748 F.3d 1142 (Fed. Cir. 2014), 2013-5019, A&D Auto Sales, Inc. v. United States

Docket Nº:2013-5019, 2013-5020
Citation:748 F.3d 1142
Opinion Judge:Dyk, Circuit Judge.
Party Name:A& D AUTO SALES, INC., ALLEY'S OF KINGSPORT, INC., ARCHER CHRYSLER JEEP WEST, INC., ARCHER CHRYSLER PLYMOUTH, INC., ARCHER DODGE, INC., ARCHER FINANCIAL HOLDINGS, INC., AXELROD CHRYSLER DODGE JEEP, INC., AXELROD CHRYSLER, INC., BARRY DODGE INC., BENNETT AUTOPLEX INC., BENSON MOTOR INC., ARROW FORD, INC., BILL KAY SUZUKI, INC., BOARDWALK AUTO CENTER
Attorney:ROGER J. MARZULLA, Marzulla Law, LLC, of Washington, DC, argued for plaintiffs-appellees in case no. 2013-5019. With him on the brief were NANCIE G. MARZULLA. Of counsel on the brief was LEONARD A. BELLAVIA, Bellavia Gentile & Associates, LLP, of Mineola, New York. HARRY ZANVILLE, Law Office of H...
Judge Panel:Before NEWMAN, DYK, and TARANTO, Circuit Judges.
Case Date:April 07, 2014
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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748 F.3d 1142 (Fed. Cir. 2014)

