Action Nissan v. Hyundai Motor America

• Decision Date: 29 August 2008
• Docket Number: No. 6:06-cv-1747-Orl-19KRS.,6:06-cv-1747-Orl-19KRS.
• Citation: 617 F.Supp.2d 1177
• Parties: ACTION NISSAN, INC., d/b/a Universal Hyundai, Plaintiff, v. HYUNDAI MOTOR AMERICA, Defendant.
• Court: U.S. District Court — Middle District of Florida

617 F.Supp.2d 1177

ACTION NISSAN, INC., d/b/a Universal Hyundai, Plaintiff, v. HYUNDAI MOTOR AMERICA, Defendant.

No. 6:06-cv-1747-Orl-19KRS.

United States District Court, M.D. Florida, Orlando Division.

August 29, 2008.

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Kenneth L. Paretti, Robert A. Morris, A. Edward Quinton, III, Adams, Quinton & Paretti, PA, Miami, FL, for Plaintiff.

Dean Bunch, James Andrew Bertron, Jr., Melissa Fletcher Allaman, Sutherland, Asbill & Brennan, LLP, Tallahassee, FL, Nicholas T. Christakos, Sutherland, Asbill & Brennan, LLP, Washington, DC, for Defendant.

ORDER

PATRICIA C. FAWSETT, District Judge.

This case comes before the Court on the following:

1. Motion for Summary Judgment by Defendant Hyundai Motor America (Doc. No. 39, filed Feb. 28, 2008);

2. Response and Memorandum of Law in Opposition to Defendant's Motion for Summary Judgment by Plaintiff Action Nissan, d/b/a Universal Hyundai (Doc. No. 58, filed Mar. 31, 2008);

3. Motion for Partial Summary Judgment and Incorporated Memorandum of Law by Plaintiff (Doc. No. 71, filed Apr. 15, 2008);

4. Notice of Filing Exhibits to Plaintiffs Motion for Partial Summary Judgment by Plaintiff (Doc. No. 85, filed Apr. 22, 2008);

5. Second Motion for Summary Judgment by Defendant (Doc. No. 101, filed May 13, 2008);

6. Opposition to. Plaintiff's Motion for Summary Judgment by Defendant (Doc. No. 103, filed May 15, 2008); and

7. Response and Memorandum of Law in Opposition to Defendant's Second Motion for Summary Judgment by Plaintiff (Doc. No. 105, filed May 15, 2008).

Background

I. Procedural History

Plaintiff Action Nissan, Inc., doing business as Universal Hyundai, brought this action against Defendant Hyundai Motor America alleging breach of contract (Count I); breach of the implied covenants of good faith and fair dealing (Count II); violation of Florida's Dealer Protection Act ("DPA"), § 320.64(18), Fla. Stat. (2006)¹ (Count III); and breach of fiduciary duty (Count IV). (Doc. No. 2 at 1-11, filed Nov. 13, 2006.) Defendant has filed two Motions for Summary Judgment, and Plaintiff has filed a Motion for Partial Summary Judgment. (Doc. Nos. 39, 71, 101.) All Motions are opposed. (Doc. Nos. 58, 103, 105.)

II. Undisputed Facts

Plaintiff has been a Hyundai new motor vehicle franchised dealer with Defendant since 1996. (Doc. No. 2 at 2, ¶ 6; Doc. No. 6 at 2, ¶ 6.) In November of 2002, Plaintiff and Defendant renewed their contractual relationship by signing a Hyundai Motor America Dealer Sales and Service Agreement ("the franchise agreement"). (Doc. No. 2 at 2, ¶ 6; id. at 13-19; Doc. No. 6 at 2, ¶ 6.) This agreement explicitly incorporated the Hyundai Motor America Dealer Sales and Service Agreement Standard Provisions. (Doc. No. 2 at 2, ¶ 7; id. at 21-46; Doc. No. 6 at 2, ¶ 7.) The standard provisions provided for the creation of a dealers' cooperative advertising association, the Hyundai Dealer Advertising Association ("HDAA"). (Doc. No. 2 at 23-24.) The HDAA was to be financed through Defendant's collection of "the assessment of a fixed amount for each new Hyundai Motor Vehicle purchased by Hyundai dealers." (Id. at 24.) Defendant would then transfer these funds to the appropriate regional HDAA for use in area advertising. (Id.; Doc. No. 39-2 at 12.) As explained in the franchise agreement, Defendant collected the assessments "[a]s a service to the [HDAA] ... provided that the [HDAA] maintains control over the amount of the assessment and the manner in which the funds are expended" and "so long as such funds are expended for the promotion of Hyundai Products ...."² (Doc. No. 2 at 24.)

