Former D&G franchisee says he was cheated out of $1.5 million; Milan court schedules hearing on 12 January 2016
(NL/6187396618) The former D&G franchisee in Panama City, DOLGA Trading Corp., filed suit in a private arbitration court in Milan in 2013 against Dolce & Gabbana for damages arising from the latters alleged breach of its delivery obligations. The arbitration court upheld the breach of contract and ordered Dolce & Gabbana to pay damages for loss of profit. The Panamanian company had identified calculation errors in the award to its detriment that reached the millions of dollars.
Each party had selected one of the three arbitrators. Dolce & Gabbana named a corporate lawyer from Milan. Calculating lost profits for violations of international goods delivery contracts are a part of the normal work of a corporate lawyer. DOLGAs counsel says: An Italian corporate lawyer is familiar with Article 76 of the UN Sales Convention (CISG) and Article 1518 of the Italian Civil Code which says that the gross proceeds lost and not the net are what must be reimbursed. Costs are therefore not taken into account. DOLGA accuses the arbitrators not only of unlawfully applying the costs to the gross damages, but also doubling the costs to its further disadvantage.
After the panel rejected their petition for a correction to the damages, DOLGA has to wonder whether this is gross negligence or intent. The company saw a glimmer of hope in a statement by Stefano Gabbana on 24 October 2014. Immediately after his acquittal for tax evasion by the Supreme Court of Cassation in Rome (Corte Suprema di Cassazione), surprising at least for Milan prosecutor Laura Pedio, Gabbana is reported as having said: Siamo onesti (Were honest).
Believing that an honest businessman would not accept unjust enrichment in the millions due to a calculation error and at the expense of a former business partner, DOLGA turned to then managing director Alfonso Dolce. DOLGA asked him as an honest businessman to pay the correct amount of damages for the period set by the arbitration panel, but he refused.
Without needing to be a mathematician or a lawyer, the following calculation error is easy to understand. The arbitrators confirmed the Panamanian companys net profits for the first five months of 2012 in the amount of $649,121.78. The estimate for the profit lost in the final seven months of 2012 was based on the same terms and conditions as the first five months of that year, which means that there should have been an average monthly net profit of $129,824.356 in 2012. This means that DOLGA lost $908,770.49 in net profit in the seven months from June to December 2012. The tribunal, however, arrived at a figure of just $137,705.38.
The disproportion between $649,121.78 for 5 months and $137,705.38 for 7 months can be appreciated by anyone.
By DOLGAs calculations, the overall loss should have come to about $1.5 million. With a comprehensive 89 page complaint, DOLGA filed suit against Dolce & Gabbana on 28 August 2015. On 11 September 2015, the 1st Civil Chamber of the Milan Court of Appeal (Corte dAppello di Milano, Sezione Civile 1a) ordered the first hearing to be held at 9:15 am on 12 January 2016 under case number RG 3040/2015. DOLGA is currently examining whether Milan prosecutor Laura Pedio should investigate Dolce & Gabbana once again.