A jury recently awarded $1.6 million to a local motorcycle dealership in a civil case against a manufacturer for its role in a failed negotiation to sell the business.
The verdict against Yamaha was rendered Aug. 9 in the Paso Robles branch of San Luis Obispo Superior Court. Powerhouse Motorsports, a former Paso Robles business, filed the lawsuit.
Powerhouse closed its doors in 2008 because it was struggling financially and then started the process of selling the dealership at 2800 Riverside Ave. to a company called MDK Motorsports.
The lawsuit alleged that Yamaha effectively blocked the franchise dealer from transferring ownership by refusing to consider an application for the sale while terminating its business relationship with the owner.
Digital Access for only $0.99
For the most comprehensive local coverage, subscribe today.
The plaintiff alleged that Yamaha, one of the dealership’s product lines, which also included Suzuki and Polaris, sought to undermine the sale by failing to process a credit application filed by MDK — violating law that protects dealers in such sales.
Powerhouse also claimed Yamaha worked “behind the scenes to stop the sale” after initially supporting the negotiation and stopped returning phone calls about the proposed sale, according to a news release filed by the dealer’s attorney.
“As a result, Powerhouse Motorsports failed, leaving behind an empty facility and former employees whose opportunity to be retained by the new company had been lost,” wrote Dennis Law, the plaintiff’s attorney, in a statement.
In addition to the jury’s award, Yamaha also must pay about $500,000 in attorneys’ fees and interest to Andre, Morris and Buttery, the firm that represented the dealer.
But the lawyers representing Yamaha said in a statement that the company “is in the process of vigorously appealing this case.”
Yamaha claims that since Powerhouse closed its doors for business, the dealer had a 10-day window by law to protest Yamaha’s notice of termination, which it sent to the home of Powerhouse’s owner, Timothy Pilg.
“Powerhouse failed to contact either Mr. Law or any other attorney and failed to file a timely protest, such that the termination was final and effective by law after the last day to file the protest August 5, 2008,” Yamaha’s lawyers said in a statement.
Yamaha also said that the California New Motor Vehicle Board held a two-day hearing involving several witnesses and documentary evidence that determined the termination of the dealership was proper. That hearing preceded the filing of the lawsuit.
But Law referred to the verdict as a “message that Yamaha must abide by the law and cannot mistreat its franchise dealers.”
The trial was heard before Judge Martin Tangeman.