JAY AUTOMOTIVE GROUP INC v. American Suzuki Motor Corporation

Filing 20

ORDER denying 9 Motion to Dismiss. Ordered by Judge Clay D. Land on 02/09/2012. (aaf)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
JAY AUTOMOTIVE GROUP, INC.
d/b/a Jay Suzuki,

*
*

Plaintiff,
*
vs.

CASE NO. 4:11-CV-129(CDL)
*

AMERICAN SUZUKI MOTOR
CORPORATION,

*

Defendant.

*
O R D E R

This action arises from a dispute between Plaintiff, Jay
Automotive Group, Inc. d/b/a Jay Suzuki (“Jay”), and Defendant,
American

Suzuki

Motor

Corporation

(“ASMC”).

These

parties

entered into a franchise agreement for Jay to sell, offer to
sell,

solicit,

vehicles,

and

and

advertise

sell

Suzuki

Suzuki

branded

vehicles,
parts

dealership in Muscogee County, Georgia.
violated

the

Georgia

O.C.G.A.

§

Motor

10-1-620

et

Vehicle

seq.,

at

a

Suzuki

motor

vehicle

Jay alleges that ASMC

Franchise

and

service

the

Practices

Federal

Act,

Racketeer

Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et
seq.

(“RICO”),

misrepresentation

and
in

committed

violation

of

fraud

and

negligent

Georgia

law.

Presently

pending before the Court is ASMC’s Motion to Dismiss (ECF No. 9)

for failure to state a claim.

For the following reasons, the

motion is denied.
FACTUAL ALLEGATIONS
Accepting the allegations in Jay’s First Amended Complaint
(“Amended Complaint”) (ECF No. 5) as true and construing all
reasonable inferences in Jay’s favor as required at this stage
of the proceedings, the Court finds that Jay has alleged the
following facts.
In May

of

1991, Jay entered into a

franchise

agreement

(“the Franchise”) with ASMC for the purpose of being licensed
and authorized to use the Suzuki trademark in: selling, offering
to sell, soliciting, and advertising the sale of new Suzuki
vehicles;

servicing

Suzuki

vehicles,

including

performing

warranty repairs authorized by ASMC; and selling Suzuki branded
parts.

Jay

operated

the

Franchise

as

an

authorized

Suzuki

dealer at its Suzuki Square dealership in Columbus, Georgia.
Because of ASMC’s actions, Jay was subsequently forced to close
the dealership.
Continuously from 2005, ASMC, through its representatives
and agents, represented to Jay via United States Mail, wire, and
internet transmittals that ASMC was “substantially increasing
the number of Suzuki vehicles to be distributed regionally and
that

[ASMC]

was

going

to

substantially

and

significantly

increase its national and regional efforts to promote the sale

2

of Suzuki vehicles.”
Am.

Compl.].

On

1st Am. Compl. ¶ 7, ECF No. 5 [hereinafter
September

13,

2005,

ASMC’s

president

of

automotive operations, Koichi Suzuki, personally represented to
Jay

at

its

undertake

dealership

intensified

that

ASMC

“would

marketing

and

be

engaged

promotions,

in
add

and
new

products, and take necessary measures to triple its sales from
2003 to 2007.”

Id. ¶ 8.

During 2005 to at least 2009, ASMC

repeatedly represented to Jay in monthly email communications
that

it

would

representatives

be

significantly

and

employees,

increasing

including

sales.

Pat

Murphy,

ASMC’s
Bruce

Shufreider, and Clint Wetty, made these representations.
Making
believe

these

ASMC

representations,

would

be

“engaging

ASMC

in

and

intended
funding

for

Jay

to

advertising,

marketing and product promotion in the form of advertisements
and

product

incentives.”

representations,

ASMC

knew

Id.

¶

these

10.

At

methods

accomplishing the goal of tripling sales.

the
were

time

of

integral

the
to

ASMC also “knew it

had no intention of expending its own money to provide adequate
advertising,

marketing

increase its sales.”

or

a

meaningful

sales

strategy

to

Id. ¶ 11.

In September 2005, ASMC “falsely reported an approximate
fifteen percent increase in nationwide sales” for August 2005.
Id. ¶ 12.

ASMC also misrepresented to Jay that Jay “could and

should achieve similar sales growth.”

3

Id.

From 2005 through

2008, ASMC continued to report similarly false sales numbers to
Jay

via

oral

communications,

transmittals.
Shufreider,

ASMC’s

and

email to Jay.
Performance

Wetty,

emails,

mail,

representatives,
made

similar

and

including

false

wire

Murphy,

representations

by

ASMC specially prepared for Jay annual Sales
Evaluations

and

Opportunity

and

Representation Guides showing false sales figures.

