Coffee v. General Motors Acceptance Corp.

Decision Date19 May 1998
Docket NumberNo. CV 396-019.,CV 396-019.
Citation5 F.Supp.2d 1365
PartiesL. Mitchell COFFEE, Jr. and LMC Motors, Inc., Plaintiffs, v. GENERAL MOTORS ACCEPTANCE CORPORATION, Defendant.
CourtU.S. District Court — Southern District of Georgia

Donald Walker Gillis, Dublin, GA, Joseph J. Burton, Jr., Burton & Anderson, Atlanta, GA, Rosemary S. Armstrong, Atlanta, GA, for Plaintiffs.

Dwight J. Davis, M. Graham Loomis, King & Spalding, Atlanta, GA, for Defendant.


BOWEN, Chief Judge.

Three matters are presently before the Court in the above-captioned case: (1) Defendant's Motion for Summary Judgment, (2) Plaintiffs' "Notice of Objection or in the Alternative Motion to Strike" (Motion to Strike), and (3) Plaintiffs' Motion for Partial Summary Judgment. The Court heard oral argument on these matters on December 12, 1997. After careful consideration of the parties' arguments and the relevant statutory and case law, Plaintiffs' motions are DENIED and Defendant's motion is GRANTED IN PART and DENIED IN PART for the reasons stated below.


This case arises out of an inventory financing arrangement between Plaintiff LMC Motors, Inc. (LMC), which operated a General Motors (GM) dealership in Eastman, Georgia, and Defendant General Motors Acceptance Corporation (GMAC), a wholly owned subsidiary of GM. Plaintiff L. Mitchell Coffee, Jr. (Coffee) is the president and sole shareholder of LMC. Coffee first became involved in the automobile business during the late 1980s, when he acquired 49% of the stock in Hilliard, Inc., which at the time operated the GM dealership in Eastman. Coffee made this investment at the request of his friend Zack Hilliard, the dealership's owner. Coffee purchased the remaining stock from Mr. Hilliard in August 1989, and in December of that year GM approved Coffee as a dealer. Coffee operated the dealership under its former name until December 1990, when he changed the corporation's name to LMC Motors, Inc.1

Hilliard, Inc. had previously entered into an inventory financing arrangement with GMAC — sometimes referred to as a "floor plan" financing arrangement — which the parties continued following Coffee's acquisition of the dealership. In this type of arrangement, the lender (GMAC) provides a line of credit to the dealership (Hilliard/LMC), which the dealership uses to finance the purchase of vehicles from the manufacturer (GM). On December 27, 1990, Coffee executed several agreements on behalf of LMC in connection with this inventory financing arrangement: (1) a Promissory Note, (2) a Loan Agreement, (3) a Wholesale Security Agreement, (4) an Amendment to the Wholesale Security Agreement, (5) a Guaranty Agreement, and (6) a Security Agreement.2 In general terms, GMAC extended a $1.5 million line of credit to LMC, which the parties agree was intended to permit LMC to finance up to eighty vehicles. GMAC, however, frequently adjusted the number of vehicles it would finance — and hence the amount it would advance on LMC's behalf — based upon a sixty-day supply of vehicles. That is, GMAC would allow LMC to purchase only the number of vehicles that the dealership was likely to sell in a two-month period. According to GMAC, this "sixty-day-supply" rule is standard company policy and is also an accepted guideline within the automobile industry.

Plaintiffs detail several instances in which they allege that GMAC restricted and adjusted LMC's credit limit.3 While GMAC contests some of these allegations, it admits that it "periodically adjusted LMC's credit limit based on LMC's sales rate and other financial criteria, such as liquidity and capitalization." (Def.'s Am. Brief in Support of its Mot. for Summ.J. at 4). Furthermore, GMAC admits that it "suspended"4 LMC's line of credit on two different occasions: once from February to September 1990, and again from March to July 1993. According to GMAC, the 1990 suspension was initiated at Coffee's request after it was discovered that LMC had $650,000.00 in previously undisclosed off-balance sheet debt;5 according to Plaintiffs, however, GMAC refused to "reinstate" the line of credit until Coffee made an additional $100,000.00 capital contribution to LMC. The 1993 suspension, on the other hand, was initiated by GMAC because a check from LMC to GMAC had been returned for insufficient funds.6 GMAC conditioned reinstatement of the credit line upon satisfaction of several financial criteria, including an additional capital contribution by Coffee.

