Field Auto City, Inc. v. General Motors Corp., 1:06cv1174.

• Decision Date: 26 February 2007
• Docket Number: No. 1:06cv1174.,1:06cv1174.
• Citation: Field Auto City, Inc. v. General Motors Corp., 476 F.Supp.2d 545 (E.D. Va. 2007)
• Court: U.S. District Court — Eastern District of Virginia
• Parties: FIELD AUTO CITY, INC., Plaintiff, v. GENERAL MOTORS CORPORATION, and General Motors Acceptance Corporation, Defendants.

476 F.Supp.2d 545

FIELD AUTO CITY, INC., Plaintiff, v.GENERAL MOTORS CORPORATION, and General Motors Acceptance Corporation, Defendants.

No. 1:06cv1174.

United States District Court, E.D. Virginia, Alexandria Division.

February 26, 2007.

COPYRIGHT MATERIAL OMITTED

Michael Patrick Fortkort, Myers & Fuller, Oakhill, VA, for Plaintiff.

Sheila Ladan Shadmand, Jones Day, Washington, DC, Kathleen Joanna Lynch Holmes, Williams Mullen PC, McLean, VA, for Defendants.

MEMORANDUM OPINION

ELLIS, District Judge.

This commercial dispute pitting an automobile dealer against an automobile manufacturer and its finance subsidiary has grown into a multi-year, multi-forum saga.Although numerous causes of action were pursued in state court, plaintiff asserts here the same two claims against both defendants: the first under the Automobile Dealer's Day in Court Act, 15 U.S.C. § 1221 et seq.("ADDCA"), and the second under 42 U.S.C. § 1983.At issue on both defendants' motions to dismiss pursuant to Rules 12(b)(1)and12(b)(6), Fed. R.Civ.P., are the following questions:

(i) whether jurisdiction over the 42 U.S.C. § 1983 claim is barred by Rooker-Feldman doctrine,¹

(ii) whether the ADDCA claim is barred by res judicata, and

(iii) whether plaintiffs§ 1983 claim fails to state a claim for lack of state action.

I.²

PlaintiffField Auto City, Inc. is a Virginia corporation in the business of selling cars at a retail dealership in Alexandria, Virginia.Plaintiff commenced this business in 1997 under the name Koons Buick Pontiac GMC, Inc., and subsequently changed its name to Field Auto City.

DefendantGeneral Motors Acceptance Corporation("GMAC") is a Delaware corporation, and is a wholly owned finance subsidiary of defendantGeneral Motors Corporation("GM"), a manufacturer of automobiles and also a Delaware corporation.

For the first few years of its operation, plaintiff financed its inventory through a line of credit with Wachovia Bank.For various reasons, including chiefly GM dealer incentives, plaintiff found it advantageous to begin financing through GMAC.So commencing November 14, 2003, plaintiff financed its inventory through GMAC, and to that end entered into a series of financing contracts, security agreements, and related amendments with GMAC.The agreements provided, inter alia,

(i) that plaintiff agreed to pay to GMAC "upon demand," with interest, any amount GMAC advanced or agreed to advance to a vehicle manufacturer or distributor on plaintiff's behalf;

(ii) that plaintiff granted GMAC a security interest in various forms of collateral, including plaintiffs inventory of new and used vehicles and proceeds thereof, and

(iii) that "as each vehicle is sold, or leased,"plaintiff would "remit to [GMAC] the amount [GMAC] advanced or [became] obligated to advance on [plaintiff s] behalf...."

The remittance requirement was modified by an amendment to the security agreement, which provided that remittance of financed amounts could be delayed upon certain conditions.Further, the security agreement provided that should plaintiff default on payment, GMAC's remedies included, in addition to the standard Uniform Commercial Code remedies, the "immediate possession of said vehicles, without demand or further notice and without legal process."