A& D AUTO SALES, INC., ALLEY'S OF KINGSPORT, INC., ARCHER CHRYSLER JEEP WEST, INC., ARCHER CHRYSLER PLYMOUTH, INC., ARCHER DODGE, INC., ARCHER FINANCIAL HOLDINGS, INC., AXELROD CHRYSLER DODGE JEEP, INC., AXELROD CHRYSLER, INC., BARRY DODGE INC., BENNETT AUTOPLEX INC., BENSON MOTOR INC., ARROW FORD, INC., BILL KAY SUZUKI, INC., BOARDWALK AUTO CENTER, INC., BOB LUEGERS MOTORS, INC., BOB ROHRMAN MOTORS, INC., BOB TAYLOR JEEP, INC., BONDY'S FORD, INC., BROTHER'S MOTORS, INC., BURKE AUTOMOTIVE GROUP, INC., BY FISHEL'S JEEPS, INC., CARDENAS MOTORS, INC., CARSON AUTOMOTIVE INC., CDOHY, INC., CARSON CJ, LLC, CENTURY DODGE, INC., CHILSON, INC., CLARKSTON MOTORS, INC., COLEMAN AUTO GROUP, INC., COLEMAN CHRYSLER JEEP, INC., COUNTRY MOTORS, INC., CRAIN CDJ, LLC, CUNNINGHAM CHRYSLER JEEP, INC., CURFIN INVESTMENTS, INC., DJ-MACK INC., DET AUTOMOTIVE GROUP, INC., DAVE CROFT MOTORS, INC., BURKE BROTHERS, INC., DODGE OF ENGLEWOOD, INC., DON DRENNEN CHRYSLER JEEP, INC., DON PHILLIPS & SON SR. ENTERPRISES, INC., DONATO & SON'S JEEP, INC., DOUGLAS AUTOMOTIVE GROUP, INC., EJE, INC., EL DORADO MOTORS, INC., ELHART DODGE, INC., ELHART PONTIAC-GMC TRUCK, INC., ERTLEY CHRYSLER JEEP DODGE, LLC., FITZGERALD AUTO MALLS, INC., FT AUTOMOTIVE II, LLC, FT AUTOMOTIVE IV, LLC, FORT MORGANAUTO CENTER, INC., FOX HILLS MOTOR SALES, INC., G.K. ALCOMBRACK, INC., GOLDEN MOTORS, INC., GRAYSON PONTIAC, INC., GRESHAM CHRYSLER JEEP, INC., GRUBBS NISSAN MID-CITIES LIMITED, HAHN MOTOR COMPANY, HAMILTON CHRYSLER, INC., HARVEY M. HARPER CO., HOOVER MOTORS HOLDING CO., INC., HOOVER DODGE, INC., I.M. JARRETT & SON, INC., ISLAND JEEP, INC., JAMES W. HALTERMAN, INC., JIM MARSH AMERICAN CORPORATION, JOHN CULLEN DODGE, LLC, JOHNSON COUNTY MOTORS, L.C., KINGSTON DODGE, INC., KITAGAWA MOTORS, INC., KOVATCH FORD, INC., LFCJ, INC., LEE PETERSON MOTORS, INC., LENIHAN JEEP, INC., LIVONIA CHRYSLER JEEP, INC., LOU BACHRODT CHEVROLET, INC., MANCARI'S OF ORLAND HILLS, INC., MARKETPLACE SUZUKI, INC., MARSTALLER MOTORS, INC., MELCHIORRE, INC., MILLER-CAMPBELL COMPANY, MILLER MOTOR CAR CORPORATION, MILNER O'QUINN CHRYSLER DODGE JEEP, INC., MORONG BRUNSWICK, NEIL HUFFMAN ENTERPRISES, INC., NEIL HUFFMAN, INC., LUNT MOTOR COMPANY, MANUEL DODGE, INC., MATT MONTGOMERY, INC., MATTHEWS CHRYSLER, INC., MT. CLEMENS DODGE, INC., NEW CITY AUTO SALES, INC., NORTHGLENN DODGE, INC., JEFF HUNTER MOTORS, INC., JELMAC LLC, PAINTER SALES AND LEASING, PAINTER'S SUN COUNTRY CHRYSLER, INC., PEN MOTORS, INC., PLEASANT VALLEY MOTORS, INC., PRESTON CHRYSLER JEEP, INC., PRIDE CHRYSLER JEEP, INC., QUALITY JEEP-CHRYSLER, INC., RFJS COMPANY, LLC, REUTHER DODGE LLC, REUTHER'S INVESTMENT COMPANY, RHODEN AUTO CENTER, INC., RICHARD CHRYSLER JEEP, INC., RIVERSIDE AUTO SALES OF MARQUETTE, INC., ROCK OF TEXAS AUTOMOTIVE, INC., ROHR-ALPHA MOTORS, INC., SCK, INC., SCOTIA MOTORS, INC., SCOTT CHEVROLET, INC., SHOEMAKER AUTO GROUP, INC., SIEMANS IMPORTS, INC., SOUTH SHORE AUTO LINES, INC., SOUTHEAST AUTOMOTIVE, INC., STAR CHRYSLER, INC., TAMAROFF 12 MILE MOTORS, INC., TARBOX CHRYSLER JEEP, LLC, TARBOX MOTORS INC., TAYLOR & SONS, INC., TED BRITT OF FREDERICKSBURG, INC., TENAFLY CHRYSLER JEEP, INC., TETON MOTORS, INC., THOMAS SALES & SERVICE, INC., TOMSIC MOTOR COMPANY, TRANSIT LLC, TRI-STATE AUTOMOTIVE ASSOCIATES, INC., THE UNION SALES COMPANY, URKA AUTO CENTER, INC., VALLEY DODGE, INC., VERONA MOTOR SALES, INC., VIC OSMAN LINCOLN-MERCURY, INC., VILLAGE CHRYSLER JEEP, INC., WACO DODGE SALES, INC., WALKER MOTORS, INC., WALLACE CHRYSLER JEEP, LLC, WESTMINSTER DODGE, INC., WESTSIDE DODGE, INC., WHEATON MOTOR CITY, INC., WHEELER LEASING CO. II, INC., WHITEY'S, INC., WILLIAM T. PRITCHARD, INC., WRIGHT DODGE, LLC, WYCKOFF CHRYSLER, INC., AND YOUNG VOLKSWAGEN, INC., Plaintiffs-Appellees

v.

UNITED STATES, Defendant-Appellant; COLONIAL CHEVROLET CO., INC., AND MIKE FINNIN MOTORS, INC., Plaintiffs-Appellees

v.

UNITED STATES, Defendant-Appellant

2013-5019, 2013-5020

United States Court of Appeals, Federal Circuit

April 7, 2014

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Appeal from the United States Court of Federal Claims in No. 11-CV-0100, Senior Judge Robert H. Hodges, Jr. Appeal from the United States Court of Federal Claims in No. 10-CV-0647, Senior Judge Robert H. Hodges, Jr.

ROGER J. MARZULLA, Marzulla Law, LLC, of Washington, DC, argued for plaintiffs-appellees in case no. 2013-5019. With him on the brief were NANCIE G. MARZULLA. Of counsel on the brief was LEONARD A. BELLAVIA, Bellavia Gentile & Associates, LLP, of Mineola, New York.

