the michigan version of the implied covenant of good faith and fair dealing and the california determination statute the terminate dismissal of the on mobility their day in court act and the bad faith claims should be reversed because matthew complaint alleges details implausible facts which have proved well as stablished that chrysler's exercise of its discretion over matthew's location which is given to it under the dealer agreement was motivated by a protection while bad faith reason i thought that for that claim to succeed you had to show there was some kind of a wrongful demand by the defendant and here they just were enforcing the provisions that your client agreed to write the key case here i think that applies is the case of general motors versus new chevrolet which was a third circuit case is discussed more in the context of the bad faith claim but it also has a very informative discussion of the automobile do their day in court act and in that case and i'll quote from that case where the third circuit says we now explain that while a manufacture does not make a wrongful demand if it merely insist that the dealer comply with a reasonable obligation imposed by the franchise agreement which is what you're saying your honor a dealer can state a claim for relief under the automobile dealer day in court act by alleging th manufactures reliance on those objectively reasonable provisions is in fact motivated by a protection bad faith reason and that's exactly what matthew alleged in this case and i think well you said it in your complaint but what underlying facts have you alleged to make it plausible under twelve million it but that's where i guess i have this all right well there are several possible facts that are made to to support that in fact it's more i just turned follow your argument right the facts make a plausible case that this is not of it the factual allegations make a possible case that this conduct five chrysler was motivated by a desire to rid itself of the dealer and those facts facts are number one that there was a history here of and secondly that the reasons that chrysler gave to for not allowing the relocation  were protection all and there is a detailed allegations of complaint of why each reason they gave as to why the proposed relocation site was inferior to the present location was a protection statement and that the motivation to rid themselves of the dealer it's the reasons the dealer is making a are the manufacturers taking a conduct here and here's the key just cause of action with that with those allegations support both the automobile do their court act and the bad faith claim under michigan law but under the automobile dealers the court that there has to be a deviation from the contract and i think that what judge wapner was trying to get to work is the deviation from the contract that predicates the cause of that action well again i think the third circuit had a right on the head and there are if the deviation from the contract is i believe that the facts support both the automobile bill hommel bill dealer day in court act and the bad faith claim under michigan law because of the fact that the motivation here which was that it was to force the it out of business and is continuing to attempt to force it out of business by making the locate there the key distinction between this and other cases like hubbard and golden gate is that here the manufacturer knowledge controls the relocation issue or has the discretion to decide whether the dealer can relocate or not the manufacturer also controls the economic terms under which the us economic terms which the allegations a complaint spot in detail close to a two and three quarter million dollar run factor which is way above according to the complaint what other dealers would pay in order to  allow that's the problem right your client agreed to that was that your client agreed to that no it is not agreed to that that that's it has not signed the lease which would require to pay that amount so it is on a month to month tenancy paying double the original round as a holding down a regional agreement i'm saying in the original agreement i thought your client agreed that if it if your client did not carry out i can't remember what the specifics were then the consequence was what they're now doing actually i think they could do more but in any event that your client already knew what he signed up for right you know my client originally honored and to an understanding it believe that it would buy the facility and build its own that that was not part of the contract the contract was that if the subsequent terms were accepted on the lease renewal it would be a month to month tenancy and the rig could be set at a percentage increase so that's what the that's what your client but the but the conduct really here is not allowing the dealer to move the fact that it controls economic terms helps it use that  agrees to do something and then you're the opposition says that you violated we're going to go to court and we're supposed to test the motivation of the plaintiff here you're saying that that he was he was following the contract is that true well the contract says that the dealer can request the right to relocate and the manufacturer has the discretion whether to approve or den right and and what the law says and what i think the third circuit correctly said is if that exercise of discretion whether to allow relocation or not is taken and is shown to have been  undertaken for the reasons given our production on it was actually taken for a bad faith reason such as trying to terminate the dealer which is what the statute federal statute is intended just to prevent then there is a decision which it would completely different facts in that the dealer never alleged that there was a bad faith motivation and the court only had and that was a decided on summary judgment not motion to dismiss  and the only evidence show on was that the manufacturer exercised a business judgment in that the parcel to which the dealer would real kate to would be three separate parcels and that the manufacturer did not feel that that was the right thing there was no counterevidence shown by the dealer to show that this was really a motivation to get rid of the you know that if we choose not and force by sanctions a demand of the dealer stay on location for the purpose of putting that dealer out of business and because of the i have the ability then to impose economic terms which does not allow the dealer to be competitive and profitable that's the wrongful demand and the sanction is obviously if the dealer were to relocate to in order to be able to keep going then it would be terminated represented to the court that your client is out of the market is not out of business at this moment we are alleged in the complaint that if it's not allowed to relocate it will be out of business because the terms under which is being required to stay at that location will result hold a million that and we are saying that the that's sufficient for the give the dealer a chance to to prove those facts to the bad faith climb the real question first question and the question which i think the district court got wrong as they're saying that the relocation provision of the contract is not subject to the duty of good faith and again the court in the third circuit and they see cry or chevrolet case found that not to be the case a similar provision in the h said that the duty of good faith does apply where one of the parties or vested discretion over a contract term said it's difficult to understand why a provision that gives the manufacturer the there's other questions thank you thank you  it is of course f c s position that the district court decision on two occasions here it was appropriate to smith's all of all three of appellants claims and to be frank i think the briefs are fairly clear so i just would really like to provide a summary and certainly take any questions it's s c s position that this is almost a classic twamley it ball situation whether or not the claims have been plausibly stated or supported by factual allegations here the claims requires the panel's pointed out some some allegation of intimidated intimidated intimidation with some resulting sanction and as my colleague mr norman stated the facts supporting those protection will allegations were two one his