In 1973, rule changes made the iconic and highly successful Porsche 917 ineligible for many races. Porsche developed the 911 Carrera RSR to take its place, which required that the automaker homologate at least 500 street versions to qualify for competition. Porsche ended up selling 1,525 Carrera RS cars and 55 RSRs that went to privateer race teams. Most important were the eight RSR prototypes that Porsche built for its factory race teams. One of these RSR prototype cars, chassis number 9113600686 — the seventh one built and known colloquially as “R7” — became the subject of intense litigation in the […]
In 1973, rule changes made the iconic and highly successful Porsche 917 ineligible for many races. Porsche developed the 911 Carrera RSR to take its place, which required that the automaker homologate at least 500 street versions to qualify for competition. Porsche ended up selling 1,525 Carrera RS cars and 55 RSRs that went to privateer race teams. Most important were the eight RSR prototypes that Porsche built for its factory race teams. One of these RSR prototype cars, chassis number 9113600686 — the seventh one built and known colloquially as “R7” — became the subject of intense litigation in the U.S. District Court for the Southern District of New York.
Provenance claims
R7 finished 4th at Le Mans in 1973, sporting the turned-up wrap-around spoiler nicknamed the “Mary Stuart” tail. Later in 1973, Porsche replaced it with a rectangular tail nicknamed the “longtail,” then exported the car to Brumos Racing. Peter Gregg and Hurley Haywood raced R7 at Watkins Glen, then sold it to Héctor Rebaque. His Rebaque Rojas team raced the car in Mexico City, with Rebaque and Memo Rojas driving. In 1975, rule changes forced the longtail to be replaced with a new, 1975-style tail.
According to the plaintiff, Jacob Shalit, R7 was being transported to a race in 1975 at the Autódromo Monterrey when it was involved in an accident that damaged the unibody chassis to the point where it could not be repaired economically. Rebaque salvaged the mechanical parts and the chassis plate, and apparently discarded the chassis. He then sold the salvaged parts to Diego Febles.
In 2007, Febles sold the parts to Toluca Lake Historics, a restoration shop. Shalit purchased the salvaged parts and “the title to R7” from Toluca, and commissioned the shop to restore R7 in longtail form using a donor body shell.
The restoration was completed in 2009 and Shalit raced the car at the Monterey Historics. He holds a California title, a Certificate of Authenticity from Porsche and FIA papers that he claims recognize the car as R7.
The defendant, Kenny Schachter, claims a slightly different chain of events. Although he admits that there may have been a 1975 accident, he disputes that R7 was so badly damaged. His chain of title does not include Febles. Instead, he claims Rebaque sold R7 to Gonzalo Baca Spross, who sold it to Massimo Baliva, who sold it to Ronald Hughes. Lastly, RS Trading, which appears to be a company controlled by Schachter’s wife, acquired R7 from Claudio Roddaro, acting on behalf of Hughes.
The stories are different here, but they might be reconcilable. Schachter is not specific about exactly what he acquired from Hughes, describing it only as “R7.” Shalit is clear that Rebaque separated the mechanical components and chassis plate from the chassis and sold only them to Febles. So Schachter could be claiming that he acquired the chassis. In his filing he denies that all of the parts acquired by Shalit are actually from R7, but does not specifically state that he has any of the original mechanical parts.
Lack of clarity
This lack of clarity is not surprising. The only useful court-filed documents are Shalit’s complaint and Schachter’s answer and counterclaim. As the plaintiff, Shalit is required to demonstrate that he has a valid claim, meaning that he has to lay out much of his evidence in his complaint. The defendant, however, doesn’t have to explain his entire case in his answer. It suffices in many instances to simply deny the plaintiff’s allegations and save the details for later. Schachter has done pretty much that, denying most of Shalit’s allegations and providing only limited portions of his facts and case.
Shalit’s complaint includes a lengthy list of things that are wrong with Schachter’s car, making the point that there’s no way possible for his chassis to be an authentic RSR chassis. Schachter denies the allegations, and counters that all Shalit did, at most, was buy “a box of parts” and make a car out of them.
Schachter also alleges that the car Shalit races does not even have the engine, transaxle and chassis plate that Shalit claims are from R7. Shalit even acknowledges this, explaining that he does not want to risk damaging them, so he usually uses an alternate engine and transaxle.
The dispute is, of course, all about money. Both parties are concerned that if they attempt to sell their cars, they will run into problems due to the existence of the other party’s car. Shalit has not yet tried to sell because he knows it would be futile, or at least would sell only at a strong discount. Schachter has tried, with more than one sale dying when Shalit contacted the potential buyers and scared them off with his claims that he owns the real R7.
Help from the court
Each party wants the court to declare their car the “real” R7, but it’s difficult to put the dispute into a clearly recognized legal cause of action. Each accuses the other of unfair competition, but they aren’t businesses competing in the marketplace. Shalit accuses Schachter of fraud, but Shalit isn’t the one buying Schachter’s car and getting defrauded.
Each party accuses the other of interference with their prospective economic advantage by preventing them from selling their car at its full value. That seems to be a tough claim for Shalit, as the mere existence and public awareness of Schachter’s car doesn’t sound like an act of interference. But Schachter may have the better claim, as Shalit has apparently contacted prospective buyers of Schachter’s car and intentionally scuttled their purchases.
Schachter claims that Shalit is slandering his title to R7 by falsely claiming that he owns the real R7. The shortcoming to that claim is that Shalit is not disputing that Schachter owns his car. Rather, he is disputing the history and provenance of the car. There is no such thing as “the real R7” as an intangible asset. “The real R7” is merely the history of where a car came from and what was done with it.
My take
My personal opinion — and I know that some readers will disagree — is that Schachter is correct and there is no way that Shalit owns the “real” R7. By his own admission, the entire chassis of his car is from another car, and a street 911 at that. Sure, he may have installed some of the real parts from the original R7, but he doesn’t have enough holy water to sprinkle on it to magically transform the chassis into something else. Does it really matter that the torsion bars might have raced at Le Mans?
There is a school of thought that a race car chassis is a wear part that can be replaced as needed, but that is not what happened here. If the Brumos team had crashed the car badly, replaced the chassis and continued to race it, that would be one thing. But it’s an altogether different matter when the race team dismantles the car and some restoration shop, many years later, mates some of the parts with a different chassis and calls it the same car.
It’s as simple as this: 9113600686 is a chassis number that Porsche assigned to the chassis it built for this car. Once that chassis disappears from the Earth, R7 is gone, even if you saved its chassis plate. Sticking that onto another chassis does not change those physical facts. There is no such thing as an intangible asset here that someone can own and affix to whatever assemblage of metal one selects.
I also wonder how Shalit’s car is allowed to race in a “historic” race if the “real” engine, transaxle and chassis plate are safely in his garage. The car running around the track cannot then be anything more than a replica, without any historic significance.
I apologize for criticizing Shalit’s car without criticizing Schachter’s car. But, as I explained, we just don’t have much information about Schachter’s car. If all the facts were in, I probably wouldn’t think Schachter owned the “real” R7 either. I’m afraid that the real R7 is long gone, even if perhaps some of its parts may still be around.
Early ending
As much as we would love to see how this plays out in court, it appears we won’t because the case has been settled. We have been unable to confirm the terms of the settlement but will update you when we find out. The most likely outcome is that one owner buys the other’s car to terminate the controversy. ♦
John Draneas is an attorney in Oregon and has been SCM’s “Legal Files” columnist since 2003. His recently published book The Best of Legal Files can be purchased on our website. John can be contacted at john@draneaslaw.com. His comments are general in nature and are not intended to substitute for consultation with an attorney.