Tri-County Motors, Inc. v. American Suzuki Motor

• Decision Date: 03 July 2007
• Docket Number: No. 04-cv-0835-ENV-KAM.,04-cv-0835-ENV-KAM.
• Parties: TRI-COUNTY MOTORS, INC., Plaintiff, v. AMERICAN SUZUKI MOTOR CORPORATION, Defendant.
• Court: U.S. District Court — Eastern District of New York

Page 161

494 F.Supp.2d 161

TRI-COUNTY MOTORS, INC., Plaintiff, v. AMERICAN SUZUKI MOTOR CORPORATION, Defendant.

No. 04-cv-0835-ENV-KAM.

United States District Court, E.D. New York.

July 3, 2007.

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Jeffrey R. Miller, Jeffrey Miller, P. New York, NY, for Plaintiff.

Carla W. McMillian, Sutherland, As & Brennan, LLP, Atlanta, GA, Michael Levin, Barger & Wolen, LLP, New York NY, for Defendant.

DECISION AND ORDER

VITALIANO, District Judge.

Plaintiff Tri-County Motors, Inc. ("Tri-County") brings this action against defendant American Suzuki Motor Corporation ("ASMC") alleging breach of contract and promissory estoppel, tortious interference with contractual relations, and violation of the New York State Franchised Motor Vehicle Dealer Act all in connection with a failed attempt on the part of TriCounty to obtain a Suzuki franchise. ASMC now moves for summary judgment pursuant to Federal Rule of Civil Procedure 56, which will be considered together with the earlier motion of Tri-County for an order striking ASMC's answer or, alternatively, imposing sanctions against ASMC for alleged discovery abuses, including spoliation of evidence. For the reasons set forth below, ASMC's motion is granted and Tri-County's is denied.

I. Factual Background¹

Vladimir Zanan ("Zanan") and Lester Wu ("Wu") are the principals of Tri-County, an entity formed in. June 2003 for the purpose of engaging in the sale of new and used automobiles. On July 28, 2003, Tri-County entered into an asset purchase agreement ("purchase agreement") with Five Towns Suzuki, Inc. ("Five Towns Suzuki"), an already-existing ASMC Suzuki franchise located in Lawrence, New York, agreeing to pay Five Towns Suzuki $625,000 for certain of its assets, including $615,000 for the goodwill value of its business.² The purchase agreement also contained the following contingency clause: "The entire transaction provided for in this Agreement is subject to, conditioned and contingent upon the consent of Suzuki to the transaction contemplated herein and upon [Tri-County] being approved by Suzuki [as a franchisee]...." Def.'s Rule 56.1 Stmt. ¶¶ 6, 7; Borromeo Decl., Ex. 1.

The purchase agreement was thereafter forwarded for review to Christopher Borromeo ("Borromeo"), ASMC's Eastern Regional Dealer Network Manager and Assistant Regional Sales Manager, at ASMC's Regional Office in Mechanicsburg, Pennsylvania. On July 31, 2003, Borromeo sent Tri-County's counsel "[d]ealer [a]pplications and worksheet documents" to be completed and submitted by Tri-County's principals. In an attached cover letter, Borromeo explained that completion of the application package was "necessary to evaluate your clients' ability, automotive expertise in new vehicle sales and service, integrity, character, experience, reputation and other personal qualifications necessary for the performance of the Suzuki Sales and Service Agreement" as well as to ensure that "your clients' operational proposal ... is consistent with Suzuki's policies and procedures regarding facilities, capital and management." Borromeo also noted that, pursuant to a recently-enacted ASMC "retail initiative" known as "Suzuki Square," dealers were required "to conform to an established retail exterior and interior retail image." Consequently, "any new proposal requires an exclusive Suzuki facility." Borromeo concluded by stating that although "final approval/disapproval [of the dealer applications] will be at the sole discretion of [ASMC's] Executive Management in Brea, California," "no dealer candidate will be unreasonably denied." Def.'s Rule 56.1 Stmt. ¶ 4, 5; Borromeo Decl., Ex. 3.

As requested, Zanan and Wu completed their respective ASMC dealer applications. Each provided information regarding, inter alia, their education, work experience, and financial status. The applications, which were signed by Zanan and Wu on September 8, 2003, also included the following language:

1. The receipt by ASMC of this application does not obligate ASMC in any way to enter into [a dealership agreement].

2. No act other than the formal execution of [an agreement] by an officer of ASMC shall constitute approval of the application [by] ASMC, and any action taken, any expenditures made, or commitments assumed by [Tri-County] prior to the receipt of such executed agreement shall be at [Tri-County's] sole risk and responsibility without any liability or obligation whatsoever on the part of ASMC.

3. No representative or employee of ASMC, other than an authorized officer, has the authority to approve, modify or waive the terms of this application.

Borromeo Decl., Ex. 4, 5; Def.'s Rule 56.1 Stmt. ¶¶ 10, 12.

