Judice's Sunshine Pontiac, Inc. v. General Motors Corp.

• Decision Date: 14 July 1976
• Docket Number: Civ. A. No. 75-1155.
• Parties: JUDICE'S SUNSHINE PONTIAC, INC., a corporation of the State of Delaware, and P. John Judice, Plaintiffs, v. GENERAL MOTORS CORPORATION, a corporation of the State of Delaware, and General Motors Acceptance Corporation, a corporation of the State of Delaware, Defendants.
• Court: U.S. District Court — District of New Jersey

418 F. Supp. 1212

JUDICE'S SUNSHINE PONTIAC, INC., a corporation of the State of Delaware, and P. John Judice, Plaintiffs, v. GENERAL MOTORS CORPORATION, a corporation of the State of Delaware, and General Motors Acceptance Corporation, a corporation of the State of Delaware, Defendants.

Civ. A. No. 75-1155.

United States District Court, D. New Jersey.

July 14, 1976.

COPYRIGHT MATERIAL OMITTED

Pickett & Jennings, by Robert T. Pickett, Newark, N. J., David Berger, P. A., Philadelphia, Pa., of counsel; by David Berger, Warren D. Mulloy, Stanley R. Wolfe, Warren Rubin, Philadelphia, Pa., for plaintiffs.

Carpenter, Bennett & Morrisey, by Thomas L. Morrisey, Newark, N. J., Frazer F. Hilder, Michael J. Basford, Detroit, Mich., Michael S. Waters, John F. Lynch, Jr., Newark, N. J., on the brief, for defendant General Motors Corp.

Morley, Cramer, Tansey & Haggerty, by Carroll A. Morley, Woodbridge, N. J., for defendant General Motors Acceptance Corp.

FINDINGS OF FACT and CONCLUSIONS OF LAW

BROTMAN, District Judge.

Presently before the court is a motion for a preliminary injunction. This application arises in the context of an action by the plaintiffs, Judice's Sunshine Pontiac, Inc. (hereinafter "Sunshine Pontiac") and P. John Judice (hereinafter "Judice") against the defendants, General Motors Corporation (hereinafter "General Motors") and General Motors Acceptance Corporation (hereinafter "GMAC"). The Amended Complaint alleges causes of action under the Sherman Act, Section 1, 15 U.S.C. § 1,¹ the Robinson-Patman Act, 15 U.S.C. § 13,² the Automobile Dealers' Day-in-Court Act, 15 U.S.C. § 1222,³ the New Jersey Antitrust Act, N.J. S.A. 56:9-3⁴ and the common law. Plaintiffs seek treble damages,⁵ costs and a reasonable attorney's fee under the federal and state antitrust laws.⁶ Declaratory and injunctive relief is also sought.

Fundamentally this is an antitrust action alleging an unlawful conspiracy and combination to restrain trade between General Motors, GMAC and other co-conspirators.⁷ Plaintiffs maintain that the overall intent and purpose of the conspiracy and combination was and is to: destroy Judice as a competitor of dealerships owned by General Motors and its co-conspirators; allocate geographic markets among General Motors and its co-conspirators; prevent price competition; and discourage minority group members, such as Judice, from seeking to obtain dealerships and from competing with existing dealers.⁸

No application to enjoin preliminarily the alleged illegal antitrust activities of General Motors is before the court. Rather, plaintiffs' application addresses itself primarily to certain procedural questions: namely, should this litigation continue and if so in whose control and at whose expense? Also involved is Judice's continued status as President of Sunshine Pontiac and as a member of its Board of Directors. Finally the application seeks to clarify the nature of Judice's continuing relationship with General Motors. Specifically plaintiffs' motion seeks to restrain General Motors and the Board of Directors from taking action to:

a. Remove plaintiff P. John Judice from the Board of Directors and as President and chief operating officer of Sunshine Pontiac;

b. Interfere with the prosecution of this action including representation by existing counsel;

c. Refuse to pay the costs, including counsel fees, in connection with this litigation;

d. Override any decision made by plaintiff, P. John Judice, where said decision directly involves plaintiffs' relationship with General Motors.⁹

Affidavits have been filed in support of and in opposition to the application. Pursuant to Fed.R.Civ.P. 52(a) the court makes the following Findings of Fact and Conclusions of Law:

FINDINGS OF FACT

1. In the Spring of 1974 Judice expressed an interest in purchasing the dealership assets of Crest Pontiac, Inc., Oaklyn, New Jersey, which were then available for sale. Since Judice did not have sufficient capital to finance the dealership, he contacted Motors Holding Division, General Motors (hereinafter "Motors Holding"), which provides capital financing to prospective dealers who do not otherwise have access to the capital necessary to begin a dealership. Early in July a proposal was put together by Judice and the Zone Manager, Philadelphia Zone, Pontiac Motor Division, whereby Judice would form a dealership corporation to replace Crest Pontiac. This proposal was forwarded to the Pontiac Central Office in Michigan on July 18, 1974. Judice's Sunshine Pontiac, Inc. was incorporated as a Delaware corporation on August 19, 1974. On August 26, 1974 the proposal was tentatively approved by Pontiac Motor Division, subject to an investigation by Motors Holding. Subsequently Judice was notified of Motors Holding's approval. On September 19, 1974 a Pontiac Dealer Sale and Service Agreement was entered into between Sunshine Pontiac and Pontiac Motor Division. Sunshine Pontiac is located at 1200 White Horse Pike, Oaklyn, New Jersey.¹⁰

