Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-12-15981/USCOURTS-ca9-12-15981-0/pdf.json

Parties Involved:
Fresno Motors, LLC
Appellant
Mercedes-Benz USA, LLC
Appellee
Selma Motors, Inc.
Appellant

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

FRESNO MOTORS, LLC, a California

limited liability company and SELMA

MOTORS, INC., a California

corporation,

Plaintiffs-Appellants,

v.

MERCEDES BENZ USA, LLC, a

Delaware limited liability company,

Defendant-Appellee.

No. 12-15981

D.C. No.

1:11-CV-02000-

CJC

OPINION

On Appeal from the United States District Court

for the Eastern District of California

Cormac J. Carney, District Judge, Presiding

Argued and Submitted

January 17, 2014—San Francisco, California

Filed November 5, 2014

Before: J. Clifford Wallace, Jay S. Bybee, Circuit Judges,

and Robert W. Gettleman, District Judge.*

Opinion by Judge Gettleman

* The Honorable Robert W. Gettleman, Senior United States District

Judge for the Northern District of Illinois, sitting by designation.

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2 FRESNO MOTORS V. MERCEDES-BENZ

SUMMARY**

California Law

The panel affirmed in part, and reversed in part, the

district court’s summary judgment entered in favor of

Mercedes-Benz USA, LLC in a diversity action brought by

plaintiffs whose attempt to purchase a Fresno Mercedes-Benz

dealership was unsuccessful due to Mercedes-Benz’s exercise

of a right of first refusal.

Applying California law, the panel affirmed the district

court and held that the plaintiffs had no claims for intentional

interference with contract or prospective economic advantage

where Mercedes-Benz timely and lawfully exercised its right

of first refusal (“ROFR”). The panel also held that California

Vehicle Code § 11713.3(t)(2) did not require a franchisor to

send notice of the intent to exercise a ROFR to the

prospective transferee. The panel further held that even if

plaintiffs were entitled to notice from Mercedes-Benz of its

exercise of the ROFR, the notice plaintiffs received was both

timely and in proper form.

Mercedes-Benz and the existing franchisee entered into

an acknowledgment agreement which set out the parties’

rights and obligations with respect to Mercedes-Benz’s

exercise of its ROFR. The panel affirmed the district court,

and held that plaintiffs’ claim that Mercedes-Benz

fraudulently concealed the existence of the acknowledgment

agreement had no merit. 

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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FRESNO MOTORS V. MERCEDES-BENZ 3

California Vehicle Code § 11713.3(t)(6) provides for a

proposed transferee’s right to recover its expenses from a

franchisor that usurps its contract by exercising a ROFR. The

panel concluded that the plaintiffs, as prospective transferees,

had an implied right of action under section 11713.3(t)(6),

and reversed the summary judgment to Mercedes-Benz on

that count, and remanded for further proceedings.

Finally, the panel affirmed the district court’s grant of

summary judgment to Mercedes-Benz on plaintiffs’ claim

under the California Unfair Competition Statute.

COUNSEL

Alexander F. Stuart (argued) and Ellyn E. Nesbit,

Willoughby, Stuart &Bening, San Jose, California; Oliver W.

Wagner, Wagner Jones Helsley, P.C., Fresno, California, for

Plaintiffs-Appellants.

Gwen J. Young (argued) and Ryan P. Day, Wheeler, Trigg,

O’Donnell LLP, Denver, Colorado, for Defendant-Appellee.

OPINION

GETTLEMAN, District Judge:

Plaintiffs Fresno Motors, LLC (“Fresno”) and Selma

Motors, Inc. (“Selma”) (jointly, “plaintiffs”) signed an Asset

PurchaseAgreement to purchase a Mercedes-Benz dealership

from Asbury Fresno Imports, LLC (“Asbury”). MercedesBenz USA, LLC (“MB”), the manufacturer/importer of the

vehicles sold by the dealership, exercised a right of first

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4 FRESNO MOTORS V. MERCEDES-BENZ

refusal (“ROFR”) contained in its dealership agreement with

Asbury. After several unsuccessful attempts to resolve

plaintiffs’ objections to MB’s exercise of its ROFR, plaintiffs

brought this action contesting the timeliness and propriety of

that exercise.

In a first amended complaint (“FAC”) plaintiffs assert

five claims against MB, all brought under California law:

(1) intentional interference with existing contractual

advantage; (2) intentional interference with prospective

economic advantage; (3) violation of California Business and

Professions Code § 17200; (4) violation of California Vehicle

Code § 17133.3(t); and (5) fraudulent concealment. MB

moved to dismiss the FAC under Fed. R. Civ. P. 12(b)(1) and

12(b)(6). Because all operative facts appeared to be agreed,

the district court converted the motion to one for summary

judgment under Fed. R. Civ. P. 12(d) and 56, and allowed the

parties to file supplemental briefs and additional evidence if

needed. In a March 27, 2012, comprehensive opinion, the

court granted defendants summary judgment on all claims. 

Plaintiffs timely appealed.

I.

Asbury owned and operated the Fresno Dealership

pursuant to a Passenger Car Dealer Agreement (“PCDA”) and

Light Truck Dealer Agreement (“LTDA”) (jointly, “Dealer

Agreement”) with MB. It operated the dealership on premises

that it leased from CAR AAG CA L.L.C. (the “Landlord”)

under an April 1, 2003, Lease Agreement (“Lease”) with a

fifteen year term and two ten-year renewal options.

In fall 2008, Selma, owned by Dwight G. Nelson, began

negotiating with Asbury for the purchase of the Fresno

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FRESNO MOTORS V. MERCEDES-BENZ 5

Dealership. Selma and Asbury executed an initial Asset

Purchase Agreement on December 11, 2008. At that time

Selma began working with MB to become approved as a

Mercedes-Benz dealer, and submitted a completed Dealer

Application Packet on December 28, 2008. Selma and Asbury

mutually terminated the initial agreement on January 16,

2009.

