Stadium Chrysler Jeep v. Daimlerchrysler Motors

• Decision Date: 14 July 2004
• Docket Number: Civil Action No. 02-5345 (JAP).
• Citation: 324 F.Supp.2d 587
• Court: U.S. District Court — District of New Jersey
• Parties: STADIUM CHRYSLER JEEP, L.L.C., a domestic limited liability company of New Jersey; Teterboro Chrysler Plymouth, Inc. d/b/a/ Teterboro CPJ; Kobbe & Flannery, Inc., d/b/a/ Tenafly Jeep Eagle Chrysler Plymouth; Wyckoff Chrysler Plymouth, Inc.; and Fleetway Chrysler Plymouth, Inc., Plaintiffs, v. DAIMLERCHRYSLER MOTORS COMPANY, LLC, a Delaware limited liability company, Defendant.

324 F.Supp.2d 587

STADIUM CHRYSLER JEEP, L.L.C., a domestic limited liability company of New Jersey; Teterboro Chrysler Plymouth, Inc. d/b/a/ Teterboro CPJ; Kobbe & Flannery, Inc., d/b/a/ Tenafly Jeep Eagle Chrysler Plymouth; Wyckoff Chrysler Plymouth, Inc.; and Fleetway Chrysler Plymouth, Inc., Plaintiffs, v. DAIMLERCHRYSLER MOTORS COMPANY, LLC, a Delaware limited liability company, Defendant.

Civil Action No. 02-5345 (JAP).

United States District Court, D. New Jersey.

July 14, 2004.

COPYRIGHT MATERIAL OMITTED

Bressler, Amery & Ross, PC, Eric L. Chase, Esq., Florham Park, NJ, for Plaintiffs, Stadium Chrysler Jeep, L.L.C.; Teterboro Chrysler Plymouth, Inc. d/b/a/ Teterboro CPJ; Kobbe & Flannery, Inc., d/b/a/ Tenafly Jeep Eagle Chrysler Plymouth; Wyckoff Chrysler Plymouth, Inc.; and Fleetway Chrysler Plymouth, Inc.

Hale and Dorr LLP, George W. Mykulak, Esq., Princeton, NJ, for Defendant, DaimlerChrysler Motors Company, LLC.

OPINION

PISANO, District Judge.

Before the Court are cross-motions for summary judgment filed by the Plaintiffs, Stadium Chrysler Jeep, L.L.C. ("Stadium"); Teterboro Chrysler Plymouth, Inc. d/b/a/ Teterboro CPJ ("Teterboro"); Kobbe & Flannery, Inc., d/b/a/ Tenafly Jeep Eagle Chrysler Plymouth ("Tenafly"); Wyckoff Chrysler Plymouth, Inc. ("Wyckoff"); and Fleetway Chrysler Plymouth, Inc. ("Fleetway") (collectively the "Plaintiffs") and Defendant DaimlerChrysler Motors Company, LLC ("DaimlerChrysler" or the "Defendant") pursuant to Federal Rule of Civil Procedure 56.

The Plaintiffs' complaint (the "Complaint") alleges violations of the New Jersey Franchise Practices Act, N.J.S.A. §§ 56:10-13 (Count I), and 10-7 and 13.4 (Count II); violation of the Automobile Dealer's Day in Court Act, 15 U.S.C. §§ 1221-25 (Count III); and common law breach of contract (Count IV), breach of the implied covenant of good faith and fair dealing (Count V), and unjust enrichment (Count VI). The Defendant timely filed its answer.

The Court has jurisdiction to consider this matter under 28 U.S.C. § 1331 with respect to Count III, and 28 U.S.C. § 1332 with respect to the remaining state law claims. The Court heard oral argument on March 29, 2004, and for the reasons set forth below, the Court grants summary judgment for the Plaintiffs in part, and for the Defendant in part.

I. BACKGROUND

This case involves the termination of the Plymouth brand of automobiles, which were marketed, manufactured, and distributed by Defendant DaimlerChrysler until September 30, 2001. Before the termination, each of the Plaintiffs had entered into Plymouth Sales and Service Agreements (each referred to as an "SSA"), and each were authorized dealers of Plymouth vehicles. Defendant's Local Civil Rule 56.1 Statement of Undisputed Facts, referred to herein as "Def.'s 56.1 Stmt." at ¶¶ 12, 19, 35, 42, 53; Plaintiffs's Local Civil Rule 56.1 Statement, referred to herein as "Pls.'s 56.1 Stmt." at ¶¶ 15, 17, 19, 21, 23. The SSA's expressly incorporate standard Additional Terms and Provisions ("Additional Terms"). Certification of George Mykulak ("Mykulak Cert.") Appendix ("App.") F, Engelsdorfer Ex. 12; Certification of Jason M. Schoenberg ("Schoenberg Cert.") Ex. J at ¶ 5; Def.'s 56.1 Stmt. at ¶ 5; Compl. at ¶ 17. The Additional Terms provide that "[i]n the event of a dispute hereunder, the terms of this Agreement shall be construed in accordance with the laws of the State of Michigan." Mykulak Cert.App. F at ¶ 42.

Paragraph 27 of the Additional Terms provides in pertinent part: "[DaimlerChrysler] at any time may discontinue any or all models, lines or body styles and may revise, change or modify their construction or classification.... [DaimlerChrysler] at any time may declare obsolete or discontinue any or all parts, accessories and other merchandise." Mykulak Cert.App. F at ¶ 27. Paragraph 28 governs termination of the franchise relationship, and expressly provides that the SSA "will terminate automatically without notice from either party on ... the discontinuance by [DaimlerChrysler] of the production or distribution of all [DaimlerChrysler] vehicles listed on the Motor Vehicle Addendum," id. at ¶ 28(c)(v), which, according to DaimlerChrysler, "identifies the line-make sold under the particular [SSA]," Def.'s 56.1 Stmt. at ¶ 7. The Additional Terms also contain DaimlerChrysler's repurchase obligations, which pertain to repurchase of new, unused, and unsold specified vehicles, parts, accessories, special tools, and signs in the event of a termination. Mykulak Cert.App. F at ¶ 29.

