Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_11-cv-02000/USCOURTS-caed-1_11-cv-02000-10/pdf.json

Parties Involved:
Fresno Motors, LLC
Plaintiff
Mercedes-Benz USA, LLC
Defendant
Selma Motors, Inc
Plaintiff

Document Text:

-1- 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF CALIFORNIA 

FRESNO DIVISION 

FRESNO MOTORS, LLC and SELMA 

MOTORS, INC., 

 Plaintiffs, 

 v. 

MERCEDES-BENZ USA, LLC, 

 Defendant. 

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

)

Case No.: 1:11-cv-2000-CJC 

ORDER DENYING DEFENDANT’S 

MOTION FOR SUMMARY 

JUDGMENT AND GRANTING IN 

SUBSTANTIAL PART PLAINTIFFS’ 

MOTION FOR SUMMARY 

JUDGMENT 

)

I. INTRODUCTION

On September 8, 2011, Plaintiffs Fresno Motors, LLC and Selma Motors, Inc. 

(together, “Plaintiffs”) brought this action against Defendant Mercedes-Benz USA, LLC 

(“MBUSA”) after Plaintiffs’ failed attempt to purchase a Mercedes-Benz dealership from 

Case 1:11-cv-02000-CJC Document 105 Filed 06/26/15 Page 1 of 13
-2- 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

third-party Asbury Fresno Imports, LLC (“Asbury”). (Dkt. No. 1.) On March 27, 2012, 

this Court granted summary judgment for MBUSA on all five claims in the operative 

First Amended Complaint (“FAC”). (Dkt. No. 71 [“Order”]; see also Dkt. Nos. 29, 52 

[“Def.’s Converted MSJ”].) The Ninth Circuit subsequently affirmed summary judgment 

on four of the five causes of action but remanded for adjudication of Plaintiffs’ sole 

surviving claim under California Vehicle Code § 11713.3(t)(6). (Dkt. No. 83.) Before 

the Court are Plaintiffs’ motion for summary judgment on MBUSA’s liability under 

section 11713.3(t)(6) and damages, (Dkt. No. 88 [“Pls.’ MSJ”]), and MBUSA’s crossmotion for summary judgment of no liability, (Dkt. No. 93 [“Def.’s MSJ”]). For the 

following reasons, the Court DENIES MBUSA’s motion for summary judgment and 

GRANTS IN SUBSTANTIAL PART Plaintiffs’ motion for summary judgment. 

II. BACKGROUND 

The parties are familiar with the background facts of this case, which are 

extensively detailed in this Court’s March 27, 2012 Order and the Ninth Circuit’s 

November 5, 2014 Opinion. The facts pertinent to the present motions are as follows.

On March 27, 2009, Plaintiffs entered into an Asset Purchase Agreement (“APA”) with 

Asbury to purchase the assets of a Mercedes-Benz dealership. (PSUF 1; Dkt. No. 88-2, 

Decl. of Dwight G. Nelson ISO Pls.’ MSJ [“Nelson Decl.”] ¶¶ 2–3; Exh. A.)1

 On June 

15, 2009, MBUSA notified Plaintiffs that it was exercising its contractual right of first 

refusal (“ROFR”) to purchase the dealership assets under the terms of the APA. (PSUF 

2; Nelson Decl. ¶ 4; Exh. B [“ROFR Notice”].) The parties now agree that the exercise 

of the ROFR was timely. (DSUF 1.) On July 14, 2009, Plaintiffs provided MBUSA with 

 

1

 “PSUF” references encompass Plaintiffs’ statement of uncontroverted facts in support of their motion 

for summary judgment, (Dkt. No. 88-1), MBUSA’s response to Plaintiffs’ statement of uncontroverted 

facts, (Dkt. No. 90), and Plaintiffs’ reply to MBUSA’s response, (Dkt. No. 99). Citations to “DSUF” 

encompasses both MBUSA’s statement of uncontroverted facts in support of its cross-motion, (Dkt. No. 

92), and Plaintiffs’ response to MBUSA’s statement, (Dkt. No. 98). Unless otherwise indicated, the 

cited facts are not substantively disputed.

Case 1:11-cv-02000-CJC Document 105 Filed 06/26/15 Page 2 of 13
-3- 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

an itemization of their expenses incurred from the investigating, evaluating, and 

negotiating of the APA with Asbury. (PSUF 6; Nelson Decl. ¶ 6; Exh. E 

[“Itemization”].) Plaintiffs’ itemization totaled $1,957,246.00. (Id.)

