Court Opinion

ID: 4315247
Source: CourtListenerOpinion
Date Created: 2018-09-25 20:00:25.908254+00
Date Added: 2024-06-11T13:27:32.183078
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS
                                                                              FILED
                           FOR THE NINTH CIRCUIT
                                                                              SEP 25 2018
                                                                          MOLLY C. DWYER, CLERK
                                                                            U.S. COURT OF APPEALS
MATHEW ENTERPRISE, INC.,                         No.   17-15060

              Plaintiff-Appellant,               D.C. No. 5:16-cv-03551-LHK

 v.
                                                 MEMORANDUM*
FCA US, LLC,

              Defendant-Appellee.

MATHEW ENTERPRISE, INC.,                         No.   17-17392

              Plaintiff-Appellant,               D.C. No. 5:17-cv-03251-LHK

 v.

FCA US, LLC,

              Defendant-Appellee.

                   Appeal from the United States District Court
                     for the Northern District of California
                     Lucy H. Koh, District Judge, Presiding

                    Argued and Submitted September 10, 2018
                            San Francisco, California

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: WALLACE, RAWLINSON, and WATFORD, Circuit Judges.

      Mathew Enterprise, Inc. (Enterprise) appeals from the district court’s judgment

dismissing its claims against FCA US, LLC (FCA) alleging violation of the

Automobile Dealers’ Day in Court Act (ADDCA), 15 U.S.C. §§ 1221-1225; breach

of the implied covenant of good faith and fair dealing under Michigan law; and

violation of California Vehicle Code § 3060. We review de novo dismissals under

Rule 12(b)(6) of the Federal Rules of Civil Procedure. See Segalman v. Sw. Airlines

Co., 895 F.3d 1219, 1222 (9th Cir. 2018).

      1.     The district court did not err in dismissing Enterprise’s ADDCA claim,

as all actions were authorized by the parties’ agreement, and FCA exhibited no

coercive or intimidating behavior. See Autohaus Brugger, Inc. v. Saab Motors, Inc.,

567 F.2d 901, 910-11 (9th Cir. 1978).

      Enterprise argues that FCA violated the ADDCA when FCA: (1) rejected

Enterprise’s proposal to relocate the dealership and (2) insisted that Enterprise either

sign a new lease agreement or pay rent at the increased holdover lease rate provided

in the lease. Neither supports a claim under the ADDCA.

      “There is nothing in [the ADDCA] which gives a dealer the right to dictate the

location of its own choosing. Likewise, there is nothing in [the ADDCA] which

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would deprive [FCA] of making business judgment as to locations of its franchises.”

Golden Gate Acceptance Corp. v. Gen. Motors Corp., 597 F.2d 676, 680-81 (9th Cir.

1979) (citations and internal quotation marks omitted). Section 11(d)(ii) of the “Sales

and Service Agreement Additional Terms and Provisions” provides that “[Enterprise]

shall not make any change in the location of Dealership Operations . . . without the

prior written approval of [FCA].” FCA subsequently used its business judgment to

deny Enterprise’s relocation request, and Enterprise’s complaint does not allege any

coercive measure taken by FCA that deviates from the express contractual terms.

Therefore, Enterprise failed to allege bad faith plausibly. See Brugger, 567 F.2d at

910-11; see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (requiring the pleading

of plausible allegations).

      Paragraph 25 of the lease permitted application of the holdover lease rate absent

renewal or a new agreement. Implementation of mutually, agreed-upon contractual

terms does not constitute a lack of good faith. See 15 U.S.C. § 1221(e); see also

Golden Gate, 597 F.2d at 680 n.8.

      2. The district court committed no error in dismissing Enterprise’s good faith

and fair dealing claim. Michigan law governs the parties’ agreement, and “Michigan

does not recognize a cause of action for breach of the implied covenant of good faith

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and fair dealing.” In re Leix Estate, 797 N.W.2d 673, 683 (Mich. Ct. App. 2010)

(citation omitted).

      3.     Enterprise’s claim under California Vehicle Code § 3060 was properly

dismissed because it failed to allege any facts that FCA, under any reasonable

interpretation of the statute, “terminate[d] or refuse[d] to continue” the franchise. Cal.

Veh. Code § 3060.

      AFFIRMED.

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