Conroy Datsun Ltd. v. Nissan Motor Corp. in USA

• Decision Date: 18 December 1980
• Docket Number: No. 79 C 2870.,79 C 2870.
• Citation: 506 F. Supp. 1051
• Parties: CONROY DATSUN LTD., Mi Inc., Lawrence P. Conroy and Joan Conroy, Plaintiffs, v. NISSAN MOTOR CORPORATION IN U. S. A., Defendant.
• Court: U.S. District Court — Northern District of Illinois

506 F. Supp. 1051

CONROY DATSUN LTD., Mi Inc., Lawrence P. Conroy and Joan Conroy, Plaintiffs, v. NISSAN MOTOR CORPORATION IN U. S. A., Defendant.

No. 79 C 2870.

United States District Court, N. D. Illinois, E. D.

December 18, 1980.

COPYRIGHT MATERIAL OMITTED

John Bernard Cashion, Chicago, Ill., for plaintiffs.

Barbara Altman, John P. Lynch, Hedlund, Hunter & Lynch, Chicago, Ill., for defendant.

MEMORANDUM OPINION AND ORDER

ASPEN, District Judge:

Plaintiffs bring this action against defendant Nissan Motor Corporation in U.S.A. ("Nissan") pursuant to the Automobile Dealers' Day in Court Act ("the Act"), 15 U.S.C. §§ 1221 et seq., alleging Nissan's failure to act in good faith in complying with the provisions of the plaintiffs' automobile dealership franchise. In Count I of the complaint, plaintiffs Conroy Datsun Ltd. ("CDL") and Lawrence P. Conroy ("Conroy") allege that Nissan prevented them from selling or transferring their interest in the dealership and that Nissan required them to make capital improvements in the dealership premises under circumstances that would impair the profitability of the dealership. In Count II, all plaintiffs request declaratory judgment pursuant to Fed.R.Civ.P. 57 and 28 U.S.C. §§ 2201, 2202, "declaring that all damages for which defendant is liable are payable irrespective of the manner in which the funds were acquired by CDL." This matter is now before this Court on three motions: (1) plaintiffs' motion for leave to file amendments to their complaint; (2) Nissan's motion to dismiss Count I insofar as it attempts to state a claim on behalf of Conroy, and to dismiss Count II for lack of subject matter jurisdiction and for failure to state a claim upon which relief may be granted; and (3) Nissan's motion for summary judgment as to Count I.

I. AMENDING THE COMPLAINT

Plaintiffs filed this action as a two-count complaint on July 10, 1979. The complaint included an allegation that Nissan had violated the Act by failing to provide a sufficient stock of popular automobile models to the franchise. At Conroy's deposition on November 30, 1979, plaintiffs' counsel stated that plaintiffs intended to drop this allegation. However, plaintiffs' counsel added that if additional information was uncovered during discovery, plaintiffs would broaden the scope of their complaint. Conroy concurred with the statements made by his attorney.¹ Shortly thereafter, plaintiffs filed an amended complaint, with the popular model allegation deleted.

Plaintiffs now seek to amend their complaint for a second time in order to reallege the "popular models" claim as part of Count I, and to add a third count under 15 U.S.C. §§ 1221 et seq., for Nissan's alleged failure to pay for warranty work performed by CDL. Nissan opposes plaintiffs' motion for leave to amend on the grounds that Nissan would be unduly prejudiced because of plaintiffs' unreasonable delay, bad faith, and dilatory motive. With respect to the attempt to add Count III, Nissan argues that the Court is without subject matter jurisdiction to hear that claim.

Under Rule 15(a) of the Federal Rules of Civil Procedure, once a defendant has answered, plaintiff may amend the complaint "only by leave of the court or by written consent of the adverse party." Rule 15(a) directs that leave to amend be granted liberally. Foman v. Davis, 371 U.S. 178, 181, 83 S.Ct. 227, 229, 9 L.Ed.2d 222 (1962); Stern v. United States Gypsum, Inc., 547 F.2d 1329, 1334 (7th Cir.), cert. denied, 434 U.S. 975, 98 S.Ct. 533, 54 L.Ed.2d 467 (1977). Such leave, however, is inappropriate where there is "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of the allowance of the amendment, futility of amendment, etc." Foman, 371 U.S. at 182, 83 S.Ct. at 230, Mertens v. Hummel, 587 F.2d 862, 865 (7th Cir. 1978). The determination as to whether leave to amend should be granted is committed to the discretion of the trial court. Mertens, id.

