M6 Motors, Inc. v. Nissan of N. Olmsted, LLC

• Decision Date: 12 June 2014
• Docket Number: No. 100684.,100684.
• Citation: 14 N.E.3d 1054
• Parties: M6 MOTORS, INC., Plaintiff–Appellee v. NISSAN OF NORTH OLMSTED, LLC, Defendant–Appellant.
• Court: Ohio Court of Appeals

14 N.E.3d 1054

M6 MOTORS, INC., Plaintiff–Appellee

v.NISSAN OF NORTH OLMSTED, LLC, Defendant–Appellant.

No. 100684.

Court of Appeals of Ohio, Eighth District, Cuyahoga County.

June 12, 2014.

Robert A. Poklar, Shawn W. Maestle, Matthew C. Miller, Weston Hurd L.L.P., Christopher M. Devito, Morganstern MacAdams & Devito Co., Cleveland, OH, for Appellant.

James B. Niehaus, Gregory R. Farkas, Frantz Ward L.L.P., Cleveland, OH, for Appellee.

Before: S. GALLAGHER, P.J., McCORMACK, J., and BLACKMON, J.

Opinion

TIM McCORMACK, J.

{¶ 1} Defendant-appellant, Nissan of North Olmsted, LLC (“North Olmsted Nissan”), appeals the trial court's order granting declaratory judgment in favor of M6 Motors, Inc., d.b.a. Nissan of Middleburg Heights (“Middleburg Heights Nissan”). For the reasons that follow, we affirm the decision of the trial court.

Procedural History and Substantive Facts

{¶ 2} This appeal stems from a dispute between two Nissan dealerships: Middleburg Heights Nissan, which is located at 7168 Pearl Road, Middleburg Heights, Ohio, and North Olmsted Nissan, which is located at 28500 Lorain Road, North Olmsted, Ohio. Bernardo Moreno, Middleburg Heights Nissan's principal, formed Middleburg Heights Nissan for the purpose of acquiring a Nissan franchise from North Coast Nissan. North Coast Nissan was operating out of the Pearl Road location at the time Moreno signed the asset purchase agreement to acquire it. Moreno signed the purchase agreement on March 5, 2012, and Nissan of North America, the Nissan manufacturer (“Nissan Manufacturer”), approved the sale of North Coast Nissan to Middleburg Heights Nissan on April 30, 2012.

{¶ 3} After signing the purchase agreement with North Coast Nissan, Moreno met with Mike D'Amato, president of North Olmsted Nissan, and advised D'Amato that he intended to relocate the Middleburg Heights Nissan's dealership from its current location on Pearl Road to 13960 Brookpark Road, Cleveland, Ohio (the “protest site”), in addition to 14080 Brookpark Road, purportedly for storage, which is located next door. Moreno had obtained a survey that measured the distances between the dealerships, measuring in a straight line from the closest point at each location, and forwarded the information to D'Amato. The survey indicated that the distance from the closest point of the property located at 28500 Lorain Road to the closest point of the property located at 7168 Pearl Road is 7.43 miles. The survey also indicated that the straight-line distance between 28500 Lorain Road and 14080 Brookpark Road is 7.44 miles. Moreno testified that the distance to the 14080 Brookpark Road property, rather than 13960 Brookpark Road, was measured because the storage facility was the closest property to North Olmsted Nissan's property.

{¶ 4} Middleburg Heights Nissan sought and received approval from the Nissan Manufacturer for its relocation to the protest site as well as to the proposed site located at 14080 Brookpark Road. On May 4, 2012, the Nissan Manufacturer advised North Olmsted Nissan that it approved the sale of North Coast's dealership assets to Middleburg Heights Nissan. The Nissan Manufacturer also advised North Olmsted Nissan that it approved the relocation of the dealership to the protest site and that upon relocation, Middleburg Heights Nissan would also be maintaining an offsite storage location for new vehicles at 14080 Brookpark Road.

{¶ 5} After learning of Middleburg Heights Nissan's intent to relocate, North Olmsted Nissan filed an administrative protest with the Ohio Motor Vehicle Dealers Board (the “Board”) against the Nissan Manufacturer, protesting the relocation of Middleburg Heights Nissan's franchise to the protest site. The protest was based on Moreno's expressed intent to relocate and the measurements indicated in Moreno's survey.