On July 30, 2009, Plaintiffs and MBUSA participated in a mediation session in an 

attempt to resolve their disputes regarding MBUSA’s exercise of the ROFR. (DSUF 5, 

6.) Prior to mediation, the parties submitted mediation briefs detailing the parties’ 

positions on whether MBUSA properly exercised the ROFR and whether MBUSA’s 

exercise of the ROFR was timely. (DSUF 7; Dkt. No. 63, Decl. of Dwight G. Nelson 

ISO Pls.’ Opp’n to Def.’s Converted MSJ ¶ 20; Exh. L [“Pls.’ Mediation Br.”], Exh. M, 

Def.’s Mediation Br.) At the end of the mediation, MBUSA agreed to assign its rights in 

the APA back to Plaintiffs if certain conditions were met. (DSUF 7–8.) Immediately 

following the mediation, the parties’ counsel memorialized these conditions in an email 

exchange. (DSUF 9; Dkt. No. 23 [FAC], Exh. G [“Post-Mediation Emails”].) After 

several more weeks of negotiations, the parties finalized these terms in an Assignment 

and Assumption Agreement (“AAA”) on August 28, 2009. (DSUF 9–11; Dkt. No. 56-2, 

Decl. of Gwen J. Young ISO Def.’s Converted MSJ ¶ 3; Exh. 1 [AAA]). Although the 

parties disagree as to precisely why the deal fell through, it is undisputed that the 

conditions for closing the deal were ultimately not satisfied, and Plaintiffs never signed 

the AAA. (DSUF 12–14.) 

The FAC alleged five causes of action, including a claim for relief based on 

MBUSA’s alleged violations of California Vehicle Code § 11713.3(t). (FAC ¶¶ 92–98.)

Under this cause of action, Plaintiffs alleged that MBUSA had failed to provide proper 

notice of its exercise of the ROFR under section 11713.3(t)(2) and failed to reimburse 

Plaintiffs for expenses incurred in the attempt to purchase the dealership under section 

11713.3(t)(6). (Id.) On March 27, 2012, the Court granted summary judgment for 

MBUSA on the FAC, including the section 11713.3(t) claim. (Order at 33–41.) 

Case 1:11-cv-02000-CJC Document 105 Filed 06/26/15 Page 3 of 13
-4- 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Specifically, the Court determined that, as a matter of first impression, Plaintiffs lacked 

standing to bring a claim under section 11713.3(t). (Id.) The Ninth Circuit reversed in 

part on this issue, holding that Plaintiffs had standing to sue under subsection (t)(6), 

which provided “a proposed transferee [with] a right to recover its expenses from a 

franchisor that usurps its contract by exercising a ROFR.” Fresno Motors, LLC v. 

Mercedes Benz USA, LLC, 771 F.3d 1119, 1133–34 (9th Cir. 2014).2

 To hold otherwise 

would render subsection (t)(6) meaningless by conferring onto “a proposed transferee the 

right to receive payment for its expenses without the ability to enforce that right in any 

meaningful manner.” Id. at 1134. Having concluded that Plaintiffs held an implied right 

of action under section 11713.3(t)(6), the Ninth Circuit remanded for proceedings on this 

claim. Id.

III. LEGAL STANDARD

The Court may grant summary judgment on “each claim or defense—or the part of 

each claim or defense—on which summary judgment is sought.” Fed. R. Civ. P. 56(a).

Summary judgment is proper where the pleadings, the discovery and disclosure materials 

on file, and any affidavits show that “there is no genuine dispute as to any material fact 

and the movant is entitled to judgment as a matter of law.” Id.; see also Celotex Corp. v. 

Catrett, 477 U.S. 317, 322 (1986). The party seeking summary judgment bears the initial 

burden of demonstrating the absence of a genuine issue of material fact. Celotex, 477 

U.S. at 325. A factual issue is “genuine” when there is sufficient evidence such that a 

reasonable trier of fact could resolve the issue in the nonmovant’s favor. Anderson v. 

Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is “material” when its resolution 

might affect the outcome of the suit under the governing law, and is determined by 

 

2

 With respect to subsection (t)(2), the Ninth Circuit concluded that notice in the present case was 

proper and did not violate any provisions of the California Vehicle Code. Fresno Motors, 771 F.3d at 

1128–29.

Case 1:11-cv-02000-CJC Document 105 Filed 06/26/15 Page 4 of 13
-5- 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

looking to the substantive law. Id. “Factual disputes that are irrelevant or unnecessary 

will not be counted.” Id. at 249. 

