Seattle Powersports, LLC v. Harley-Davidson Motor Co.

• Decision Date: 15 September 2020
• Docket Number: Case No. 20-CV-311
• Parties: SEATTLE POWERSPORTS, LLC d/b/a LAWLESS HARLEY-DAVIDSON OF RENTON, Plaintiff, v. HARLEY-DAVIDSON MOTOR CO., INC., Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

SEATTLE POWERSPORTS, LLC d/b/a LAWLESS HARLEY-DAVIDSON OF RENTON, Plaintiff, v. HARLEY-DAVIDSON MOTOR CO., INC., Defendant.

Case No. 20-CV-311

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN

September 15, 2020

DECISION AND ORDER

Plaintiff, a former Harley-Davidson dealer ("Renton"), alleges breaches of contract and a duty of good faith and fair dealing against Harley-Davidson Motor Co. ("HDMC"). HDMC has moved for summary judgment and to stay discovery, arguing that this action is barred by a release agreement signed by Renton that encompasses Renton's claims. For the reasons that follow, HDMC's motion for summary judgment is GRANTED.

I. BACKGROUND

In December 2013, Plaintiff acquired a Harley-Davidson motorcycle dealership operating in the Renton, WA market, contracting with HDMC ("Dealer Contract") to operate as a franchised Harley-Davidson dealer. ECF No. 58, ¶ 1.¹ According to the complaint, HDMC intentionally failed to supply Renton with enough new motorcycles for Renton to meet customer demand in its market and sell enough new motorcycles to meet its obligations to HDMC, despite Renton's repeated requests for more inventory. See ECF No. 1, ¶¶ 20-36. Renton further alleges that it sold its dealership franchise for significantly less than it would have had the promised inventory been provided, which HDMC subsequently supplied toRenton's successor, TMCL, Inc. ("TMCL"). Id., ¶¶ 37-38. Renton sold its dealership to TMCL on November 13, 2018. ECF No. 55, Resp. ¶ 5; ECF No. 58, ¶ 4.

In operating the dealership, Renton entered into agreements with Eaglemark Savings Bank ("ESB") whereby ESB purchased from Renton retail sales installment contracts ("Retail Plan Account Financing Agreement"), "GAP protection policies," and servicing plans bought by Renton customers. See ECF No. 58, ¶¶ 9-11. On November 9, 2018, Renton entered into an Assignment and Assumption Agreement with ESB, Harley-Davidson Credit Corp. ("HDCC"),² and Lawless Powersports, LLC d/b/a Lawless Harley-Davidson of Scott City ("Scott City")³ by which Renton's remaining rights and obligations under the Retail Plan Account Financing Agreement with ESB were assigned to Scott City. Id., ¶¶ 13-15, 18. See also ECF No. 56, ¶¶ 12-13 (declaration of Jeffrey Cheek); ECF No. 52-1 (copy of the Assignment and Assumption Agreement); ECF No. 54 at 5-9 (explaining remaining contingent liabilities between Renton and ESB). The Assignment and Assumption Agreement includes the following provision:

21. Release, Waiver and Covenant Not to Sue. Assignor [Renton] hereby waives, releases, agrees not to sue, and forever discharges HDCC, ESB and their affiliates, officers, employees, agents and attorneys from all actions, causes of action, claims, defenses, setoffs, counterclaims and demands, known or unknown, in law or equity which it had, now has or could, shall or might have had against HDCC, ESB, or any of their affiliates, officers, employees, agents, and attorneys, by reason of any matter, cause or thing whatsoever related to this Agreement, the Loans, amounts and terms outlined in the attached exhibits or any other documents, related transactions, relationships, acts or omissions

from the beginning of time to the date of this Agreement.

ECF No. 52-1 at 4, ¶ 21 (emphasis added). Also included is a provision that the Assignment and Assumption Agreement "shall be construed and enforced in accordance with and governed by the laws of Nevada." See id., ¶ 20.

Renton filed this action against HDMC on August 23, 2019 in the Western District of Washington, alleging breach of contract, breach of a duty of good faith and fair dealing, various Washington state law violations, and promissory estoppel, all relating to the Dealer Contract. ECF No. 1, ¶¶ 39-85. On February 7, the District Court granted in part and denied in part HDMC's motion to dismiss, dismissing Renton's state law and promissory estoppel claims. ECF No. 37 (adopting report and recommendation at ECF No. 32). The Court also granted HDMC's request to transfer the case to this District under 28 U.S.C. § 1404(a). Id. HDMC subsequently moved for summary judgment and to stay discovery, arguing that the release clause above is a threshold issue and bars Renton's action in its entirety.⁴ ECF Nos. 43 & 47. Renton argues that the release language is inapplicable to its Dealer Contract claims or, at the very least, is ambiguous and requires extrinsic evidence to determine its reach. See ECF No. 49 (Renton's Rule 56(d) motion for discovery).

