Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_13-cv-00802/USCOURTS-caed-2_13-cv-00802-2/pdf.json

Parties Involved:
Rahim Hassanally
Defendant
Maverick Auto Group 2, LLC
Defendant
Volkswagen of America, Inc.
Plaintiff
Volkswagen of Fairfield
Defendant

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

VOLKSWAGEN OF AMERICA, INC.,

Plaintiff,

v.

MAVERICK AUTO GROUP 2, LLC dba 

VOLKSWAGEN OF FAIRFIELD and 

RAHIM HASSANALLY,

Defendants.

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Case No. 2:13-CV-00802-JAM-EFB

ORDER GRANTING PLAINTIFF’S 

MOTION FOR SUMMARY JUDGMENT

This matter is before the Court on Plaintiff Volkswagen of 

America, Inc.’s (“Plaintiff”) Motion for Summary Judgment (Doc. 

#19). Defendants Maverick Auto Group 2, LLC dba Volkswagen of 

Fairfield (“Defendant Fairfield”) and Rahim Hassanally (“Defendant 

Hassanally”) (collectively “Defendants”) oppose Plaintiff’s motion 

(Doc. #21). Plaintiff filed a reply (Doc. #25). For the following 

reasons, Plaintiff’s motion is GRANTED.1

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff is the exclusive distributor of Volkswagen of 

America vehicles within the United States. Defendants’ Response to 

Plaintiff’s Statement of Undisputed Facts (“DRSUF”) ¶ 1. On 

 1 This motion was determined to be suitable for decision without 

oral argument. E.D. Cal. L.R. 230(g). The hearing was originally 

scheduled for November 19, 2014.

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January 12, 2011, Plaintiff and Defendant Fairfield entered into a 

Volkswagen Dealer Agreement (“Dealer Agreement”) authorizing 

Defendant Fairfield as a Volkswagen of America Dealer. DRSUF ¶ 2. 

As part of the Dealer Agreement, Defendant Fairfield agreed to 

construct a new or renovated Volkswagen dealership facility by 

January 12, 2013, that complied in full with all of Plaintiff’s 

requirements for a “White Frame Facility.” DRSUF ¶ 3. The Dealer

Agreement further provided for a $600,000 Capital Contribution from 

Plaintiff to Defendant Fairfield. DRSUF ¶ 4. Defendants allege 

that Plaintiff also made oral representations to Defendants that 

the Volkswagen dealership in Napa, California would be moved to a 

location outside Defendant Fairfield’s marketing area. Defendants’

Statement of Undisputed Facts (“DSUF”) ¶ 1. Defendants further 

allege that Plaintiff made representations that Defendant Fairfield 

would be receiving an increased allocation of inventory from 

Plaintiff. DSUF ¶ 2. Defendants allege that these oral 

representations were part of the January 12, 2011 agreement between 

Plaintiff and Defendants. DSUF ¶¶ 1-2.

Also on January 12, 2011, Defendant Hassanally entered into a 

personal guarantee (“Guarantee”) in which he agreed to be liable to 

Plaintiff for all indebtedness of Defendant Fairfield to Plaintiff 

arising out of the Dealer Agreement. DRSUF ¶ 9.

On February 9, 2012, Plaintiff sent Defendants a letter 

reminding them of the upcoming construction deadlines and the need 

to meet those deadlines or face repayment of the Capital 

Contribution. DRSUF ¶ 11. On March 20, 2012, Plaintiff sent 

Defendants a letter informing them that Defendant Fairfield was in 

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breach of the Dealer Agreement due to its failure to meet the 

interim construction deadlines set forth in the agreement. DRSUF 

¶ 13. In this same letter, Plaintiff agreed to extend two of the 

interim construction deadlines to accommodate Defendants’ needs. 

DRSUF ¶ 14. On September 5, 2012, Plaintiff sent Defendants a 

letter in which it granted Defendant Fairfield a one-time extension 

of the final deadline to complete construction of the new facility, 

now requiring that construction be completed by June 12, 2013. 

DRSUF ¶ 16. On October 17, 2012, Plaintiff sent Defendants a 

letter in which Plaintiff expressed concern over Defendant 

Fairfield’s lack of progress towards completion of the new 

facility. DRSUF ¶ 19. Plaintiff also expressed its position that 

continued lack of progress would constitute an anticipatory breach 

of the Dealer Agreement by Defendant Fairfield. DRSUF ¶ 19.