HARRY ZANVILLE, Law Office of Harry Zanville, San Diego, California, argued for plaintiffs-appellees in case no. 2013-5020. With him on the brief were STEVEN J. EAGLE, Law Office of Steven J. Eagle, of Arlington, Virginia, RICHARD D. FAULKNER, JAMES D. BLUME, Blume, Faulkner Skeen & Northam, PPLC, of Richardson, Texas, and G. KEVIN BUCHANAN, Buchanan & Bellan, L.L.P., of Dallas, Texas.

KENNETH M. DINTZER, Assistant Director, Civil Division, Commercial Litigation Branch, United States Department of Justice, of Washington, DC, argued for defendant-appellant. With him on the brief were STUART F. DELERY, Principal Deputy Assistant Attorney General, JEANNE E. DAVIDSON, Director, DAVID A. HARRINGTON, and ELIZABETH M. HOSFORD, Senior Trial Counsels, and SARAH M. VALENTI and SETH W. GREENE, Trial Attorneys. Of counsel were DANIEL B. VOLK, and SARAH M. BIENKOWSKI, Attorneys.

JONATHAN A. MICHAELS, Michaels Law Group, APLC, of Newport Beach, California, for amici curiae, Spitzer Motor City, et al. With him on the brief was KATHRYN J. HARVEY. Of counsel on the brief was ALLEN P. PRESS, Green Jacobson, P.C., of Clayton, Missouri.

Before NEWMAN, DYK, and TARANTO, Circuit Judges.

OPINION

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Dyk, Circuit Judge.

These appeals arise from two takings suits related to the 2009 bankruptcies of General Motors Corporation (" GM" ) and Chrysler LLC (" Chrysler" ). The plaintiffs are former dealers of those companies whose franchises were terminated in the bankruptcies. The plaintiffs allege that these terminations constituted a taking because the government required them as a condition of its providing financial assistance to GM and Chrysler and/or to the companies that succeeded them in the bankruptcies. The government moved to dismiss the suits for failure to state a claim. The United States Court of Federal Claims (" Claims Court" ) denied dismissal, and the government brought these interlocutory appeals.

Because we lack the benefit of a fully developed factual record, we do not at this stage address every issue the government raises. As to the issues we do address, we reject the government's arguments for dismissal. While we hold that the complaints are deficient because they do not sufficiently allege that the economic value of the plaintiffs' franchises was reduced or eliminated as a result of the government's actions, we nonetheless affirm the Claims Court's decision to deny dismissal at this point in the proceedings. The proper remedy is to grant the plaintiffs leave to amend their complaints to include the necessary allegations, and on remand the Claims Court shall do so.

Background

At this stage in the proceedings, we accept the dealers' well-pleaded factual allegations as true. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). While we primarily consider the allegations in the complaint, we may also look to " matters incorporated by reference or integral to the claim, items subject to judicial notice, [and] matters of public record." 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1357 (3d ed. 2004).

I

The bankruptcies of GM and Chrysler took place in the historic recession and credit crisis of 2008-09. GM and Chrysler were in serious financial difficulty, as loans to automobile dealers and consumers had come to an " abrupt halt" and sales " plummeted." A& D J.A. 78.1 Automobile sales were down more than 37% from the previous year, falling to their lowest level in 26 years. In a major public speech, President Bush expressed fears that " [i]f we were to allow the free market to take its course now, it would almost certainly lead to disorderly bankruptcy and liquidation for the automakers." President George W. Bush, President Bush Discusses Administration's Plan to Assist Automakers (Dec. 19, 2008) (transcript available at http://georgewbush-whitehouse.archives.gov/news/releases/2008/12/20081219.html). In late 2008, the chief executives of GM and Chrysler appeared before Congress to ask for emergency financial assistance in the form of loans and lines of credit. Shortly thereafter, Treasury Secretary Henry Paulson created the Automotive Industry Financing Program, through which the Department of Treasury (" Treasury" ) would make loans and other investments in the automakers using government funds. As the plaintiffs agree, the stated goal of the program was

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to avoid " disorderly bankruptcy and liquidation," which would entirely eliminate them as ongoing entities. Id. The program was created as a part of the wider Troubled Asset Relief Program (" TARP" ), which made similar investments in a number of financial institutions. TARP had been established by Congress two months earlier, in the Emergency Economic Stabilization Act of 2008, Pub. L. 110-343, 122 Stat. 3765.

The government's first assistance to the automakers consisted of stopgap loans ($13.4 billion to GM, $4 billion to Chrysler) intended to keep the companies from having to cease operations pending talks over more comprehensive assistance. In connection with these loans, the government and the automakers entered formal agreements setting...

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