On March 27, 2009, Selma and Asbury executed a second

Asset Purchase Agreement (“APA”). MB sent Selma a

second dealer application, but on April 3, 2009, Selma

informed MB that all of the requested information was in the

original package. MB requested that Selma confirm that all

information in the original package remained current, and on

April 14 Selma responded by sending MB updated

information including a Commitment Letter covering the

floor plan financing for the proposed dealership, which

Mercedes-Benz Financial confirmed as valid. On April 20,

2009, Selma sent MB a “Wholesale Financing Commitment

Form” executed by Mercedes-Benz Financial.

On April 23, 2009, Nelson formed Fresno for the sole

purpose of buying the Fresno Dealership from Asbury. The

following day, Selma (through Nelson) informed MB that it

intended to assign the APA to Fresno. On April 30, 2009,

MB informed Nelson that because Fresno was the purchasing

entity it was critical that MB receive a Wholesale Financing

Commitment Form from Mercedes-Benz Financial reflecting

Fresno as the buyer.

On May 1, 2009, Selma, Asbury and Fresno executed a

second amendment to the APA, completing the assignment to

Fresno. That amendment assigned to Fresno all of Selma’s

rights under the APA, but specifically indicated that it was

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6 FRESNO MOTORS V. MERCEDES-BENZ

not intended to operate as release of Selma’s obligations. 

That same day, Fresno (through Nelson) sent to MB by

facsimile and overnight mail the Wholesale Financing

Commitment Form signed by Mercedes-Benz Financial

evidencing its commitment to extend floor plan financing to

Fresno.

Exactly forty-five days later, on June 15, 2009, at 8:18

p.m. EDT (5:18 Pacific Time), MB exercised its contractual

ROFR. MB provided notice to Asbury by sending it a letter

by email and facsimile. Although not contractually required

to do so, MB also sent a copy of the letter to Nelson’s

personal email address and to the email address of Fresno’s

comptroller, Charles Fletcher. MB also sent the letter by

facsimile to a fax machine at Nelson’s business address at

Selma Motors. The letter indicates that it was also sent via

overnight delivery, but apparently was not placed with

Federal Express until the following day, and then delivered

on June 17, 2009.

On June 19, 2009, MB and Asbury entered into an

agreement (the “Acknowledgment Agreement”), which states

that “[o]n June 15, 2009, MB provided timely written notice

to Asbury of its exercise of its right of first refusal with

respect to the . . . Fresno Motors APA . . . .” The

Acknowledgment Agreement then expressly set out the

parties’ rights and obligations with respect to MB’s exercise

of its right of first refusal. In particular, the Agreement

provides:

1. Terms of Exercise. MB acknowledges that

by its exercise of its right of first refusal, MB

will be subject to the same terms and

conditions under the Fresno Motors APA as

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FRESNO MOTORS V. MERCEDES-BENZ 7

such terms and conditions apply to Fresno

Motors. Further, any subsequent assignment

by MB of its rights or obligations under any

or all of the Fresno Motors APA and Purchase

Documents, including, without limitation, the

Sublease, shall not operate as a release of MB

of its obligations under such Agreements. For

avoidance of doubt, MB expressly agrees that

it shall be primarily responsible for the

performance under the Fresno Motors APA

and Sublease. Asbury acknowledges that MB

may assign its rights and obligations under the

Fresno Motors APA and the Sublease to a

third party provided that MBremain primarily

responsible for the performance of any such

assignee with respect to the Fresno Motors

APA and the Sublease.

The Acknowledgment Agreement also provides that

Asbury would terminate the Fresno APA with respect to

Fresno Motors, but that the termination would “not be

deemed a termination of the Fresno Motors APA as such

terms and conditions now apply to MB as a result of its

exercise of its right of first refusal as well as to any proposed

assignee of MB.” MB agreed to continue to be bound by the

terms and conditions of the APA as if it were the original

party.

Asbury did in fact terminate the APA with Fresno that

same day, June 19, 2009. Fresno challenged MB’s exercise of

its ROFR as untimely. After MB’s attempts to assign the

APA to a third party failed, MB agreed to mediate its dispute

with Fresno. That mediation took place on July 30, 2009, at

which time MB agreed to assign its rights under the APA

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8 FRESNO MOTORS V. MERCEDES-BENZ

back to Fresno under certain conditions. Neither Asbury nor

MB had yet informed Fresno of the Acknowledgment

Agreement. Fresno did not receive that information until

August 31, 2009.

MB’s counsel memorialized the conditions of the

assignment in an email to Fresno’s counsel immediately after

the mediation. MB and Fresno negotiated and finalized the

terms of an “Assignment and Assumption Agreement” by

August 28, 2009. Fresno did not sign, however, and

negotiations reached an impasse when MB would not provide

the Landlord with a guaranty of Fresno’s obligations under

the Sublease. Still unaware of the Acknowledgment

Agreement, Fresno attempted to negotiate with the Landlord

an assumption of Asbury’s lease or a new lease with an

option to purchase. These negotiations were ultimately

unsuccessful, and in mid-October Asbury terminated the

APA.

II.

We review de novo a district court’s order granting

summary judgment. In re Oracle Corp. Sec. Litig., 627 F.3d

376, 387 (9th Cir. 2010). We may affirm “on any ground

supported by the record, regardless of whether the district

court relied upon, rejected, or even considered that ground.” 

In re ATM Fee Antitrust Litig., 686 F.3d 741, 748 (9th Cir.

2012) (citation omitted).

Summary judgment is appropriate where “there is no

genuine dispute as to any material fact and the movant is

entitled to judgment as a matter of law.” Fed. R. Civ. P.