As part of the application process, Zanan and Wu were also supplied with an example of a "Term Dealer Sales and Service Agreement", which noted that an agreement would only "come into full force and effect ... when executed by SUZUKI." Borromeo Decl., Ex. 2.

On September 10, 2003, Zanan personally delivered the completed dealer applications to Borromeo and ASMC's District Sales Manager, John Bookstaver ("Bookstaver"). During this meeting, Zanan showed Borromeo and Bookstaver three potential site facilities, including 550 Burnside Avenue in Inwood, New York. The Burnside Avenue property contained two buildings: one larger, built out with a showroom, office and a parts and service facility, directly fronting Burnside Avenue and the other smaller, housing a larger central showroom, but set back on the lot away from the street.³ Def.'s Rule 56.1 Stmt. ¶¶ 14, 16; Pl.'s Counter-Stmt ¶ 16.

Fifteen days later, Borromeo confirmed by letter that at least two of the parts and service facilities viewed by ASMC were "satisfactory in size and operational capacity," but would, in any event, need to be renovated to comply with Suzuki brand specifications. Borromeo also added that "Mr. Zanan needs to move quickly in his selection of a service and parts facility." Def.'s Rule 56.1 Stmt. ¶ 17.

At this point, however, the evidence submitted by the parties notably diverges. ASMC, for its part, asserts that Borromeo "subsequently" learned that Tri-County was proposing the larger and more prominent of the two buildings at the Burnside Avenue property as the site of Tri-County's "exclusive" Suzuki dealership. ASMC contends that, within the automobile industry, the word "exclusive" means that "only one franchise would operate at the site." Def.'s Rule 56.1 Stmt. ¶¶ 18, 19. Tri-County, however, disputes these representations arguing that Borromeo was told only that the "larger showroom" — and not the larger building — was to be assigned to Tri-County's prospective Suzuki dealership and that, within the automobile industry, the word "exclusive" indicates solely. that "only one franchise [would] operate in the [particular] showroom," i.e., that exclusivity did not prohibit another franchise selling a different brand from operating out of a different showroom on the same site. Pl.'s Counter-Stmt. ¶¶ 18, 19. In any case, on November 12, 2003, shortly after learning that the dealership was to be "exclusive," Borromeo completed a Dealer Sign Survey Request denoting that both the sales and service components of the dealership would be "exclusive." Def.'s Rule 56.1 Stmt. ¶ 20. In addition, as is required on ASMC's new dealer application, Borromeo prepared a "Facility Standards Addendum," which reflected specifically that the larger building fronting Burnside Avenue would be used for Suzuki's new car sales, parts and service operations. See Borromeo Decl., Ex. 9.

Tri-County signed leases for the Burnside Avenue site on November 24, 2003. In correspondence with the owners of the property, Tri-County left open the possibility of locating an additional non-Suzuki dealership on the site: "The use of the premises shall not be limited to a Suzuki new car dealership, but rather, the sales, service and/or leasing of new and used automobiles and/or for any purpose set forth in the Certificate of Occupancy." Def.'s Rule 56.1 Stmt. ¶¶ 21, 22.

On November 25, 2003, the parties agree, Borromeo and Zanan paid a visit to Burnside Avenue to tour the site and discuss logistics. Thereafter, the stories again diverge. ASMC asserts that, during this meeting, Borromeo and Zanan "discussed how the larger showroom, service, and parts building [i.e., the building directly fronting Burnside Avenue] could be renovated to comply with Suzuki standards." Def.'s Rule 56.1 Stmt. ¶ 23. Zanan, on the other hand, contends that Borromeo was again explicitly "advised that the larger showroom, also known as the central showroom [i.e., the showroom in the building located further back on the lot], would be used for American Suzuki." Pl.'s Counter-Stmt ¶ 23 (citing Zanan Aff.).

The fires of controversy were fanned on December 5, 2003 when, according to ASMC, its District Parts and Service Director, Richard Meyer ("Meyer"), told Borromeo that he "had learned that Tri-County planned on putting the Suzuki dealership in the smaller building located at the rear of the lot instead of the larger building which was previously discussed." Def.'s Rule 56.1 Stmt. ¶ 24 (emphasis in original). In a letter to Zanan and Wu sent later that same day, Michael Ross ("Ross"), ASMC's Regional Sales Manager, wrote that Tri-County's "intention to dual" the Burnside Avenue site with a non-Suzuki franchise was "not acceptable to Suzuki." Ross asserted that ASMC had been "constant in [its] position regarding exclusivity beginning with the correspondence from Chris Borromeo to you on July 31, 2003." In addition, Ross noted that, in any case, "[t]he proposed service and parts facility at 550 Burnside Avenue ... is not adequate as a dual in size or in physical layout." Borromeo Decl., Ex. 8.

Tri-County's counsel responded to ASMC's rejection of his client's proposal in a letter dated December 16, 2003. Counsel asked that ASMC reconsider its decision,...