Fresno Motors, LLC v. Mercedes–Benz USA, LLC

• Decision Date: 27 March 2012
• Docket Number: Case No. 1:11–cv–02000–CJC.
• Citation: 852 F.Supp.2d 1280
• Parties: FRESNO MOTORS, LLC, a California limited company; and Selma Motors, Inc., a California corporation, Plaintiffs, v. MERCEDES–BENZ USA, LLC, a Delaware limited liability company, Defendant.
• Court: U.S. District Court — Eastern District of California

852 F.Supp.2d 1280

FRESNO MOTORS, LLC, a California limited company; and Selma Motors, Inc., a California corporation, Plaintiffs,

v.MERCEDES–BENZ USA, LLC, a Delaware limited liability company, Defendant.

Case No. 1:11–cv–02000–CJC.

United States District Court,

E.D. California,

Fresno Division.

March 27, 2012.

Oliver W. Wanger, Wanger Jones Helsley PC, Fresno, CA, Alexander F. Stuart, Willoughby, Stuart & Bening, Inc., San Jose, CA, for Plaintiffs.

Clement Leo Glynn, Peter Abraham Cownan, Glynn & Finley, LLP, Walnut Creek, CA, Gwen J. Young, PHV, Ryan Patrick Day, PHV, Steven Matthew Kelso, PHV, Wheeler Trigg O'Donnell LLP, Denver, CO, for Defendant.

ORDER GRANTING DEFENDANT'S CONVERTED MOTION FOR SUMMARY JUDGMENT

CORMAC J. CARNEY, District Judge.

I. INTRODUCTION

Plaintiffs Fresno Motors, LLC and Selma Motors, Inc. (collectively, “Plaintiffs”) brought this action against Mercedes–Benz USA, LLC (“MBUSA”), alleging that MBUSA tortiously interfered with Plaintiffs' contractual right to purchase the assets of Mercedes–Benz of Fresno, a local Mercedes–Benz dealership (“Fresno Dealership”), from Asbury Fresno Imports, LLC (“Asbury”). (Dkt. No. 1.) In the operative First Amended Complaint (“FAC”), Plaintiffs allege that it executed an Asset Purchase Agreement (“APA”) with Asbury to acquire certain assets in Asbury's Fresno Dealership, including Asbury's leasehold interest in the dealership premises. (FAC ¶ 12.) Plaintiffs allege that they were unable to close on the APA because MBUSA belatedly and unlawfully exercised its right of first refusal to purchase the dealership assets. ( Id. ¶¶ 28–39.) Plaintiffs further allege that MBUSA thereafter conspired with Asbury and executed a secret agreement with Asbury acknowledging that MBUSA timely exercised its right of first refusal and additionally promising that, in the event MBUSA assigned its rights under the APA, MBUSA would purportedly guarantee the assignee's sublease under the APA. ( Id. ¶¶ 40–45.) Plaintiffs, MBUSA, and Asbury thereafter engaged in negotiations to assign MBUSA's rights and obligations under the APA to Fresno Motors. ( Id. ¶¶ 51–53.) During these negotiations, Plaintiffs allege that MBUSA concealed its promise to guarantee a sublease, forcing Plaintiffs to negotiate a new lease arrangement with Asbury's landlord. ( Id. ¶¶ 54–55.) Negotiations between Plaintiffs, MBUSA, and Asbury eventually broke down, and Asbury terminated the APA. ( Id. ¶¶ 59–64.)

Based on these allegations, Plaintiffs assert five causes of action against MBUSA under California law: (1) intentional interference with existing contractual advantage; (2) intentional interference with prospective economic advantage; (3) unfair and deceptive business acts and practices under California's Unfair Competition Law (“UCL”), Cal. Bus. & Prof.Code §§ 17200, et seq.; (4) violation of California Vehicle Code section 11713.3(t); and (5) fraudulent concealment. (Dkt. No. 23.) Plaintiffs request, inter alia, compensatory, statutory, and punitive damages as well as restitution. (FAC, Prayer.)

On November 18, 2011, MBUSA filed its renewed motion to dismiss the FAC pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (Dkt. No. 29.) The Court converted the motion to a summary judgment motion under Rules 12(d) and 56 because the Court determined that the material facts of the case were undisputed, the success of Plaintiffs' claims hinged on determination of legal issues, and additional evidence, where needed, could be submitted without further discovery. (Ct. Order, Dkt. No. 52, Jan. 12, 2012.) Presently before the Court is MBUSA's converted summary judgment motion, filed on February 3, 2012. (Dkt. No. 56.) After considering the undisputed evidence presented by the parties and the arguments of their counsel, the Court concludes that summary judgment is warranted in favor of MBUSA on all of Plaintiffs' claims.