2. Judice is President, chief operating officer and a member of the Board of Directors of Sunshine Pontiac. As President of Sunshine Pontiac Judice is charged with the responsibility of running the day-to-day operations of the dealership.

3. When General Motors invests capital in dealerships its investment is channeled through the Motors Holding Dealer Investment Plan. The basic scheme of the Plan is that the dealer will invest all his available commercial investment funds, run the day-to-day operation of the dealership and buy out General Motors within a reasonable period of time, thus assuming sole ownership of the dealership.

4. Motors Holding invested $120,000 in Sunshine Pontiac. This investment consisted of $60,000 in Class A voting shares and $60,000 in a loan taking an unsecured promissory note bearing 6% simple interest. Judice invested $40,000 in Class B non-voting shares. This investment consisted of $7,000 of Judice's personal funds and $33,000 borrowed from Progress Venture Capital Corporation, an investment corporation organized to assist minority persons, such as Judice, a Puerto Rican, in business ventures.¹¹

5. By virtue of its exclusive control of the Class A voting stock, General Motors has selected the Board of Directors of Sunshine Pontiac. The members of the Board are W. S. Gonne, Branch Manager, Motors Holding, D. J. Ritter, Regional Manager, Motors Holding, and Judice.

6. Through its complete ownership of Sunshine Pontiac's voting stock and its effective control over the Board of Directors, General Motors seeks to and does in fact secure and preserve its substantial investment in Sunshine Pontiac.

7. Pursuant to the Motors Holding Dealer Investment Plan an Option Agreement was entered into between Judice and General Motors on September 18, 1974. Judice retains the right under the Option Agreement to purchase all the Class A voting stock owned by General Motors out of stock dividends and bonuses received from Sunshine Pontiac.¹²

8. Judice, acting individually and on behalf of Sunshine Pontiac, commenced this action and engaged counsel to represent him and Sunshine Pontiac. Such action was taken without notice to or consent by Gonne and Ritter, General Motors' representatives on the Board of Directors of Sunshine Pontiac.¹³

9. Plaintiffs' original complaint was filed on June 30, 1975 by the law firm of Pickett and Jennings, Newark, New Jersey. An Amended Complaint was filed by David Berger, P. A., Philadelphia, Pennsylvania, and Pickett and Jennings on September 19, 1975. David Berger, P. A., carries the major responsibility for the litigation of plaintiffs' claims.

10. Prior to the filing of the Amended Complaint a Fee Agreement was entered into between David Berger, P. A., and Judice, individually and on behalf of Sunshine Pontiac, on September 2, 1975. A copy of the Fee Agreement has been supplied to the court, but not to opposing counsel.¹⁴

11. On October 24, 1975 Gonne delivered to Judice Notice of a Special Meeting of the Board of Directors to be held on October 29, 1975. The purpose of this meeting was to review and act with respect to the filing of this lawsuit, the retention of counsel to prosecute the lawsuit and the disbursement of Sunshine Pontiac's funds, to counsel or otherwise, in connection with the litigation.

12. Judice requested a postponement of the Special Meeting, which was refused. He then moved before the court on October 28, 1975 for a temporary restraining order. The court did not issue such an order. However, it did set the matter down for a hearing on Judice's application for a preliminary injunction, which hearing was held on November 25, 1975. Pending the decision of the court on the instant application, General Motors has held the calling of the Special Meeting in abeyance.

13. If the Special Meeting is held, Gonne and Ritter would vote to terminate the lawsuit on behalf of Sunshine Pontiac, to remove David Berger, P. A., as counsel for Sunshine Pontiac and to refuse to disburse any corporate funds in connection with the prosecution of the lawsuit.

14. Although Article VIII of the Option Agreement provides that General Motors may use its absolute voting power to remove Judice as President and as a director of Sunshine Pontiac, General Motors, through its General Manager, Motors Holding, has represented that it has no present intention to remove Judice.¹⁵

15. With respect to the present financial condition of Sunshine Pontiac, the court makes no Finding of Fact.¹⁶

CONCLUSIONS OF LAW

Several factors may be considered on an application for a preliminary injunction: first, whether the moving party has made a strong showing that it is likely to prevail on the merits of the controversy; second, whether the movant has demonstrated that it would be irreparably harmed if preliminary injunctive relief is not granted; third, whether the grant of a preliminary injunction would substantially harm other parties interested in the controversy;...