Wednesday, April 29, 2009



From Greg Gerber of RVeNEWS

WILMINGTON, Del. -- Giant RV has filed a massive $12.8 million claim against Monaco Coach Corporation as part of Monaco's bankruptcy, RVeNEWS learned today.

The California RV dealership is seeking $442,000 in unpaid warranty claims, $565,448 in unpaid reorder incentives, $750,000 for potential exposure on Monaco products, $760,000 for damage to Giant RV's reputation and brand as a result of Monaco's bankruptcy and $10.8 million in anti-trust violation damages.

At the time of the filing, Giant said Monaco owed $300,000 in submitted warranty claims. "Monaco provided its customers with a one-year express product warranty," wrote Peter Kravitz, vice president of Giant RV, in the claim filed with the court. "Dealers such as Giant RV provide warranty service to customers and were entitled to reimbursement of warranty claims per terms of the dealer agreement and industry standards."

For each unit sold, Kravitz claimed Monaco reserved at least $2,000 to cover warranty claims. Because the bankruptcy filing put Monaco's warranty reimbursement program in doubt, Giant RV said it was left with the "very real potential exposure" on each of the 71 new units it sold within one year of March 6, the date Monaco filed bankruptcy.

The $565,448 for unpaid incentives resulted from what Giant RV claimed was currently owed incentive payments and co-op money available through Monaco's Franchise of the Future program. "These are funds that Monaco promised to Giant RV as a material inducement to purchase Monaco units," Kravitz wrote.

Kravitz also claimed there were several outstanding "Lemon Law" claims in California for which Monaco has a duty to defend and indemnify the dealership under their signed dealer agreement. One of the four claims already being adjudicated in California courts may exceed $500,000 alone.

The bankruptcy filing by Monaco has also damaged Giant RV's goodwill and brand, Kravitz wrote. The filing "will force Giant RV to incur substantial additional flooring charges as units age as the goodwill of the brand has been scarred and depreciated," he added.

To mitigate those damages, Giant RV is attempting to purchase extended service contracts for unsold Monaco units. Those contracts will cost roughly $1,500 per unit. "In addition, flooring for these units continues to accrue at approximately $70,000 per month," Kravitz wrote. "Giant RV estimates the total damages to Giant RV as a result of the bankruptcy filing will easily exceed $760,000."

The largest claim, $12.8 million for anti-trust violations, is due to action Monaco took to unload units at lower prices and at auctions which gave non-authorized Monaco dealers access to the same products Giant RV was authorized to carry.

"Based on Monaco's anticompetitive conduct, Giant RV filed a protest with the New Motor Vehicle Board. Giant RV discussed this conduct with Richard Bond, Monaco's general counsel, during which conversation Mr. Bond did not dispute any of the assertions or their implications," Kravitz wrote. "Rather, he indicated that Monaco was desperate to sell its finished goods and needed to take the actions to accomplish the goal. These damages exceed $10.8 million prior to trebling the damages as allowed by statute."

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