On February 20, 2013, Plaintiff sent Defendants a letter 

requesting adequate assurances that construction of a White Frame 

compliant facility would be completed by June 12, 2013. DRSUF 

¶ 21. On March 6, 2013, Defendant Fairfield responded to 

Plaintiff’s February 20th letter. DRSUF ¶ 22. In this letter, 

Defendant Fairfield maintained that Plaintiff had made oral 

representations to Defendants about its plans to relocate the Napa 

dealership outside of the Fairfield marketing area, and that the 

amount of inventory allocated to Defendants’ dealership would be 

increased. DRSUF ¶ 23.

On March 14, 2013, Plaintiff responded to Defendants’ letter, 

informing Defendant Fairfield that it had failed to provide 

adequate assurances, and giving it until March 25, 2013 to do so. 

DRSUF ¶ 25. On March 22, 2013, Defendants sent Plaintiff a letter, 

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asking for more time and reiterating their position regarding the 

relocation of the Napa dealership and increased vehicle allocation 

issues. DRSUF ¶¶ 26-27. On April 1, 2013, Plaintiff sent 

Defendants a letter, demanding immediate repayment of the $600,000 

Capital Contribution. DRSUF ¶ 28. Defendants have not repaid the 

$600,000 to Plaintiff. DRSUF ¶ 29.

On April 24, 2013, Plaintiff filed the Complaint (Doc. #1) in 

this Court. Plaintiffs’ Complaint includes the following causes of 

action: (1) Breach of Contract against Defendant Fairfield; and 

(2) Breach of Guarantee against Defendant Hassanally.

II. OPINION

A. Defendants’ Late-filed Opposition

As discussed in the Court’s November 14, 2014 minute order 

(Doc. #22), Defendants’ opposition was filed eight days late. 

Defendants filed a response (Doc. #24) to the Court’s minute order, 

attempting to explain the tardiness of their filing. Because the 

Court prefers to adjudicate cases on their merits, the Court finds 

that Defendants have, barely, met the standard for excusable 

neglect under Rule 6(b)(1)(B) of the Federal Rules of Civil 

Procedure (“FRCP”). The Court will consider Defendants’ late-filed 

opposition and the supporting documents.

B. Analysis

The parties’ sole dispute revolves around the two oral 

promises allegedly made by Plaintiff to Defendants prior to the 

execution of the written agreement. First, Defendants contend that 

Plaintiff agreed to move a Volkswagen dealership from Napa, CA to 

an alternate location. Second, Defendants maintain that Plaintiff 

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promised to increase the number of vehicles allocated to 

Defendants’ dealership. Plaintiff argues that any evidence of 

these alleged oral promises is inadmissible because the Dealer 

Agreement contained a merger clause, and because the oral promises 

are fundamentally inconsistent with the terms of the written 

contract. Mot. at 12, 17. Defendants respond that the merger 

clause does not bar Court’s consideration of the collateral oral 

terms. Opp. at 7.

California law restricts the admissibility of parol evidence 

where a written contract exists. Specifically, the parol evidence 

rule provides that terms “set forth in a writing intended by the 

parties as a final expression of their agreement with respect to 

such terms as are included therein may not be contradicted by 

evidence of any prior agreement or of a contemporaneous oral 

agreement.” Cal. Civ. Proc. Code § 1856(a). The Ninth Circuit has 

noted that “the parties' inclusion of an integration clause in the 

written contract is but one factor” in determining the 

admissibility of parol evidence. Sicor Ltd. v. Cetus Corp., 51 

F.3d 848, 859 (9th Cir. 1995). Nevertheless, “an integration or 

merger clause is persuasive evidence of full integration.” Cent.

Coast Pipe Lining, Inc. v. Pipe Shield USA, Inc., 2013 WL 6442603 

at *4 (C.D. Cal. Dec. 9, 2013).

The Agreement contains such a merger clause, which provides as 

follows: “This instrument contains the entire agreement between the 

parties. No representations or statements other than those 

expressly set forth or referred to herein were made or relied upon 

in entering into this Agreement.” Collins Dec., Ex. 1, Standard 

Provisions, Article 17(4). This clause is “persuasive evidence” 

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that the Agreement was fully integrated, and that no parol evidence 

may be considered by the Court. Cent. Coast Pipe Lining, 2013 WL 

6442603 at *4. 

However, as noted by the Court in its November 20, 2013 Order, 

the analysis does not end here. Rather, the Court must consider 

the nature of the alleged collateral terms, and “determine whether 

the parties intended [them] to be a part of their bargain.” 

Gerdlund v. Elec. Dispensers Int'l, 190 Cal.App.3d 263, 271 (1987). 

Importantly, “proof of a collateral agreement which contradicts an 

express provision of the written agreement” is never admissible, as 

“it cannot reasonably be presumed that the parties intended to 

integrate two directly contradictory terms in the same agreement.” 