{¶ 6} On May 15, 2012, the Board accepted North Olmsted Nissan's protest and notified the Nissan Manufacturer of the protest. Upon receiving notification of North Olmsted Nissan's protest, the Nissan Manufacturer moved to dismiss the protest, arguing that North Olmsted Nissan failed to timely protest the relocation and that a dealer has no right of protest when a manufacturer proposes to relocate another dealer further from that dealer. Middleburg Heights Nissan, who was not a party to the protest, filed a motion to intervene in the proceedings as well as a motion to dismiss the protest. Middleburg Heights Nissan argued that it has a right to intervene in the proceedings and that the protest should be dismissed for lack of jurisdiction. On March 27, 2013, the hearing examiner granted Middleburg Heights Nissan's motion to intervene for the limited purposes of attending the hearing and presenting evidence to be considered by the examiner and the Board. The hearing examiner determined, however, that even though Middleburg Heights Nissan was an “other interested individual,” it did not have the right to engage in discovery or conduct cross-examination of the witnesses at the hearing. The hearing examiner also denied Middleburg Heights Nissan's motion to dismiss as “moot and a legal nullity.”

{¶ 7} Finally, the hearing examiner denied the Nissan Manufacturer's motion to dismiss the protest, finding that North Olmsted Nissan has standing to protest the relocation. It also determined that the issue of the distance between the dealership and the protest site, whether it is 13960 Brookpark Road or 14080 Brookpark Road, is an issue of fact and was, therefore, not ripe for review under a motion to dismiss. It then ordered the matter to proceed to a hearing in order to determine whether the Nissan Manufacturer has good cause to relocate Middleburg Heights Nissan's dealership within North Olmsted Nissan's relevant market area.

{¶ 8} Middleburg Heights Nissan states that due to the delay of approximately one year from the date of the protest to the hearing examiner's order denying the Nissan Manufacturer's motion to dismiss, Middleburg Heights Nissan lost the ability to acquire the protest site. It therefore withdrew its request to the Nissan Manufacturer to relocate its dealership to that location on May 31, 2013.¹

{¶ 9} At the same time, Middleburg Heights Nissan sought approval from the Nissan Manufacturer for relocation to 13930 Brookpark Road, Cleveland, Ohio (the “proposed site”). Middleburg Heights Nissan obtained a survey that showed the distance from the closest point of the property located at 28500 Lorain Road to the closest point of the property located at 13930 Brookpark Road is 7.61 miles. In his request on behalf of Middleburg Heights Nissan, Moreno provided that while the proposed site is currently occupied as an Acura dealership, he has control of the property and the facility and he has plans to sell the Acura dealership. The Nissan Manufacturer declined to approve the proposed relocation on June 12, 2013, stating as follows:

[Middleburg Heights Nissan's] proposal to relocate to 13930 Brookpark Road presents [the Nissan Manufacturer] with the prospect of more of the same delays and failure by the Board to determine its own jurisdiction. [North Olmsted Nissan] has already threatened to protest any proposed relocation by [Middleburg Heights Nissan], presumably because it believes it can materially delay any approved relocation proposal by simply initiating a protest proceeding, regardless of whether it has any legal right to protest the relocation. The hearing examiner is apparently unwilling to address this standing question. Accordingly, because the Board failed to address the standing and jurisdiction issues in a timely way, [the Nissan Manufacturer] cannot and does not approve your request to relocate to 13930 Brookpark Road.

{¶ 10} On June 13, 2013, Middleburg Heights Nissan, filed a declaratory judgment action asking the trial court to declare that (1) the proper statutory interpretation of “further” as used in R.C. 4517.50(C)(3) requires the use of the straight line, or “as the crow flies,” method of measuring distance, from closest point to closest point; and (2) 13930 Brookpark Road, the proposed site, is further from North Olmsted Nissan's dealership than the current dealership location at 7168 Pearl Road.

{¶ 11} North Olmsted Nissan moved to dismiss Middleburg Heights Nissan's complaint, stating that the trial court lacked jurisdiction to entertain the complaint because there was no controversy between the parties, Middleburg Heights Nissan had failed to exhaust its administrative remedies, and the Nissan Manufacturer was a necessary party to the dispute. Thereafter, Middleburg Heights Nissan filed a motion for summary judgment on Count 1 of the complaint, to which North Olmsted Nissan responded with a cross-motion for summary judgment.

{¶ 12} On August 7, 2013, the trial court issued an order denying North Olmsted Nissan's motion to dismiss. The trial court found that there is a justiciable controversy between two parties that the legislative scheme did not contemplate the Board having jurisdiction to review. The trial court further held that the Nissan Manufacturer was not a necessary party to the action because North Olmsted Nissan does not seek any relief from the Nissan Manufacturer and the Nissan Manufacturer has no “legally protectable rights” relating to either count of Middleburg Heights Nissan's complaint. On August 15, 2013, North Olmsted Nissan filed a motion for reconsideration, or alternatively, motion to stay, which was denied.²

{¶ 13} On October 10, 2013, the court held a hearing on Counts 1 and 2 of the complaint, during which time it heard arguments on summary judgment. On November 25, 2013, the court entered judgment in favor of Middleburg Heights Nissan and against North Olmsted Nissan on all counts of the complaint. It declared that the straight line method of measurement is the appropriate method of measuring the distance between the properties for purposes of enforcing R.C. 4517.50(C)(3). The court further declared that the property located...