SHYANN EMBRY, et al. v. DISCOUNT MOTORS, LLC, et al.
CIVIL ACTION NO. 4:23-CV-00078-HBB
UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY OWENSBORO DIVISION
September 10, 2024
H. Brent Brennenstuhl, United States Magistrate Judge
Before the Court are two motions for summary judgment, one filed by Defendant Donald Adams at DN 38 and the other by Defendant Eddie Howard at DN 42. The parties have consented to the undersigned‘s exercise of dispositive authority pursuant to
NATURE OF THE CASE
Defendant Discount Motors is a Kentucky limited liability company (DN 43-4, p. 3). Defendant Don Adams owns and is employed by Discount Motors (Id.). Defendant Eddie Howard was an employee (Id.). Plaintiffs Shyann Embry and Leah Early purchased used vehicles from Discount Motors (DN 40, p. 4). They allege that the Defendants manipulated the odometers on the vehicles to misrepresent the mileage in violation of the Federal Odometer Act (Id. at pp. 5). They further allege that the Defendants similarly manipulated the odometers and misrepresented the mileage of a large number of vehicles sold to other purchasers and assert claims both individually and as representatives of a class (Id. at pp. 3-4, 6-9).
DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT
Adams and Howard argue that Discount Motors is a Kentucky limited liability company in good standing and the Plaintiffs’ contracts to purchase their automobiles were with Discount Motors (DN 38, p. 1; DN 42, p. 1). Adams argues that Kentucky law does not impose liability upon a member for the actions of the LLC (DN 38, pp. 1-2). Howard, proceeding pro se, joins in Adams’ motion and incorporates it by reference (DN 42, pp. 1-2). Of note, however, there is no indication in the record that Howard is a member, as opposed to an employee, of the LLC.
In support of his motion, Adams cites Pannell v. Shannon, 425 S.W.3d 58 (Ky. 2014) for the proposition that an officer or agent of a corporate entity entering into a contract on behalf of the entity cannot be held personally liable unless the individual signs the agreement in their personal capacity (DN 38, pp. 1-2). Turning to the Plaintiffs’ First Amended Class Action Complaint, Adams emphasizes that they have alleged the Plaintiffs “and Discount Motors entered into a contract” to sell the automobiles in question (DN 46, p. 1) (citing DN 40, ¶¶ 20-22). Given that Adams did not personally contract with the Plaintiffs to sell the cars, he contends that he cannot be liable for the actions of the LLC (DN 38, p. 2; DN 46, p. 2). Howard argues the same (DN 42, p. 1).
The issue Defendants present is a narrow one of law - whether the Plaintiffs’ claims sound only against the LLC. To this end, the Plaintiffs argue that the Federal Odometer Act creates a private right of action against the individual defendants and Kentucky‘s LLC law does not insulate them from individual liability (DN 43, pp. 7-12). The undersigned agrees.
DISCUSSION
To grant a motion for summary judgment, the Court must find that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law.
Here, there are no disputes regarding the facts of the case. The question turns on application of the law to the facts.
The Federal Odometer Act provides that no person may “disconnect, reset, alter, or have disconnected, reset, or altered, an odometer of a motor vehicle intending to change the mileage registered by the odometer.”
The Defendants’ argument that they did not personally contract with the purchasers is unavailing. Liability under the statute is not limited to the contract with the “transferor,” and a Plaintiff need only allege that the individual engaged in the prohibited conduct or conspired to do so. See Rowan v. Max Auto Mall, Inc., No. 01 C 3648, 2002 U.S. Dist. LEXIS 2202, *4-5 (N. D. Ill. Jan. 29, 2002). As one court astutely observed:
The Odometer Act‘s provisions apply to all “persons.” The term person includes “corporations, companies, associations, firms, partnerships, societies, joint stock companies and individuals.” The term also includes owners, employees, or agents of car dealers. . . . Any human being or business entity that violates any section of the Act may be held liable.
Rife v. Randolf Ezrre Wholesale Auto Sales, LLC, No. CV-19-04689-PHX-DLR, 2022 U.S. Dist. LEXIS 21480, *8 (D. Ariz. Feb. 7, 2022) (citation omitted). To that end, the Plaintiffs’ First Amended Complaint alleges that the Defendants “conspired to alter the odometer readings, and thus the reported mileage, of vehicles sold at their car lot . . ..” (DN 40 at ¶ 10). The Plaintiffs further allege that the Defendants “individually and conspiracy with one another, used a peripheral device to digitally ‘roll back’ the odometers of vehicles before placing them on the Lot for sale.” (Id. at ¶ 11). Consequently, Plaintiffs’ claims against Adams and Howard are not dependent upon a contractual relationship.
Kentucky law shields members from vicarious personal liability for actions or obligations of an LLC. Specifically,
The Defendants’ argument that they must have contracted with the Defendants in order to bear liability under the Act is incorrect. Likewise, their argument that the involvement of the LLC in the sale of the vehicles shields them from liability is unavailing. Beyond these two arguments, the Defendants have not otherwise challenged the sufficiency of the Plaintiffs’ evidence of culpability to withstand challenge on summary judgment.
WHEREFORE, the motions of Defendants Adams and Howard for summary judgment are DENIED.
September 10, 2024
H. Brent Brennenstuhl
United States Magistrate Judge
Copies to: Counsel of Record
Eddie Howard, pro se
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