56(a). The court views the evidence in the light most

favorable to the non-moving party to determine if there are

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FRESNO MOTORS V. MERCEDES-BENZ 9

any genuine issues of material fact and whether the moving

party is entitled to judgment as a matter of law. Cnty. of

Tuolumne v. Sonora Cmty. Hosp., 236 F.3d 1148, 1154 (9th

Cir. 2001). The court draws all justifiable inferences in favor

of the non-moving party. Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 255 (1986). A fact is “material” only if it

might affect the outcome of the case, and a dispute is

“genuine” only if a reasonable trier of fact could resolve the

issue in the non-movant’s favor. Id. at 248. Summary

judgment is improper “where divergent ultimate inferences

may reasonably be drawn from the undisputed facts.” Miller

v. Glenn Miller Prods., Inc., 454 F.3d 975, 988 (9th Cir.

2006).

III.

A. Tortious Interference

Plaintiffs assert that by exercising its ROFR in an

“untimely” and therefore “unlawful” manner, MB tortiously

interfered with plaintiffs’ contractual relationship with

Asbury and their prospective economic advantage in the

Fresno Dealership. Under California law, the elements of the

tort of intentional interference with contractual relations are:

“(1) a valid contract between plaintiff and a third party;

(2) defendant’s knowledge of this contract; (3) defendant’s

intentional acts designed to induce a breach or disruption of

the contractual relationship; (4) actual breach or disruption of

the contractual relationship; and (5) resulting damage.” Pac.

Gas & Elec. Co. v. Bear Stearns & Co., 50 Cal. 3d 1118,

1126, 270 Cal. Rptr. 1, 3–4, 791 P.2d 587, 589–90 (1990). 

Tortious interference with prospective economic advantage

is similar, protecting “the same interests and stable economic

relationships as does the tort of interference with contract,”

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10 FRESNO MOTORS V. MERCEDES-BENZ

with the chief practical distinction being that “a broader range

of privilege to interfere is recognized when the relationship

or economic advantage interfered with is only prospective.” 

Id. In addition, a claim for interference with prospective

economic advantage requires proof that the defendant “not

only interfered with the plaintiff’s expectancy, but engaged

in conduct that was wrongful by some legal measure other

than the fact of interference itself.” Della Penna v. Toyota

Motor Sales, USA, Inc., 11 Cal. 4th 376, 393, 45 Cal. Rptr. 2d

436, 447, 902 P.2d 740, 751 (1995).

The district court granted summary judgment to MB,

concluding that because MB “had a substantial, continuing

economic interest and necessary involvement in the APA that

was contractually recognized and statutorily protected,” it

was “not - a - stranger” to the relationship between plaintiffs

and Asbury. Under the district court’s interpretation of

California law, the two interference torts “may only lie

against ‘strangers’ or interlopers who do not have a direct and

significant interest in the plaintiff’s contractual relationship

with another individual or entity.” Fresno Motors LLC v.

Mercedes-Benz USA, LLC, 852 F. Supp. 2d 1280, 1293 (C.D.

Cal. 2012).

The “not - a - stranger” principle relied on by the district

court is an elusive concept that has spawned much

controversy in both the California courts and this court. It

stems from the statement by the California Supreme Court in

Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 7 Cal. 4th

503, 514, 28 Cal. Reptr. 2d 475, 480, 869 P.2d 454, 459

(1994), that “[t]he tort duty not to interfere with the contract

falls only on strangers – interlopers who have no legitimate

interest in the scope or course of the contract’s performance.” 

The issue in Applied Equip. was narrower, however, than the

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FRESNO MOTORS V. MERCEDES-BENZ 11

Supreme Court’s statement. The only issue was whether “a

contracting party [may] be held liable in tort for conspiracy

to interfere with its own contract.” Id. at 507. Relying on the

long-standing proposition that the tort cause of action for

interference with contract does not lie against a party to the

contract because “[o]ne contracting partyowes no general tort

duty to another not to interfere with performance of the

contract; its duty is simply to perform the contract according

to its terms,” the court then concluded that because a

contracting party cannot be liable for the underlying tort of

interference with contract, it also could not be liable for

conspiracy to interfere with the contract. “Because a party to

a contract owes no tort duty to refrain from interference with

its performance, he or she cannot be bootstrapped into tort

liability by the pejorative plea of conspiracy.” Id. at 514.

It was in this context that the Applied Equip. court defined

the tort duty not to interfere with contract as falling “only on

strangers - interlopers who have no legitimate interest in the

scope or course of the contract’s performance.” Id. This

statement has, not surprisingly, led many courts to hold that

there is also no tort duty not to interfere falling on noncontracting parties who do have a legitimate interest in the

scope or course of the contract’s performance, concluding, as

did the district court in the instant case, that such third-parties

are not strangers to the relationship. See, e.g. Exxon Corp. v.

Superior Court, 51 Cal. App. 4th 1672, 1688, 60 Cal. Rptr.

195, 205 (1997) (gasoline franchisor “has a clear financial

interest in its dealers and therefore is privileged to ‘interfere’

with the contract”); Kasparian v. Cnty. of Los Angeles,

38 Cal. App. 4th 242, 262, 45 Cal. Rptr. 2d 90, 100 (1995);

Mintz v. Blue Cross of Cal., 172 Cal. App. 4th 1595, 1603,

92 Cal. Rptr. 3d 442, 429 (2009).

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12 FRESNO MOTORS V. MERCEDES-BENZ

This court, too, has addressed the issue, stating that

“California law has long recognized that the core of

intentional interference business torts is interference with an

economic relationship by a third party stranger to that

relationship, so that an entity with a direct interest or

involvement in that relationship is not usually liable for harm

caused by pursuit of its interests.” Marin Tug & Barge, Inc.

v. Westport Petroleum, Inc., 271 F.3d 825, 832 (9th Cir.

2001) (emphasis in original). The principle enunciated in

Marin Tug has been followed by several district courts within

this circuit. See, e.g. ViChip Corp. v. Lee, 438 F. Supp. 2d

1087, 1097 (N.D. Cal. 2006); Nat’l Rural Telecomms. Co-op.

v. DIRECTV, Inc., 319 F. Supp. 2d 1059, 1070–72 (C.D. Cal.