Gerlund, 190 Cal.App.3d at 271. Therefore, the overarching rule is 

that parol evidence may admitted only “to prove the existence of a 

separate oral agreement as to any matter . . . which is not 

inconsistent with [the written agreement’s] terms.” Gerlund, 190 

Cal.App.3d at 271.

The Dealer Agreement provides that “Dealer shall repay the 

entire $600,000 Capital Contribution to VWoA, immediately upon 

written notice from VWoA, if for any reason Dealer fails to comply 

in full with the Construction Deadlines, or the White Frame 

Commencement Date fails to occur by the deadline[.]” Collins Dec., 

Ex. 1, Addendum at 6(b). Plaintiff argues that this “for any 

reason” language is fundamentally inconsistent with the collateral 

terms allegedly agreed upon by the parties. Specifically, 

Plaintiff argues that “the plain language of the agreement makes 

repayment contingent upon the timely building of the White Frame 

Facility” and the unconditional nature of the “for any reason” 

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language forecloses the existence of additional obligations by 

Plaintiff, such as the relocation of the Napa dealership, or an 

increased vehicle allocation to Defendants. Mot. at 21. 

Inexplicably, Defendants do not address this argument in their 

opposition.

The Court concludes that the “for any reason” language of the 

written agreement is wholly incompatible with the oral terms 

alleged by Defendants. If the parties intended Defendants’ 

repayment of the Capital Contribution to be excused by Plaintiff’s 

failure to relocate the Napa dealership, or by Plaintiff’s failure 

to effect an increased vehicle allocation to Defendants’ 

dealership, they would not have included the written provision 

quoted above. The clear and unambiguous meaning of “for any 

reason” is that Defendants’ failure to comply with the applicable 

deadlines would result in the unconditional repayment of the 

Capital Contribution. Because the proffered parol evidence is 

“inconsistent with [the Agreement’s] terms,” its admissibility is 

statutorily barred. Gerlund, 190 Cal.App.3d at 271; Cal. Civ. 

Proc. Code § 1856(a).

Defendants’ reliance on the Court’s November 20, 2013 Order, 

which denied Plaintiff’s motion for judgment on the pleadings, is 

unavailing. Included in this Order was a discussion of the parol 

evidence rule, as well as the following conclusion: “Although the 

written agreement between Plaintiff and Defendants included an 

integration clause, this clause would not necessarily exclude 

evidence that the agreement included additional material terms. 

. . . As long as the additional terms agreed upon do not 

contradict the terms of the written agreement, such parol evidence 

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may still be admissible.” Order at 7. Defendants’ argument to the 

contrary notwithstanding, this Order does not control the issue 

presently before the Court. Opp. at 8. It was far from a 

definitive statement that the Court would consider the alleged oral 

agreement: rather, it was an invitation for Defendants to develop –

through discovery – evidence of additional oral terms which did not 

contradict the written agreement. As discussed above, Defendants 

have failed to present such evidence.

The inadmissibility of Defendants’ proposed parol evidence is 

dispositive on both of Plaintiff’s claims. Notably, Defendants do 

not dispute any of the 29 facts set forth in Plaintiff’s separate 

statement of undisputed facts. See generally, DRSUF. It is 

undisputed that Plaintiff requested adequate assurances from 

Defendants, pursuant to California Commercial Code § 2609, due to 

Defendants’ lack of progress towards complying with its facility 

obligations. DRSUF ¶ 21. It is similarly undisputed that 

Defendant Fairfield’s response “did not state that Fairfield would 

construct the White Frame compliant facility by the extended 

deadline.” DRSUF ¶ 24. After Defendants failed to provide 

adequate assurances that it would comply with the extended 

deadline, Plaintiff demanded repayment of the $600,000 Capital 

Contribution, pursuant to the terms of the Agreement. DRSUF ¶ 28. 

Defendant Fairfield’s failure to repay the Capital Contribution is 

in violation of the Dealer Agreement, and Defendant Fairfield has 

breached the contract. Accordingly, Plaintiff’s motion for summary 

judgment on its first cause of action for breach of contract 

against Defendant Fairfield is GRANTED.

Similarly, it is undisputed that Defendant Hassanally signed a 

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personal guarantee, in which he agreed to be “liable to VWoA for 

all indebtedness of Fairfield to VWoA arising out of [the Dealer

Agreement].” DRSUF ¶9. Defendant Hassanally’s failure to pay 

Plaintiff the amount owed by Defendant Fairfield is a breach of 

that guarantee. Accordingly, Plaintiff’s motion for summary 

judgment on its second cause of action for breach of guarantee 

against Defendant Hassanally is GRANTED.

III. ORDER

For the foregoing reasons, Plaintiff’s Motion for Summary 

Judgment is GRANTED.

IT IS SO ORDERED.

Dated: December 10, 2014

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