Cent. Buick, GMC, Inc. v. Gen. Motors LLC

• Decision Date: 28 June 2017
• Docket Number: Case No. 8:15-cv-2393-T-27AAS
• Parties: CENTRAL BUICK, GMC, INC. and CENTRAL BUICK, GMC, INC., in the name of FLORIDA DEPARTMENT OF HIGHWAY SAFETY AND MOTOR VEHICLES and STATE OF FLORIDA for the use and benefit of CENTRAL BUICK, GMC, INC., Plaintiff, v. GENERAL MOTORS LLC, Defendant.
• Court: U.S. District Court — Middle District of Florida

CENTRAL BUICK, GMC, INC. andCENTRAL BUICK, GMC, INC., in the nameof FLORIDA DEPARTMENT OF HIGHWAYSAFETY AND MOTOR VEHICLES andSTATE OF FLORIDA for the use and benefit ofCENTRAL BUICK, GMC, INC., Plaintiff, v. GENERAL MOTORS LLC, Defendant.

Case No. 8:15-cv-2393-T-27AAS

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA TAMPA DIVISION

June 28, 2017

ORDER

BEFORE THE COURT are the parties' cross-motions for summary judgment (Dkts. 44, 49), and the respective responses (Dkts. 52, 54). Central Buick GMC, Inc. brought this single count complaint for injunctive relief pursuant to § 320.695 of Florida's Dealer Protection Act, §§ 320.60-320.70. Central contends that on June 17, 2015, General Motors LLC wrongfully sought to terminate the parties' franchise agreement in violation of Fla. Stat. § 320.641(3). Within the statutory 90-day notice period, Central filed a complaint in Polk County Circuit Court for a determination of whether the termination is unfair or prohibited and to enjoin GM from terminating the agreement.¹ GM subsequently removed the action on the basis of diversity jurisdiction. Because there are disputedfacts regarding the termination, the parties' motions will be DENIED, with one exception regarding Central's challenge to its 2011 APR modification.

I. Undisputed Material Facts

Central is an independent automobile dealership in Winter Haven. Prior to the financial crisis of 2008, it operated as a Pontiac, Buick, and GMC dealership. (Dkt. 45-19 ¶¶ 2-4). After 2008, and as part of GM's bankruptcy, the Pontiac line of vehicles was discontinued and Central reorganized as a Buick-GMC dealership. (Dkt. 45-19 ¶ 4). Effective November 1, 2010, the parties entered into a Dealer Sales and Service Agreement ("DSSA") for Buick motor vehicles and GMC light duty trucks. (Dkt. 27-2). Article 9 of the DSSA sets forth Central's performance obligations as a dealer:

Satisfactory performance of [Central's] sales obligations under Article 5.1 requires [Central] to achieve a Retail Sales Index equal or greater than 100. If [Central's] Retail Sales Index is less than 100, [Central's] sales performance will be rated as provided in the General Motors Sales Evaluation process. . . . In addition to the Retail Sales Index, [GM] will consider any other relevant factors in deciding whether to proceed under the provisions of Article 13.2 to address any failure by [Central] to adequately perform its sales responsibilities. [GM] will only pursue its rights under Article 13.2 to address any failure by [Central] to adequately perform its sales responsibilities if [GM] determines that [Central] has materially breached its sales performance obligations under this Dealer Agreement.

(Dkt. 27-2 at 22). And, Article 13.2 sets forth the procedures for GM to terminate the agreement:

If [GM] determines . . . that [Central] has failed to adequately perform its sales or service responsibilities relating to customer satisfaction and training, [GM] will review such failure with [Central].

As soon as practical thereafter, [GM] will notify [Central] in writing of the nature of [Central's] failure and of the period of time (which shall not be less than six months) during which [Central] will have the opportunity to correct the failure. If [Central] does not correct the failure by the expiration of the period, [GM] will so advise [Central] in writing.

If, however, [Central] remains in material breach of its obligations at the expiration of the period, [GM] may terminate this Agreement by giving [Central] 90 days advancewritten notice.

(Dkt. 27-2 at 31).

On May 19, 2014, GM notified Central that it breached the DSSA by failing to meet sales and customer satisfaction performance obligations in 2012 and 2013. (Dkt. 45-17). Specifically, Central was ranked last in Florida in Sales Performance based on its Retail Sales Index ("RSI") of 39.5 for 2012 and 37.0 for 2013, and Central's Customer Satisfaction Performance was below the region's performance.² (Dkt. 45-17). Central was provided six months, from July 1, 2014 through December 31, 2014, "to correct its performance deficiencies." (Dkt. 45-17 at 2). At the end of 2014, Central was ranked 54 of 63 Florida dealers based on its RSI of 61.3, placing it in the bottom 15% of eligible dealers in the state with an "unsatisfactory" rating.³ (Dkt. 45-18 at 2,3).