Beginning in the fall of 1999, DaimlerChrysler publicly announced "its decision to discontinue the Plymouth brand on a nationwide basis in late 2001, with the end of 2001 model year production." Def.'s 56.1 Stmt. at ¶ 55; see also Pls.'s 56.1 Stmt. at ¶ 25. At that point in time, the Plymouth product-line consisted of five automobiles: the Neon subcompact economy car, the Breeze mid-size sedan, the Voyager and Grand Voyager minivans, and the Prowler Roadster. Def.'s 56.1 Stmt. at ¶ 56. "DaimlerChrysler tied its decision to discontinue the remaining Plymouth models to a concurrent expansion of the Chrysler brand." Id. at ¶ 59. To this end, in 2000, DaimlerChrysler began "transitioning all existing Plymouth models but one into the Chrysler brand...." Id. at 70. Under this transition plan, Neon would be the only remaining Plymouth as of the effective date of the discontinuation, and then it would become an exclusive Dodge model. Id.

In connection with the termination of Plymouth, "DaimlerChrysler developed a compensation plan to offer to terminated Plymouth dealers that would provide them the option of accepting lump sum compensation payments in lieu of returning vehicles, parts and tools." Def.'s 56.1 Stmt. at ¶ 81. DaimlerChrysler informed Plymouth dealers of the compensation plan in two separate August 2001 mailings. Id. at ¶ 83. On or about August 13, 2001, DaimlerChrysler issued letter which acknowledged to Plymouth dealers that individual sales and service agreements imposed repurchase obligations upon it in connection with the discontinuance, and that state law may modify those obligations. Id. at ¶ 83(A); Pls.'s 56.1 Stmt. at ¶¶ 26-27; Schoenberg Cert. Ex. Z (Aug. 13, 2001 letter). With the August 13 mailing, DaimlerChrysler included a sample copy of the Plymouth Discontinuance Repurchase/Compensation Agreement (the "Discontinuance Agreement"). Def.'s 56.1 Stmt. at ¶ 83(A); Pls.'s 56.1 Stmt. at ¶ 26.

On or about August 30, 2001, DaimlerChrysler issued a letter which detailed the various options of Plymouth dealers ("Repurchase Instruction Letter"). Def.'s 56.1 Stmt. at ¶ 83(B); Pls.'s 56.1 Stmt. at ¶¶ 28-29; Schoenberg Cert. Ex. AA (Aug. 30, 2001 letter). The Repurchase Instruction Letter stated that

[e]ssentially, the Plymouth Discontinuance Repurchase/Compensation Agreement provides that [DaimlerChrysler] will offer [Plymouth dealers] the option to either receive a one-time compensation payment of three thousand and 00/100 ($3,000) dollars for each eligible new, unused, unsold and undamaged Plymouth vehicle in your inventory (other than Plymouth Prowlers), or you may request [DaimlerChrysler] to repurchase all eligible 2001 model Plymouth vehicles, unless otherwise required under state law.

Schoenberg Cert. Ex. AA at 1. Plymouth dealers were also offered a lump-sum compensation payment of five thousand dollars ($5,000) in lieu of "repurchase of eligible unique Plymouth parts and accessories under the terminated Plymouth Agreement," and three thousand dollars ($3,000) in lieu of the repurchase of any Plymouth special tools. Id. The Repurchase Instruction Letter also indicated that acceptance of lump sum compensation required release of all other claims against DaimlerChrysler for compensation relating to the discontinuance of Plymouth. Def.'s 56.1 Stmt. at ¶ 85; Pls.'s 56.1 Stmt. at ¶ ¶ 29-30; Schoenberg Cert. Ex. Z at 3. "Specifically excluded from this release are (1) amounts owing by [DaimlerChrysler] to DEALER as the result of this agreement, and (2) amounts that may be owing by [DaimlerChrysler] to DEALER in the ordinary course of business...." Schoenberg Cert. Ex. Z. At 3.

On or about September 30, 2001, the effective date of the termination, Plymouth was officially discontinued. Def.'s 56.1 Stmt. at ¶ 93; Pls.'s 56.1 Stmt. at ¶ 31. By this time, DaimlerChrysler had expanded their Chrysler and Dodge lines to include discontinued Plymouth models. Def.'s 56.1 Stmt. at ¶ 93.

The liability and damages phases of this litigation have been bifurcated, and at this stage, the only issues before the Court relate to liability. Any arguments of counsel that involve damages will not be addressed by the Court.

II. LEGAL DISCUSSION

A. Summary Judgment Standard

Summary judgment is appropriate under Rule 56(c) of the Federal Rules of Civil Procedure when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). On a motion for summary judgment, the moving party must first show that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). An issue is genuine "if the evidence is such that a reasonable jury could return a verdict" for the non-moving party. Healy v. N.Y. Life Ins. Co., 860 F.2d 1209, 1219 n. 3 (3d Cir.1988). "The substantive law governing the dispute will determine which facts are material and only disputes over those facts `that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.'" Simmerman v. Corino, 804 F.Supp. 644, 649 (D.N.J.1992) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).

If the moving party can show that no genuine issue of material fact...