At the outset, it bears noting that virtually every amendment of a complaint results in some degree of prejudice to a defendant, in that new discovery generally will be required and the date of trial will be delayed. Thus, it is not enough that a defendant will suffer prejudice from the amendment; that prejudice must be undue. Hess v. Gray, 85 F.R.D. 15, 20 (N.D.Ill.1979). Undue prejudice has been found in cases where the amendment "brings entirely new and separate claims, adds new parties, or at least entails more than an alternative claim or a change in the allegations of the complaint;" and where the amendment would require expensive and time-consuming new discovery. A. Cherney Disposal Co. v. Chicago & Suburban Refuse Disposal Corp., 68 F.R.D. 383, 385 (N.D.Ill.1975). In such instances, a motion for leave to amend should be denied because the prejudice to the defendant outweighs the right to have the case tried on the merits. Hess v. Gray, 85 F.R.D. at 20.

In weighing the equities in this case, the Court finds that Nissan has been unduly prejudiced by plaintiffs' inconsistent handling of the popular models claim. When plaintiffs deleted this claim in their amended complaint, defendant pursued discovery under the reasonable belief that the popular models claim was no longer at issue. Discovery continued apace and depositions of potential witnesses were held. Then, ten days before the close of discovery, plaintiffs brought the instant motion, which, if allowed, would require additional and duplicative discovery on an entirely new area of inquiry.

It is incumbent upon the movant to show that the information upon which the new claim is based was unknown or unavailable prior to the filing of the motion. Motions to amend pleadings so as to restore allegations that the movant previously abandoned create a difficult burden for the moving party since it is obvious that the movant did not suddenly discover a new cause of action. Accordingly, a number of courts have denied motions to amend pleadings for purposes of restoring allegations. See, e. g., Waters v. Weyerhauser Mortgage Co., 582 F.2d 503, 507 (9th Cir. 1978); Friedman v. Transamerica Corp., 5 F.R.D. 115, 116 (D.Del.1946).

Plaintiffs do not dispute that delay and prejudice will result if their motion for leave to amend is granted. Instead, they claim that the popular models claim is being asserted at this late date because they received information integral to the claim during the deposition of James Walsh.² Had James Walsh been a witness connected to Nissan and deposed by plaintiffs, this argument would merit serious consideration; however, James Walsh is the nephew of plaintiff Conroy, and the general manager of plaintiff CDL. At deposition, Walsh testified that he and Conroy shared involvement in CDL's business and that he and Conroy discussed the instant lawsuit before it was filed. It is, thus, clear that any information possessed by James Walsh was readily available to plaintiffs well before the filing of their motion for leave to amend. Plaintiffs have failed to offer any other reason for their delay in asserting their claim. Consequently, the Court finds that plaintiffs have shown no good cause to amend Count I of the complaint which would justify the resulting prejudice to Nissan.

Plaintiffs' motion for leave to amend to add Count III raises somewhat different questions. Nissan does not assert any undue prejudice by the addition of the proposed Count III because plaintiffs' counsel informed Nissan of their intention to pursue this claim at Conroy's deposition, long before this motion was filed. Instead, Nissan asserts that Count III should be dismissed because the Court lacks subject matter jurisdiction over the claim. In Count III, plaintiffs seek to recover $5,410.70 in allegedly unpaid warranty claims. Plaintiffs allege that this failure to pay warranty claims constitute bad faith in violation of the Dealers' Day in Court Act, 15 U.S.C. §§ 1221 et seq.

Nissan argues that this claim must be dismissed because it fails to allege coercion, intimidation, or threats of coercion or intimidation on the part of the manufacturer. Although it is true that an indispensable element of a cause of action under the Act is a lack of good faith in which coercion, intimidation, or threats thereof exist, Ed Houser Enterprises v. General Motors Corp., 595 F.2d 366, 369 (7th Cir. 1978) (per curiam); Lawrence Chrysler Plymouth, Inc. v. Chrysler Corp., 461 F.2d 608 (7th Cir. 1972), cert. denied, 409 U.S. 981, 93 S.Ct. 317, 34 L.Ed.2d 245 (1972), the appropriate time for determining whether such coercion existed is not on a motion for leave to amend the complaint. If it appears reasonably conceivable that at trial plaintiffs can establish a set of facts entitling them to relief, the complaint should not be dismissed. Mathers Fund, Inc. v. Colwell Co., 564 F.2d 780, 783 (7th Cir. 1977). Accordingly, because plaintiffs could conceivably prove the requisite coercion at trial, plaintiffs' motion for leave to amend their complaint to add Count III is granted.

II. NISSAN'S MOTION TO DISMISS CONROY

Nissan has moved this Court to dismiss Conroy from Count I of the complaint on the grounds that only CDL has standing to bring this action under the Act. The Act, pursuant to which plaintiffs have brought this action, specifically limits plaintiffs to "automobile dealers," statutorily defined as:

any person, partnership, corporation, association, or other form of business enterprise resident in the United States or in any Territory thereof or in the District of Columbia operating under the terms of a franchise and engaged in the sale or distribution of passenger cars, trucks, or station wagons.

15 U.S.C. § 1221(c). Although four plaintiffs have brought this suit, only one of them, CDL, has operated "under the terms of a franchise and engaged in the sale or distribution"...