Luther v. KIA MOTORS AMERICA, INC.

• Decision Date: 18 December 2009
• Docket Number: Civil Action No. 08-386.
• Citation: 676 F. Supp.2d 408
• Parties: Mario L. LUTHER and Mario Luther, Inc., Plaintiffs, v. KIA MOTORS AMERICA, INC., Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

676 F.Supp.2d 408

Mario L. LUTHER and Mario Luther, Inc., Plaintiffs, v. KIA MOTORS AMERICA, INC., Defendant.

Civil Action No. 08-386.

United States District Court, W.D. Pennsylvania.

December 18, 2009.

Samuel H. Clark, Holsinger, Clark & Armstrong, P.C., Indiana, PA, Eric L. Chase, Gerd W. Stabbert, Bressler, Amery & Ross, P.C., Florham Park, N.J., Kevin M Gormly, Lambert and Martineau, Indiana, PA, for Plaintiffs.

Christopher C. Spencer, Elizabeth Kinland Shoenfeld, O'Hagan Spencer, LLC, Richmond, VA, John E. Hall, Thomas J. Sweeney, Audrey K. Kwak, Paula J. Allan, Eckert, Seamans, Cherin & Mellott, Pittsburgh, PA, for Defendant.

MEMORANDUM OPINION

WILLIAM L. STANDISH, District Judge.

Pending before the Court is a motion for summary judgment pursuant to Fed. R.Civ.P. 56, filed by Defendant Kia Motors America, Inc. ("Kia"), at Doc. No. 82. For the reasons stated below, Defendant's motion is granted.

I. BACKGROUND

A. Factual History¹

Mario Luther ("Mr. Luther") is the sole shareholder and officer of Mario Luther, Inc. ("Luther, Inc."), a Pennsylvania corporation located in Homer City, Indiana County, Pennsylvania. In April 2007, Mr. Luther was contacted by representatives of Kia Motors America, Inc.,² to discuss the possibility of becoming a Kia vehicle franchisee. (Amended Complaint, Doc. No. 34, "Am. Compl.," ¶ 4.) A regional manager of Kia met with Plaintiffs later in April in Homer City and the parties continued to discuss the possible franchise for several months. (Id., ¶¶ 5-6.) The agents stated that in order to determine if Plaintiffs would be offered a Kia franchise in the Indiana/Blairsville market area, Mr. Luther needed to provide confidential information concerning sales and customer satisfaction related to his other dealerships as well as other information about his finances and assets. As requested, Mr. Luther provided this information. (Id., ¶ 7.)

On June 28, 2007, Mr. Luther signed a five-page document³ entitled "Application for Kia Sales and Service Agreement." (See Defendant's Appendix to Motion for Summary Judgment, Doc. No. 85, "Def.'s App.," Exhibit A, "Kia Application.") In that document, Mr. Luther, as Applicant, agreed as follows:

Kia's issuance of this application form to applicant or the retention of a completed form does not in any way imply Kia's approval of the application....

This application does not in any way obligate Kia to enter into a Kia Dealer Sales and Service Agreement with me Mr. Luther or my proposed dealership entity.⁴ Upon its review of my application package, Kia may accept or reject my application in its sole discretion.

Any actions taken, expenditures made, or commitments assumed by me or an entity affiliated with me, whether relating to real estate, leases, or otherwise, shall be at my sole risk and responsibility without any liability whatsoever on the part of Kia or its representative.

No act, other than the written execution of a Kia Dealer Sales and Service Agreement by an Executive Officer of Kia shall constitute approval of this application by Kia,

No representations or statements by Kia or its representatives have been made to me or any person or entity affiliated with me which induced me to execute this application, nor have any representations or statements been made which would in any way indicate the action which Kia intends to take on this application.

(Kia Application, ¶¶ 1-4, 7.)

On August 1, 2007, Mr. Luther, along with two other candidates who were being considered for the Kia franchise in the Indiana/Blairsville area, met with Barbara Robinson, a market representation manager from Kia's Eastern Region. On August 10, 2007, Ms. Robinson telephoned Mr. Luther to discuss the application for becoming a franchisee. As Mr. Luther recalls the conversation, Ms. Robinson him she had discussed the application with Michael Tocci, the Kia Eastern Region Director, and "the decision was made that we were the people that were going to be the Kia dealer in this market area." (Plaintiffs' Appendix, Doc. No. 88, "Plfs.' App.," Exhibit B, Deposition of Mario Luther, "Luther Depo.," at 104-105.) Mr. Luther understood that Kia's national office would have final approval of his dealership application, but had been assured by Ms. Robinson that such approval was only a "formality." (Id. at 110-111.) She also told Mr. Luther he would soon receive some paperwork he needed to return as soon as possible because there was a deadline for getting financial assistance for constructing a new Kia dealership facility. (Id. at 103-108.)