2003).

More recently, however, several decisions of the

California Courts of Appeal have rejected Marin Tug’s

interpretation of Applied Equip., concluding that Applied

Equip. should be limited to its specific holding that only

parties to a contract are excluded from asserting an

intentional interference claim. See, e.g., Woods v. Fox Broad.

Sub., Inc., 129 Cal. App. 4th 344, 352–53, 28 Cal. Rptr. 3d

463, 469–70 (2005); Powerhouse Motorsports Grp., Inc. v.

Yamaha Motor Corp., 221 Cal. App. 4th 867, 883–84,

164 Cal. Rptr. 3d 811, 825 (2013); Asahi Kasei Pharma

Corp. v. Actelion Ltd., 222 Cal. App. 4th 945, 959–65,

169 Cal. Rptr. 3d 689, 700–05 (2013).

Finally, just recently a panel of this court has stated that

Marin Tug’s enunciation of California law is inconsistent

with the later decisions of the California intermediate courts

in Powerhouse and Woods, concluding that only the

contracting parties have a “direct interest or involvement in

that relationship,” thus limiting Applied Equip. to its specific

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FRESNO MOTORS V. MERCEDES-BENZ 13

holding that only parties to a contract are immune from

claims of intentional interference with existing contractual

relations. United Nat’l Maint., Inc. v. San Diego Convention

Ctr., Inc., 766 F.3d 1002, 1007–08, (9th Cir. 2014) (citations

omitted).1

As is readily apparent, the viability of the “not - a -

stranger” principle relied on by the district court is in a state

of flux, and there is no indication that the California Supreme

Court will clarify it any time soon. This court need not reach

the issue, however, because, as plaintiffs emphasized

repeatedly in their district court briefs, “an auto manufacturer

who lawfully exercises an unexpired ROFR cannot be sued

for inducing a breach of contract,” and in this court, “Fresno

Motors’ suit is premised on MB’s unlawful and improper

means ofinterferingwith Fresno Motors’ APA” byexercising

its ROFR in an allegedly untimely and unlawful manner. 

Notably, even plaintiffs readily admit that both their

intentional interference with prospective economic advantage

claim and their intentional interference with contract claim

fail if MB properly and timely exercised its ROFR.

The district court, in a brief footnote in an otherwise

lengthy and comprehensive opinion, stated that “the parties

dispute the timing of [MB’s] exercise, and the Court finds

that this issue implicates contested facts that cannot be

resolved on a motion for summary judgment . . . .” Fresno

Motors, 852 F. Supp. 2d at 1302–03 n. 16. The district court,

however, did not identify what facts it viewed as contested,

and our review of the record and the parties’ briefs reveals no

such contest. The date, time, and manner by which MB

1 United Nat’l Maint. involved intentional interference with contract

only, and its holding is limited to that tort. 766 F.3d at 1007.

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exercised the ROFR are all incontestably established by the

documents in the record, and clearly demonstrate that MB

timely and lawfully exercised its ROFR, leaving plaintiffs

with no claim for intentional interference with contract or

prospective economic advantage.

The ROFR is contained in Section IX. B. of the Dealer

Agreement between MB and Asbury, which provides:

1. Rights Granted.

If a proposal to sell Dealer’s principal assets

or transfer the majority ownership in Dealer is

submitted by Dealer to [MB], . . . [MB] has a

right of first refusal or option to purchase such

assets or ownership interest, including any

leasehold interest or realty. [MB’s] exercise of

its right or option under this Section IX. B

supercedes Dealer’s right to transfer its

interest in, or ownership of, the Dealership.

[MB’s] right or option may be assigned by it

to any third party and [MB] hereby guarantees

the full payment to Dealer of the purchase

price by such assignee.

Under Section IX. B. 2., MB had sixty days from its

receipt of all data and documentation customarily required by

it to evaluate a proposed transfer of ownership within which

to exercise its ROFR. The Agreement does not specify any

manner by which MB is required to communicate its exercise

of its ROFR. Other sections of the contract do specify when

notice and/or written notice are required. For example, notice

is required under: Section I. A. when MB revises vehicle

prices; Section III. E., where the Dealer agrees to provide

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FRESNO MOTORS V. MERCEDES-BENZ 15

prompt notice to MB of any customer complaints; and

Section VIII. C., where the Dealer is required to provide

written notice of any dispute over deductions or offsets

imposed by MB within ninety days. Other provisions

actually indicate that notice shall be in writing and “shall be

mailed to the person(s) designated to receive such notice, via

overnight mail, or shall be delivered in person.” Section XI.

F. Finally, the Dealer Agreement contains a general notice

provision (XIV) that provides, “[e]xcept as otherwise 

specifically provided herein, any notice required to be given

by either party to the other shall be in writing, shall be

delivered personally or by mail to the party at its address as

stated in this Agreement, and shall be effective upon receipt

by hand delivery or upon mailing.”

MB’s contractual ROFR is tempered by the California

Vehicle Code. In particular, Cal. Veh. Code § 11713.3(t)(2)

provides that it shall be unlawful for a manufacturer to

exercise a right of first refusal unless “[t]he franchisor gives

written notice of its exercise of the right of first refusal no

later than 45 days after the franchisor receives all of the

information required pursuant to subparagraph (A) of

paragraph (2) subdivision (d).” That information must

include all information generally utilized by the manufacturer

in reviewing a prospective franchisee.

In the instant case, it is undisputed that MB did not

receive the final necessary document, the Wholesale

Financing Commitment Form signed by Mercedes-Benz

Financial evidencing its commitment to extend floor plan

financing to the actual purchaser, Fresno Motors, a

requirement under the standard dealer agreement, until May

1, 2009. Indeed, Fresno did not become the actual purchaser

until it, Selma, and Asbury executed the second amendment

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16 FRESNO MOTORS V. MERCEDES-BENZ

to the APA on May 1, 2009. That was the last piece of

required information as far as MB was concerned, and that

was the trigger date for exercising its ROFR. Any argument

to the contrary is simply specious. MB was entitled to the

documents establishing Fresno as the purchaser and was

entitled to a commitment of Floor Plan Financing by

Mercedes-Benz Financial to the actual purchaser.