On June 17, 2015, GM notified Central of Central's 2015 first quarter rankings. (Dkt. 45-23). Central ranked 52 of 63 based on its RSI of 62.14, and its dealer rating improved from "unsatisfactory" to "needs significant improvement." (Dkt. 45-23). A "needs significant improvement rating" placed Central with a RSI lower than 84.9 but not in the bottom 15% of dealers in the stale. (Dkt. 45-23 at 2). Stated differently, Central moved out of the bottom 15% of dealers in the first quarter of 2015.

The following day, June 18, 2015, GM notified Central that it was terminating the DSSAeffective September 16, 2015 because Central failed to reach a RSI of 100 during the cure period of July 1, 2014 through December 31, 2014. (Dkt. 27-8). Central's RSI for the cure period was 68.2. (Dkt. 27-8). This action followed.

II. Standard

Summary judgment is appropriate where "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "A genuine factual dispute exists only if a reasonable fact-finder 'could find by a preponderance of the evidence that the [non-movant] is entitled to a verdict.'" Kernel Records Oy v. Mosley, 694 F.3d 1294, 1300 (11th Cir. 2012) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986)). A fact is material if it may affect the outcome of the suit under the governing law. Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997).

The moving party bears the initial burden of showing the court, by reference to materials on file, that there are no genuine disputes of material fact that should be decided at trial. Hickson Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256, 1260 (11th Cir. 2004) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). If the moving party fails to demonstrate the absence of a genuine dispute, the motion should be denied. Kernel Records, 694 F.3d at 1300 (citation omitted). On the other hand, "'[i]f no reasonable jury could return a verdict in favor of the nonmoving party, there is no genuine issue of material fact and summary judgment will be granted.'" Lima v. Fla. Dep't of Children & Families, 627 F. App'x 782, 785-86 (11th Cir. 2015) (quoting Beal v. Paramount Pictures Corp., 20 F.3d 454, 459 (11th Cir.1994)). And, "[w]here parties file[ ] cross-motions for summary judgment[,] . . . each party's motion must be examined on its own merits, and in each case all reasonable inferences must be drawn against the party whose motion is under consideration."Fireman's Fund Ins. Co. v. Great Am. Ins. Co. of N.Y., 822 F.3d 620, 648 n.12 (2d Cir. 2016) (alterations in original, quotation marks and citation omitted).

III. Discussion

Section 320.641 of Florida's Dealer Protection Act regulates the cancellation of franchise agreements between dealers and manufacturers. A manufacturer may terminate an agreement so long as it is "fair and not prohibited." Fla. Stat. § 320.641(3). A termination is unfair if

it is not clearly permitted by the franchise agreement; is not undertaken in good faith; is not undertaken for good cause; or is based on an alleged breach of the franchise agreement which is not in fact a material and substantial breach; or, if the grounds relied upon for . . . cancellation . . . have not been applied in a uniform and consistent manner by the [manufacturer].

Id. The manufacturer has the burden of proving that the termination complies with the statute. Id.

Because this action is founded on statutory liability, Florida law applies. Risley v. Nissan Motor Corp. USA, 254 F.3d 1296, 1299 (11th Cir.), opinion reinstated on reh'g sub nom. Risley v. Nissan Motor Corp. in USA, 260 F.3d 1310 (11th Cir. 2001). And, "[i]n rendering a decision based on state substantive law, '[this Court is] bound to decide the case the way it appears the state's highest court would.'"⁴ Risley, 254 F.3d 1296 at 1299 (quoting e.g., Royal Ins. Co. of Am. v.Whitaker Contracting Corp., 242 F.3d 1035, 1040 (11th Cir.2001) (internal quotation marks and citation omitted)).

(1) Clearly Permitted

GM contends that the termination is clearly permitted by the DSSA because Central failed to achieve an RSI equal or greater than 100 during the cure period. Central counters that GM failed to consider "other relevant factors" before proceeding with termination and therefore, the termination is not clearly permitted.

The DSSA is a contract between the parties, and contract interpretation is ordinarily a matter of state law. In re Chira, 567 F.3d 1307, 1311 (11th Cir. 2009). Article 17.12 of the DSSA provides that Michigan law governs its interpretation. (Dkt. 45-24 at 38). Under Michigan law, "[a]bsent an ambiguity or internal inconsistency, contractual interpretation begins and ends with the actual words of a written agreement." Innovation Ventures v. Liquid Mfg., 885 N.W.2d 861, 870, reh'g denied sub nom. Innovation Ventures, L.L.C. v. Liquid Mfg., L.L.C., 884N.W.2d 573 (Mich. 2016). Therefore, determining if the termination is clearly permitted under Fla. Stat. § 320.641(3) requires an interpretation of the DSSA under Michigan law. In re Chira, 567 F.3d at 1311; Innovation Ventures, 855 N.W.2d at 870.

Article 9 sets forth the procedure for GM to follow before initiating the termination process under Article 13.2. First, GM considers a dealer's RSI and other relevant factors before determining whether to proceed with the Article 13.2 procedures. GM will only pursue its Article 13.2 rights ifit determines the dealer is in material and substantial breach of the DSSA. GM proceeds with Article 13.2 by reviewing the failure with the dealer and providing the dealer a cure period...