Ms. Robinson, on the other hand, testified that the purpose of the August 10 conversation was to request the necessary documentation from Mr. Luther showing he was qualified in terms of capital, facility requirements and customer satisfaction ability. (Def.'s App., Exhibit E, Deposition of Barbara Robinson, "Robinson Depo.," at 59.) She further recalled that although she told Mr. Luther he had been selected as the candidate the Eastern Region office would propose to Kia headquarters, she never told him he would be a Kia dealer because she did not have the authority to make such a commitment. (Id.)

Mr. Luther followed up the same day with letters to Ms. Robinson and Mr. Tocci. In the letter to Mr. Tocci, Mr. Luther wrote that he understood completing the application process was the "first step to becoming a Kia dealer." He also stated that his application would be completed "in the time frame outlined" and it was his "sincere hope that it will receive the acceptance at the National level." (Def.'s App., Exhibit D, Luther Depo. at 114-115, and Def.'s App., Exhibit F.)

Also in August, Ms. Robinson spoke with Karen Holby, the controller for Luther, Inc. Ms. Holby stated at her deposition that although Ms. Robinson never told her Mr. Luther's application had been approved by the regional office or that it would be approved by the national office, she did say that "in the past, approval at regional meant success at national. She informed me that I should move forward, her exact words, to form MCDL, Inc. and to send in to Kia any additional information that they had requested." Ms. Holby also testified that after this conversation, she called the company's attorney to form the new corporation "because I felt at that point we were moving forward and we were the Kia dealer." (Def.'s App., Exhibit G, Deposition of Karen Holby, at 27 and 37.)

In response to e-mail communications from Ms. Robinson, Mr. Luther submitted additional materials to the Eastern Region office so she in turn could submit them to the national office by the end of August. Among the materials he submitted was a "Kia Image Facility Assistance Program" application, the documentation necessary for him to get financial assistance to build a new facility for the franchise. He also submitted a "Dealer Applicant Information Sheet" which provided details about the ownership of the potential franchise, the person designated to execute Kia documents, contact information regarding the location of the dealership, and the number of Kia vehicles to be sold at the new dealership. (Plfs.' App., Exhibits E-l through E-19.) In the next few weeks, Mr. Luther completed and submitted numerous other documents as part of the dealer package.⁵ Plaintiffs also provided a check in the amount of $15,000 to Kia on or about September 18, 2007, as a deposit for signage that would be used at the new franchise location. (Am. Compl., ¶ 17.) According to Ms. Robinson's deposition testimony, none of the other potential Kia dealership candidates in the area was asked to complete any of these documents or provide a signage deposit check. (Plfs.' App., Exhibit E, Robinson Depo., at 99-114.)

On October 23, 2007, Mr. Luther met with Mr. Tocci to discuss his Kia dealership application. Mr. Luther understood at the time that contrary to prior representations, he was merely one of several candidates in the area who were being considered for the franchise. (Def.'s App., Luther Depo. at 150.) According to Mr. Tocci's deposition testimony, at least two "red flags" were detected in the application materials submitted by Mr. Luther— the ratio of new to used vehicles sold at two of his other dealerships and customer satisfaction information from those locations. (Def.'s App., Exhibit B, Deposition of Michael Tocci, at 80-81 and 137-138.) Mr. Tocci therefore did not sign off on Mr. Luther's dealership application and declined to submit the package to Kia's national office for approval. Sometime thereafter, Mr. Luther learned that a competitor had been awarded the Kia franchise for the Indiana/Blairsville market area.

B. Procedural History

Plaintiffs filed suit in the Court of Common Pleas of Indiana County, Pennsylvania, on February 25, 2008; the case was timely removed to this Court on March 18, 2008, pursuant to 28 U.S.C. § 1332(a) based on complete diversity of the parties and an amount in controversy greater than $75,000. Defendant then moved to dismiss the case under Federal Rule of Civil Procedure 12(b)(6); the motion was denied without prejudice on June 12, 2008 2008 WL 2397331, (Doc, No. 12.) Following unsuccessful mediation, Plaintiffs filed an amended complaint in which they first alleged that Defendant breached an oral contract to grant them a Kia franchise, despite Plaintiffs having fulfilled all the prerequisite obligations thereof. In Count II, Plaintiffs claimed that on August 10, 2007, Mr. Luther entered into an oral contract with a Kia representative under which that representative promised to submit the franchise application to Defendant's national office for approval, but subsequently breached the agreement by failing or refusing to do so. Plaintiffs further alleged in Count III that during August and September 2007, Kia employees represented to Plaintiffs that they "had been selected for and/or had been granted a Kia Franchise" (Am. Compl. ¶ 33), and induced Plaintiffs to act on that...