prior litigation between the parties both of those lawsuits you're hearing today both of those were brought by the appellant and in both of those cases resulted in the sit ins against the appellant the second were that mr norman stated that there were detailed statements in the complaint as to the pretext i would counter that and say actually that the the factual allegations made in the complaint actually refute that the there's two in particular that are political here one is the f c a permitted the dealership for seven years to continue on the expired rental term i'm not sure how that can be seen as pretextual also at about the same time that the denial of relocation was occurring it was also less in the complaint that f c a approved another dealership for the appellant again i'm not sure how that could be protection and how f c a could be seen to be driving a out of business when they in fact are granting them another opportunity to do business in another city this my understanding was his argument is that that your client is trying to make the terms so onerous that he'll give up the dealership and he instead has posed an alternative location that would improve the dealership what's your response to that assertion ca actually engaged to outside expert witnesses to look at the proposed location and both expert witnesses concluded in those are also included within the record that the proposed location was inferior for a number of reasons a number of business related real  reasons and like to review the a d c a claim for a moment that claim of course require some type of coercion or intimidation and that's been interpreted interpreted to be some type of wrongful demand that would result in some type of sanction here it appears that the wrongful demand was stay in your own local stay in your current location that you agreed to and i pointed out in their briefs and as the panel inquired this was an exercise of business discretion under the parties contract the discretion was provided to f c a to review those types of decisions and make those business decisions what's your response to know are that this dealer has been in business in that location since two thousand and six that it has been in business with the new rent structure to which they agreed in the two thousand and six least since january first of two thousand and sixteen that  it is still in business today those i think billy are believe are the facts that we have in front of us today  i just don't believe there's been a showing of any coercion intimidation wrongful to me and or any type of resulting penalty briefly on the breach of duty of good faith and fair dealing claim it's not permitted under michigan law it is permitted i will full disclosure there is an exception and that's when the parties have left discretion for another day for example if there was a gap filler in a contract and the party said you know what let's get this contract written and let's leave another provision open for another day that's the type of discretion where a good faith and fair dealing claim is actionable under michigan law here the discretion was given absolutely to f c a to make the determination on the relocation but opposing counsel affairs could third circuit it with also interpret the michigan law in found that there could be a cause of action for a ban they put your response i would concur with that two points the new ac case found by the cert third circuit was actually a summary judgment case and so that they went through discovery in the court found that there was no eighty ca or of the breach of the covenant and i think they found that there could be a breach a covenant case in the context of a breach of contract so in other words some kind of faulty exercise of discretion could be a basis for breach of contract claim under michigan law here it's interesting when judge dismissed this case dismissed the good faith and fair dealing claim under the first order she did so with leave to amend appellant made the  decision not to amend the complaint instead the appellant asked judge code to make that decision final so it could move forward with this appeal so and the way it played this claim was as a breach of the covenant not a breach of contract and the fact that it was dismissed should have been a surprise in the case that you're going to hear right after this the litigant the at the appellant actually had a breach of the covenant claim denied in twenty fourteen by the district court in that case so this isn't something new this is and should be a surprise surprise so you would agree that if there were an allegation that discretion was not exercise reasonably under the contract visions that could be a viable basis for a breach of contract klein at the risk of of creating different types of law i would agree with that but i do think that the argument  to the extent it's advanced by appellant is misplaced since it was applied here thank you and briefly on the third claim for constructive terminations under california vehicle code section thirty sixty simply put third section thirty sixty provides that a manufacturer such as shit f c a shall not terminate a dealer unless there is a notice provided and certain procedures are followed well under the exact language of that statute this is this is in a political no terminations occurred there's been no notice there's been no procedures followed judge co dismissed this claim initially for failure exhaust administrative remedies applicant went to the new motor vehicle board made the claim there and as it says in the complaint second complaint here it was dismissed without prejudice interesting again the appellant did decided not to refile before the board the board found that there was no jurisdiction because there had been no terminations and frankly that's what should continue to happen here any further questions otherwise  there obviously are factual issues over whether the decision not to allow matthew to relocate was pretextual and whether the they enforced to stay at the current location will  cause matthew to go out of business those are factual questions the allegation the comply and say that it was protection it will go out of business they are plausible there are details in the complaint which i think help  support the plausibility of those two essential facts and at this point matthew deserves a right to to prove those on it the same as whether or not the motivation that the art chrysler has and not allowing the relocation was based on business judgment versus a a protection all bad faith desire to rid itself of evidence was down there hasn't even been discovery air we believe that discovery will produce many items of internal communications that show that f c a did want to get rid motivation to me proven by a lot of evidence of the discussion you're speculating there may be something there that can help you yeah and i'm just saying we shouldn't speculate at this point we need we should at this point the question is whether there's been enough clout here to give matthew a chance for discovery and a chance to prove the facts as as as alleged thank you but what role should we put for golden gate case a good faith business judgment but we believe the kid facts in this case are opposite so you agree with the golden gate you just don't think you think it's just distinguishable in the facts i think it's the same as well on the facts of what facts do we have before us that would allow us to distinguish will gage is a pretty strong case against you written by stan barnes who certainly knew what he was doing he was former in the justice department over any trust  w how is this going to fit into your case it seems to me there's a road block and go for another nine circuit case the auto house of the ruger i think it has the court said in determining whether there is an automobile  day in court act violation not only do we look at what the manufacturer did but the manufacturers reasons for doing that and again in golden gate their own evidence was that the general motors deny the relocation request because of the deal was proposing to relocate to three different parcels rather than having all dealership operations under one rough and the court found that that was a reasonable business judgment and therefore there was no  court the final case on counter for argument is matthew enterprise this chrysler group