Marketing
ASMC further

reported false numbers in press releases and to trade journals,
such

as

Automotive

News.

ASMC

represented

to

Jay

that

Jay

“could and would achieve similar sales numbers and profit if
[Jay]

would

franchise.”
2008,

ASMC

spend

more

Id. ¶ 13.
knew

money

‘investing’

in

its

Suzuki

In making these representations through

the

representations

representations were false and misleading.

and

other

similar

Id. ¶ 14.

ASMC also “induced and conspired with Suzuki dealerships,
including Huntsville Suzuki, Shoals Suzuki and Varsity Suzuki,
to report inflated, false sales numbers.”

Id.

ASMC had the

express purpose of benefitting itself by inducing Jay and other
dealers

to

maintain

and

invest

additional

franchises and purchase vehicles from ASMC.
ASMC’s representations were false.

money

in

their

Jay did not know

ASMC knew that Jay did not

know and could not have known its representations were false.
From at least 2005 to 2007, ASMC knew Jay was considering
selling

or

terminating

the

Franchise.

4

ASMC

intended

its

representations

to

induce

Jay

to

continue

operating

Franchise and purchasing Suzuki vehicles from ASMC.

the

ASMC also

intended to induce Jay to spend money advertising, marketing,
and

promoting

the

Suzuki

brand.

In

reliance

on

ASMC’s

representations, Jay did not terminate or sell its Franchise.
Id. ¶ 17.
In June 2007, Jay executed a new dealership agreement with
ASMC

and

continued

Franchise.
ASMC’s

its

dealership,

investing

more

in

the

Jay entered this agreement in express reliance on

falsely

reported

sales

numbers,

assurances

of

growing

Jay’s sales numbers, and promises to increase the visibility of
Suzuki products in American markets with increased advertising
and marketing efforts by ASMC.

Id. ¶ 18.

Jay invested more

than $1,500,000.00 in building and equipping a new and larger
sales

facility,

which

ASMC

maintain the Franchise.

expressly

required

for

Jay

to

Jay also incurred customary operating

costs and expenses associated with operating and maintaining the
expanded
costs,
those

Franchise.

which

were

services.

Jay

incurred

necessary

ASMC

failed

advertising

because
to

ASMC

and

marketing

refused

adequately

to

provide

market

the

Suzuki

brand even though it controlled the content and form of all
advertisements and benefitted from the increased brand exposure
provided

by

Jay’s

marketing.

ASMC

also

made

material

misrepresentations about the Suzuki brand’s viability. Id. ¶ 19.

5

Additionally,
models

to

Jay

ASMC

despite

failed

to

provide

Jay’s

repeated

marketable

requests

for

vehicle
certain

vehicles by specific descriptions that Jay could reasonably be
expected to sell in its market.
requested

models

despite

ASMC refused to provide the

their

availability

allocated them to “more favored dealerships.”

and

instead

Id. ¶ 20.

From

2005 to the close of the dealership, ASMC ignored Jay’s repeated
requests

to

purchase

marketable

inventory

and

only

made

available less marketable vehicles or conditioned the sale of
marketable vehicles on “impermissible extraneous requirements.”
Id.

¶

21-22.

The

less

marketable

vehicles

included

those

overloaded with options and out of the price range for Jay’s
buyers’ market and the locality’s demographic.

ASMC only gave

Jay the option to buy the “leftover” and less marketable Suzuki
brand vehicles that other dealers did not purchase.

Id. ¶ 22.

Jay performed poorly, and its poor performance was directly
attributable to ASMC’s failure to reasonably promote the Suzuki
brand

and

ASMC’s

failure

to

vehicles and new sales products.

provide

requested

marketable

Id. ¶ 23. ASMC’s failures and

representations discussed above as well as decreasing the number
of Suzuki vehicles distributed to Jay’s region caused Jay the
following monetary losses, in addition to continued damage to
reputation: more than $400,000.00 for the 2007 fiscal year; more

6

than

$350,000.00

for

the

2008

fiscal

year;

and

more

than

$75,000.00 for the 2009 fiscal year.
On December 2, 2009, a complaint was filed in the Northern
District of Alabama, alleging ASMC “colluded and conspired with
certain Suzuki dealers . . . to report false and misleading
sales numbers to [Jay] among other Suzuki dealers.”

Id. ¶ 34

(referencing D2K, Inc. d/b/a/ Suzuki of Huntsville, et al. v.
American Suzuki Motor Corporation, No. 5:09-CV-02436).

