Ford Motor Co. v. Ghreiwati Auto

• Decision Date: 15 May 2013
• Docket Number: Case No. 12–14313.
• Citation: 945 F.Supp.2d 851
• Parties: FORD MOTOR COMPANY, Plaintiff, v. GHREIWATI AUTO, et al., Defendants.
• Court: U.S. District Court — Eastern District of Michigan

945 F.Supp.2d 851

FORD MOTOR COMPANY, Plaintiff,

v.GHREIWATI AUTO, et al., Defendants.

Case No. 12–14313.

United States District Court,

E.D. Michigan,

Southern Division.

May 15, 2013.

Thomas S. Bishoff, Dykema Gossett, Detroit, MI, for Plaintiff.

Daniel E. Myers, Loula M. Fuller, Fuller & Myers, Tallahassee, FL, John B. Alfs, Clark Hill, Birmingham, MI, for Defendants.

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART FORD'S MOTION TO DISMISS DEFENDANTS' COUNTERCLAIMS [14]

NANCY G. EDMUNDS, District Judge.

At this case's core is two dealership contract disputes between Plaintiff Ford Motor Company and two dealership defendants: Defendant Ghreiwati Auto (Auto) and Defendant Orient Development General Trading Co., L.L.C. (Orient). The Auto and Orient contracts are almost identical and there are overlapping owners between the two defendants.

On September 9, 2012, Ford filed suit against Auto and Orient seeking (1) to enjoin arbitration proceedings it alleges are subject to the Federal Arbitration Act, 9 U.S.C. § 1 et seq., but for which 15 U.S.C. § 1226 only allows the arbitration to take place when both parties to the manufacturer-dealer contract consent, and Ford has withheld its consent, (2) a declaratory judgment that Ford has no obligation to arbitrate the controversies between itself and Auto and itself and Orient, and (3) to enjoin Auto and Orient from their alleged “continued and unauthorized use of Ford's trademarks[.] (Dkt. 1, Comp. ¶ 9.)

On November 15, 2012, Defendants filed their answer with affirmative defenses and counterclaims. (Dkt. 5.) Defendants each have five claims against Ford: (1) breach of contract, the Global Importer Dealer Sales and Service Agreement (GIDSSA), that Defendants each entered into with Ford, (2) violation of the Michigan Dealer Act, Michigan Compiled Laws § 445.1561 et seq., (3) taking of trade secrets, taking corporate opportunity and breach of fiduciary duty of loyalty, (4) unjust enrichment, and (5) promissory estoppel. (Dkt. 5, Countercl.)

Before the Court is Ford's motion to dismiss Counts III through X of Auto and Orient's counterclaims, all of the claims except for the breach of contract claims. (Dkt. 14, Pl.'s Mot. to Dismiss.)

For the reasons explained below, the Court GRANTS Ford's motion to dismiss with respect to the Michigan Dealer Act, breach of fiduciary duty, and taking of trade secrets and corporate opportunity claims; the Court DENIES Ford's motion to dismiss with respect to the unjust enrichment and promissory estoppel claims.

I. FactsA. Auto and Orient's relationships with Ford

Auto is a Syrian corporation with its principal place of business in Damascus, Syria. (Countercl. ¶ 4.) Auto is owned by five individuals: Imad Ghreiwati (24.5%); Issam Ghreiwati (24.5%); Bashar Ghreiwati (24.5%); Muhammed Ghreiwati (24.5%) (the “Ghreiwatis”); and Sabrieh Sammane (2%). ( Id. ¶ 7.)

Orient is an Iraqi limited liability company with its principal place of business in Baghdad, Iraq. (Countercl. ¶ 5.)

In October, 2003, Auto and Ford entered into the Auto GIDSSA. (Countercl. ¶ 4.) The Ghreiwatis entered into the Auto GIDSSA as Lebanese citizens, using their Lebanese passports.¹ ( Id. ¶ 8.) They resided in Syria, though, for eight years, while they did business as Auto with Ford. ( Id.)

Auto states that it performed “extremely well for Ford in Syria” for approximately eight years. (Countercl. ¶ 10.) During that time, Auto alleges that it sold a high volume of Ford vehicles throughout Syria and often sold the vehicles to third party traders who resold the vehicles to the public. ( Id. ¶ 12.) Auto states that Ford never complained to Auto that Auto was selling “in or from unauthorized locations, marketing in or from unauthorized locations, selling to third party traders, storing Ford products in unauthorized locations or misusing Ford's trademarks[.]” ( Id. ¶¶ 12–13.) Auto says that it “was encouraged to sell as many Ford vehicles as possible wherever it could throughout Syria based on the ancient Middle East practice of using third party traders.” ( Id. ¶ 13.)

Auto alleges that the use of third party traders “is the way business has been conducted in the Middle East for hundreds of years and it does not conflict with the language of the GIDSSA.” (Countercl. ¶ 14.) Auto states that the GIDSSA does not prohibit against third party trader usage and that this usage was “approved based on the partie[s'] course of performance.” ( Id.)

