Tysinger Motor Co. Inc v. Chrysler Group LLC
| Decision Date | 07 January 2011 |
| Docket Number | Civil Action No. 3:10CV554 |
| Parties | TYSINGER MOTOR COMPANY, INC., d/b/a Tysinger Dodge, Plaintiff, v. CHRYSLER GROUP, LLC, Defendant. |
| Court | U.S. District Court — Eastern District of Virginia |
This matter is before the Court on the Plaintiff's motion to vacate arbitration award pursuant to 9 U.S.C. § 10 (Docket Nos. 1 & 8) and the Defendant's motion to dismiss (Docket No. 23) the Plaintiff's motion to vacate arbitration award. The Court will dispense with oral argument because the facts and legal contentions are adequately presented in the materials presently before the Court, and argument would not aid in the decisional process.
The Plaintiff, Tysinger Motor Company, Inc., d/b/a Tysinger Dodge ("the Plaintiff or "Tysinger"), is an automotive dealership in Hampton, Virginia that, until 2009, sold Dodge brand vehicles pursuant to a sales and service franchise agreement with Chrysler, LLC ("Old Chrysler").1In connection with Old Chrysler's much publicized bankruptcy, the Plaintiff was one of approximately 800 dealers whose franchise agreement was rejected by Old Chrysler's successorentity, Defendant Chrysler Group, LLC ("New Chrysler" or "the Defendant"). Congress, as part of the Consolidated Appropriations Act of 2010, created a singular remedy for rejected dealerships in Public Law 111-117 § 747 ("section 747" or "§ 747"). The remedy allowed former franchisees to seek review of their rejection before an American Arbitration Association ("AAA") arbitrator in binding arbitration. Pursuant to § 747, the selected AAA arbitrator determined, considering seven enumerated factors, whether the rejected dealer should be added to the relevant manufacturer's dealership network. In addition to its motion to vacate arbitration award, the Plaintiff requested that the Court stay, pending the outcome of this proceeding, the arbitration ruling of Roderick Mathews ("Mathews" or "the Arbitrator"), the AAA arbitrator, in which Mathews found that the Plaintiff was not entitled to be added to New Chrysler's dealership network. By Memorandum Order issued on September 1, 2010, the Court (1) found that it had subject matter jurisdiction in this case pursuant to 28 U.S.C. § 1331 and (2) denied the Plaintiff's motion to stay. Now before the Court is the Plaintiff's motion to vacate arbitration award pursuant to 9 U.S.C. § 10 and the Defendant's motion to dismiss the Plaintiffs motion to vacate arbitration award.
In addition to the facts noted above, the Plaintiff's allegations2 in its motion to vacate include the following: Subsequent to the termination of the Plaintiff's franchise, the Defendant entered into a letter of intent with Pomoco Hampton Chrysler Jeep of Hampton ("Pomoco Hampton") to award it the Dodge franchise that had been the Plaintiffs franchise. Mo. to Vacate, ¶ 17. Pomoco Hampton is owned by Pomoco Group, Inc., whose founder is Dois I. Rosser. Id., ¶ 14. During the arbitration proceedings, the parties disclosed their fact and expert witnesses. Id., ¶ 11. The Defendant served its fact witness disclosure on Mathews, Tysinger's attorneys, and the AAA representative on June 15, 2010, disclosing that it might offer, among others, Steven Adams, Vice President of the Pomoco Group, and Tysinger objected to the named witnesses being allowed to testify. Id., ¶ 12. During the proceedings, on June 29 and 30, 2010, Adams testified in support of New Chrysler's contention that its best interests were served by eliminating Tysinger's dealership and giving it to Pomoco Hampton. Id., ¶¶ 18 & 26. Tysinger's objection to Adams' testimony was overruled by Mathews. Id., ¶ 18.
