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Montana Trucks LLC v. UD Trucks North America Inc.

United States District Court, D. Montana, Missoula Division

May 16, 2017

MONTANA TRUCKS LLC, Plaintiff,
v.
UD TRUCKS NORTH AMERICA INC, f/k/a NISSAN DIESEL AMERICA INC., and UD TRUCKS CORP., f/k/a NISSAN DIESEL MOTOR CO., LTD., Defendants.

          OPINION AND ORDER

          Donald W. Molloy, District Judge.

         This case involves a contract dispute between Plaintiff Montana Trucks LLC ("Montana Trucks") and Defendant UD Trucks North America, Inc. f/k/a Nissan Diesel America, Inc. ("UD America"). UD America is a distributor of medium-duty cab and chassis trucks manufactured by UD Trucks Corp. f/k/a Nissan Diesel Motor Co., Ltd. ("UD Japan"). (Pl.'sSDF, Doc. 134 at 1(1).) On December 10, 2003, UD America and Montana Trucks entered into a Dealer Sales and Service Agreement ("the Contract") in which UD America agreed to supply UD3300 model trucks to Montana Trucks. (Dec. 20, 2016 Order, Doc. 123 at 2.)

         A Distributor Agreement exists between UD America and UD Japan under which UD Japan warranted to UD America that its trucks were free from defects in material and workmanship. (Doc. 134 at 1(6).) The Distributor Agreement specifies, and this Court agreed, that UD America is not an agent or alter ego of UD Japan. (Id.; Doc. 123 at 1.) As the manufacturer of the trucks, UD Japan self-determined and certified that the UD3300 trucks supplied were compliant with Federal Motor Vehicle Safety Standard ("FMVSS") 121. (Doc. 134 at 1(8).) An Incomplete Vehicle Document, provided by UD Japan, was included with every cab-chassis sold to UD America for distribution to its dealers, including Montana Trucks. (Id.)

         Between January 1, 2007 and January 1, 2010, Randy Botsford, his brother Terry Botsford, and Mark Byington all had ownership interest in Montana Trucks. (Id. at 1(10).) Randy Botsford has been a managing member since 2007. (Id. at 1(11).) The Botsfords and Byington were also members of Pioneer Drive, LLC ("Pioneer Drive"), another Montana corporation. (Id. at 1(12).) Specifically, Randy Botsford was the president, Terry Botsford was the attorney of record, and Mark Byington was the Chief Financial Officer for Pioneer Drive. (Id.) In 2006, Pioneer Drive entered into a separate agreement with UD America by which it would convert UD3300 model trucks from incomplete 4x2 chassis with left-hand side drive configuration and controls into dualized truck chassis with right-hand driver configuration and controls, for use as street sweepers. (Id. at I(13), (27).) In May 2007, Nevada Automotive Test Center ("Test Center") reported to Pioneer Drive that the UD33OO truck it tested, which Pioneer Drive had converted into a 4x4, did not meet FMVSS 121 standards. (Id. at 1(16).) In July 2008, Pioneer Drive filed a complaint against UD America's predecessor corporation, Nissan Diesel America, Inc., alleging the UD33OO air brake system did not comply with FMVSS 121. (Id. at 1(14).)

         In October 2008, Pioneer Drive received a report from an independent brake testing company ("Link-Radlinski"), which found the brakes on both unmodified and modified UD33OO trucks failed FMVSS 121 compliance testing, (id at 1(18)); however, UD America denied that the brakes were noncompliant, (Doc. 123 at 2). UD America claims that it relied upon UD Japan's assurances of compliance. (Doc. 134 at I(22), (23).) The extent and timing of UD America's actual knowledge of the noncompliance is disputed by Montana Trucks. (Id.) In 2009, during the pendency of the Pioneer Drive lawsuit, UD America terminated the Contract with Montana Trucks and refused to repurchase the faulty vehicles. (Doc. 123 at 2.)

         On February 1, 2010, Kazuaki Sasame ("Sasame"), the president of UD America and veteran executive of UD Japan, testified that the compliance certificates that accompanied the UD33OO trucks were false. (Doc. 123 at 2; Doc. 134 at II(5), (6).) This date is the last possible date the claims in the Second Amended Complaint could have arisen. (Doc. 123 at 2.) However, the parties dispute the earliest possible date of accrual.