Auto also alleges that it and Ford were “highly rewarded” for Auto's sales, marketing, promotion, and storage practices throughout Syria. (Countercl. ¶ 15.) Auto maintains that Ford agreed to Auto's sales, marketing, promotion, and storage practices based on the parties' course of performance for eight years. ( Id.)

During the eight-year business relationship, Auto states that Ford visited its principal place of business and was “well[-]aware of Auto's sales and marketing practices which not only include[d] sales to third party traders, but also successful penetration of a market that was divided by religious regions. (Countercl. ¶ 18.)

Given the success of the relationship, Auto alleges that Ford approached Auto's owners about opening a dealership in Iraq. (Countercl. ¶ 17.) Auto maintains that Ford knew that Auto's owners could study the market in Iraq and “accurately analyze projected sales information which Ford was otherwise unable to obtain in Iraq.” ( Id.) Auto states that, at the time of the discussions with Ford, Ford had established three selling regions in Iraq, because Iraq was divided into thirds by religions: the Kurds in the north, the Shias in the south and west, and the Sunnis in central and west. ( Id.) Auto states that NIVA, a dealership in northern Iraq, had been a Ford importer-dealer in northern Iraq and had never been “willing or capable of achieving a high volume of sales throughout the Iraq market.” ( Id. ¶ 19.)

Orient states that, after much discussion, Ford offered it the GIDSSA for Iraq “with the promise of a long[-]term manufacturer-dealer relationship [.]” (Countercl. ¶ 20.) Orient suggests that Ford was using Orient to “test the Iraq market to determine if one dealer could successfully penetrate a market divided by religious differences as Auto had done in Syria.” ( Id.) Orient states that Ford was “unsure how its products could best be marketed in Iraq” since NIVA “had been unable to make sales throughout the country.” ( Id.)

Orient states that Ford then required a separate and distinct entity from Auto—a distinct corporate entity in Iraq, with Iraqi ownership and management—and a business plan for Iraq before Ford would award a letter of understanding (“LOU”) or the GIDSSA for Iraq. (Countercl. ¶ 21.) Orient states that it formed itself as an independent Iraqi corporation with the ownership consisting of: Falah Hassan Omar Al Rawi (26%); Omar Hasan Omar Al Rawi (25%); Imad Ghreiwati (13%); Issam Ghreiwati (12%); Bashar Ghreiwati (12%); and Muhammad Ghreiwati (12%). ( Id. ¶ 23.)

After the formation, Orient states that it prepared a business and operating plan for Iraq, submitted it to Ford, and received Ford's approval. (Countercl. ¶ 24.) Orient states that its business plan “was prepared based on some of Orient's owner[s'] past experience in marketing Ford products in Syria.” ( Id.) Orient states that it anticipated and relied upon the reasonable expectation that the Iraq GIDSSA “would be interpreted consistent with the established course of performance existing between Auto and Ford in Syria.” ( Id.) Orient explains that the sales projections in the business plan “were based on the mutually agreed upon practices of Auto in Syria.” ( Id.)

Ford accepted Orient's business plan and awarded the LOU on November 12, 2009. (Countercl. ¶ 25.) Orient states that the business plan forecasted sales of 4,000 vehicles. ( Id.) Orient alleges that, by accepting the business plan, Ford “confirmed its agreement to do business in Iraq applying the same interpretations to its contract with Orient that Ford had applied with Auto in Syria.” ( Id.) Orient states, “[s]pecifically by accepting Orient's business plan Ford agreed that Orient could sell to third party traders who could then resell Ford products to the public.” ( Id.) Orient asserts that “[this acceptance] is clear just through business practice and simple common sense.” ( Id.) Orient adds that neither it nor Ford “expected Orient could store, much less sell, thousands of vehicles from a location that was so dangerous that even Ford employees could not visit.” ( Id.)

Once Ford awarded Orient the LOU, Orient states that it purchased land, built a facility in the war zone of Baghdad, hired security, trained personnel and had to find a safe and secure site to store new Ford products that was located outside Baghdad. (Countercl. ¶ 29.) Orient states it spent millions of dollars in order to comply with the LOU. ( Id.)

Orient again suggests that Ford agreed to market the vehicles in the same way as Ford marketed in Syria because Orient entered into a contract with the Dajleh and Euphrates Bank for Development and Investment. (Countercl. ¶ 30.) Those contracts permitted, Orient maintains, Orient to “sell vehicles to the public from any and all of the bank's locations throughout Iraq.” ( Id.) Orient adds that the bank has branches all over Iraq. ( Id.) Orient also offers the fact that neither party “believed” that Orient could sell 4,000 vehicles in the first year when Orient was located in the “Green Zone” of Baghdad, the “most heavily protected area in” Baghdad. ( Id. ¶ 31.) Orient states that Ford knew or should have known that selling 4,000 vehicles in the restricted locality would be impossible and impracticable. ( Id.)

Orient maintains that further evidence that Ford and Orient agreed to the same course of performance as in Syria exists in the fact that Ford “requested and required Orient to inspect and replace defective tires on Ford recall vehicles...