 Where the movant will bear the burden of proof on an issue at trial, the movant 

“must affirmatively demonstrate that no reasonable trier of fact could find other than for 

the moving party.” Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). 

In contrast, where the nonmovant will have the burden of proof on an issue at trial, the 

moving party may discharge its burden of production by either (1) negating an essential 

element of the opposing party’s claim or defense, Adickes v. S.H. Kress & Co., 398 U.S. 

144, 158–60 (1970), or (2) showing that there is an absence of evidence to support the 

nonmoving party’s case, Celotex, 477 U.S. at 325. Once this burden is met, the party 

resisting the motion must set forth, by affidavit or as otherwise provided under Rule 56, 

“specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 256.

IV. ANALYSIS 

 A. MBUSA’s Liability under section 11713.3(t)(6) 

California Vehicle Code § 11713.3(t)(6) states,

It is unlawful and a violation of this code for a manufacturer . . . to do . . .

any of the following: 

(t) To 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 or of the assets of the 

franchised business unless all of the following requirements are met: 

(6) The franchisor shall reimburse the proposed transferee for 

expenses paid or incurred by the proposed transferee in 

evaluating, investigating, and negotiating the proposed transfer. 

. . .

Case 1:11-cv-02000-CJC Document 105 Filed 06/26/15 Page 5 of 13
-6- 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Cal. Veh. Code § 11713.3(t)(6). The Ninth Circuit interpreted this subsection as giving 

“displaced prospective buyers” the “statutory right to recover its reasonably incurred 

expenses from the manufacturer.” Fresno Motors, 771 F.3d at 1133–34. 

The parties now move for summary judgment on the issue of MBUSA’s liability 

under this subsection. Plaintiffs contend that when MBUSA timely exercised its ROFR, 

it became obligated to reimburse Plaintiffs for their expenses incurred in evaluating, 

investigating, and negotiating the proposed transfer. (Pls.’ MSJ at 4–6; Dkt. No. 97, Pls.’ 

Opp’n to Def.’s MSJ at 3.) MBUSA argues that it is not liable for any of Plaintiffs’ 

expenses because Plaintiffs “received the benefit of [their] bargain . . . once [MBUSA] 

agreed to assign its rights in the [APA] back to Fresno Motors.” (Def.’s MSJ at 5.) The 

parties’ motions raise two questions that must be answered to determine the issue of 

liability: Was Plaintiffs’ right to reimbursement triggered when MBUSA exercised its 

ROFR on June 15, 2009, and, if so, was this right waived or forfeited through any 

subsequent actions or events?

On the first question, the Court finds MBUSA’s exercise of the ROFR on June 15, 

2009 triggered its obligation to reimburse Plaintiffs under subsection (t)(6). The statute 

makes it unlawful for a manufacturer “to exercise a right of first refusal . . . unless . . . the 

franchisor . . . reimburse[s] the proposed transferee for expenses paid or incurred by the 

proposed transferee . . . .” Cal. Veh. Code § 11713.3(t)(6). This language necessarily 

indicates that MBUSA’s statutory obligation to reimburse the proposed transferee is a 

mandatory condition of the valid exercise of its ROFR. Put differently, the lawful 

exercise of the ROFR is concomitant with the obligation to reimburse. The Ninth Circuit 

held that MBUSA’s exercise of its ROFR was valid and timely on June 15, 2009. (DSUF 

1); see Fresno Motors, 771 F.3d at 1127, 1128 (holding that the record “demonstrate[s] 

that MB[USA] timely and lawfully exercised its ROFR” on June 15, 2009). Thus, 

Case 1:11-cv-02000-CJC Document 105 Filed 06/26/15 Page 6 of 13
-7- 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

MBUSA concurrently incurred a reimbursement obligation—and Plaintiffs obtained a 

legal claim for reimbursement—at that time.3

Having established that Plaintiffs had a statutory claim for reimbursement on June 

15, 2009, the second question asks whether any subsequent events or actions occurred 

that eliminated Plaintiffs’ claim. MBUSA argues in the affirmative and points to the July 

30, 2009 mediation session and, more specifically, to (1) MBUSA’s agreement to assign 

its rights in the APA back to Plaintiffs, and (2) Plaintiffs’ “admission” that they would 

have no right to reimbursement when they agreed to MBUSA’s re-assignment of the 

rights under the APA. (Def.’s Mot. at 5–6.) The Court disagrees that either of these 

grounds led to a waiver or relinquishment of Plaintiffs’ claim for reimbursement. 