The parties to these agreements fell to fighting almost immediately.A January 2004 audit by GMAC allegedly revealed that plaintiff had not been remitting the proceeds of sales to GMAC, a condition GMAC alleges constituted a default under the financing agreements.Plaintiff disputed this, claiming the audit was fraudulently conducted in retaliation for plaintiffs manager allegedly telling customers that GMAC was lying to them about the reasons they were being denied credit.When the parties were unable to resolve this dispute, GMAC, on March 2, 2004, filed a petition in detinue in Alexandria Circuit Court.General Motors Acceptance Corp. v. Field Auto City, Inc., No. CL04001130(Va.Cir.March 2, 2004).Pursuant to this petition, GMAC obtained an ex parte seizure order and the sheriff seized plaintiff's vehicle inventory that same day.Although Virginia law requires posting of a seizure bond in these circumstances,³plaintiff alleges GMAC's initial bond was nonconforming and that GMAC did not file a conforming bond until some two years later.Plaintiff also alleges that GMAC violated the terms of the seizure order by removing vehicles from plaintiffs lot, as the seizure order authorized the sheriff to take possession of the inventory, but did not grant GMAC a right of possession.After an adversary hearing March 9, 2004, the state court concluded that no grounds for seizure existed, and thus abated the seizure order, and ordered the vehicles returned, noting that GMAC was adequately protected by its possession of the manufacturer's certificates of origin for the vehicles.Accordingly, the vehicles were returned to plaintiff over the course of the next nine to eleven days.Plaintiff alleges that once the vehicles were returned, they could no longer be sold as new vehicles, thereby causing plaintiff to suffer substantial economic loss.

Plaintiff responded to the detinue petition by asserting numerous counterclaims solely against GMAC.These counterclaims were subsequently amended three times.The first amended set of counterclaims resulted in a state court decision that the seizure was wrongful and that plaintiff was entitled to statutory damages.On motion for reconsideration, the state court withdrew this decision and instead granted GMAC's demurrer and dismissed this first amended set of counterclaims.⁴The state court at that time also permitted GMAC to amend its detinue petition and plaintiff to amend its counterclaims.Subsequent versions of the plaintiffs counterclaims to the detinue action culminated in a prolix eighty page scattershot pleading alleging violations of Article 9, breach of contract, fraud, constructive fraud, violation of an alleged duty of good faith, tortious interference with contract, and conversion.At various points in the process of amending the counterclaims, plaintiff also asserted claims for unjust enrichment, trespass to chattels, negligent misrepresentation, violations of various Virginia statutes, and violations of the Racketeer-Influenced and Corrupt Organizations Act,18 U.S.C. § 1961 et seq.Finally, after plaintiffs fourth attempt to assert a valid set of counterclaims, the state court dismissed the counterclaims with prejudice.General Motors Acceptance Corp. v. Field Auto City, Inc., No. CL04001130(Va. Cir.April 26, 2006)(Order granting demurrer).Thereafter, on May 19, 2006, the state court dismissed GMAC's amended detinue petition as moot.General Motors Acceptance Corp. v. Field Auto City, Inc., No. CL04001130(Va.Cir.May 19, 2006)(Order dismissing petition as moot).

Plaintiff's appeal of the dismissal of the third amended counterclaims (that is, the fourth set of counterclaims) met with no success.The Supreme Court of Virginia refused plaintiff's appeal on October 24, 2006.Field Auto City, Inc. v. General Motors Acceptance Corp.,No. 061703(Va.Oct. 24, 2006)(Order refusing appeal).A subsequent petition for rehearing in the Supreme Court of Virginia was also denied on January 19, 2007.Field Auto City, Inc. v. General Motors Acceptance Corp.,No. 061703(Va.Jan. 19, 2007)(Order denying rehearing).

The instant federal action was filed on October 18, 2006, before the Supreme Court of Virginia denied plaintiff's appeal of the trial court's dismissal of plaintiffs counterclaims, and before that court's denial of plaintiffs request for a rehearing of the denial of the appeal.The federal complaint adds GM as a defendant and alleges against both GM and GMAC the same two causes of action — one under § 1983 and a second under the ADDCA.Both defendants seek dismissal of these claims on Rooker-Feldman and res judicata grounds.

Given these defenses, it is useful to set forth in tabular form plaintiffs various sets of counterclaims.

Pleading Claim Remedies sought
                3rd amended counterclaims
                                                Violation of UCC art. 9         $2.4M damage to inventory
                                                                                $15.355M lost going concern
                                                                                value, $13.1M lost profits
                                                Breach of contract              same, plus $120K funds
                                                                                GMAC withheld from plaintiff
                                                                                and costs and fees
                                                Fraud                           same as breach of contract
                                                Constructive fraud              same as breach of contract
                                                Violation of statutory duty     same as breach of contract
                                                of good faith
                                                Tortious interference           same as breach of contract
                                                with prospective economic
                                                opportunity
                                                Tortious interference with      $700K
                                                contract
                                                Tortious conversion             $120K, and $5M consequential
                                                                                damages
                2nd amended counterclaims
                                                Conversion and unjust           $120K
                                                enrichment
                                                Trespass to chattels            $13.1M lost profits
                                                Wrongful seizure                $13.1M lost profits
                                                Wrongful seizure                $13.1M lost profits
                                                Wrongful seizure                $13.1M lost profits
                                                Tortious interference with

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