Harley importer in legal mess
Milwaukee Motorcycle Imports left in lurch as former client faces charges
A Milwaukee company specializing in importing Harley-Davidson motorcycles from outside of the United States is embroiled in a legal dispute with a Harley-Davidson dealer in suburban Detroit.
At the heart of the court case is a contract between Milwaukee Motorcycle Imports Inc. (MMI) and Motown Harley-Davidson/Buell, a Taylor, Mich.-based motorcycle dealer.
Motown is suing to enjoin MMI from seeking arbitration from the American Arbitration Association.
Motown, in the wake of a legal battle with its former general manager, is attempting to pull out of a contract in which MMI would import at least 700 motorcycles over a two-year period for Motown.
Under the contract, MMI would locate "gray market" motorcycles Motown could purchase, mostly from Harley dealers in Europe.
MMI would then import and alter the bikes to comply with US Environmental Protection Agency and Department of Transportation regulations.
Representatives of MMI and Motown both declined to comment on the case.
According to Motown’s civil complaint filed July 16 in Eastern Wisconsin District Federal Court, the contract was signed in March 2001 by MMI president Theresa Kent and Motown general manager Ronald Buchbaum.
However, Buchbaum left Motown in July 2002 and was sued by Motown for overstating profits, fraud and embezzlement.
The civil complaint, filed against Buchbaum and his wife in Wayne County, Mich., Circuit Court, alleges Buchbaum issued more than $50,000 of unauthorized checks to himself during his tenure at Mototwn, excluding counting a $9,000 check Buchbaum wrote himself on the way out the door.
Motown also accuses Buchbaum and his wife of "conspiracy … to allow for the employment of Mrs. Buchbaum at a salary of $35,000 per year while allegedly producing a newsletter and or magazine concerning said dealership."
Another salaried employee was responsible for producing the printed materials, according to the complaint.
In March, Buchbaum also was charged in criminal court in Wayne County with embezzlement and larceny by conversion under $20,000. The case has been remanded to the district court in Taylor, Mich.
In its suit against MMI, Motown’s attorney, Michael Mishlove of Friebert, Finerty & St. John, Milwaukee, claims the "purported contract" between the two parties was not final.
"By handwritten and initialed changes to the contract-termination provisions of the draft import/conform agreement, Motown rejected and modified the terms of the agreement offered by MMI," Mishlove wrote.
Therefore, Motown would not need to submit to arbitration to resolve the dispute as provided for in MMI’s contract, Mishlove wrote.
A copy of the contract filed with MMI’s response to the civil complaint suggests that Buchbaum inserted a clause allowing the dealer to pull out of the contract if, "due to unreasonable pricing," Motown does not buy at least 700 motorcycles within the two-year period.
"Motown’s modification of the contract-termination provisions of the draft import/conform agreement constituted a counter-offer to the terms proposed by MMI," Mishlove wrote. "On information and belief, MMI never accepted Motown’s counter-offer."
However, according to one source close to Motown, the Michigan company used MMI to import a substantial number of motorcycles during the contract period. The imports suggest there was an agreement between the two parties, the source said. Due to recent Wisconsin case law, that fact might make it difficult for Motown to keep the dispute out of arbitration.
In 1999, Eclipse Media Inc., a Milwaukee-based Web development company, filed a suit in Milwaukee County Circuit Court against two Quad/Graphics Inc. subsidiaries – Quad/Creative, LLC, and Quad/Merger Inc.
According to that civil complaint, Eclipse had started work on a project for the two subsidiaries even as the contract to perform the work was being routed through the large company’s management structure.
A jury quickly found that the two subsidiaries had breached their contracts with Eclipse, even though no formal contracts were signed when the companies broke off their relationship with Eclipse.
Due to various post-verdict motions and appeals, litigation did not formally end until June 2002.
The precedent suggests that even in the absence of signed documents, it may be possible to prove that an agreement exists, according to Jane Schlict, the attorney from the Milwaukee law firm of Cook & Franke who successfully represented Eclipse.
"You may not have a fully executed agreement, but you might have drafts of the agreements and you may have e-mails stating the intention to accept the agreement," Schlict said. "In the case of Eclipse, they also had started to perform on the contract, and Quad never told them not to perform."
Aug. 8, 003 Small Business Times, Milwaukee, by Charles Rathmann, SBT Reporter
Terry Kosdrosky of Crain’s Detroit Business contributed to this story.