II. STANDARD OF REVIEW

Summary judgment is required where "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). When considering a motion for summary judgment, I view the evidence in the light most favorable to the non-moving party and must grant the motion if no reasonable juror could find for that party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 255 (1986). While appellate courtsoften remand a denial of additional time for discovery when the motion for summary judgment is filed before the close of discovery, courts will deny a Rule 56(d) request due to either (1) the moving party's failure to pursue discovery diligently before the summary judgment motion, or (2) the apparent futility of the requested discovery. Smith v. OSF HealthCare Sys., 933 F.3d 859, 865-66 (7th Cir. 2019) (citing cases).

III. DISCUSSION⁵

A. Applicable law

A federal court sitting in diversity generally applies the choice-of-law rules of the state in which it sits. In re Jafari, 569 F.3d 644, 648 (7th Cir. 2009) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941)). When a diversity case is transferred by defendant's motion, the law of the transferor district is applied as if there had been no more than "a change of courtrooms." Soo Line R. Co. v. Overton, 992 F.2d 640, 643 (7th Cir. 1993) (quoting Van Dusen v. Barrack, 376 U.S. 612, 639-40 (1964)). Thus, when a federal court transfers a case under § 1404(a), the original forum's choice-of-law rules still apply. See Eckstein v. Balcor Film Inv'rs, 8 F.3d 1121, 1126 (7th Cir. 1993) (citing cases). See also Wright & Miller, 15 Fed. Prac. & Proc. Juris. § 3846 (4th ed.). Accordingly, I will apply Washington choice-of-law rules.

The Assignment and Assumption Agreement contains a provision indicating that the agreement "shall be construed and enforced in accordance with and governed by the laws of Nevada."⁶ Washington courts generally enforce choice-of-law clauses. Brown v. MHNGov't Servs., Inc., 178 Wash.2d 258, 263 (2013) (citing McKee v. AT&T Corp., 164 Wash.2d 372, 384 (2008)). Washington law will apply instead if (1) without the provision, Washington law would apply; (2) the chosen state's law violates a fundamental public policy of Washington; and (3) Washington's interest in the issue's determination materially outweighs the chosen state's interest. Id. (citing McKee). A choice-of-law provision will be enforced unless all three of these conditions are met. McKee, 164 Wash.2d at 384.

The parties do not meaningfully address the choice-of-law issue. HDMC cites Wisconsin case law, briefly refers to Nevada law in its reply, and offers no argument on the choice-of-law issue. Renton asserts that Washington law applies, then cites Wisconsin law throughout the body of its brief, briefly applying Washington and Nevada law at its end. Both sides assert that their desired result is achieved based on the plain language of the provision, regardless of which law is applied. Because neither side has demonstrated nor is it clear that (1) Washington law would apply absent the choice-of-law clause, (2) basic Nevada contract law somehow violates a fundamental public policy of Washington, or (3) Washington's interest outweighs that of Nevada, I will defer to the parties' choice of Nevada law in interpreting the release language at issue.

B. Release clause

Interpretation of a contract is a question of law. Shelton v. Shelton, 78 P.3d 507, 510 (Nev. 2003). Generally, when a release is unambiguous, it must be construed from the language contained within it. In re Amerco Derivative Litig., 252 P.3d 681, 693 (Nev. 2011) (citing Chwialkowski v. Sachs, 834 P.2d 405, 406 (Nev. 1992)). See also Kaldi v. Farmers Ins. Exch., 21 P.3d 16, 21 (Nev. 2001) ("Where 'a written contract is clear and unambiguous on its face, extraneous evidence cannot be introduced to explain its meaning.'") (quoting Geo. B. Smith Chemical v. Simon, 555 P.2d 216, 216 (Nev. 1976)). However, when acontract term or provision is ambiguous, the court can look to extrinsic evidence to clarify the ambiguous language. Ringle v. Bruton, 86 P.3d 1032, 1037 (Nev. 2004). A contract is ambiguous when it is subject to more than one reasonable interpretation. Anvui, LLC v. G.L. Dragon, LLC, 163 P.3d 405, 407 (Nev. 2007). A basic rule of contract interpretation is that "[e]very word must be given effect if at all possible." Musser v. Bank of Am., 964 P.2d 51, 54 (Nev. 1998) (quoting Royal Indem. Co. v. Special Serv. Supply Co., 413 P.2d 500, 502 (Nev. 1966)). See also Phillips v. Mercer, 579 P.2d 174, 176 (Nev. 1978) ("A court should not interpret a contract so as to make meaningless its provisions.").

HDMC's position is that the release language at issue unambiguously bars Renton's claims for breach of contract and good faith/fair dealing as to the Dealer Contract with HDMC because (1) HDMC is an "affiliate" of HDCC and (2) the Dealer Contract falls under the broad umbrella of "any other documents, related transactions, relationships, acts or omissions." See ECF No. 1, ¶¶ 39-56 & Ex. A. Renton argues that this release language is merely "catch-all" language that is necessarily limited in its scope and refers only to "materials, contracts, transactions, communications, acts or omissions that form the basis and are related to those liabilities." ECF No. 54 at 9-10. See also id. at 9 ("The 'Loans' refers to the contractual...