Under California law, a legal right may be waived only by the “intentional 

relinquishment of a known right after full knowledge of the facts.” DRG/Beverly Hills, 

Ltd. v. Chopstix Dim Sum Cafe & Takeout III, Ltd., 30 Cal. App. 4th 54, 59 (1994). “The 

essence of waiver . . . is the voluntary relinquishment of a known right.” City of Hollister 

v. Monterey Ins. Co., 165 Cal. App. 4th 455, 487 (2008) (emphasis added). As such, the 

“the pivotal issue in a claim of waiver is the intention of the party who allegedly 

relinquished the known legal right.” Habitat Trust for Wildlife, Inc. v. City of Rancho 

Cucamonga, 175 Cal. App. 4th 1306, 1320 (2009) (quoting DRG/Beverly Hills, 30 Cal. 

App. 4th at 60). Waiver may be express, based on the words of the waiving party, or 

implied, based on conduct indicating an intent to relinquish the right. Old Republic Ins. 

 

3

 Although not contested here, Plaintiffs have further demonstrated that they met the statutory 

requirement to provide a timely itemization of their expenses. See Cal. Veh. Code § 11713.3(t)(6) 

(obligating proposed transferee to provide a written itemization “within 30 days of the proposed 

transferee’s receipt of a written request from the franchisor for that accounting”). MBUSA’s June 15, 

2009 letter requested Plaintiffs to “review [their] respective rights and obligations with respect to our 

exercise of this right of first refusal, including the submission of any reasonable expenses incurred . . . .”

(DSUF 2; ROFR Notice.) On July 14, 2009, 29 days after receipt of MBUSA’s letter, Plaintiffs 

transmitted a letter with an itemization of its purported expenses and fees in connection with the APA. 

(See Itemization.) 

Case 1:11-cv-02000-CJC Document 105 Filed 06/26/15 Page 7 of 13
-8- 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Co. v. FSR Brokerage, Inc., 80 Cal. App. 4th 666, 678 (2000). To find waiver in the 

latter instance, the party’s acts must be “so inconsistent with an intent to enforce the right 

as to induce a reasonable belief that such right has been relinquished.” Id.

Nothing in the record demonstrates that Plaintiffs expressly or impliedly waived, 

or voluntarily relinquished, their claim for reimbursement from MBUSA. Merely 

participating in a mediation session in an attempt to resolve the disputes concerning the 

propriety of MBUSA’s exercise of the ROFR does not indicate any intent on Plaintiffs’ 

part to voluntarily relinquish their claim. Nor do any of the communications following 

the mediation session reveal such intent. There is no mention of Plaintiffs’ 

reimbursement claim—let alone an express agreement to waive such claim—in any of the 

emails that were exchanged following the mediation session. (See Post-Mediation 

Emails.) This is significant because the parties agree that the mediation resulted in 

MBUSA’s agreement to assign the APA to Plaintiffs under certain conditions, as

memorialized in the email exchange. (DSUF 8, 9.) Thus, the absence of any reference in 

the emails to Plaintiffs’ claim, which, at the time, was for nearly $2 million, is highly 

probative of the lack of Plaintiffs’ intent to waive their claim and the unreasonableness of 

any belief by MBUSA that such right had been relinquished. This conclusion is further 

bolstered by the same glaring silence on Plaintiffs’ reimbursement claim in the AAA, 

which the parties drafted after several more weeks of negotiations and intended to be the 

final contract. (DSUF 11; AAA.) The parties are sophisticated businesses who had 

representation by counsel. Through the course of this litigation, the parties produced 

voluminous documents and written communication exchanges that carefully track the 

parties’ offers, positions, agreements, and disagreements for every step of Plaintiffs’ 

quest to purchase the dealership. Implying Plaintiffs’ waiver from these facts, 

particularly given the history of the parties’ dealings, is simply not credible.4

 

4

 Relatedly, the Court rejects MBUSA’s argument that it mooted its liability by agreeing to assign its 

rights in the APA back to Plaintiffs, thus restoring to Plaintiffs the “benefit of the bargain.” (Def.’s MSJ 

Case 1:11-cv-02000-CJC Document 105 Filed 06/26/15 Page 8 of 13
-9- 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

The only evidence MBUSA cites that even alludes to Plaintiffs’ reimbursement 

claim is Plaintiffs’ mediation brief, submitted two days prior to the mediation session. In 

this nine-page brief, Plaintiffs vehemently oppose the propriety of MBUSA’s exercise of 

the ROFR. (See Pl.’s Mediation Br.) In the last two pages, under the heading “Nelson’s 

Approach to Resolution,” it states: 

Nelson wants this dealership and remains ready, willing and able to move 

forward with closing on this deal. All that is necessary is that MBUSA give 

him the green light so that the parties to the [APA] can close. If MBUSA 

refuses, Nelson will be left with nearly $2 million in “reliance” damages, in 

addition to the lost profits he would have made operating this dealership. . . . 

