Steven v. Toyota Motor Sales USA, Inc.
| Decision Date | 30 October 2019 |
| Docket Number | Case No. 19-1179-JWB |
| Parties | MICHAEL E. STEVEN and HAROLD D. JOHNSON, Plaintiffs, v. TOYOTA MOTOR SALES USA, INC., Defendant. |
| Court | U.S. District Court — District of Kansas |
This case comes before the court on Defendant's motion to dismiss (Doc. 5) and Plaintiff Michael Steven's motion to amend (Doc. 16). The motions have been fully briefed and are ripe for decision. (Docs. 6, 15, 17, 21.) Defendant's motion is GRANTED and Steven's motion is DENIED for the reasons stated herein.
The following facts are taken from the allegations in Plaintiff's complaint. Plaintiff Steven has been a Toyota dealer since 1970. Plaintiff Johnson was Steven's Chief Financial Officer. Defendant Toyota Motor Sales USA ("Toyota") is a California corporation. In 1989, Toyota announced that they were unveiling a new luxury line called "Lexus." (Doc. 1 at 2.) Toyota informed its dealers that current Toyota dealers would be favored to become Lexus dealers. Steven sent a request to be appointed as the new Lexus franchisee in the same area that Steven had a Toyota franchise. Steven was allegedly informed by Toyota representatives that he was favored for the new franchise. There were other applicants for the franchise, however. After receiving the news that he would be selected, Steven acquired property for the new Lexus dealership that satisfied Toyota's requirements. Steven informed Toyota of his real estate purchase. Toyota representatives were enthusiastic about the property.
After expending significant funds, Steven was notified by Lexus representatives that he was not selected as the Lexus franchisee. The new franchise was awarded to Gorges and Wittman Lexus, LP. Steven then called Gorges and offered him $1,000,000 if he would decline the dealership. Gorges declined the offer after speaking with his partners. Steven wrote a letter to Lexus Vice President David Illingsworth to inquire as to why his offer was rejected. Illingsworth informed Steven that were several issues with Steven's Toyota franchise. Steven "understood the letter from [] Illingsworth to mean that Steven's future as a Toyota franchisee would be in jeopardy if they filed a complaint concerning the appointment of a non-Toyota dealer." (Doc. 1 at 5.) Because of these "threats," Plaintiffs were prohibited from pursuing a complaint against Toyota. (Id.) Plaintiffs assert that they could not file a complaint until Steven sold his franchise in 2016. Plaintiffs also assert that Brian Barents, a Toyota employee involved in the Lexus Dealership Development, awarded the franchise to Gorges & Wittmann because he had a partnership interest in the dealership. Plaintiffs allege that this was a conflict of interest, illegal, and a violation of Toyota's standards.
Plaintiffs allege that Toyota's actions resulted in a decrease in sales volume in the Toyota franchise and a loss of profits from the Lexus franchise. Steven has asserted a claim under the Automobile Dealers Day in Court Act ("ADDCA"), 15 U.S.C. § 1222, alleging that the ADDCA was violated as Toyota acted in bad faith by threatening Steven and not awarding him the franchise. Johnson asserted a claim of tortious interference with a business relationship due to the failure to award the Lexus franchise to Steven.
Toyota has moved to dismiss the complaint on the basis that Steven does not have standing under the ADDCA and all claims are barred by the statute of limitations. Steven filed a response to the motion to dismiss. (Doc. 15.) Howard did not file a response. Steven also has moved to amend the complaint against Toyota. (Doc. 16.) Steven's proposed amended complaint names Steven as the sole Plaintiff. Steven continues to assert a claim under the ADDCA and also asserts a claim of promissory estoppel under Kansas law. The amended complaint includes affidavits from both Steven and Johnson. Essentially, the amended complaint adds allegations regarding the alleged threats made by Toyota. The new allegations state that Steven "exchanged several letters with Toyota representatives" regarding Toyota's decision not to award him the Lexus franchise. (Doc. 16-1 at 6.) Steven allegedly received vague responses from Toyota. In "many future conversations with Toyota representatives," Steven was told that if he insisted on making an issue about the Lexus franchise, Steven's Toyota dealership would be in jeopardy. (Id.) These alleged threats included revocation of the franchise, appointing a second Toyota franchise in Steven's area, decreasing Steven's car allocation, and excessive audits. There are no dates or time periods identified for these new alleged threats. Steven's affidavit states that the initial letter exchange with Illingsworth occurred in the "fall of 1989." (Doc. 16-1, Steven aff. at 4.)
