O'NEAL v. General Motors Corp.

• Decision Date: 10 December 1993
• Docket Number: No. 92-741-Civ-Orl-22.,92-741-Civ-Orl-22.
• Citation: 841 F. Supp. 391
• Parties: James O'NEAL, Jr., APAG Holdings, Inc., and APAG Orlando, Inc., Plaintiffs, v. GENERAL MOTORS CORPORATION and General Motors Acceptance Corporation, Defendants.
• Court: U.S. District Court — Middle District of Florida

841 F. Supp. 391

James O'NEAL, Jr., APAG Holdings, Inc., and APAG Orlando, Inc., Plaintiffs, v. GENERAL MOTORS CORPORATION and General Motors Acceptance Corporation, Defendants.

No. 92-741-Civ-Orl-22.

United States District Court, M.D. Florida, Orlando Division.

December 10, 1993.

COPYRIGHT MATERIAL OMITTED

Ross Mathew Goodman, Levin, Middlebrooks, Mabie, Thomas, Mayes & Mitchell, P.A., Pensacola, FL, W. Stewart Gilman, W. Stewart Gilman, P.A., Apopka, FL, for plaintiffs.

Frank A. Shepherd, Gary M. Pappas, Popham, Haik, Schnobrich & Kaufman, Ltd., Miami, FL, Charles Martin Tatelbaum, Johnson, Blakely, Pope, Bokor, Ruppel & Burns, P.A., Clearwater, FL, for defendants.

MEMORANDUM OPINION

BAKER, United States Magistrate Judge.

This case is before the Court on the following matters:

(1) Motion by Defendant General Motors Acceptance Corporation (GMAC) to Dismiss the Second Amended Complaint, and Memorandum in Support Thereof (Doc. Nos. 60 & 63), and Plaintiffs' Response to Defendant GMAC's Motion to Dismiss (Doc. No. 71);

(2) Motion by Defendant GMAC for Summary Judgment, and Memorandum in Support Thereof (Doc. Nos. 61 & 64), and Plaintiffs' Memorandum in Opposition to GMAC's Motion for Summary Judgment (Doc. No. 72); and

(3) Renewed Motion by Defendant General Motors Corporation (GM) for Summary Judgment, and Memorandum in Support Thereof (Doc. Nos. 68 & 69), and Plaintiffs' Memorandum in Opposition to GM's Renewed Motion for Summary Judgment (Doc. No. 72).

Pursuant to 28 U.S.C. 636(c)(1), the parties have consented to proceed before the United States Magistrate Judge (Doc. No. 46). Based on the arguments made at the hearing and a review of the file and the relevant law, by separate order the Court grants GMAC's and GM's Motions for Summary Judgment (Doc. Nos. 61 & 68) as to Count I.

I. STATEMENT OF FACTS

Plaintiffs James O'Neal, Jr., APAG Holdings, Inc., and APAG Orlando, Inc.,¹ claim to have entered a franchise relationship with Defendants GM and GMAC in which Plaintiffs were "automobile dealers" as defined under 15 U.S.C. 1221(c) and Defendants were "automobile manufacturers" as defined under 15 U.S.C. 1221(a) (Doc. No. 47 at 2). Plaintiffs allege a franchise relationship existed by virtue of the existence of written franchise agreements and a business plan confirmed in writing for the Arnold Palmer Automotive Group (APAG) (Doc. No. 47 at 3).

In the late 1980s, Plaintiff O'Neal came up with a business plan for which a holding company, APAG Holding, would own various sub-corporations, including APAG Orlando, for the purpose of operating a nationwide chain of automobile dealerships (Doc. No. 72 at 2). As part of O'Neal's business plan, Plaintiffs entered into written franchise agreements with General Motors regarding several dealerships in other parts of the country, including Kerr Buick in Denver, Colorado, and Claremont Auto Park in Claremont, California (Doc. No. 47 at 4; Doc. No. 27 and Exhibits).

Also as a part of the business plan, O'Neal obtained from General Electric Capital Corporation (GE) a $90 million line of credit for financing the purchase by APAG Holdings, Inc., of various dealerships (Doc. No. 47 at 4 and Exh. A). Plaintiffs allege that GMAC issued a commitment to provide APAG a credit for $19.5 million, to aid Plaintiffs in financing the plan (Doc. No. 47 at 5 and Exh. C; Doc. No. 72, Attachment 21).

Pursuant to the plan, Plaintiffs entered into an agreement to purchase the assets of Braun Cadillac, Inc. (the Braun dealership), an Orlando, Florida automobile dealership which at the time of the signing of the agreement, August 1989, was party to a GM Cadillac Dealer Sales and Service Agreement. (Doc. No. 25; Doc. No. 47 at 5 and Exh. B; Doc. No. 72 at 2). GM had knowledge of the Braun-O'Neal purchase agreement as early as May 23, 1990 (Doc. No. 67 at 3). In March 1990, Plaintiffs and the Braun dealership entered into a management agreement whereby Plaintiffs became the operators of the Braun dealership (Doc. No. 72, Att. 14).