Previously, on June 22, 2010, Mathews had advised the parties that he was familiar with Adams and knew that he was the project manager for a residential real estate project in Surry County, Virginia known as "Cypress Creek." Id., ¶ 13. Mathews advised that he had acquired an interest in profits from Cypress Creek from his father-in-law who was hired by principles of Pomoco Hampton to perform work on Cypress Creek. Id., ¶ 15. Cypress Creek is owned in part by Pomoco Developments, a subsidiary of Pomoco Hampton, and the business address for Pomoco Developments, Cypress Creek, and Pomoco Group is the same as the address for the Pomoco Hampton dealership. Id., ¶ 14. Adams is the registered agent for Cypress Creek, Pomoco Developments, and Pomoco Group. Rosser, the chairman of the Pomoco Group, owns 99% of Cypress Creek. Id. Pomoco Group is a holding company that owns the five Pomoco dealerships. Id. Adams has the ability to influence the profits from Cypress Creek, which could directly affect Mathews. Id., ¶ 23. The Defendant's attorneys acknowledged that "each of the four representatives of Pomoco Group has a vested interest" in the outcome, yet they vigorouslydefendant Mathews as the Arbitrator and insisted that he continue to serve as the Arbitrator. Id., ¶ 17. The primary beneficiary of the Arbitrator's ruling in favor of New Chrysler is Pomoco Hampton. Id., ¶ 19. Pomoco Group and Adams also benefited. Id., ¶¶ 20 & 21. The Pomoco principals can influence when and if Cypress Creek realizes profits which affects the Arbitrator financially. Id., ¶¶ 22 & 23. Despite Tysinger's objections to the service of Mathews as Arbitrator, the AAA reaffirmed his service on June 25, 2010. Id., ¶ 25. The arbitration was held on June 29 and 30, 2010 in Richmond, and Tysinger again voiced its objection to the Arbitrator. Id., ¶ 26. On July 22, 2010, the Arbitrator found that Tysinger failed to sustain its burden of proof and denied Tysinger's request to be added to New Chrysler's Dodge dealers network. Id., ¶ 26.
To survive a Rule 12(b)(6) motion to dismiss, a pleading must "permit the court to infer more than the mere possibility of misconduct" by alleging "sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Francis v. Giacomelli, 588 F.3d 186, 193 (4th Cir. 2009) (quoting Ashcroft v. Iqbal, 556 U.S. �, �, 129 S. Ct. 1937, 1949-50 (2009)). A pleading "must contain more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
The parties appear to disagree regarding the standard of review, primarily because Tysinger filed a motion to vacate rather than a complaint. The Defendant argues that Tysinger's motion to vacate should not be evaluated as a complaint or afforded any such deference and that Tysinger's motion to vacate should be denied for the reasons set forth in the Defendant's opposition to the motion to vacate (Docket No. 16). Tysinger sets forth in its response brief inopposition (Docket No. 26) to the Defendant's motion to dismiss the usual standard of review-including that "the court should assume the veracity of well-pleaded factual allegations" and "draw all reasonable inferences in the plaintiff's favor." See Pl.'s Response Br. at 6. Even if the motion to vacate is evaluated as a complaint, for the reasons explained herein, the Plaintiff's motion to vacate must be denied.
The Plaintiff's motion to vacate seeks to vacate the underlying arbitration award pursuant to provisions of the Federal Arbitration Act ("FAA"). Tysinger argues in its motion to vacate that "[u]nder the Federal Arbitration Act, this Court may make an order vacating an arbitration award 'where there was evident partiality or corruption in the arbitrators, or either of them, '" citing 9 U.S.C. § 10(a)(2). By Memorandum Order issued on September 1, 2010, the Court held that the FAA does not apply to the arbitration proceedings at issue in this case that took place pursuant to § 747. This ruling is the binding law of the case and, while Tysinger "notes its exception to that ruling, " Tysinger is no longer contesting the FAA's applicability. See Pl.'s Response Br. at 1. Thus, the motion to vacate is based on an inapplicable statute.
Next, section 747 does not provide for any judicial review of arbitration determinations made pursuant to that statute. Tysinger appears to admit this, conceding that "the text of the statute § 747 does not provide a means of vacating an award[.]" Pl.'s Response Br. at 7. Section 747 was very limited in scope. It allowed former franchisees to seek review of their rejection as a Chrysler franchisee before an AAA arbitrator in binding arbitration. It granted such former franchisees the right to seek to be added as a franchisee to the New Chrysler dealer network in the geographical area where it was located when its franchise was rejected. Relief was limited to a letter of intent to enter into a sales and service agreement, subject to certain other conditions andthe rights of other dealers under various state dealer laws. Other relief, including damages, was prohibited. The statute's authority for such arbitrations was quite short-lived-180 days, plus a 30-day extension for good cause, from its enactment, and section 747 is no longer in effect. See section 747(d). The procedure and relief were carefully crafted to provide for a prompt and final decision as to each rejected dealership so that all parties could move forward quickly. Congress did not provide in section 747 any authority under which a party can appeal, move to vacate, or move to stay the arbitrator's determination, although it certainly could have done so. Where Congress does not provide relief that it clearly knows how to provide, it is understood to have deliberately chosen not to provide that relief. See Meghrig v. KFC Western, Inc., 516 U.S. 479, 485 (1996) (). Thus, the Court has no authority to review the arbitration determination made pursuant to ...
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