Yerington Ford, Inc. v. General Motors Acceptance

• Decision Date: 15 December 2004
• Docket Number: No. CVN030147LRHVPC.,CVN030147LRHVPC.
• Citation: 359 F.Supp.2d 1075
• Parties: YERINGTON FORD, INC., William Giles and Linda Giles, Plaintiffs, v. GENERAL MOTORS ACCEPTANCE CORPORATION, Defendant.
• Court: U.S. District Court — District of Nevada

Page 1075

359 F.Supp.2d 1075

YERINGTON FORD, INC., William Giles and Linda Giles, Plaintiffs, v. GENERAL MOTORS ACCEPTANCE CORPORATION, Defendant.

No. CVN030147LRHVPC.

United States District Court, D. Nevada.

December 15, 2004.

L. Bissonnette, Law Office of Michael P. Hambsch, South Lake Tahoe, NV, William Wheeler, William Wheeler & Associates, PC, Philadelphia, PA, for Plaintiffs.

Christopher Jaime, Michael Malloy, Walther Key Maupin, et al., Reno, NV, for Defendant.

ORDER

HICKS, District Judge.

The Court presently has the following motions before it: (1) Defendant's Motion for Leave to File Dispositive Motion Based on Post-Cutoff Events and Motion for Summary Judgment on Counts 1-12 (Docket No. 100). Plaintiffs have filed a Response (Docket No. 103), to which Defendants have replied (Docket No. 109).(2) Defendant's Motion for Summary Judgment on Counts 3-13 (Docket No. 78). Plaintiffs have filed an Opposition (Docket No. 107), to which Defendants have replied (Docket No. 114).(3) Defendant's Motion for Summary Judgment on Counts 1 and 2 (Docket No. 79), with the accompanying Opposition (Docket No. 95) and Reply (Docket No. 96).(4) Defendant's Consolidated Motions in Limine (Docket No. 81) with numerous responsive pleadings. This Court has jurisdiction pursuant to 28 U.S.C. § 1332, based on the diversity of the parties and the amount in controversy. Each motion for summary judgment is brought pursuant to Rule 56 of the Federal Rules of Civil Procedure. This Court will address each motion in turn.

I. FACTUAL AND PROCEDURAL BACKGROUND

The facts surrounding this case are largely in dispute. In considering Defendant's motion for summary judgment, this Court will view the facts in the light most favorable to the non-moving party. Rose v. Wells Fargo & Co., 902 F.2d 1417, 1420 (9th Cir.1990). Therefore, this Court assumes, without finding, the truth of those facts alleged by Plaintiffs which are supported by the record. Reese v. Jefferson School Dist. No. 14J, 208 F.3d 736 (9th Cir.2000); Doe v. Tenet, 329 F.3d 1135, 1138 (9th Cir.2003).

Plaintiffs William ("Giles") and Linda Giles (collectively "the Giles") are the officers and sole shareholders of plaintiff Yerington Ford, a dealership selling new and used vehicles in Yerington, Nevada, under a franchise agreement with Ford Motor Company. In 1998, Yerington Ford and Defendant General Motors Acceptance Corporation ("GMAC") entered into a "wholesale floorplan financing" agreement, which allowed Yerington Ford to purchase and display new and used vehicles for sale, and then to repay GMAC, with interest, after the vehicles were sold.

The events giving rise to this lawsuit commenced on October 10, 2001, when GMAC conducted a "floorplan audit" revealing that Yerington Ford had sold eleven vehicles "out of trust." (Am. Compl.(# 25) at ¶¶ 9, 32; Mot. Summ. J. (# 100) at ¶¶ 3-4.) An "out of trust" sale occurs when the dealership sells a financed vehicle without paying the lender as required by the floorplan agreement. (Mot. Summ. J. (# 100) at ¶ 3.) On the following day, Jeffrey Sanders, an Operations Manager employed by GMAC, allegedly informed Plaintiffs that GMAC would padlock the door to the dealership if the Giles did not sign a document assigning vehicle sales proceeds to GMAC. (Pls.' Resp. to Mot. Summ. J. (# 96) Ex. A.) The assignment, dated October 11, 2001, makes no explicit assignment, however, of any rights regarding an "open account" containing funds that Ford Motor Company paid to Yerington Ford under various factory credit programs. After the signing of this assignment, GMAC began receiving from Ford Motor Company the open account money earned by Yerington Ford and continued to do so for most months until the dealership closed in May 2003. (Pls.' Resp. to Mot. Summ. J.(# 96) Exs. A & B.)

