Eddie's Truck Ctr. v. Daimler Vans LLC
| Decision Date | 11 May 2023 |
| Docket Number | 5:21-CV-05081-VLD |
| Parties | EDDIE'S TRUCK CENTER, INC, FOUR OPEN A TRUCKS, INC, Plaintiffs, v. DAIMLER VANS USA LLC, MERCEDEZ-BENZ USA LLC, Defendants. |
| Court | U.S. District Court — District of South Dakota |
This matter is before the court on the complaint of plaintiffs Eddie's Truck Center, Inc. (“Floyd's Rapid City”[1]) and Four Open A Trucks, Inc. (“Floyd's Belgrade”) alleging damages caused by defendants' Daimler Vans USA LLC (“DVUSA”) and Mercedes-Benz USA, LLC (“MBUSA”) violation of SDCL § 32-6B-45 and Mont. Code Ann. § 61-4-205(1). See Docket No. 1. This court has original jurisdiction over this matter under 28 U.S.C. § 1332 because of the diversity of citizenship of the parties and the amount in controversy.
Pending is defendants' motion for judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c). See Docket No. 44. Plaintiffs oppose this motion. See Docket No. 59.
This case arises out of defendants' termination of franchise and service agreements with its authorized dealers Floyd's Rapid City and Floyd's Belgrade, when defendants allegedly ended the distribution of the Freightliner Sprinter vehicle.
Floyd's Rapid City, a motor vehicle dealer located in Rapid City South Dakota, entered into a Commercial Vehicle Dealer Agreement with DVUSA which granted Floyd's Rapid City a franchise to sell and service new Freightliner Sprinter motor vehicles and to use the Sprinter trademark. Docket No. 1 ¶ 1. Both MBUSA and DVUSA distributed Sprinter commercial vans to dealers that each of them enfranchised. Id. ¶¶ 24-26. The vans that MBUSA and DVUSA distributed were nearly identical and bore the same “Sprinter” trademark and logo. Id. ¶ 28. Floyd's Rapid City's franchise agreement was with DVUSA only. Id. ¶¶ 18-19. DVUSA is a wholly owned subsidiary of MBUSA, and MBUSA completely controls DVUSA's business operations. Id. ¶ 15.
In August 2020, DVUSA notified Floyd's Rapid City that the manufacturer of the Freightliner Sprinter “decided to discontinue distribution” of the vehicle in the United States market “with production to cease in September 2021 and all new retail sales to be completed no later than December 31, 2021.” Docket No. 47-1. In September 2021, DVUSA sent notice to Floyd's Rapid City confirming that their dealer agreement would be terminated effective December 31, 2021. Docket No. 1, ¶ 44; Docket No. 45, p. 3. Plaintiffs contend that MBUSA (DVUSA's parent company), continues to distribute nearly identical Sprinter vans using the same Sprinter trademark Docket No. 1 at ¶¶ 45-46.
Floyd's Rapid City asserts that defendants' termination of the dealership agreement violated SDCL § 32-6B-45 because the termination was made without “good cause” and Floyd's Rapid City substantially complied with the essential and reasonable requirements of the agreement. Docket No. 1, ¶ 58. Floyd's Rapid City also asserts that “Sprinter vehicles will continue to be sold by MBUSA for resale to other Sprinter dealers, including other Freightliner dealers currently enfranchised by DVUSA.” Docket No. 1, ¶ 45.
Floyd's Belgrade, a motor vehicle dealer located in Belgrade, Montana, entered into a separate service provider agreement with DVUSA that authorized Floyd's Belgrade to service Freightliner Sprinter vehicles and purchase parts, accessories, and tools. See Docket No. 47-2. This service provider agreement states that “[Floyd's Belgrade] does not, by this Agreement, acquire any rights to engage in the sale of new Mercedes-Benz or Freightliner passenger vehicles or commercial vehicles.” Docket No. 47-2, ¶ 22. The agreement had an automatic expiration date of July 1, 2021, but DVUSA extended the agreement through the earlier of either October 31, 2021, or the execution of a new agreement. See Docket No. 47-3.
In October 2021, DVUSA sent notice to Floyd's Belgrade saying that:
i)The 2018 [agreement] will be extended through December 31, 2021; ii) Effective December 31, 2021, the 2018 [agreement] will be terminated due to the discontinuation of the Freightliner Sprinter; and iii) For the period commencing January 1, 2022 and ending December 31, 2026, Floyd's shall be authorized to continue with the activities authorized by, and under the terms of, the 2018 [agreement].
Id. Floyd's Belgrade asserts that defendants' termination and refusal to continue their service agreement is without “good cause” in violation of Mont. Code. Ann. § 61-4-205.
