756 F.3d 204 (2nd Cir. 2014), 13-1886, Giuffre Hyundai, Ltd. v. Hyundai Motor America

Docket Nº:13-1886
Citation:756 F.3d 204
Opinion Judge:Sack, Circuit Judge:
Party Name:GIUFFRE HYUNDAI, LTD., d/b/a GIUFFRE HYUNDAI, Plaintiff--Appellant, v. HYUNDAI MOTOR AMERICA, Defendant--Appellee
Attorney:ERIC L. CHASE (Ronald J. Campione, on the brief), Bressler, Amery & Ross, P.C., New York, NY, for Plaintiff-Appellant. FREDERICK LIU, Hogan Lovells U.S. LLP, Washington, DC (John J. Sullivan, Hogan Lovells U.S. LLP, New York, NY, on the brief), for Defendant-Appellee.
Judge Panel:Before: STRAUB, SACK, and LOHIER, Circuit Judges.
Case Date:June 25, 2014
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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756 F.3d 204 (2nd Cir. 2014)

GIUFFRE HYUNDAI, LTD., d/b/a GIUFFRE HYUNDAI, Plaintiff--Appellant,

v.

HYUNDAI MOTOR AMERICA, Defendant--Appellee

No. 13-1886

United States Court of Appeals, Second Circuit

June 25, 2014

Argued: March 20, 2014.

Petition for certiorari filed at, 08/06/2014

Appeal from a judgment of the United States District Court for the Eastern District of New York (Jack B. Weinstein, Judge) granting the defendant's motion for summary judgment and denying the plaintiff's cross-motion for partial summary judgment. The plaintiff sought to enjoin the termination of its automobile dealership contract on the ground that it was entitled to an opportunity to cure the breach occasioned by a state court's decision finding that the plaintiff had engaged in fraudulent and deceptive business practices.

ERIC L. CHASE (Ronald J. Campione, on the brief), Bressler, Amery & Ross, P.C., New York, NY, for Plaintiff-Appellant.

FREDERICK LIU, Hogan Lovells U.S. LLP, Washington, DC (John J. Sullivan, Hogan Lovells U.S. LLP, New York, NY, on the brief), for Defendant-Appellee.

Before: STRAUB, SACK, and LOHIER, Circuit Judges.

OPINION

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Sack, Circuit Judge:

The plaintiff, Giuffre Hyundai, Ltd. (" Giuffre" ), was an authorized dealer of Hyundai automobiles pursuant to a contract with that company's domestic affiliate, Hyundai Motor America (" HMA" ). HMA terminated its contract with Giuffre after a New York State court concluded that the dealer had engaged in fraudulent, illegal, and deceptive business practices--a clear breach of the contract terms. Giuffre responded by bringing suit in the United States District Court for the Eastern District of New York seeking to enjoin the termination. Giuffre relied in pertinent part on section 463 of the New York Vehicle and Traffic Law, which provides protections to motor vehicle franchisees in their dealings with automobile manufacturers. Giuffre claimed that section 463 required HMA to provide it with notice of and an opportunity to cure the breach occasioned by the state court's ruling.

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The district court (Jack B. Weinstein, Judge ) disagreed, concluding that the breach here was incurable and that HMA was therefore entitled to terminate the contract immediately, notwithstanding the terms of the Vehicle and Traffic Law. Because we conclude that section 463 does not abrogate the common law with respect to incurable breaches of contract, we affirm the district court's grant of summary judgment for HMA.

BACKGROUND

Giuffre Hyundai was a franchised Hyundai dealer based in Brooklyn, New York. It sold Hyundai cars pursuant to a Dealer Sales and Service Agreement (" DSSA" ) with HMA. That contract included provisions stipulating that " HMA has selected [Giuffre] because of the reputation of its Owner(s) and the General Manager . . . for integrity and their commitment to fair dealing." DSSA 10(C)(2). It required Giuffre to refrain from " engag[ing] in any misrepresentation or unfair or deceptive trade practices." Id. HMA reserved the right to " terminate [the DSSA] immediately" if

[Giuffre] or any Owner, officer, or General Manager of [Giuffre], is convicted of any felony or for any violation of law which in HMA's sole opinion tends to adversely affect the operation, management, reputation, business or interests of [Giuffre] or HMA, or to impair the good will associated with the Hyundai Marks.1 Such violations of law may include, without limitation, any finding or adjudication by any court of competent jurisdiction or government agency that [Giuffre] has engaged in any misrepresentation or unfair or deceptive trade practice[.]

Id. 16(B)(1)(b).

Giuffre's Conduct and HMA's Notice of Termination

In December 2010, New York's Attorney General brought a civil suit against Giuffre; its owner, John Giuffre; and three other dealerships he owned, alleging that they had engaged in a pattern of fraudulent and deceptive business practices. See People v. Giuffre Motor Car Co., No. 30163/2010 (N.Y. S.Ct. 2010).

The New York Supreme Court, Kings County, eventually granted summary judgment for the Attorney General, ruling that the dealerships had " engaged in fraudulent and illegal business practices[,] . . . deceptive acts[,] . . . and false advertising" in violation of several New York statutes and the federal Truth in Lending Act, 15 U.S.C. § 1601 et seq. See Decision/Order at 7, Giuffre Motor Car Co., No. 30163/2010 (N.Y. S.Ct. Dec. 7, 2011). Concluding that the evidence " describe[d] a common practice of strong-arm sales methods and unethical conduct," id. at 4, the court commented: " The list of grievances is extensive and unsettling. Multiple statutory violations appear in several individual transactions. The Court is struck by the similarity of the claims being made [by the customers] and the brazen nature of the sales persons," id. at 5. In response to what it called these " credible allegations of deceptive and fraudulent business practices," the court found that John Giuffre had " offered nothing more than conclusory statements in a general denial which is insufficient to defeat an award of summary judgment." Id. at 7.

The court enjoined the dealerships from committing further violations and ordered

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both restitution and civil penalties. See Order, Giuffre Motor Car Co., No. 30163/2010 (N.Y. S.Ct. Feb. 22, 2012). The Attorney General eventually agreed to a total payment of $500,000 in satisfaction of the judgment. See Consent Order and Judgment, Giuffre Motor Car Co., No. 30163/2010 (N.Y. S.Ct. Sept. 14, 2012).

HMA apparently learned of the Attorney General's suit and the court's decision for the first time from an October 2012 article in the New York Post headlined...

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