Carduco, Inc. d/b/a Cardenas Metroplex v. Mercedes-Benz USA

Fraud verdict against Mercedes-Benz

The Case

“All I asked for—and all I have ever asked for—is honesty from my business partner, Mercedes-Benz.” — Renato Cardenas

Renato Cardenas—a car dealer in the Rio Grande Valley for more than 40 years—agreed to buy a Mercedes-Benz dealership in Harlingen, Texas for $7 million. His intent was to relocate the dealership from one of the poorest areas in Texas to a first-class facility in the wealthier and blossoming McAllen. But while Cardenas was in the process of buying the Harlingen dealership, Mercedes-Benz executives were working behind the scenes to install another dealer in McAllen who had a relationship with Mercedes-Benz’s then-CEO. In order to avoid a protest by Cardenas under the State’s motor vehicle laws, Mercedes-Benz concealed its side-deal from Cardenas and specifically stated that it had no plans to install another dealer in the Rio Grande Valley. Immediately after Cardenas closed on his $7 million purchase, Mercedes-Benz revealed, for the first time, that Cardenas would not only be precluded from relocating his dealership to McAllen, but that he would now face crushing competition in Harlingen from a new McAllen dealership. The result was financially devastating.

 

445th Judicial District Court of Cameron County, Texas

Carduco Turns To Reese Marketos LLP

Carduco filed protests with the Board of Motor Vehicles but could not get any relief. In 2011, Carduco hired Reese Marketos LLP to represent it. After reviewing the case, Reese Marketos dismissed Carduco’s administrative protest and sued Mercedes-Benz for fraud in a state district court.

During the course of litigation, Reese Marketos had to seek sanctions against Mercedes-Benz for discovery abuses including failing to produce documents before key depositions of Mercedes-Benz executives. After relentlessly pursuing Mercedes-Benz’s internal documents and the Court ordered Mercedes-Benz executives to fly to Dallas to sit for depositions after the discovery abuses, Reese Marketos discovered damning evidence that proved Mercedes-Benz’s fraudulent conduct. Reese Marketos also secured a spoliation instruction for Mercedes-Benz’s intentional destruction of documents.

The Trial and Appeal

After ten days of testimony, the jury reached a unanimous verdict, finding that Mercedes-Benz defrauded Carduco, and further finding, beyond a reasonable doubt, that Mercedes-Benz committed a felony in the process—removing the statutory cap on punitive damages. After electing remedies, the Court entered a judgment awarding Carduco $130,307,722.

On appeal, Reese Marketos teamed up with former Texas Supreme Court Justice Wallace Jefferson. The Thirteenth Court of Appeals affirmed the trial court’s judgment awarding Carduco’s actual damages in the amount of $15.3 million but reduced the punitive damages award from $115 million to $600,000. Both sides have appealed the Court of Appeals decision to the Texas Supreme Court, where it is currently pending.


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