With the

filing of that complaint, Jay learned for the first time that
ASMC,

including

Potter,

and

its

general

president
manager

Koichi

Patrick

Suzuki,
Murphy,

executive

Jim

“conspired

and

colluded with numerous [named] dealers . . . to falsely report
inflated sales numbers from 2005 through 2008.”

Id. ¶ 35.

committed

other

these

acts

“to

defraud

[Jay]

and

ASMC

innocent

dealers by representing that the falsely reported sales numbers
were in fact achievable by [Jay].”

Id. ¶ 36.

During 2010, ASMC again decreased the number of vehicles it
distributed regionally, failed to promote the regional sale of
Suzuki vehicles or the Suzuki brand, and refused to provide Jay
with more marketable inventory or new sales products.

In May

2010, ASMC “attempted to induce [Jay] to voluntarily terminate
the Franchise, which offer [Jay] ultimately rejected.”
29.

ASMC

including

sought
the

to

prevent

Franchise

a

Act,

by

7

lawsuit
trying

under
to

Id. ¶

Georgia

induce

Jay

law,
to

voluntarily terminate the Franchise.

At no time did ASMC notify

Jay of any intention to terminate the Franchise.
Starting in approximately May 2010, ASMC “attempt[ed] to
besmirch”

Jay’s

reputation

terminate the Franchise.

and

induce

Id. ¶ 31.

Jay

to

voluntarily

To do so, ASMC, “through

its employees, including but not limited to Patrick Murphy, has
intentionally promulgated misleading scores of [Jay’s] customer
satisfaction ratings and has wrongfully stated that [Jay] has
inadequate or substandard customer satisfaction review scores in
correspondence

to

decreased

number

the

[Jay].”
of

Id.

During

vehicles

it

2011,

ASMC

distributed

again

regionally,

failed to promote the regional sale of Suzuki vehicles or the
Suzuki brand, and refused to provide Jay with more marketable
inventory

or

new

sales

products.

ASMC’s

actions

and

aforementioned representations and failures caused Jay to incur
a loss of over $200,000.00 for the 2010 fiscal year.
“ASMC
fraudulent

intended

to

and

misrepresentations

Id. ¶ 37.

did

benefit

to,

and

financially

inducement

of,

from

its

[Jay].”

These benefits included, but were not limited to,

selling vehicles to Jay and benefitting from the promotion and
recognition for the Suzuki brand furnished by Jay’s self-funded
advertising and marketing campaigns.

Ultimately, ASMC’s actions

resulted

business

in

Jay’s

loss

of

money,

reputation,

inability to generate a profit and continue operation.

8

and

DISCUSSION
ASMC seeks to dismiss all of Jay’s claims based on its
failure to state a claim under Federal Rule of Civil Procedure
12(b)(6).

ASMC seeks to dismiss Jay’s claims that are grounded

in fraud because of Jay’s alleged failure to plead those claims
with sufficient specificity as required by Federal Rule of Civil
Procedure

Rule

9(b).

The

Court

will

first

evaluate

the

Complaint’s compliance with Rule 9(b) and then evaluate ASMC’s
other

arguments

for

dismissal

as

to

each

claim

under

Rule

12(b)(6).
I.

Federal Rule of Civil Procedure 9(b)
ASMC contends that Jay’s claims are all grounded in fraud

and that the Amended Complaint does not comply with Rule 9(b)
because the facts pled by Jay in support of its claims are not
sufficiently
dismiss,

a

specific.
complaint

“Generally,
‘does

not

to

survive

need

a

motion

detailed

to

factual

allegations,’ but it must provide the defendant with fair notice
of what the claim is about and the grounds upon which it rests.”
Curtis Inv. Co. v. Bayerische Hypo-und Vereinsbank, AG, 341 F.
App’x 487, 491 (11th Cir. 2009) (per curiam) (quoting Bell Atl.
v. Twombly, 550 U.S. 544, 545 (2007)).

Where the claims are

grounded in fraud, a complaint must comply with Rule 9(b)’s
requirement that “[i]n alleging fraud or mistake, a party must
state with particularity the circumstances constituting fraud or

9

mistake.

Malice, intent, knowledge, and other conditions of a

person's mind may be alleged generally.” Fed. R. Civ. P. 9(b).
“Thus, under Rule 9(b), it is sufficient to plead the who, what,
when, where, and how of the allegedly false statements and then
allege

generally

that

requisite intent.”

those

statements

were

made

with

the

Mizzaro v. Home Depot, Inc., 544 F.3d 1230,

1237 (11th Cir. 2008).

Rule 9(b) “is read alongside [Federal

Rule of Civil Procedure 8(a)], which requires only ‘a short and
plain

statement

of

the

entitled to relief.’”

claim

showing

that

the

pleader

is

Brooks v. Blue Cross & Blue Shield of

Fla., Inc., 116 F.3d 1364, 1371 (11th Cir. 1997) (quoting Fed.
R. Civ. P. 8(a)).

