Daewoo Motor America, Inc. v. General Motors Corp.

• Decision Date: 26 August 2004
• Docket Number: No. 6:04CV201-ORL-31KRS.,6:04CV201-ORL-31KRS.
• Citation: 315 B.R. 148
• Parties: DAEWOO MOTOR AMERICA, INC., Plaintiff, v. GENERAL MOTORS CORP., Suzuki Motor Corp., American Suzuki Motor Corp., GM Daewoo Auto & Technology Co., Defendants.
• Court: U.S. Bankruptcy Court — Middle District of Florida

315 B.R. 148

DAEWOO MOTOR AMERICA, INC., Plaintiff, v. GENERAL MOTORS CORP., Suzuki Motor Corp., American Suzuki Motor Corp., GM Daewoo Auto & Technology Co., Defendants.

No. 6:04CV201-ORL-31KRS.

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

August 26, 2004.

Daniel E. Myers, Loula Moore Fuller, Myers & Fuller, P.A., Tallahassee, FL, Joseph F. Coyne, Jr., Kenneth A. O'Brien, Jr., Sheppard, Mullin, Richter & Hampton, Los Angeles, CA, Theodore B. Stolman, Stutman, Triester & Glatt, P.C., Los Angeles, CA, for Plaintiff.

Peter J. Leeson, IV, Kirkland & Ellis, Michael T. Purleski, Stephen T. Owens, Squire, Sanders & Dempsey LLP, A. William Urquhart, David W. Quinto, Quinn, Emanuel, Urquhart & Oliver, Los Angeles, CA, Joseph Donaldson Edwards, Stephen John Mitchell, Squire, Sanders & Dempsey L.L.P., Tampa, FL, R. Benjamine Reid, Carlton Fields, P.A., Miami, FL, Sarah A. Long, Carlton Fields, P.A., Orlando, FL, for Defendants.

Denise Madigan, Los Angeles, CA, pro se.

ORDER

PRESNELL, District Judge.

This cause comes for the Court's consideration on the following:

1) General Motors Corp.'s ("GM") Motion to Dismiss (Doc. 73), Memorandum in Support thereof (Doc. 121); GM Daewoo Auto & Technology Co.'s ("GMDAT") Supplemental Memorandum (Doc. 127); and American Suzuki Motor Corp.'s ("American Suzuki") Supplemental Memorandum (Doc. 129). In addition, Daewoo Motor America ("DMA") filed a Response (Doc. 138) and Supplemental Brief (Doc. 139), and GM filed a Reply (Doc. 147). GMDAT also filed a Response (Doc. 149).

2) Suzuki Motor Corp.'s ("Suzuki") Motion to Dismiss (Doc. 136) and Memorandum in Support thereof (Doc. 137), and DMA's Response thereto (Doc. 140). In addition, DMA filed a Memorandum in Opposition (Doc. 145), and Suzuki filed a Reply (Doc. 150) and Supplemental Brief (Doc. 151).

The Court heard oral argument on August 20, 2004.

I. Background

DMA was incorporated in Delaware¹ on June 30, 1997, as a wholly owned subsidiary of Daewoo Motor Co., Ltd. ("DWMC"), a South Korean automobile manufacturer. DMA served as the exclusive distributor of Daewoo automobiles in the United States, and provided exclusive warranty services and replacement parts to U.S. Daewoo dealers.²

On November 18, 1999, DMA and DWMC entered into an Automobile Purchase and Distribution Agreement ("the Distribution Agreement").³ Under this Agreement, DWMC (the "Seller") agreed to sell to DMA (the "Buyer") certain "Products," and granted to DMA "the exclusive right to distribute, sell, rent, lease and otherwise dispose of and service, directly or through one or more subsidiaries or independent contractors, the Products in the United States and all territories and possessions thereof." (Doc. 144, Ex. 7) (parenthetical information omitted).⁴ The Agreement further provided:

Whereas, Seller is the exclusive worldwide distributor of the Products (as defined in Section 1), which are manufactured by Seller;

Whereas, Seller, as exclusive worldwide distributor has the right to grant to others the exclusive right to sell the products in certain regions, including the Territory (as defined in Section 2);

Whereas, Buyer is the wholly owned subsidiary of Seller;

...

... Seller hereby agrees to sell to Buyer and Buyer hereby agrees to purchase from Seller the Products for resale or for rental or lease in the Territory. For purposes of this Agreement, "Products" shall mean the motor vehicles provided on Exhibit A attached hereto (as said Exhibit A may be amended from time to time by Seller to add or delete motor vehicle models) ...

... Seller shall not Sell or service, directly or indirectly, or permit any other person or corporation, partnership, limited liability company or their entity to Sell or service the Products in the Territory.

The Agreement references "Exhibit A," but the parties agree that no such exhibit ever existed and therefore never was "attached."

In the late 1990s, DWMC began to suffer financial hardship. Thus, on November 10, 2000, DWMC filed for protection in Korea under the Korean Corporate Reorganization Act ("CRA"),⁵ and the Korean Court appointed a Receiver.

DWMC notified DMA of its insolvency and plans to file for court receivership. (Doc. 123, Ex. 6). The notification included a summary of Korean bankruptcy law as well as statements indicating that creditors must participate in the reorganization plan to be repaid and that failure to file a claim would result in the loss of that creditor's rights. (Id.). DMA in turn notified the U.S. dealers with whom it had Dealer Agreements of DWMC's insolvency.⁶ During this initial phase of insolvency, DMA remained the exclusive distributor of Daewoo vehicles in the United States.