That means that MB had until June 15, 2009, to exercise

its ROFR. It is undisputed that it did so by sending a letter to

Asbury by both email and facsimile at 5:18 p.m. PDT. It also

sent a copy of that letter to Fresno via email and facsimile on

that date. Finally, the following day, June 16, it placed the

letter with Federal Express for overnight delivery. Plaintiffs

argue that MB’s exercise was untimely because it came after

5:00 p.m., and improper because it was transmitted

electronically rather than by regular mail. This argument

fails for a variety of reasons. First, under the Dealer

Agreement, the only party entitled to any form of

communication from MB of its exercise of the ROFR was

Asbury, which has never complained about the timing or

manner of MB’s exercise of the ROFR. The Dealer

Agreement is silent as to the manner by which MB was to

exercise this right. Certainly, nothing in the provisions

granting MB the ROFR requires MB to give formal notice

pursuant to the agreement’s notice provision or otherwise. 

Consequently, the “notices” provision of the Dealer

Agreement in section XIV. A., which governs when notice is

“required to be given by either party,” does not apply.

Plaintiffs argue that regardless of the Dealer Agreement,

section 11713.3(t)(2) of the California Vehicle Code requires

the franchisor to give forty-five days written notice to

lawfully exercise a ROFR. This section does not provide a

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FRESNO MOTORS V. MERCEDES-BENZ 17

ROFR, however; it simply allows a franchisor to exercise a

contractual right pursuant to the terms of the contract, and is

silent as to whom notice should be given. Nothing in the

statute suggests that notice must be sent to the prospective

transferee.2

Plaintiffs also argue that their right to notice under the

statute can be implied because subsection (t)(6) requires the

franchisor to reimburse the proposed transferee for its

expenses incurred in evaluating the proposed transfer. But

that section has its own notice provision, requiring the

proposed transferee to provide the franchisor a written

itemization of such expenses within thirty days of receipt of

a written request from the franchisor. Cal. Veh. Code

§ 11713.3(t)(6). Nothing in this section implies that the

proposed transferee is entitled to notice of the franchisor’s

exercise of a ROFR. Quite the opposite. It demonstrates that

the legislature specificallyprovided for notice to the proposed

transferee when it wanted it to be given. The fact that the

legislature did not specifically require notice from the

franchisor to the proposed transferee of the exercise of a

ROFR suggests that it did not see the need for such notice.

Finally, even if plaintiffs were entitled to notice from MB

of its exercise of the ROFR, the notice plaintiffs received was

both timely and in proper form. Nothing in either the Dealer

Agreement or section 11713.3(t)(2) requires that notice be

received (or sent) by 5:00 p.m. or the close of business. A

statement (relied on by plaintiffs) by MB’s Dealer Network

Manager that he considered 5:00 p.m. on June 15, 2009, to be

2 When the statute requires any form of communication from the

franchisor to the proposed transferee it is specifically spelled out. See Cal.

Veh. Code § 11713.3(t)(6).

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18 FRESNO MOTORS V. MERCEDES-BENZ

their deadline is certainly not legally binding on MB,

particularly when plaintiffs have not claimed that they relied

to their detriment on that statement. There is no evidence in

the record to even remotely suggest that plaintiffs took any

detrimental action between 5:00 p.m. and 5:18 p.m. Thus,

even if plaintiffs were entitled to receive notice of MB’s

exercise of the ROFR, their receipt of that notice on June 15,

2009, was timely.

The form of notice was also proper. Section

11713.3(t)(2) requires “written notice.” It does not require

any particular form of notice or define the manner by which

such written notice must be delivered. When the legislature

intended to require written notice be delivered in a specific

manner, it specifically did so. For example, section

11713.3(d) expressly states that the notice of the

manufacturer’s approval or disapproval of a proposed sale

must “be in writing and shall be personally served or sent by

certified mail, return receipt requested, or by guaranteed

overnight delivery service that provides verification of

delivery and shall be directed to the franchisee.” Cal. Veh.

Code § 11713.3(d)(2). The legislature provided no such

specification of the notice required to lawfully exercise a

ROFR. All that is required is some form of written notice.

Citing Cal. Civ. Code § 1633.5, plaintiffs argue that

electronic notice is insufficient unless agreed upon by the

parties. That section is part of the California Uniform

Electronic Transactions Act, and specifically indicates that it

applies only to a transaction between parties who have agreed

to conduct the transaction by electronic means. Cal. Civ.

Code § 1633.5(b). Plaintiffs and MB had not engaged in any

transaction, electronic or otherwise, when MB exercised its

ROFR. Plaintiffs’ right to written notice, if they had any at

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FRESNO MOTORS V. MERCEDES-BENZ 19

all, comes from the California Vehicle Code. Section 1633.7

of the Electronic Transfer Act provides that if a law requires

a record to be in writing, or requires a signature, an electronic

record or signature suffices. Cal. Civ. Code § 1633.7(c)–(d). 

Thus, plaintiffs’ receipt of the notice by electronic mail and

facsimile constitutes written notice.3

Because MB lawfully exercised its ROFR, plaintiffs have

no claim for intentional interference with prospective

economic advantage, which requires plaintiffs to demonstrate

that MB committed a legal wrong independent from the

interference. Della Penna, 11 Cal. 4th at 393. Nor can MB’s

conduct be considered “wrongful.” Even if MB misled

plaintiffs by setting a self-imposed deadline to exercise and

then missing it by a few minutes, plaintiffs cannot show that

they were entitled to notice of MB’s exercise of its ROFR or

that they were harmed by the insignificant delay. Thus,

plaintiffs also have no claim for intentional interference with

contract. As plaintiffs themselves candidly admit, “an auto

manufacturer who lawfully exercises an unexpired ROFR is

not liable for interference.” Consequently, summary

judgment to MB on these claims is affirmed.