Allowing Nelson to close this deal will avoid any payments by MBUSA to 

Nelson, and it will give MBUSA a great dealer in Fresno. If MBUSA 

refuses to allow Nelson this dealership, it needs to make Nelson whole by 

paying him $2 million. 

(Id. at 8–9.) Pointing to this language, MBUSA argues that “Plaintiffs admitted then that 

they would have no right to reimbursement of the fees and expenses they now claim 

when they agreed to take an assignment of MBUSA’s rights under its exercise.” (Def.’s 

MSJ at 6.) MBUSA further argues “[t]hat . . . negotiations ultimately broke down 

entirely over Asbury’s final demands does not change Plaintiffs’ admissions.” (Id.)

In essence, MBUSA seeks to estop Plaintiffs from recovering their expenses due to 

their representations in the mediation brief. See 1 Witkin, Summary of Cal. Law (10th 

ed. 2005) Contracts, § 244 (“In its usual application, estoppel is based upon a 

 

at 5.) MBUSA erroneously presumes that it can “turn back the clock,” so to speak, and unilaterally strip 

Plaintiffs of their statutorily-vested right. Not only does MBUSA fail to point to any law that would 

support such a proposition, but this directly contradicts well-established California law on waiver, which 

focuses on whether the right-holder’s words and actions evince an intention to relinquish the right. See

DRG/Beverly Hills, 30 Cal. App. 4th at 60 (“All case law on the subject of waiver is unequivocal: 

Waiver always rests upon intent. Waiver is the intentional relinquishment of a known right after 

knowledge of the facts.” (internal citations and quotation marks omitted)). Plaintiffs obtained a legal 

claim for reimbursement the moment MBUSA exercised its right of first refusal, and such claim could 

not be inadvertently extinguished as a result of the actions of another party, i.e., MBUSA.

Case 1:11-cv-02000-CJC Document 105 Filed 06/26/15 Page 9 of 13
-10- 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

representation of fact that the party is not permitted to deny.”). MBUSA’s argument 

most closely resembles the doctrine of promissory estoppel, under which “a promisor is 

bound when he should reasonably expect a substantial change of position, either by act or 

forbearance, in reliance on his promise, if injustice can be avoided only by its 

enforcement.” Youngman v. Nev. Irrigation Dist., 70 Cal. 2d 240, 249 (1969). An 

indispensable element of the doctrine of promissory estoppel is a promise. Garcia v. 

World Sav., FSB, 183 Cal. App. 4th 1031, 1044 (2010) (“[T]his doctrine cannot be 

invoked and must be held inapplicable in the absence of a showing that a promise had 

been made upon which the complaining party relied to his prejudice.” (internal citation 

and quotation marks omitted)). That promise must “be clear and unambiguous in its 

terms.” Id. (internal citation and quotation marks omitted). 

MBUSA cannot invoke the doctrine of promissory estoppel because the mediation 

brief does not set forth a clear and unambiguous promise that Plaintiffs would forgo their 

reimbursement claim. The briefs were merely the parties’ preliminary statements of their 

respective positions prior to entering the mediation session to possibly reach a resolution 

of their conflict. Garcia, 183 Cal. App. 4th at 1044 (“Estoppel cannot be established 

from . . . preliminary discussions and negotiations.”). Even accepting that Plaintiffs’ 

brief did contain some sort of offer to forgo their reimbursement claim, the Court cannot 

ascertain what the proposed terms of the promise were. Critically, the mediation brief is 

ambiguous as to what events needed to transpire before Plaintiffs would forgo their 

claim. For example, the brief states, “Allowing Nelson to close this deal will avoid any 

payments by MBUSA to Nelson, and it will give MBUSA a great dealer in Fresno.”

