Griaznov v. J-K Techs., LLC, Civil Action No. ELH-16-2522

• Decision Date: 11 September 2018
• Docket Number: Civil Action No. ELH-16-2522
• Parties: KONSTANTIN GRIAZNOV, Plaintiff/Counterclaim Defendant, v. J-K TECHNOLOGIES, LLC, Defendant/Counterclaim Plaintiff.
• Court: U.S. District Court — District of Maryland

KONSTANTIN GRIAZNOV, Plaintiff/Counterclaim Defendant,
v.
J-K TECHNOLOGIES, LLC, Defendant/Counterclaim Plaintiff.

Civil Action No. ELH-16-2522

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

September 11, 2018

MEMORANDUM OPINION

This case is rooted in a contract to bring a 2012 McLaren MP4-12C (the "Vehicle")¹ into compliance with government regulations regarding safety and emissions. The parties dispute, inter alia, whether money is due and owing under the contract.

Plaintiff Konstantin Griaznov is the owner of the Vehicle, valued in excess of $278,000. See ECF 1 ("Complaint"); ECF 34 ("Amended Complaint"), ¶¶ 1, 7. In July 2013, Griaznov imported the Vehicle into the United States, without knowledge that the Vehicle was ineligible for importation. Id. ¶¶ 13, 14. Pursuant to a "Compliance and Conversion Agreement" between plaintiff and defendant, J.K. Technologies, LLC ("J.K."),² J.K. agreed, inter alia, to provide compliance and automotive services for the purpose of satisfying required safety standards promulgated by the U.S. Department of Transportation ("DOT") and mandatory emissions standards promulgated by the U.S. Environmental Protection Agency ("EPA"). ECF 55-1 (the

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"Agreement"). Plaintiff paid a deposit of about $20,500 to J.K. in October 2013 for the "conversion" of the Vehicle. ECF 45-1 at 9; ECF 45-2, ¶¶ 22, 51; ECF 55-1.³

Plaintiff asserts that on numerus occasions, he sought to cancel the Agreement, as permitted under its terms, and asked J.K. to export the Vehicle. ECF 4, ¶¶ 28, 30. But, J.K. refused to export the Vehicle. Id. ¶ 30. After J.K. completed much of the work, Griaznov terminated the Agreement and refused to pay J.K. for services rendered. Therefore, J.K. has retained possession of the Vehicle.

Accordingly, Griaznov filed suit against J.K. He asserts claims of replevin, trespass to chattels, trover and conversion, breach of contract, and violation of the Maryland Consumer Protection Act ("CPA"), Md. Code (2013 Repl. Vol., 2017 Supp.), §§ 13-101 et seq. of the Commercial Law Article ("C.L."), which bars "unfair or deceptive trade practices." C.L. § 13-301; see ECF 34. Additionally, claiming that J.K. wrongfully possesses the Vehicle, Griaznov asks the Court to declare that J.K. cannot retain the Vehicle under C.L. § 16-202(c)(1) (the Maryland "Garageman's Lien Statute"). According to plaintiff, C.L. § 16-202(c)(1) is preempted by the National Traffic and Motor Vehicle Safety Act of 1966, as amended by the Imported Vehicle Safety Compliance Act of 1988, 49 U.S.C. §§ 30101 et seq. (collectively, the "Safety Act"). Further, Griaznov seeks to enjoin J.K. from "using, altering, damaging, destroying, or selling the Vehicle," and he seeks an injunction requiring J.K. to "restore the Vehicle to its original condition . . . ." ECF 34 at 7-8.

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J.K. has filed a Counterclaim (ECF 7), alleging breach of contract, and seeking compensatory damages for research, labor, parts, and storage costs incurred by J.K. in connection with the conversion. Id. at 11-12, ¶¶ 13-24. According to J.K., on August 12, 2016, it completed the conversion of the Vehicle to meet DOT standards, and on August 30, 2016, it completed the conversion to meet EPA standards. Id. ¶¶ 20-21. It maintains that it is entitled to recover $177,412.82 on its counterclaim (ECF 45-1 at 4),⁴ as well as attorneys' fees, interest, and costs, pursuant to ¶ 18 of the Agreement. ECF 7 at 12; see also ECF 55-1, ¶ 18.

J.K. has moved for summary judgment as to Griaznov's Amended Complaint and as to its Counterclaim (ECF 45), supported by a memorandum of law (ECF 45-1) (collectively, the "Motion") and several exhibits. See ECF 45-2 through ECF 45-5. Griaznov opposes the Motion.⁵ See ECF 54 ("Opposition").⁶ J.K. has replied. See ECF 55 ("Reply").

No hearing is necessary to resolve the Motion. See Local Rule 105.6. For the reasons that follow, I shall grant the Motion, in part.

I. Factual and Procedural Background

Plaintiff is a citizen of Russia. ECF 34, ¶ 1. He resides in Florida. Id.

J.K. is a Registered Importer ("RI") with DOT's National Highway Traffic Safety Administration. ECF 45-2, ¶ 5. J.K. is also an Independent Commercial Importer ("ICI"), as

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recognized by the EPA. Id. ¶ 6. J.K. has two members: Lois Joyeusaz and Jonathan Weisheit. Id. ¶¶ 2, 4. In an Affidavit of Weisheit (ECF 45-2), submitted with the Motion, he avers that J.K. "is not now and has never been an automotive repair facility." Id. ¶ 8. Rather, J.K. specializes in the conversion of foreign manufactured automobiles to comply with DOT and EPA standards, thereby allowing those vehicles to be imported into the United States. Id. ¶ 7.

