MNW, LLC v. Mega Auto Group, Inc.
2012 U.S. Dist. LEXIS 108376
N.D. Ind.2012Background
- MNW, LLC (Mercedes-Benz of Fort Wayne) sues VIP and Flash over $296,615 wired for 41 Mercedes vehicles later exported; Mega Auto Group and Perfect Auto Sales (defaulted) and Mark Shulman allegedly arranged purchases using Mega/Perfect licenses; Shulman signed Acknowledgments of Export Policy on Mega/Perfect's behalf; MBUSA export policy imposes liquidated damages and charges when exports occur within 24 months; Plaintiff seeks declaratory judgment to retain funds and attorneys’ fees, while VIP and Flash counterclaim for (criminal) conversion; trial was a three-day bench trial in 2011; Plaintiff ultimately wins declaratory judgment that it may retain the funds under the contracts, Acknowledgments, and an indemnity agreement signed April 17, 2008; funds have not been spent and remain a contingent liability on Plaintiff’s balance sheet.
- The Indemnity Agreement (April 17, 2008) binds Mega, Perfect, and Shulman to indemnify Indemnitees for exports or policy violations, including a liquidated damages amount of $7,500 per vehicle; VIP and Flash are not parties to the Indemnity Agreement but funds were wired to Plaintiff by VIP/Flash under contracts signed by Shulman on behalf of Mega/Perfect; the court later determines the Indemnity Agreement is an authentic contract and the offset provision permits Plaintiff to retain the $296,615 to satisfy potential indemnity obligations; the court finds the Acknowledgments apply to multiple transactions and bind Mega/Perfect through Shulman; the court awards declaratory relief and sets further proceedings for costs/fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authenticity of the Indemnity Agreement | Indemnity signed April 17, 2008 is authentic. | Signatures may not match; insufficient corroboration. | Indemnity Agreement found authentic by a preponderance of the evidence. |
| Effect of Indemnity Agreement on funds | Offset right allows retention of funds as sums owing to Indemnitors. | VIP/Flash not parties to the Indemnity Agreement; no right to offset. | Funds may be retained as offset under the Indemnity Agreement. |
| Scope of Acknowledgments of Export Policy | Acknowledgments bind Mega/Perfect to liquidated damages across multiple deals. | Language ambiguous; may apply only to single transactions. | Acknowledgments apply to multiple transactions and bind Mega/Perfect. |
| Authority of Shulman to bind multiple principals | Default against Mega/Perfect confirms liability under Indemnity. | Shulman lacked authority to bind multiple principals to one contract. | Moot; default against Mega/Perfect establishes liability; relevance limited. |
| Declaratory judgment proper in this context | Statutory authorization for declaratory relief to determine rights re contracts. | Preemption or unnecessary if other relief available. | Declaratory judgment granted in Plaintiff’s favor. |
Key Cases Cited
- Davis v. Hutchins, 321 F.3d 641 (7th Cir. 2003) (default establishes liability for well-pleaded facts but not damages)
- Franco v. Selective Ins. Co., 184 F.3d 4 (1st Cir. 1999) (default principles; damages not established by default)
- Town & Country Homecenter of Crawfordsville, Indiana, Inc. v. Woods, 725 N.E.2d 1006 (Ind. Ct. App. 2000) (lender not obliged to oversee contractor payments absent agreement)
- Gash v. Kohm, 476 N.E.2d 910 (Ind. Ct. App. 1985) (burden of proof standard in civil cases)