B. Fraudulent Concealment

Plaintiffs’ claim for fraudulent concealment “arises from

the Acknowledgment Agreement and whether MB promised

3 The court notes that during the entire course of events, most, if not all

communications, including submission of documents between plaintiffs,

Asbury, and MB were sent electronically. “Whether the parties agree to

conduct a transaction by electronic means is determined from the context

and surrounding circumstances, including the parties’ conduct.” Cal Civ.

Code § 1633.5(b).

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20 FRESNO MOTORS V. MERCEDES-BENZ

it would guarantee a sublease of the Dealership premises in

the event that MB assigned its right to purchase [the Fresno

Dealership] to a third party.” According to plaintiffs, they

incurred unnecessary expenses attempting to get Asbury

released from the Lease, either by assuming the Lease and the

two ten year renewals or by entering a new lease with the

Landlord. These negotiations stalled because the Landlord

would not accept any lease without Asbury’s or MB’s

guaranty. Plaintiffs claim that had they known that MB had

already guaranteed their performance under a sublease, they

would not have needed to enter those negotiations. The

district court granted summary judgment to MB, concluding

that plaintiffs misinterpreted the Acknowledgment

Agreement as a guaranty and because the purportedly

concealed facts of that agreement were not material and had

been disclosed already to plaintiffs or were readily

discoverable. We agree and affirm.

According to the FAC, after the conclusion of the

mediation, MB’s counsel sent an email to plaintiffs’ then

counsel setting forth the general terms of their agreement to

assign MB’s rights under the APA back to Fresno. Plaintiffs’

counsel replied by indicating that one issue was assuring that

plaintiffs would acquire the balance of the Lease plus the two

ten-year extensions, so that plaintiffs would have sufficient

time to make certain improvements that MB required. 

Plaintiffs’ counsel indicated that he thought MB would

execute its ROFR and obtain a lease assignment from the

Landlord, and that plaintiffs would then get an assignment or

sublease from MB. This was necessary because the Landlord

was not comfortable with an assignment to a small dealer but

would be comfortable with MB on the lease.

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FRESNO MOTORS V. MERCEDES-BENZ 21

MB’s counsel responded by informing plaintiffs’ counsel

that MB would not enter into a sublease of the premises with

the Landlord and would not guarantee Fresno’s performance

of a sublease of the premises. According to plaintiffs, MB

intentionally withheld the fact that in the Acknowledgment

Agreement it had already agreed to be primarily responsible

for any sublease of the premises, leaving plaintiffs to

negotiate with the Landlord on the terms of an assumption by

Fresno of Asbury’s lease or a new lease with an option to

purchase. MB did this, according to plaintiffs, because the

Landlord would not agree to any form of lease without a

guaranty from MB or Asbury and, knowing that Asbury

would not agree to remain obligated to the Landlord without

a guaranty from MB, MB wanted to force plaintiffs to

negotiate terms that would release Asbury from the lease.

Under California law, the elements of a claim for

fraudulent concealment are: (1) the defendant concealed or

suppressed a material fact; (2) the defendant was under a duty

to disclose the fact to the plaintiff; (3) the defendant

intentionally concealed or suppressed the fact with the intent

to defraud the plaintiff; (4) the plaintiff was unaware of the

fact and would not have acted as he did if he had known of

the concealed or suppressed fact; and (5) the plaintiff was

damaged by the concealment. Jones v. ConocoPhillips,

198 Cal. App. 4th 1187, 1198, 130 Cal. Rptr. 3d 571, 579

(2011).

The operative provision of the Acknowledgment

Agreement provides:

1. Terms of Exercise . . . . MB will be subject

to the same terms and conditions under the

Fresno Motors APA as such terms and

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22 FRESNO MOTORS V. MERCEDES-BENZ

conditions apply to Fresno Motors. Further,

any subsequent assignment by MB of its

rights or obligations under any or all of the

Fresno Motors APA and the Purchase

Documents, including, without limitation, the

Sublease shall not operate as a release of MB

of its obligations under such Agreements. For

avoidance of doubt, MB expressly agrees that

it shall be primarily responsible for the

performance under the Fresno Motors APA

and the Sublease. Asbury acknowledges that

MB may assign its rights and obligations

under the Fresno Motors APA and the

Sublease to a third party provided that MB

remain primarily responsible for the

performance of anysuch assignee with respect

to the Fresno Motors APA and the Sublease.

Construing this provision under the California Rules of

Contract Construction as set out in Bank of the West v.

Superior Court, 2 Cal. 4th 1254, 1264, 10 Cal. Rptr. 2d 538

(1992), and the California Civil Code, the district court

properly concluded that the Acknowledgment Agreement

means only that “if [MB] assigns its rights under the APA,

it would still remain ‘primarily responsible’ under the APA

and sublease as if it were the original buyer, such that the

assignment ‘shall not operate as a release of MB of its

obligations.’” Fresno Motors, 852 F. Supp. 2d at 1311. As

the court noted, the same message was underscored

throughout the Acknowledgment Agreement: “that in

exercising its right of first refusal, [MB] will take Fresno

Motor[s’] place as the buyer and assume all of Fresno

Motor[s’] rights and obligations, including those under the

sublease, and that by assigning its right, it will continue to

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FRESNO MOTORS V. MERCEDES-BENZ 23

remain obligated to Asbury for the assignee’s performance of

the sublease.” Id. at 1312. Finally, the court concluded that

the term “primarily responsible” was not reasonably

susceptible to mean a guaranty to the Landlord of plaintiffs’

obligations under a sublease. Id.