Weisheit is the Lead Project Engineer at J.K. (id. ¶ 4) and he "was responsible for the conversion of the Vehicle." Id. ¶ 11. In that role, he personally worked on the Vehicle "to determine what modifications needed to be made to . . . make it eligible for importation into the United States." Id.; see also id. ¶ 4. His work "included, among other things, obtaining proper programming codes and working directly with DOT and EPA in order to modify the Vehicle's computer, emissions, and safety systems." Id. ¶ 11.

DOT maintains "a registry," also known as the "eligibility list for importation" (hereinafter, the "Eligibility List"), which contains the "make, model and year of a vehicle that is determined by DOT to be eligible for importation" into the United States. ECF 45-2, ¶ 21. If a vehicle is not on the Eligibility List, it may not be imported. Id. However, an RI can place a foreign manufactured vehicle on the Eligibility List by, inter alia, filing a "Petition for Import Eligibility," which DOT must then approve. Id. To file such a petition, the RI must "set forth specific alterations and/or modifications that," if made, "will bring the petition vehicle into compliance with DOT safety standards." Id.

According to Weisheit, in 2011 "Euro Tuning Hall, a fictitious entity," purchased the Vehicle from Gemballa Europe for 209,000.00 Euros. See ECF 45-1 at 4; ECF 45-2, ¶ 12.⁷ On

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an unspecified date, the Vehicle was shipped to the United States "without Griaznov ever ascertaining" if it complied with DOT and EPA standards. ECF 45-2, ¶ 12. Because Euro Tuning Hall "was not in existence and did not have a VAT number or a Tax ID number," ownership of the Vehicle was "changed from Euro Tuning Hall to Konstantin Griaznov to enter the United States." Id.

In "early July 2013," Griaznov's agent, Eugene Karr, contacted J.K. ECF 45-2, ¶ 13. According to Weisheit, Karr stated that Griaznov "had purchased the Vehicle in Germany and that the Vehicle was stuck in U.S. Customs in Miami and would need to be shipped back to Germany unless he could find an RI or ICI that would agree to perform the necessary conversion work." Id. Karr also indicated that he and Griaznov had "already spoken to . . . DOT, EPA, the manufacturer of the Vehicle (McLaren), and Gemballa," and Karr and Griaznov were aware that the "Vehicle was not approved by DOT" and was "not on the import eligibility list." Id.

Karr stated that "McLaren was going to assist in the petition process." ECF 45-2, ¶ 13. According to Weisheit, "[t]his was important because if . . . McLaren could provide Mr. Karr with a manufacturer's letter with a listing of the parts required to convert the Vehicle for EPA and DOT, the petition process would only take a few months, J.K.'s . . . work would be reduced in scope, and the EPA testing would be waived." Id.

On July 9, 2013, J.K. provided Griaznov with a financial estimate for the conversion. ECF 45-2, ¶ 15; see also ECF 45-3 (J.K.'s undated quote to Griaznov) (hereinafter, the "Quote"). The Quote states, in relevant part, ECF 45-3 at 1-2 (bold in original; italics added):

Estimate: $12,000.00-$18,000.00 plus any safety systems parts that are not in compliance with USDOT Standards, provided the vehicle has a functioning emissions system . . . [and no] additional emissions systems parts and testing will be necessary. In addition USEPA requires a 1% Fee based on the

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declared value of the vehicle. US Customs charges 2.5% duty, and US Customs and USDOT have bonds that cost approximately 1% that must be paid upon entry into the USA.

. . . . [T]his estimate is only valid for two months. The estimate is designed to give you an idea of the cost of conversion depending on how the car is equipped and its condition upon arrival in our facility. If the car is not equipped correctly or is in poor condition, there could be additional charges. There could also be additional charges if the car is not on the NHTSA eligibility list. Their website is www.nhtsa.dot.gov/cars/rules/import and contains valuable information regarding import procedures and links to other Agencies.

* * *
After the car arrives at our facility, we will do all of the necessary modifications to bring it into conformity with DOT and EPA regulations. This generally takes an average of 90-120 days. If the car is not equipped correctly . . . , is in poor condition, AND/OR is not on the DOT eligibility list . . . , there could be additional charges and additional time for your car to be released from DOT and EPA. These times range from several months to over a year if there is a fight with a manufacturer.

* * *
If the car is not emissions equipped, we replace all non-conforming parts with U.S. parts and there will be substantial extra charges and additional time.

* * *
We require a deposit of the base price plus agency fees with execution of the contract and the balance will be due upon receipt of parts for the vehicle or as billed to us by each supplier. This final payment must be in the form of a wire, ACH, or cashier's check . . . .

Also on July 9, 2013, J.K. informed Karr that certain documents were "required to obtain a Box 13 letter" from DOT. ECF 45-2, ¶ 14. According to Weisheit, a "Box 13 letter gives special permission for a vehicle that is not on the DOT eligibility list to...