DTO Law Achieves Victory on Behalf of American Honda Motor Co., Inc.

On January 6, 2023, DTO Law attained a significant victory in the Court of Appeal of the State of California for its client American Honda Motor Co. Inc. (“AHM”) in the case of Shernaman Enterprises, Inc. v. American Honda Motor Co. Inc.

The case stems from a set of facts that occurred long ago. In 2006, Daniel McCullen, sustained injuries in a motorcycle accident in Missouri. McCullen sued Shernaman Enterprises, Inc., the motorcycle dealer, and AHM, the motorcycle manufacturer and distributor, in Missouri, alleging his injuries were a result of a design defect of the motorcycle. AHM presented a vigorous defense, and McCullen ultimately dismissed AHM from the case.

Thereafter, McCullen and Shernaman utilized a Missouri statute that permitted them to stipulate to an $11 million judgment in McCullen’s favor, provided McCullen did not seek to enforce it against Shernaman; rather, McCullen could only enforce it against insurers and indemnitors. Judgment in hand, McCullen sued Honda again in Missouri in 2019, but his claim was dismissed for improper venue. In June 2020, McCullen and Shernaman sued Honda in Los Angeles Superior Court, alleging that Honda was liable for the $11 million as a result of failing to defend and indemnify Shernaman, based on the terms of a Dealership Agreement.

At the pleading stage, DTO convinced the trial court the governing law provision of the Dealership Agreement, which called for the application of California law, applied and that, under California law, all of the plaintiffs’ claims were time-barred. DTO also persuaded the trial court to disregard plaintiffs’ argument that the California borrowing statute “borrowed” the longer limitations period found under Missouri law. McCullen and Shernaman appealed, arguing the trial court mistakenly applied California law instead of Missouri law.

Through the various stages of the appeals process, Managing Partner Will Delgado and Associate Erik Mortensen of DTO Law, successfully argued the governing law clause of the Dealership Agreement was enforceable and applicable, and that the California statutes of limitations vitiated all claims. The California Court of Appeal affirmed the judgment of the trial court and awarded Honda its costs on appeal.