91 F.Supp.2d 733 (D.N.J. 2000), Civ.98-112, General Motors Corp. v. New A.C. Chevrolet, Inc.

• Citation: 91 F.Supp.2d 733
• Party Name: GENERAL MOTORS CORP., Chevrolet Motor Division, Plaintiff/Counterclaim, Defendant, v. The NEW A.C. CHEVROLET, INC. d/b/a NEW A.C. CHEVROLET, Defendant/Counterclaimant.
• Case Date: March 08, 2000
• Court: United States District Courts, 3rd Circuit, U.S. District Court — District of New Jersey

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91 F.Supp.2d 733 (D.N.J. 2000)

GENERAL MOTORS CORP., Chevrolet Motor Division, Plaintiff/Counterclaim, Defendant,

v.

The NEW A.C. CHEVROLET, INC. d/b/a NEW A.C. CHEVROLET, Defendant/Counterclaimant.

No. CIV.98-112.

United States District Court, D. New Jersey.

March 8, 2000

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Alicia Downey, Bingham Dana, LLP, Boston, MA, Lois Goodman, Carpenter, Bennett & Morrissey, Newark, NJ, for Plaintiff.

Martin G. Margolis, Margolis Law Group, P.C., Verona, NJ, for Defendant.

OPINION

HOCHBERG, District Judge.

This matter comes before this Court on a motion for summary judgment filed by General Motors Corp. ("GM") pursuant to Fed.R.Civ.P. 56, seeking judgement in GM's favor on Counts I, II, III, VI, VII, VIII, and IX of the First Amended Complaint and dismissal of the Verified Counterclaim filed by New A.C. Chevrolet, Inc. ("New A.C."). New A.C. also moves for partial summary judgment seeking to dismiss the First Amended Complaint filed by GM. For the reasons set forth below, GM's motion for summary judgment is granted and New A.C.'s motion for partial summary judgment is denied.

Subject matter jurisdiction is properly pled pursuant to 28 U.S.C. § 1330 and § 1332. The Court also has supplemental jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367(a) because the state law claims are so related to the federal claims arising under 15 U.S.C. § 1114 and § 1125(c) (the "Lanham Act") that together they form the same case or controversy.

I. STANDARD OF REVIEW

Pursuant to Rule 56(c), a motion for summary judgment will be granted

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if 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 a judgment as a matter of law.

See also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In other words, "summary judgment may be granted if the movant shows that there exists no genuine issue of material fact that would permit a reasonable jury to find for the nonmoving party." Miller v. Indiana Hosp., 843 F.2d 139, 143 (3d Cir. 1988). All facts and inferences must be construed in the light most favorable to the non-moving party. See Peters v. Delaware River Port Auth. of Pa. and N.J., 16 F.3d 1346, 1349 (3d Cir. 1994).

Substantive law controls the inquiry into which facts are "material." Anderson, 477 U.S. at 247-48, 106 S.Ct. 2505. An issue is "genuine" if a reasonable jury could decide the issue in the nonmovant's favor. Id. Thus, "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id.; accord Ridgewood Bd. of Educ. v. M.E., 172 F.3d 238, 252 (3d Cir. 1999) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)).

The party seeking summary judgment always bears the initial burden of production. Celotex Corp., 477 U.S. at 323, 106 S.Ct. 2548. This requires the moving party to establish either that there is no genuine issue of fact and that the moving party must prevail as a matter of law, or to demonstrate that the nonmoving party has not shown the requisite facts relating to an essential element of an issue on which it bears the burden. See Id. at 322-23, 106 S.Ct. 2548. Once the party seeking summary judgment has carried this initial burden, the burden shifts to the nonmoving party. To avoid summary judgment, the nonmoving party must demonstrate facts supporting each element for which it bears the burden and it must establish the existence of "genuine issue[s] of material fact" justifying trial. Miller, 843 F.2d at 143; see also Celotex Corp., 477 U.S. at 324, 106 S.Ct. 2548.

However, at the summary judgment stage, this Court neither weighs the evidence nor makes credibility determinations; these tasks are within the sole domain of the fact-finder. See Anderson, 477 U.S. at 249, 106 S.Ct. 2505. Therefore, to demonstrate a genuine issue of material fact, the summary judgment opponent need not produce evidence so strong that it mandates a decision in its favor. Rather, the party opposing summary judgement must adduce "evidence on which the jury could reasonably find for the [nonmovant]." Anderson, 477 U.S. at 252, 106 S.Ct. 2505. "The mere existence of a scintilla of evidence in support of the [nonmovant's] position will be insufficient." Id.; see also In re Headquarters Dodge, 13 F.3d 674, 679 (3d Cir. 1993). "Speculation and conclusory allegations do not satisfy this duty." Ridgewood Bd. of Educ., 172 F.3d at 252 (citing Groman v. Township of Manalapan, 47 F.3d 628, 633 (3d Cir. 1995)).