Steven asserts that the statute of limitations was tolled due to Toyota's coercions, intimidations, and threats. (Doc. 16-1, at 2.) As a result, Toyota should be estopped from asserting a statute of limitations defense. (Id.)
In order to withstand a motion to dismiss for failure to state a claim, a complaint must contain enough allegations of fact to state a claim to relief that is plausible on its face. Robbinsv. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1974 (2007)). All well-pleaded facts and the reasonable inferences derived from those facts are viewed in the light most favorable to Plaintiff. Archuleta v. Wagner, 523 F.3d 1278, 1283 (10th Cir. 2008). Conclusory allegations, however, have no bearing upon the court's consideration. Shero v. City of Grove, Okla., 510 F.3d 1196, 1200 (10th Cir. 2007). Rule 12(b)(6) "does not require that Plaintiff establish a prima facie case in [his] complaint, but rather requires only that the Plaintiff allege enough factual allegations in the complaint to set forth a plausible claim." Pueblo of Jemez v. United States, 790 F.3d 1143, 1171-72 (10th Cir. 2015) (internal citations omitted). In the end, the issue is not whether Plaintiff will ultimately prevail, but whether Plaintiff is entitled to offer evidence to support his claims. Beedle v. Wilson, 422 F.3d 1059, 1063 (10th Cir. 2005).
Toyota moves to dismiss this claim on the basis that Steven does not have standing to bring the claim as he is not a dealer under the ADDCA. Alternatively, Toyota states that this claim is barred by the statute of limitations. In support of its motion, Toyota has attached a copy of the dealer agreement for the Toyota dealership in Wichita that was executed on October 23, 1989. (Doc. 6, Exh. 1.) Toyota asserts that the court may consider the agreement because it is central to Plaintiffs' claims. (Doc. 6 at 4.) A court may consider a document that is central to a parties' claim if the document is not in dispute. Alvarado v. KOB-TV, L.L.C., 493 F.3d 1210, 1215 (10th Cir. 2007). The complaint and the amended complaint make several references to the fact that Steven is a franchisee and that his franchise was threatened by Toyota. Moreover, inorder to assert a claim under the ADDCA, it must be based on an alleged failure to act in good faith in compliance with the terms of an agreement. 15 U.S.C. § 1222. Therefore, the court finds that the agreement is central to Steven's claim against Toyota. In his response, Steven does not challenge the authenticity of the agreement and also refers to the agreement and the fact that he is a signatory. (Doc. 15 at 2-3.) Accordingly, the court will consider the franchise agreement in determining the motion to dismiss. The court now turns to the requirements to bring a claim under the ADDCA.
The ADDCA provides as follows:
An automobile dealer may bring suit against any automobile manufacturer engaged in commerce, in any district court of the United States in the district in which said manufacturer resides, or is found, or has an agent, without respect to the amount in controversy, and shall recover the damages by him sustained and the cost of suit by reason of the failure of said automobile manufacturer from and after August 8, 1956, to act in good faith in performing or complying with any of the terms or provisions of the franchise, or in terminating, canceling, or not renewing the franchise with said dealer: Provided, That in any such suit the manufacturer shall not be barred from asserting in defense of any such action the failure of the dealer to act in good faith.
15 U.S.C. § 1222.
The plain language of the statute provides that only an "automobile dealer" may bring an action under the ADDCA. Jackson v. Volvo Trucks N. Am., Inc., 462 F.3d 1234, 1239 (10th Cir. 2006). An automobile dealer is defined as "any person, partnership, corporation or association, or other form of business enterprise ... operating under the terms of a franchise and engaged in the sale or distribution of passenger cars, trucks, or station wagons." Id. (quoting 15 U.S.C. § 1221(c)). A franchise is then defined as the agreement or contract between the dealer and an automobile manufacturer. Id. Therefore, "an automobile dealer must be a party to a franchise agreement with the manufacturer" in order to have standing to bring an action under the ADDCA. Id.
Turning to the agreement, the parties to the agreement are Toyota, as the manufacturer, and Eddy's Toyota of Wichita, Inc., as the dealer. (Doc. 6-1 at 1.) The agreement states that the dealer is a corporation and that the dealer's owners are Edward Steven and Michael Steven. Both Edward and Michael Steven signed the agreement on behalf of Eddy's. (Id. at 1-2.) Reviewing the agreement, it is clear that Steven is not a party to the agreement although he is a signatory for Eddy's. Under the plain language of the statute, Steven does not have standing to bring a claim. Steven argues, however, that an exception should apply in this case. Toyota argues that Jackson forecloses...
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