In December 2000, DWMC and the Receiver sent to DMA separate reminders to file a claim by January 15, 2001, a deadline established by the Korean Court. (Doc. 123, Ex. 8; Doc. 124, Ex. 9). In January 2001, DMA's then President Dong Jin Lee wrote DWMC to request assistance with claim filing. (Doc. 124, Ex. 10; see also Hong Depo.⁷ Ex. 5 and at 54-55). With DWMC's aid, DMA retained the law firm Jin & Lee (Doc. 124, Ex 13), and DWMC appointed agents to act on DMA's behalf in the Korean proceedings. DMA did not object to DWMC's appointments (Hong Depo. at 48), and executed a Power of Attorney in favor of Jin & Lee. (Doc. 124, Ex. 10; see also Hong Depo. at 56).

On January 15, 2001, with the help of Jin & Lee, DMA filed a proof of claim before the Korean Court in the amount of $33 million, and in February 2001, filed a supplemental claim for $45,528,000.00. On February 26, 2001, DWMC's creditors held a meeting at which they reviewed the claims. Jin & Lee attended this meeting on behalf of DMA. The Receiver objected to most of DMA's claims, and the Korean Court therefore sent DMA a Notice of Objection.⁸ The Korean Court also informed DMA that it was required to affirm the claims by filing claims against the objector by the end of March. Thus, in preservation of its rights, DMA filed a complaint in the Korean Court against the Receiver and DWMC challenging the objections and seeking approval of its claims. (Doc. 124, Ex. 15). DMA sent a second Power of Attorney to Jin & Lee with regard to the lawsuit. (Doc. 124, Ex. 19). The next month, however, DMA dropped the suit. (Doc. 124, Ex. 20).⁹ DMA then filed a second supplemental claim for $1,090,968.00, which the Receiver approved.

At the same time that DWMC entered into receivership, it began acquisition talks with GM. Suzuki allegedly participated in these talks as an "Alliance Partner." (Doc. 153 at ¶ 28). On September 20, 2001, DWMC, DWMC's creditors, and GM entered into a non-binding Memorandum of Understanding ("MOU") regarding the sale of certain DWMC assets to GM. The MOU contemplated the formation of a new company that would own and operate select DWMC domestic and foreign assets and businesses. On September 26, 2001, the Korean Court approved the MOU.

On April 30, 2002, DWMC and certain creditors signed and negotiated in Korea a Master Transaction Agreement ("MTA") with GM.¹⁰ Under the MTA, "Newco A" (later known as GMDAT) would receive the exclusive right to distribute Daewoo vehicles and use the Daewoo trademark worldwide. Further, the MTA provided that assets would not be transferred until the Korean Court approved it and confirmed a reorganization plan that was consistent with its terms.

Days later, DWMC sought to terminate its Distribution Agreement with DMA, alleging material breach due to non-payment of $132 million.¹¹ On May 6, the Korean Court issued an order approving DWMC's Termination of the Distribution Agreement. (Doc. 143, Ex. 2). The Receiver also sent DMA a letter informing it of the material breach and giving DMA a 30-day cure period. (See Doc. 143, Ex. 3).¹²

Around the same time, on May 6, 2002, DWMC creditors held a meeting to approve the Reorganization Plan. By proxy executed by DMA, DWMC employee Han Su Pyon attended the meeting on DMA's behalf, voting in favor of this original Reorganization Plan. (Doc. 143, Ex. 9).

On May 16, 2002, DMA filed for bankruptcy in the Central District of California.¹³ The California Bankruptcy Court granted a motion by the Official Committee of Unsecured Creditors of DMA for leave to be appointed to prosecute claims against DWMC. (Doc. 148, Ex. A).¹⁴ In addition, pursuant to 11 U.S.C. § 362(a) and (c), a stay was automatically put in force to prevent any acts against DMA to take possession of or exercise control over DMA's assets.

On September 12, 2002, DWMC filed with the Korean Court a Modified Plan of Reorganization ("Modified Plan" or "Modified Reorganization Plan"), which incorporated the terms of the MTA. The Modified Plan differed from the original plan in that it provided for the sale of certain assets but not for the inclusion of DMA and its network of dealers. On September 30, 2002, DWMC creditors held another meeting to vote on the Modified Plan. Although DMA had notice of this meeting¹⁵ and could have executed another proxy in favor Pyon to vote on DMA's behalf on the Modified Plan (Doc. 126, Ex. 31), no representative of DMA attended the meeting nor voted on the Modified Plan. The Korean Court approved the Modified Plan and the incorporated MTA on September 30. Thereafter, GMDAT was formed, and it acquired certain assets from DWMC. (See Doc. 123, Ex. 5C).¹⁶

GM elected to maintain the Daewoo brand name in places like Korea, where it did not have an established dealership network. In the United States, however, GM eliminated the Daewoo brand name but continues to sell the former Daewoo automobiles at U.S. GM dealerships under other brand names, including Suzuki and Chevrolet.

DMA alleges that Defendants' actions have caused the de facto termination of the Distribution Agreement, destroyed business opportunities, and caused DMA to fail to meet its contractual obligations with its U.S. dealers. In 2003, DMA sued Defendants in California Bankruptcy Court. Upon...