II. BACKGROUND

This suit arises out of Plaintiffs' unsuccessful attempt to purchase the Fresno Dealership from Asbury pursuant to the APA. Mercedes–Benz, a Delaware corporation licensed by the California Department of Motor Vehicles, is a subsidiary of Daimler AG and distributes Mercedes–Benz vehicles manufactured by Daimler AG. (FAC ¶ 3 & Exh. A[APA], Appx.) ¹ Asbury, a local Mercedes–Benz dealer, owned and operated the Fresno Dealership pursuant to a Passenger Car Dealer Agreement (“PCDA”) and Light Truck Dealer Agreement (“LTDA”) (collectively, “Dealer Agreements”) with MBUSA. (Day Decl., Exh. 1 [PCDA]; Exh. 2 [LTDA].) ² Asbury also operated the Fresno Dealership on premises that it leased from CAR AAG CA, L.L.C. (the “Landlord”) under a Lease Agreement (“Lease”), dated April 1, 2003, for a lease term of fifteen years with two ten-year renewal options. (Young Decl., Exh. 13 [Lease], at 2–3, secs. 1.8, 1.13.) ³ Selma Motors and Fresno Motors were prospective buyers of the Fresno Dealership. Dwight G. Nelson is the owner and president of Selma Motors and the managing member and president of Fresno Motors. (FAC ¶ ¶ 1–2 & Exh. C [2nd Am. to APA].) On March 27, 2009, Selma Motors entered into the APA with Asbury to purchase certain assets in the Fresno Dealership, including a leasehold interest in the dealership premises. (APA; Nelson Decl. ¶ 3 & Exh. A; Undisputed Fact [“UF”] No. 1.) ⁴ Selma Motors subsequently assigned its rights under the APA to Fresno Motors. In order to purchase the Fresno Dealership from Asbury, Plaintiffs needed approval from both MBUSA regarding Asbury's sale to Plaintiffs and the Landlord regarding the transfer of Asbury's leasehold interest. (APA, at 7.) Plaintiffs, however, were unable to close on the APA when MBUSA exercised its right of first refusal. Plaintiffs, MBUSA, and Asbury thereafter attempted to renegotiate a deal under the APA, but negotiations broke down, and Asbury terminated the APA in the fall of 2009.

A. Dealer Agreements

Prior to the events underlying this action, Asbury entered into the Dealer Agreements with MBUSA on January 1, 2007. (PCDA; LTDA.) The agreements were valid from the date of execution to December 31, 2011. (PCDA, at vi; LTDA, at vi.) As an appointed Mercedes–Benz dealer, Asbury had a nonexclusive right to buy and resell Mercedes–Benz vehicles. (PCDA, at ii; LTDA, at ii.) The scope of Asbury's other functions, as an authorized dealer, also included the servicing, rental, and leasing of Mercedes–Benz vehicles; use and display of Mercedes–Benz marks and products; and financing or insurance services. (PCDA, at 37; LTDA, at 37.) The agreements further incorporated standard provisions that furnished detailed guidance regarding the parties' rights and obligations as to the acquisition, delivery, and inventory of Mercedes–Benz vehicle products; the dealer's marketing and sales of Mercedes–Benz vehicles; the dealer's service obligations, along with MBUSA's obligations to provide service manuals and materials and field personal assistance; the dealer's service and parts organization requirements; the dealer's customer satisfaction obligations; the dealer's location and facilities requirements; MBUSA's warranty obligations; the dealer's financing, capital, and accounting requirements; and the dealer's sales reporting requirements. (PCDA, at 1–20; LTDA, at 1–20.) Moreover, the agreements permitted MBUSA to monitor the dealer's performance by periodically evaluating the dealer's service and parts performance, the dealer's customer satisfaction performance, and the dealer's facilities as well as by inspecting the dealer's accounts and records on a reasonable basis. (PCDA, at 12–15, 19–20; LTDA, at 12–15, 19–20.)

The agreements additionally specified the terms and conditions for assignment. The dealer could not transfer ownership of the dealership without MBUSA's written consent. (PCDA, at ii, 35; LTCA, at ii, 36.) In the event of Asbury's assignment or transfer or its assets, the agreements also provided:

MBUSA has a right of first refusal or option to purchase such assets or ownership interest, including any leasehold interest or realty. MBUSA's exercise of its right or option under this Section IX.B supersedes Dealer's right to transfer its interest in, or ownership of, the dealership.... If Dealer has entered into a bona fide written buy/sell agreement for its dealership business or assets, MBUSA's right under this Section IX.B is a right of first refusal, enabling MBUSA to assume the buyer's rights and obligations under such buy/sell agreement, and to cancel this Agreement and all rights granted Dealer.

(PCDA, at 21, 22; LTDA, at 21, 22.) Concomitant with its right of first refusal, MBUSA was permitted to assign its right or option: “MBUSA's right or option may be assigned by it to any third party and MBUSA hereby guarantees the full payment to Dealer of the purchase price by such assignee.” (PCDA, at 21; LTDA, at 21.)

B. Lease Agreement

Asbury operated the Fresno Dealership on premises that it leased from the Landlord under the Lease Agreement for a term of fifteen years, beginning on April 1, 2003. (Young Decl., Exh. 13 [Lease].) Asbury also had two ten-year renewal options under the Lease. ( Id. at 2, sec. 1.13.) The Lease listed Asbury as the “Tenant” and the “Guarantor.” ( Id. at 1, sec. 1.4.) The Lease further provided that Asbury could not assign or sublease the Fresno Dealership premises without the Landlord's prior written consent except under certain conditions. ( Id. at 10, sec. 7.1.) The Landlord's consent to any assignment or sublease, however, could not be construed as:

(i) waiving or releasing Tenant from any of its liabilities or obligations under this Lease as a principal, (ii) waiving or releasing Guarantor from its obligations under the Guaranty, or (iii) as relieving Tenant or any assignee or subtenant from the obligation of obtaining Landlord's prior written consent to any subsequent Assignment or Sublease.

( Id. at 11, sec. 7.2.)

C. Asset Purchase Agreement

Asbury and Selma Motors executed the...