On appeal, plaintiffs do not challenge the district court’s

construction of the Acknowledgment Agreement, only its

conclusion that MB had not concealed from plaintiffs any

material fact because that agreement could not be interpreted

to mean that MB guaranteed to the Landlord plaintiffs’

performance under the Sublease. They contend that the fact

that MB “guaranteed” to Asbury plaintiffs’ performance

under the Sublease was material, and that had they known of

this guaranty they would not have entered negotiations with

the Landlord.

This argument is belied by the facts. Plaintiffs admit that

the Landlord wanted either that Asbury remain on the Lease

or that MB issue a guaranty to it. Asbury wanted to be free

from any obligation to the Landlord. That is what forced

plaintiffs to negotiate either an assumption of the master

Lease (releasing Asbury) or a guaranty running from MB to

the Landlord, something to which MB had not and would not

agree.

The fact that MB had “guaranteed” plaintiffs’ payments

to Asbury is irrelevant to plaintiffs’ claim on appeal. Such a

guaranty did not relieve Asbury from its obligations to the

Landlord. At most, it meant that if plaintiffs had failed to pay

on the lease, Asbury would have to pay the Landlord and then

seek reimbursement from MB. That is not what Asbury

wanted; it wanted out. Consequently, plaintiffs’ claim that

MB and/or Asbury fraudulently concealed the existence of

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24 FRESNO MOTORS V. MERCEDES-BENZ

the Acknowledgment Agreement has no merit. We therefore

affirm summary judgment on this claim.

C. California Vehicle Code § 11713.3(t)(6)

In Count IV of the FAC, plaintiffs seek reimbursement for

expenses incurred in negotiating the APA that was usurped

when MB exercised its ROFR. The count is brought under

Cal. Veh. Code § 11713.3(t)(6), which provides in relevant

part that:

It is unlawful and a violation of this code for

a manufacturer . . . to do . . . any of the

following:

(t) [t]o exercise a right of first refusal or

other right requiring a franchisee . . . to

sell, transfer, or assign to the franchisor,

all or a material part . . . of the franchised

business unless . . .

(6) [t]he franchisor shall reimburse the

proposed transferee for expenses paid or

incurred by the proposed transferee in

evaluating . . . and negotiating the

proposed transfer . . . . The proposed

transferee shall provide the franchisor a

written itemization of those expenses . . .

within 30 days of the proposed

transferee’s receipt of a written request

from the franchisor for that accounting. 

The franchisor shall make payment within

30 days of executing the right of first

refusal.

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FRESNO MOTORS V. MERCEDES-BENZ 25

MB argues, and the district court held, that plaintiffs have

no standing to pursue this claim because the statute provides

no private right of action to proposed transferees. We

disagree.

Not every violation of a state statute gives rise to a private

cause of action. Whether a party has a right to sue depends

on “whether the Legislature has ‘manifested an intent to

create such a private cause of action’ under the statute.” Lu

v. Hawaiian Gardens Casino, Inc., 50 Cal. 4th 592, 596,

236 P.3d 346, 348, 113 Cal. Rptr. 3d 498, 501 (2010)

(quoting Moradi-Shalal v. Fireman’s Fund Ins. Cos., 46 Cal.

3d 287, 305, 250 Cal. Rptr. 116, 126, 758 P. 2d 58, 69

(1988)). The legislature’s intent is revealed through the

language of the statute and its legislative history. Id. Some

statutes contain “‘clear, understandable, unmistakable terms’

which strongly and directly indicate” an intent to create a

private cause of action, such as when the statute expressly

states “that a person has or is liable for a cause of action for

a particular violation.” Id. at 597 (quoting Moradi-Shalal,

46 Cal. 3d at 295). More commonly, a statue may refer to a

remedy or means of enforcing its substantive provisions. 

When a statute does not contain such obvious language, the

legislative history must be examined. Id.

Section 11713.3(t)(6) does not specifically state that a

prospective transferee has a cause of action to recover unpaid

expenses, nor does it specifically refer to a remedy or means

of enforcement. It does, however, indicate the legislature’s

intent that a proposed transferee have a right to recover its

expenses from a franchisor that usurps its contract by

exercising a ROFR. The creation of this right to recovery,

which did not previouslyexist, distinguishes this section from

those, as in Lu, that merely codify existing rights. In Lu, for

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26 FRESNO MOTORS V. MERCEDES-BENZ

example, a casino’s mandatory tip pooling policy required

dealers to contribute a percentage of their tips to a pool to be

shared with other casino employees. 50 Cal. 4th at 595. The

dealers sued, alleging a violation of California Labor Code

§ 351, which provided that “[n]o employer . . . shall collect,

take, or receive any gratuity or a part thereof that is paid,

given to, or left for an employee by a patron . . . . Every

gratuity is hereby declared to be the sole property of the

employee or employees to whom it was paid, given, or left

for.” Id. at 597–98.

The California Supreme Court, after reviewing the statute,

the entire statutory scheme, and the legislative history, held

that the section did not create a private cause of action,

concluding that it simply afforded what courts had long held:

“that gratuities ordinarily belonged to the waiter or waitress

absent a contrary agreement . . . [and] did not reflect a

legislative intent to give employees a new statutory remedy

to recover any misappropriated gratuities.” Id. at 601.

Unlike the statute in Lu, the California Vehicle Code, and

in particular subsection (t)(6), did create new rights and

remedies for displaced prospective buyers. Prior to

enactment, such buyers had no right to recoup their expenses

from the proposed seller unless they had contractually

arranged to do so.

To this end, MB argues that the California Vehicle Code

creates new rights and obligations between manufacturers and

dealers only, but not for proposed transferees. It suggests that

subsection (t)(6) is designed to protect the franchisee from

suit by the proposed buyer for the unnecessary expenses. For

example, the instant Dealership Agreement provides that if,

as a result of MB’s exercise of its ROFR, the dealer (Asbury)

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FRESNO MOTORS V. MERCEDES-BENZ 27

is contractually obligated to reimburse the initial buyer for

expenses incurred in connection with the Buy/Sell

Agreement, MB shall reimburse the dealer for such costs in

an amount “up to but not exceeding Fifty Thousand Dollars

($50,000.00).” Under MB’s theory, subdivision (t)(6) would

trump the contract and allow payment to the initial buyer of

all its fees.

