficiently
definite and certain terms. Kovacs v. Freeman, 957
S.W.2d 251, 254 (Ky. 1997). As a sister court has explained:
The content, oral or written, must detail adequately the
material or “essential” terms on which the
parties purportedly have agreed. By and as part of the
agreement, the parties must themselves sufficiently point to
the standards for measuring the fulfillment and boundaries of
each material item. As it relates to the key issue of open
material terms and prospective negotiation, Kentucky takes an
all or nothing approach to contracting. Thus, while the
modern contracting trend would enforce a preliminary
agreement that essentially binds the parties to good faith
negotiations on open terms, Kentucky treats a preliminary
agreement-even one evincing intent to be bound-as
unenforceable if material terms remain subject to future or
First Tech. Capital, Inc. v. JPMorgan Chase Bank,
N.A., 53 F.Supp.3d 972, 984 (E.D. Ky. 2014) (citing
Cinelli v. Ward, 997 S.W.2d 474, 478 (1998)).
UCC, however, takes a liberal view on the requirement that a
contract must be specific regarding essential terms,
including the identity of the parties, the subject matter of
the contract, consideration, quantity, and even price. See
77A C.J.S. Sales § 26. Although the UCC allows for some
open contract terms and provides “gap-fillers”
where parties have failed to agree on others, it also makes
clear that the parties to a contract must express their
intent to be bound. KRS 355.2-204(3) (“Even though one
(1) or more terms are left open a contract for sale does not
fail for indefiniteness if the parties have intended to make
a contract and there is a reasonably certain basis for giving
an appropriate remedy.”).
the UCC requires an expression of the parties' intent to
form a contract, it does not define what words or actions
constitute intent. Compare KRS 355.2-204(3), with KRS
355.2-106. Further, when Kentucky adopted the UCC the
legislature included a provision stating that, where not
specifically defined by the UCC, Kentucky's common law
would govern interpretation. KRS 355.1-103(2). Thus, Kentucky
common law must answer whether the parties intended to enter
into a contract in this case.
Court's review of the putative contract “must begin
with an examination of the plain language of the
instrument.” Ky. Shakespeare Festival, Inc. v.
Dunaway,490 S.W.3d 691, 694 (Ky. 2016).
“‘In the absence of ambiguity, a written
instrument will be enforced strictly according to its
terms,' and a court will interpret the contract's
terms by assigning language its ordinary meaning and without
resort to extrinsic evidence.” Wehr Constr., Inc.
v. Assurance Co. of Am., 384 S.W.3d 680, 687 (Ky. 2012)
(quoting Frear v. P.T.A. Indus, Inc., 103 S.W.3d 99,
106 (Ky. 2003)). Absent ambiguity, the contract terms are to
be enforced in accordance with their ordinary meaning without
resort to extrinsic evidence. See Frear, 103 S.W.3d
at 106 (citing Hoheimer v. Hoheimer,30 ...