In February of 1986, an HDAA for the Southern region of the United States was established, called the Southern Regional Advertising Group, Inc. ("SRAG"). (Doc. No. 2 at 2, ¶ 9; Doc. No. 39-7.) The SRAG was a non-profit Georgia corporation created to provide "common and joint advertising ... to promote the sale of Hyundai motor cars by authorized dealers in the Southern Region of Hyundai Motor America." (Doc. No. 39-7 at 3.) The By-Laws of the SRAG similarly indicate that the purpose of the organization was "to arrange for regional advertising in the geographical area wherein Members are located."³ (Doc. No. 39-4 at 60.) The membership of the SRAG was made up entirely of Hyundai new motor vehicle dealers in the region. (Id. at 60-61.) The Board of Directors was also limited to member Hyundai dealers. (Id. at 64.) Defendant did not foot# 2 The franchise agreement did not otherwise discuss how the advertising assessments were to be spent. have any ownership interest in the SRAG, was not a member of the organization, and did not hold a place on its Board of Directors. (Doc. No. 39-2 at 5-6, 13; Doc. No. 101-2 at 7; Doc. No. 105-13 at 4; Doc. No. 105-17 at 3.)

The Southern region was further subdivided by advertising markets, also known as areas of dominant influence ("ADIs") or dominant market areas ("DMAs"). (Doc. No. 39-2 at 10; Doc. No. 58-2 at 47-51; Doc. No. 85-8 at 9; Doc. No. 105-13 at 12.) Orlando was one such market. (Doc. No. 105-13 at 15.) Dealers within each advertising market would meet as a local HDAA and decide how to use to the funds allocated to that market by the SRAG. (Doc. No. 101-2 at 4-6; Doc. No. 105-13 at 3-4; Doc. No. 105-18 at 2.)

Pursuant to the franchise agreement, Defendant was supposed to collect advertising assessments from the dealers in the SRAG at a rate selected by the Board of Directors of the SRAG: three percent of the price of each new vehicle purchased by the member dealers from Defendant. (Doc. No. 39-4 at 60-61; Doc. No. 58-2 at 3, ¶ 7.) Defendant then was to transfer these assessment funds to the SRAG. (Doc. No. 39-2 at 12.) The SRAG in turn allocated these funds to local markets for "Tier Two" advertising. (Id. at 7-8; Doc. No. 58-2 at 32-34; Doc. No. 85-9 at 6-7.) This type of advertising benefitted the local market as a whole and promoted particular Hyundai products. (Doc. No. 58-2 at 32-34.) Dealers were individually responsible for "Tier Three" advertising which promoted their particular dealership. (Id.)

Two Florida dealerships within the Orlando market, Coastal Hyundai ("Coastal") and Cocoa Hyundai ("Cocoa"), were designated as single point dealers. (Doc. No. 85-7 at 16; Doc. No. 85-8 at 19.) This meant that these two dealerships were considered their own advertising submarket and not technically part of the Orlando HDAA. (Doc. No. 105-13 at 15-16.) While they still paid advertising assessments to Defendant, these dealers could and did seek reimbursement for their individual dealership advertising. (Id.) Plaintiff learned about the submarket designation of Coastal and Cocoa in 2005. (Doc. No. 58-2 at 4, ¶ 8.) Since these dealers were located within Plaintiffs market, Plaintiff argues that they were reaping the benefits of the Orlando HDAA's Tier Two advertising for that market, paid in part by Plaintiff's assessment. (Doc. No. 2 at 4, ¶¶ 15-17.) Thus, Plaintiff was paying its share of Tier Two advertising and paying out of pocket for Tier Three advertising, whereas Coastal and Cocoa's Tier Two payments were "funneled back" to them and used to pay for their Tier Three advertising. (Id.) Plaintiff contends that this arrangement violates several contractual, statutory, and common law obligations owed to it by Defendant.

Standard of Review

A party is entitled to summary judgment "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled judgment as a matter of law." Fed.R.Civ.P. 56(c); accord Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1259 (11th Cir.2004). An issue of fact is "material" if, under, the applicable substantive law, it might affect the outcome of the case. Hickson Corp., 357 F.3d at 1259. An issue of fact is "genuine" if the record taken as a whole could lead a rational trier of fact to find for the non-moving party. Id. at 1260. A court must decide "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id.; Anderson, 477 U.S. at 251-52, 106 S.Ct. 2505.

The party moving for summary judgment has the burden of proving that (1) there is no genuine issue as to any material fact, and (2) it is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In determining whether the moving party has satisfied its burden, the court considers all inferences drawn from the underlying facts in the light most favorable to the party opposing the motion and resolves all reasonable doubts against the moving party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505. The court may not weigh conflicting evidence or weigh the credibility of the parties. Hairston v. Gainesville Sun Pub. Co., 9 F.3d 913, 919 (11th Cir.1993). If a reasonable fact finder could draw more than one inference from the facts and that inference creates an issue of material fact, a court must not grant summary judgment. Id. On the other hand, summary judgment must be granted "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which the party will bear the burden of proof at trial." Celotex Corp., 477 U.S. at 322, 106 S.Ct. 2548.

Analysis

I. Defendant's First Motion for Summary Judgment (Doc. No. 39)

Defendant moves for summary judgment on three grounds: (1) "[Plaintiff] signed two releases in 1999 and 2002 that preclude all four claims," (2) "there is no evidence that [Defendant] established an unfair or inequitable vehicle allocation system in violation of section 320.64(18), Florida Statutes," and (3...