The Giles also executed a deed of trust placing a 4.3 million dollar lien on property owned by the Giles, again allegedly under threat of GMAC padlocking the door of Yerington Ford. (Pls.' Resp. to Mot. Summ. J.(# 96) Ex. 25.) According to the Giles, they had been informed that the deed of trust would only be for the amount of the "out of trust" sales, which amounted to close to $300,000, and that the deed of trust would be released once that amount was paid. (Pls.' Resp. to Mot. Summ. J. (# 96) Ex. A.) As a result of Snyder's warning that GMAC would shut down Yerington Ford, the Giles also signed a forbearance agreement, apparently with the understanding that the floorplan agreement would be fully reinstated once Yerington Ford paid GMAC the amount owed for the sale of its vehicles "out of trust." (Pls.' Resp. to Mot. Summ. J.(# 96) Ex. 23.) The "out of trust" amount was paid to GMAC by October 23, 2001. (Pls.' Resp. to Mot. Summ. J.(# 96).)

On March 12, 2002, GMAC agent Douglas Snyder visited the dealership and demanded that Plaintiffs sign two documents: (1) a Joint Notice of Assignment and Demand for Payment and (2) an Assignment of Accounts Due or to Become Due. (Pls.' Resp. to Mot. Summ. J.(# 96) Ex. 20.) Snyder represented that these documents were part of the standard wholesale floorplan agreement which should have been executed on April 24, 2001 when all the other dealers floor planned by GMAC executed the same documents. The Giles were asked to backdate the Assignment of Accounts Due or to Become Due to April 24, 2001. (Id.) These assignments gave GMAC the authority to collect the monies from the open account directly from Ford Motor Company.

This action was commenced on March 19, 2003 when Plaintiffs filed a complaint (Docket No. 2), which Plaintiffs later amended (Docket No. 25). The Amended Complaint contains 13 separate counts based on claims for contract and tort violations, including claims for breach of fiduciary duty, constructive fraud, fraud, negligent misrepresentation, conversion, and undue influence. After the Amended Complaint had been filed, the Court became aware of a conflict of interest between the Giles and Yerington Ford. As a result of that conflict, Plaintiffs agreed to the dismissal with prejudice of all of Plaintiffs' breach of contract claims and of Defendant's corresponding counter-claims. (Docket No. 92.) As a result, only Plaintiffs' tort claims remain.

II. LEGAL STANDARD

A. OPERATIVE LAW

A federal district court, sitting in diversity, must apply the substantive law of the forum state in which it resides. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). See also Fortis Benefits Ins. Co. v. Johnson, 966 F.Supp. 987, 989 (D.Nev.1997). Accordingly, the Court will apply Nevada law in order to adjudicate the instant case.

B. SUMMARY JUDGMENT

Summary judgment is appropriate only when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). In assessing a motion for summary judgment, the evidence, together with all inferences that can reasonably be drawn therefrom must be read in the light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); County of Tuolumne v. Sonora Cmty. Hosp., 236 F.3d 1148, 1154 (9th Cir.2001).

The moving party bears the burden of informing the court of the basis for its motion, along with evidence showing the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). On those issues for which it bears the burden of proof, the moving party must make a showing that is "`sufficient for the court to hold that no reasonable trier of fact could find other than for the moving party.'" Calderone v. United States, 799 F.2d 254, 259 (6th Cir.1986). See also Idema v. Dreamworks, Inc., 162 F.Supp.2d 1129, 1141 (C.D.Cal.2001). For those issues where the moving party will not have the burden of proof at trial, the movant must point out to the court "that there is an absence of evidence to support the nonmoving party's case." Catrett, 477 U.S. at 325, 106 S.Ct. 2548.

In order to successfully rebut a motion for summary judgment, the non-moving party must point to facts supported by the record which demonstrate a genuine issue of material fact. Reese v. Jefferson School Dist. No. 14J, 208 F.3d 736 (9th Cir.2000). A "material fact" is a fact "that might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) Where reasonable minds could differ on the material facts at issue, summary judgment is not appropriate. See v. Durang, 711 F.2d 141, 143 (9th Cir.1983). A dispute regarding a material fact is considered genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Liberty Lobby, 477 U.S. at 248, 106 S.Ct. 2505, 91 L.Ed.2d 202. The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient to establish a genuine dispute; there must be evidence on which the jury could reasonably find for the plaintiff. See id. at 252, 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202.

III. MOTION FOR SUMMARY JUDGMENT ON COUNTS 1-12: THE ECONOMIC LOSS DOCTRINE

With the dismissal of Plaintiffs' breach of contract claims, only the intentional and/or negligent tort and fraud claims remain. Defendant argues that all these claims should be dismissed as a matter of law, based on the economic loss doctrine.¹ Defendant's argument is based on Nevada's adoption of the economic loss doctrine (or economic loss rule).

Defendant argues that the economic loss doctrine should be applied to bar both negligent and intentional tort and/or fraud claims where those claims are "intertwined with, and therefore not extraneous to or independent of, a contract or contractual...