         Here, Montana Trucks seeks damages relating to two trucks that UD America refused to repurchase ($116, 344), specialty tools and parts ($45, 225.84), lost business value and operating costs ($2, 420, 000), as well as an undetermined amount of punitive damages. (Doc. 134 at 1(24).) The two trucks at issue were purchased by Montana Trucks on or about December 28, 2007 and then modified by Pioneer Drive in October 2008. (Id. at I(29), (30).) It is unclear whether these two trucks are the same trucks that were the subject of the 2010 settlement in the Pioneer Drive litigation with UD America or what affect this fact may have in the ultimate disposition of this case. How and whether these trucks were ultimately under Montana Trucks' ownership also remains in dispute. (Id. at I(33), (34).) Additionally, the parties dispute UD America's responsibilities under the Contract post-recall. (Id. at I(36).)

         Procedural Background

         On February 15, 2012, Montana Trucks filed a lawsuit against UD America alleging breach of contract, fraud, and punitive damages. (Doc. 1.) UD America moved for summary judgment. (Doc. 30.) While that motion was pending, Montana Trucks filed a Second Amended Complaint, adding a constructive fraud claim and naming UD Japan as a defendant. (Doc. 71.) On August 12, 2013, UD America's motion for summary judgment was granted in holding that the Contract's Limitation of Remedies clause barred the breach of contract claim, and Montana's two-year statute of limitations barred the fraud and punitive damages claims. (Doc. 81 at 23.) Judgment was initially reserved on the newly-asserted constructive fraud claim, (id. at 25-26), but on October 9, 2013, summary judgment was entered on the grounds the claim was also time barred, (Doc. 88 at 5). Summary judgment was granted in favor of UD Japan as well. (Doc. 92.) Montana Trucks and UD Japan entered into a stipulation allowing Montana Trucks to reserve its claims against UD Japan while allowing UD Japan to reserve a personal jurisdiction challenge. (Doc. 90. at 2.) Acknowledging the stipulation, the case was dismissed with prejudice. (Doc. 91.)

         Montana Trucks appealed, and on July 28, 2016, the Ninth Circuit affirmed in part, reversed in part, and remanded. (Doc. 96.) Relevant here, the Ninth Circuit affirmed the conclusion that the Contract's Limitation of Remedies provision bars Montana Trucks' claim for consequential damages for breach of contract, (id. at 1); but, remanded "insofar as the plaintiff seeks damages for the loss resulting in the ordinary course of events from the seller's breach, " (id. at 2-3). Citing a recent Montana Supreme Court decision, Masters Group International, Inc. v. Comerica Bank, 352 P.3d 1101 (Mont. 2015), the Circuit reversed the fraud claim, finding that the Contract's choice-of-law provision applied to tort claims against UD America, which in turn meant that Texas' four-year statute of limitations for fraud applied. (Id. at 4.) It also remanded the attendant punitive damages claims. (Id.) Additionally, the Circuit remanded the constructive fraud and negligent misrepresentation claims against UD America to determine whether those claims are barred by the applicable Texas statute of limitations. (Id. at 5.) Likewise, the Circuit further remanded the fraud claim against UD Japan to address "[UD Japan's] post-Masters Group argument that since it was not a party to the contract, Montana Trucks' claims against it are barred by the Montana statute of limitations." (Id. at 4.)

         On December 20, 2016, UD Japan's motion to dismiss for lack of personal jurisdiction was granted. (Doc. 123.) On that same date, UD America filed a second motion for summary judgment. (Doc. 120.) That motion must now be addressed.

         Summary Conclusion

         UD America's motion for summary judgment is denied in part and granted in part. Viewing the evidence in the light most favorable to Montana Trucks, reasonable minds could reach more than one conclusion as to the claims for fraud and breach of contract. First, the date of accrual for the fraud claim is reasonably disputed and, thus, Montana Trucks' claim is not barred as a matter of law by the Texas statute of limitations. Second, because the fraud claim is not barred as a matter of law, whether the elements of fraud are met in this case remains a question of fact. Third, the amount and source of damages due to UD America's breach of contract is disputed. And, because Montana Trucks' claim for fraud may have merit and is not barred, the claim for punitive damages remains a viable question if the requisite standard of proof is met. Summary judgment is appropriate as to Montana Trucks' claims for constructive fraud and negligent misrepresentation.

         Legal Standard

         A party is entitled to summary judgment if it can demonstrate "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). Summary judgment is warranted where the documentary evidence produced by the parties permits only one conclusion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251 (1986). In resolving whether a genuine issue exists, courts "view evidence and inferences which may be drawn therefrom in the light most favorable to the adverse party." James River Ins. Co. v. Hebert Schenk, P.C., 523 F.3d 915, 920 (9th Cir. 2008). On motion for summary judgment, the question is whether a fair-minded jury could return a verdict for the non-moving party. Anderson, 477 U.S. at 252. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude entry of summary judgment; factual disputes which are irrelevant or unnecessary to the outcome are not considered. Id. at 248.

         Analysis

         I. ...


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