This argument is belied by the plain language of the

statute, which requires the manufacturer to pay all of the

proposed buyer’s reasonable expenses directly to that party. 

Had the legislature wanted to protect only the dealer as MB

has suggested, it would have simply required the

manufacturer to reimburse the dealer for all expenses it was

contractually obligated to pay to the initial buyer. It did not

do so. Instead it gave the initial buyer a statutory right to

recover its reasonably incurred expenses from the

manufacturer, even in the absence of a contractual right.

MB also argues that the only private cause of action

created by the Vehicle Code is contained in section 11726,

which provides that any licensee suffering pecuniary loss

because of a willful failure by another licensee to comply

with any provisions of the Code may recover damages and

attorney’s fees in court. MB argues that because the cause of

action in section 11726 is limited to licensees, the legislature

intended no private cause of action for proposed transferees. 

Section 11726 is a remedial section, however, not a standing

section, and it “merely specifies the remedy available for

violations of subsection (e) and does not expand or restrict the

scope of those entitled to sue under it.” Larry Menke, Inc. v.

DaimlerChrysler Motors Co., 171 Cal. App. 4th 1088, 1094,

90 Cal. Rptr. 3d 389, 394 (2009).

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Menke demonstrates the error in MB’s position. In

Menke, an automobile dealer and its proposed transferee sued

the manufacturer for violations of § 11713.3(e) after the

manufacturer refused to approve the dealer’s application to

transfer its dealership. Subsection (e) makes it unlawful and

a violation of the Vehicle Code for any manufacturer “[t]o

prevent, or attempt to prevent, a dealer from receiving fair

and reasonable compensation for the value of the franchised

business,” and further provides that “[t]here shall not be a

transfer or assignment of the dealer’s franchise without the

consent of the manufacturer or distributor, which consent

shall not be unreasonably withheld or conditioned upon the

release . . . of a claim or defense by the dealer.” Cal. Veh.

Code § 11713.3(e). Concluding that the prospective

transferee lacked standing under subsection (e), Menke held

that the terms of the section could not be clearer: “it protects

franchise owners against manufacturer conduct that would

prevent the dealer from receiving fair and reasonable

compensation for the value of the franchised business. The

statute says nothing about potential purchasers.” Menke,

171 Cal. App. 4th at 1093. Notably, despite the lack of any

specific language strongly creating a right of action, the court

did not conclude that there was no right of action under the

statute, simply that a prospective transferee or purchaser had

no right to sue the manufacturer for failure to approve the

sale. Indeed, it specifically affirmed and quoted the trial

court’s holding that “[t]he plain language of the code section

makes clear that it is the dealer selling the franchise who has

standing to sue, and not a prospective buyer.” Id. (emphasis

added).

In contrast to subsection (e), the plain language of

subsection (t)(6) speaks entirely to the right of the proposed

transferee, and says nothing about current franchisees. Thus,

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FRESNO MOTORS V. MERCEDES-BENZ 29

following the reasoning in Menke, the plain language makes

clear that it is the proposed transferee that has standing to sue,

and not the current franchisee. Any other construction

renders the subsection meaningless. It would grant a

proposed transferee the right to receive payment for its

expenses without the ability to enforce that right in any

meaningful manner. Because we conclude that plaintiffs

have an implied right of action under section 11713.3(t)(6),

we reverse the summary judgment to MB on Count IV, and

remand for proceedings consistent with this conclusion.

D. Unfair Competition (UCL)

Finally, we affirm the district court’s grant of summary

judgment to MB on plaintiffs’ claim under the California

Unfair Competition Statute, which prohibits an entity from

engaging in “unfair competition,” defined as “any unlawful,

unfair or fraudulent business act or practice.” Cal. Bus. &

Prof. Code § 17200. Section 17200 “borrows violations of

other laws and treats these violations, when committed

pursuant to business activity, as unlawful practices

independently actionable under Bus. & Prof. Code §17200 et

seq. and subject to the distinct remedies provided

thereunder.” Farmers Ins. Exch. v. Superior Court, 2 Cal. 4th

377, 383, 6 Cal. Rptr. 487, 491, 826 P.2d 730, 734 (1992)

(internal quotation marks omitted).

In the FAC plaintiffs based their UCL claims on the

alleged claims for tortious interference, providing unlawful

notice under section 11713.3(t)(2), and fraudulent

concealment. Because the court has affirmed summary

judgment to MB on all those claims, MB is entitled to

summary judgment on the UCL claims as well.

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30 FRESNO MOTORS V. MERCEDES-BENZ

Additionally, the remedy for a UCL violation is either

injunctive relief or restitution. See Cal. Bus. & Prof. Code

§ 17203. The restitutionary relief is limited to money or

property lost by the plaintiff and acquired by the defendant. 

Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 335–36,

120 Cal. Rptr. 3d 741, 761–62, 246 P.3d 877, 894 (2001).

“Restitution under § 17203 is confined to restoration of any

interest in money or property, real or personal, which may

have been acquired by means of such unfair competition.” 

Id. (emphasis in original) (internal quotation marks omitted). 

As Kwikset noted, the economic injury caused by an unfair

business practice may often involve a loss by the plaintiff

without any corresponding gain by the defendant. Such is the

instant case, at least as to plaintiffs’ remaining claim under

section 11713.3(t)(6). Under these circumstances, injunctive

relief is the only available remedy. Kwikset, 51 Cal. 4th at

336.

Because plaintiffs do not seek injunctive relief and have

no claim for restitution under section 17203, MB is entitled

to summary judgment on the UCL claims.

AFFIRMED IN PART, REVERSED IN PART and

REMANDED for proceedings consistent with this opinion. 

Each party shall bear its own costs on appeal.

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