On April 5, 1994, GMAC advised LMC that it intended to terminate their inventory financing arrangement and that it would make a formal demand for payment in ninety days. Therefore, on July 5, 1994, GMAC demanded payment of the principal amount outstanding on the line of credit, plus the accrued interest on that amount.7 At about the same time, Coffee entered into negotiations with two individuals — Frank Andrews and Woody Butts — regarding their potential investment in LMC. Andrews, Butts, and Coffee subsequently formed ABC Motors in July 1994, and ABC Motors in turn executed an asset purchase agreement with LMC. GMAC currently provides floor plan financing to ABC Motors.

It is undisputed and notable that LMC timely paid all amounts owed to GMAC under the terms of the agreement. It also is undisputed that LMC incurred substantial operating losses during its existence.8 Plaintiffs allege that LMC's losses were precipitated by GMAC's repeated and unjustified reductions in LMC's credit limit and by GMAC's consequent refusal to finance the purchase of new vehicles at certain critical times.9 GMAC, on the other hand, attributes LMC's losses to poor management, and it further claims that it was justified — and in fact authorized under the agreement — in adjusting LMC's credit limit and in terminating their financing relationship.

Plaintiffs commenced the instant lawsuit in March 1996, asserting no less than eight claims against GMAC: (1) violation of the Automobile Dealers' Day in Court Act, 15 U.S.C. § 1221 et seq.; (2) violation of the Georgia Motor Vehicle Franchise Practices Act, O.C.G.A. § 10-1-620 et seq.; (3) breach of contract; (4) promissory estoppel; (5) fraud; (6) negligent misrepresentation; (7) tortious interference with business relations; and (8) tortious interference with contractual relations. Plaintiffs pray for compensatory and punitive10 damages in excess of $2,500,000.00 and costs and attorney's fees. GMAC seeks summary judgment on all of Plaintiffs' claims, and Plaintiffs seek summary judgment on the sole issue of GMAC's liability for breach of contract. In addition, Plaintiffs have moved to strike Defendant's Exhibit 5 in support of its motion for summary judgment.


The Court should grant summary judgment only if "there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Applicable substantive law determines which facts are material, that is, which facts have the potential to affect the outcome of the trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The Court must "resolve all reasonable doubts about the facts in favor of the non-movant, and draw all justifiable inferences in his [or her] favor." United States v. Four Parcels of Real Property, 941 F.2d 1428, 1437 (11th Cir.1991) (en banc) (internal quotation marks and citations omitted).

The moving party has the initial burden of showing the Court, by reference to materials on file, the basis for its motion. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). However, the nature of the movant's initial burden "varies depending on whether the legal issues, as to which the facts in question pertain, are ones on which the movant or the non-movant would bear the burden of proof at trial." Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115 (11th Cir.1993). If the movant bears the burden of proof at trial, that party "must show that, on all the essential elements of its case, ... no reasonable jury could find for the non-moving party." Four Parcels, 941 F.2d at 1438. On the other hand, if the non-movant has the burden of proof at trial, the movant may carry its initial burden either by negating an essential element of the non-movant's case or by demonstrating that there is an absence of evidence to prove a fact necessary to the non-movant's case. See Clark v. Coats & Clark, Inc., 929 F.2d 604, 606-08 (11th Cir.1991) (explaining Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970) and Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). Merely stating that the non-movant cannot meet its burden at trial is insufficient. Id.

If — and only if — the movant carries this initial burden, the non-movant may avoid summary judgment only by "demonstrat[ing] that there is indeed a material issue of fact that precludes summary judgment." Id. at 608.11 Again, this burden varies depending upon whether the movant or non-movant bears the burden of proof at trial. If the movant has the burden of proof at trial, the non-movant may avoid summary judgment only by coming forward with evidence sufficient to withstand a motion for directed verdict at trial. Fitzpatrick, 2 F.3d at 1116 (citation omitted). If the non-movant bears the burden of proof at trial, the non-movant's response must be tailored to the method by which the movant carried its initial burden. If the movant presented evidence affirmatively negating a material fact, the non-movant "must respond with evidence sufficient to withstand a directed verdict motion at trial on the material fact sought to be negated." Id. If the movant demonstrated an absence of evidence on a material fact, the non-movant must either show that the record contains evidence that was "overlooked or ignored" by the movant, or "come forward...

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