Defendants now move for judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c). See Docket No. 44. Plaintiffs oppose this motion. See Docket No. 59.
This court recently addressed the proper standard applicable to motions for judgment on the pleadings under Federal Rule of Civil Procedure 12(c):
Courts deciding a Rule 12(c) motion are required to accept as true the well-pled allegations and must resolve all inferences in the non-moving parties' favor. Wishnatsky v. Rovner, 433 F.3d 608, 610 (8th Cir. 2006). However, this tenet does not apply to legal conclusions, “formulaic recitation of the elements of a cause of action,” or factual assertions which are so indeterminate as to require further factual enhancement. Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009). . . . When considering a motion for judgment on the pleadings, a court generally must ignore all materials outside the pleadings. Porous Media Corp. v. Pall Corp., 186 F.3d 1077, 1079 (8th Cir. 1999). However, courts may consider “some materials that are part of the public record or do not contradict the complaint . . . as well as materials that are necessarily embraced by the pleadings.” Id.
Union Ins. Co. v. Scholz, 473 F.Supp.3d 978, 982 (D.S.D. 2020). The main difference between a motion to dismiss under Rule 12(b)(6) asserting plaintiff has failed to state a claim and a motion under Rule 12(c) is timing: a Rule 12(b)(6) motion must be made before an answer is filed while a Rule 12(c) motion can be made after the pleadings have closed. Id. at 981.
A motion for judgment on the pleadings under FED. R. CIV. P. 12(c) is “appropriate only when there is no dispute as to any material facts and the moving party is entitled to judgment as a matter of law.” Ashley County, Ark. v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009) (quoting Wishnatsky, 433 F.3d at 610). “In considering a motion under [Rule 12(c)], it is analyzed under the same rubric as that of a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted.” Flandreau Santee Sioux Tribe v. Gerlach, 162 F.Supp.3d 888, 891 (D.S.D. 2016). “The facts alleged in the complaint must be enough to raise a right to relief above the speculative level.” Clemons v. Crawford, 585 F.3d 1119, 1124 (8th Cir. 2009) (quoting Drobnak v. Andersen Corp., 561 F.3d 778, 783 (8th Cir. 2009) (internal quotations omitted)).
In diversity cases, the substantive law of the state-here, South Dakota and Montana-applies to determine the rights and obligations of the parties while federal rules of procedure are applied. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938); In re Baycol Products Litigation, 616 F.3d 778, 785 (8th Cir. 2010). Where the state courts have not addressed a particular legal issue, the federal court must attempt to predict how the state's highest court would decide the issue and proceed accordingly. Lindholm v. BMW of N. Am., LLC, 862 F.3d 648, 651 (8th Cir. 2017).
Floyd's Rapid City brought a claim for damages pursuant to SDCL § 32-6B-45 caused by defendants' alleged wrongful termination of their franchise agreement. Docket No. 1. Floyd's Rapid City asserts that defendants' termination of the franchise based on a line-make discontinuation does not amount to “good cause” under SDCL § 32-6B-45. Docket No. 59, p. 4. Defendants argue that the list of “good cause” reasons to terminate that are set forth in SDCL § 32-6B-45 are nonexclusive and that a line-make discontinuation constitutes “good cause” for termination of the franchise agreement as a matter of law. Docket No. 45, p. 7. Because the parties' arguments focus on SDCL § 32-6B-45, the court first turns to construction of that statute.
In South Dakota, “every contract contains an implied covenant of good faith and fair dealing that prohibits either contracting party from preventing or injuring the other party's right to receive the agreed benefits of the contract.” Schipporeit v. Khan, 775 N.W.2d 503, 505 (S.D. 2009) (citations omitted). “Good faith” is defined in SDCL chapter 32-6B as “honesty in fact and the observance of reasonable, nondiscriminatory commercial standards of fair dealing in the trade.” SDCL § 32-6B-1(16). A “franchise” is defined as “a written or oral agreement or contract between a franchisor and franchisee that fixes the legal rights and liabilities of the parties to the agreement or contract.” SDCL § 32-6B-1(13).
Any person who wants to sell new vehicles in South Dakota must apply for a license from the state; a prerequisite to the issuance of such a license is a franchise agreement between the dealer and the manufacturer of the vehicles to be offered for sale. SDCL §§ 32-6B-6, 32-6B-10. There are certain terms and conditions that South Dakota law prohibits inserting into new vehicle franchise agreements (SDCL § 32-6B-49.1); otherwise, “parties to a contract are free to construct their agreement and understanding as they see fit -except for those contracts which violate the law or public policy.” Int'l Multifoods Corp. v. Mardian, 379 N.W.2d 840, 844 (S.D. 1985).
Floyd's Rapid City's claim is...
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