(Pls.’ Mediation Br. at 9 (emphasis added).) It is far from clear if this meant MBUSA 

was merely required to give Plaintiffs an “opportunity” to close the deal with Asbury 

(regardless of any additionally-imposed conditions), if MBUSA was required to provide 

the landlord with a guaranty of the sublease, if the deal had to definitively close, or if a 

different deal altogether was contemplated. Because any promise on Plaintiffs’ part is 

Case 1:11-cv-02000-CJC Document 105 Filed 06/26/15 Page 10 of 13
-11- 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

too indefinite, MBUSA could not have reasonably relied on the statements in Plaintiffs’ 

brief and, consequently, cannot avail itself of the doctrine of promissory estoppel. See

Garcia, 183 Cal. App. 4th at 1045 (explaining that promissory estoppel requires a 

promise that is “definite enough that a court can determine the scope of the duty, and the 

limits of performance must be sufficiently defined to provide a rational basis for the 

assessment of damages”). 

 Subsection (t)(6) gives “a proposed transferee [the] right to recover its expenses 

from a franchisor that usurps its contract by exercising a ROFR.” Fresno Motors, 771 

F.3d at 1133. Plaintiffs obtained this right when MBUSA exercised its ROFR on June 

15, 2009 and did not waive or otherwise forfeit this right thereafter. Therefore, the Court 

DENIES MBUSA’s motion for summary judgment and GRANTS summary judgment for 

Plaintiffs on the issue of MBUSA’s liability under section 11713(t)(6).

B. Damages 

Plaintiffs seek summary judgment on the issue of damages for $207,994.16.5

Subsection (t)(6) entitles Plaintiffs to recover expenses paid or incurred in “evaluating, 

investigating, and negotiating the proposed transfer.” Cal. Veh. Code § 11713.3(t)(6).

These expenses may not “exceed the usual, customary, and reasonable fees charged for 

similar work done in the area in which the franchised business is located” and include 

“legal and accounting expenses, and expenses incurred for title reports and environmental 

or other investigations of real property on which the franchisee’s operations are 

conducted.” Id. In addition to a written itemization of these expenses, the proposed 

 

5

 Although Plaintiffs’ initial itemization sought reimbursement for nearly $2 million, $1,749,252.00 of 

that amount consisted of tax credits that have since been refunded by the state and are no longer at issue.

(Pls.’ MSJ at 5.)

Case 1:11-cv-02000-CJC Document 105 Filed 06/26/15 Page 11 of 13
-12- 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

transferee must provide a “copy of all nonprivileged reports and studies for which 

expenses were incurred.” Id.

 Here, Plaintiffs seek a total of $207,994.16 and list eleven, generally-described 

categories of expenses, such as “Legal Expenses” ($93,016.73), “Appraisals” 

($9,750.00), and “Employee Labor” ($56,794.03). (Nelson Decl. ¶ 8.) Plaintiffs do not 

provide any additional description on what tasks were performed, what reports or studies 

were produced, or even how many hours were spent for each category. No supporting 

documents whatsoever are included, be that copies of the relevant nonprivileged reports 

and studies or general invoices or billing statements for the expenses. Nor do Plaintiffs 

provide any expert declarations, reports, or other evidence comparing Plaintiffs’ expenses 

with those of the “usual, customary, and reasonable fees charged for similar work done in 

the area.” Nelson’s bare assertion that the “$207,994.16 incurred by [Plaintiffs] on the 

terms set forth in the APA . . . were reasonable and customary expenses” is insufficient.

(See Nelson Decl. ¶ 9.) While excruciating detail for each category is not necessary, on 

this record, the Court has no way of verifying whether Plaintiffs’ expenses (1) were 

actually incurred; (2) relate to the evaluation, investigation, and negotiation of the 

proposed transfer; and (3) are usual, customary, and reasonable. Therefore, the Court 

DENIES Plaintiffs’ request for summary judgment on damages. 6

//

//

//

//

//

//

 

6

 As MBUSA’s conditional motion sought a continuance for the purpose of contesting Plaintiffs’ 

claimed damages, (Dkt. No. 94), this motion is DENIED AS MOOT. 

Case 1:11-cv-02000-CJC Document 105 Filed 06/26/15 Page 12 of 13
-13- 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

V. CONCLUSION 

 Accordingly, the Court DENIES MBUSA’s motion for summary judgment and 

GRANTS IN SUBSTANTIAL PART Plaintiffs’ motion for summary judgment. 

 DATED: June 26, 2015 

 __________________________________ 

 CORMAC J. CARNEY 

 UNITED STATES DISTRICT JUDGE 

Case 1:11-cv-02000-CJC Document 105 Filed 06/26/15 Page 13 of 13