In September 1990, Plaintiffs and Defendant GMAC entered a consent to lease in which Plaintiffs agreed to lease the premises occupied by the Braun dealership in Orlando (Doc. No. 72, Att. 16). Plaintiffs claim that O'Neal and APAG Holdings paid over $760,000 directly to GMAC as part of the closing costs in purchasing the Braun dealership in September 1990 (Doc. No. 72 at 4, Att. 3). In addition, APAG paid over $580,000 directly to GMAC from June through September of 1990 from funds derived from a Sun Bank loan (Doc. No. 72 at 4, attachment 20). GMAC in an intra-organization memo dated July 19, 1990, recognized APAG as "operating the Braun dealership since March 1990 under a management contract" (Doc. No. 73, attachment GC 00264).

Due to the existence of several franchise agreements between Plaintiffs and General Motors, the written agreement to transfer the assets of the Braun dealership to Plaintiffs, Defendants' knowledge of Plaintiff's purchase agreement with the Braun dealership, the management agreement between Plaintiffs and the Braun dealership, Defendants' knowledge of the credit arrangement with GE supporting the business plan, the acceptance by GMAC of funds from O'Neal and APAG, the consent to lease between Plaintiffs and GMAC, and the extension of a credit commitment by GMAC to Plaintiffs to acquire a chain of dealerships, Plaintiffs argue that a franchise relationship existed between Plaintiffs and Defendants regarding the Braun dealership (Doc. No. 47 at 3; Doc. No. 72 at 6). However, Plaintiffs do not allege the existence of an actual, written franchise agreement between the Plaintiffs and Defendants setting forth the legal rights and obligations specifically covering the Braun dealership (Doc. No. 47 and exhibits).

On December 4, 1990, the Circuit Court for the Ninth Judicial Circuit of Florida, Orange County, appointed a receiver in a foreclosure action brought by Sun Bank against Plaintiffs and several Braun entities to receive and take possession of the Braun dealership, following an alleged default on a Sun Bank loan (Doc. No. 72 at 15-16; Doc. No. 66, Exh. A). The Order Appointing Receiver provides that the receiver takes possession of the dealership premises, including all personal property ... "and such other property which may relate to the business operations of the automobile dealership trading under the name of Braun Cadillac wheresoever that property may be found" (Doc. No. 66, Exh. A at 2).

The court in its order granted the receiver "all of the rights, duties, authority, and responsibilities of a court appointed receiver, including all functions necessary to continue the business operations of Braun Cadillac, Inc., APAG Holdings, Inc., and APAG Orlando, Inc." (Doc. No. 66, Exh. A at 3). The order allows the receiver "to enforce contracts or agreements to which the business trading under the name of Braun Cadillac is a party with respect to operating the dealership" (Doc. No. 66, Exh. A at 3). The order further provides that the receiver holds "all of the rights of Braun Cadillac, Inc. in the Cadillac Motor Car Division Dealer Sales and Service Agreement...." (Doc. No. 66, Exh. A at 3).

II. GOVERNING LAW

A. Summary Judgment Standard

Summary judgment is authorized if "the pleadings, depositions, answers to interrogatories, and admission on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986); U.S. v. Four Parcels of Real Property, 941 F.2d 1428 (11th Cir.1991). Summary judgment is appropriate only in circumstances where "the evidence is such that a reasonable jury could not return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct. at 2510; accord Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).

On a motion for summary judgment, the court's function is not to weigh the evidence and determine the truth of the matter, but to determine if there is a genuine issue for trial. Anderson, 477 U.S. at 249, 106 S.Ct. at 2510. The moving party bears the burden of proving that no genuine issue of material fact exists. Celotex, 477 U.S. at 323, 106 S.Ct. at 2552. In determining whether the moving party has satisfied the burden, the court considers all inferences drawn from the underlying facts in a light most favorable to the nonmoving party, and resolves all reasonable doubts against the moving party. Anderson, 477 U.S. at 255, 106 S.Ct. at 2513; see Matsushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986).

III. ANALYSIS

A. Jurisdiction

Plaintiffs allege federal jurisdiction solely on the basis of the Automobile Dealers' Day in Court Act (the "Act"), 15 U.S.C. §§ 1221-1225, and 28 U.S.C. § 1331 (Doc. No. 47 at 2). Counts II through VIII allege breach of contract, fraud in the inducement, and other causes of action under Florida law over which the Court has supplemental jurisdiction (Doc. No. 47 at 11-20); 28 U.S.C. § 1367(a). If the Court finds that Count I cannot be sustained, Plaintiffs' state claims may be dismissed for lack of subject matter jurisdiction or may be retained in the Court's discretion, or under diversity jurisdiction (if it exists). 28 U.S.C. 1367(c)(3); 28 U.S.C. 1332; Edwards v. Okaloosa County, 5 F.3d 1431, 1433 (11th Cir.1993).

B. Automobile Dealers' Day in Court Act Claim

The principal issue before the Court is whether the Plaintiffs are entitled to the protections of the Act. Count I of Plaintiffs' Second Amended Complaint alleges a breach of good faith and violation of the Act (Doc. No. 47 at 2, 10). Defendants GM and GMAC argue that Plaintiffs do not have a claim under the Act, because they were not parties to a written franchise...