It is clear that if a moving party satisfies its initial burden of establishing a prima facie case for summary judgment, the opposing party "must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Instead, "[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no 'genuine issue for trial.' " Id. at 587, 106 S.Ct. 1348 (quoting First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 289, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968)).

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II. BACKGROUND

In 1983 New A.C. commenced business as a Chevrolet franchisee. (Affidavit of Onofrio Bruno ("Bruno Aff.") ¶ 2.) In 1986, New A.C. applied to Chevrolet for permission to dual ¹ its franchise with a Yugo franchise. (Id. at ¶ 5.) Chevrolet granted the request. (Id.) However, New A.C. ceased operating the Yugo franchise in the early 1990's and, at that point, operated only the Chevrolet dealership. (Id. at ¶ 6.)

The most recent franchise agreement between New A.C. and GM was executed on November 1, 1995. (Bruno Aff. Exh. A.; see also Affidavit of Daniel C. Durkin ("Durkin Aff.") Exh. A.) The Dealer Sales and Service Agreement ("Agreement") states, inter alia, that

"[i]f the Dealer wants to make any change in location(s) or Premises, or in the uses previously approved for those Premises, Dealer will give Division written notice of the proposed change together with reasons for the proposal, for Division's evaluation and final decision in light of the dealer network planning considerations. No change in location or in the use of Premises, including addition of any other vehicle lines, will be made without Division's prior written authorization."

(Bruno Aff. Exh. A. Art. 4.4.2; see also Durkin Aff. Exh. B Art. 4.4.2 (emphasis added).)

On May 6, 1996, New A.C. "sought...approval" from GM for the addition of a Volkswagen franchise to the Chevrolet dealership. (V. Countercl. ¶ 34, Exh. F.; see also Bruno Aff., Exh. L. ²) New A.C.'s request was denied on June 24, 1996, by GM's Zone Manager. (Durkin Aff. Exh. G.; see also Bruno Aff. Exh. M.) GM denied the request because it "generally disfavor[s] dualing of GM lines with the vehicle lines of another manufacturer" and because New A.C.'s performance as a Chevrolet dealer was "substantially deficient." (Id. at ¶ 37.) Pursuant to the Agreement. New A.C. sought Management Review of this denial on July 11, 1996. (See Durkin Aff. Exh. H.) Management Review was conducted and the decision of the Zone Manager was upheld on August 8, 1996. (Id. at Exh. I.)

In a continuing effort to obtain GM's approval to dual its Chevrolet franchise with a Volkswagen franchise, New A.C. sent GM a letter on October 28, 1996, informing GM that "progress...[had] been made" in each of the performance areas that GM had found deficient in its original rejection of New AC's plan. (Id. at Exh. J.) New A.C. requested reconsideration of its acquisition of a Volkswagen franchise ³; GM reiterated its denial on November 15, 1996, and reasserted GM's policy of disfavoring dualing with non-GM lines. (Id. at Exh. K.) While acknowledging that New A.C. had made efforts to improve its unsatisfactory performance, GM noted that its denial of New A.C.'s proposal was based on the franchisee's "performance over a period of time, not just a point in time." (Id.)

Notwithstanding these extensive communications, GM realized in January, 1997

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that New A.C. was in fact operating a Volkswagen franchise on its Chevrolet premises despite having been denied permission to dual the vehicle lines. (Id. at ¶ 16.) On January 15, 1997, GM notified New A.C. that adding the Volkswagen franchise without prior approval (and, in fact, over express objection) was a breach of the Agreement. (Id. at Exh. L.) GM warned New A.C. that "if this serious situation is not satisfactorily resolved or corrected within 30 days from your receipt of this letter, then Chevrolet Motor Division may elect to terminate the Dealer Agreement and cease all business relationships with your dealer company." (Id.) Subsequently, New A.C. contacted GM requesting a trial period for its operation of the Volkswagen franchise; GM rejected that suggestion and reminded New A.C. that it was in breach of the Agreement and was risking termination of the franchise. (Id.)

Over the following months, New A.C. and GM were in regular oral and written communication regarding New A.C.'s unilateral decision to add a Volkswagen line to the Chevrolet franchise. (Id. at ¶ 17-22; see also Bruno Aff. ¶ 33-37.) In an effort to resolve the situation without terminating New A.C., GM offered New A.C. the opportunity to be the sole Chevrolet dealer in Jersey City; to dual its Chevrolet franchise with an Oldsmobile franchise; and financial support. (Durkin Aff. Exh. N.) None of GM's offers of a compromise solution successfully resolved the present dispute.

Finally, on January 5, 1998, GM filed a complaint in this Court seeking a...