Accordingly, “[t]he application of [Rule

9(b)] must not abrogate the concept of notice pleading.”

Durham

v. Bus. Mgmt. Assocs., 847 F.2d 1505, 1511 (11th Cir. 1998).
The

gravamen

fraudulently
vehicles,
expend

induced

including

money

Franchise.

of

in
Jay

Jay’s
it

Amended

to

those

retain

it

operating,
alleges

did

Complaint

the
not

Franchise,
voluntarily

advertising,

that

ASMC

is

did

and
so

that
buy

ASMC

Suzuki

order,

and

expanding

the

by

knowingly

misrepresenting to Jay that it would promote the sale of Suzuki
vehicles via advertisements and marketing in Jay’s region and
that Jay could and would meet increased sales figures.

Jay

further claims that ASMC used falsified sales numbers to induce
Jay, and ASMC knew that it never intended to spend its own money

10

on adequate advertising, marketing, or a meaningful sales and
promotion strategy to increase sales for Jay or Jay’s region.
Jay also alleges that ASMC knew Jay would, and that Jay did in
fact,

rely

on

these

representations

in

investing

in

the

Franchise to its detriment and to the benefit of ASMC and the
Suzuki brand.
customer
refused

Additionally, Jay claims that ASMC reported false

satisfaction
to

provide

dealership’s

scores
Jay

to

with

demographic

Jay.

ASMC

marketable

as

requested

also

allegedly

inventory
by

Jay

for

or

the

placed

unreasonable conditions on the receipt of such inventory.
These

allegations

clearly

claims asserted against it.

place

ASMC

on

notice

of

the

Moreover, Jay has not made general

conclusory statements in support of its claims, but instead has
alleged

particular

facts

to

demonstrate

the

fraudulent

representations and conduct that form the basis for Jay’s claims
against ASMC in this lawsuit.
specific

factual

Jay’s Amended Complaint contains

allegations

as

to

when

the

alleged

misrepresentations were made, who made them, and how they were
communicated.

E.g.,

Am.

Compl.

¶¶

8-9,

12-13.

Jay

also

adequately alleges that in making these statements and taking
these

actions,

ASMC

intended

for

Jay

to

believe

its

representations and to induce Jay to act to its detriment, even
though ASMC knew that it had no intentions of following through
on the marketing, advertising, and efforts to increase sales

11

that it represented to Jay.

E.g., id. ¶ 14.

Further, ASMC knew

Jay “did not and could not have known these representations to
be false.”

Id. ¶ 15.

This is sufficient under Rule 9(b). See

Durham, 847 F.2d at 1511-12.
The

purpose

of

Rule

9(b)’s

particularity

requirement

is

two-fold: (1) alert defendants to the “precise misconduct with
which they are charged”; and (2) protect defendants “against
spurious charges of immoral and fraudulent behavior.”
1511

(internal

quotation

marks

omitted).

“[F]air

Id. at

notice

is

[p]erhaps the most basic consideration underlying Rule 9(b).”
Brooks, 116 F.3d at 1381 (internal quotation marks omitted).
ASMC

cannot

reasonably

complain

that

it

is

not

regarding what misconduct Jay alleges it committed.
finds

that

Jay’s

Amended

Complaint

satisfies

on

notice

The Court

Rule

9(b)’s

particularity requirement.
II.

Failure to State a Claim
When considering a 12(b)(6) motion to dismiss, the Court

must

accept

complaint

as

and

true
limit

all

facts

its

consideration

exhibits attached thereto.

set

forth
to

in
the

the

plaintiff=s

pleadings

and

Twombly, 550 U.S. at 556; Wilchombe

v. TeeVee Toons, Inc., 555 F.3d 949, 959 (11th Cir. 2009).

“To

survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.’”

12

Ashcroft v. Iqbal, 556 U.S.

662, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at
570).
“to

The complaint must include sufficient factual allegations

raise

a

right

to

relief

Twombly, 550 U.S. at 555.

above

the

speculative

“[A] formulaic recitation of the

elements of a cause of action will not do[.]”
complaint

must

contain

level.”

factual

Id.

allegations

Although the

that

“raise

a

reasonable expectation that discovery will reveal evidence of”
the

plaintiff=s

claims,

id.

at

556,

“Rule

12(b)(6)

does

not

permit dismissal of a well-pleaded complaint simply because ‘it
strikes

a

savvy

judge

that

actual

proof

of

those

facts

is

improbable,’” Watts v. Fla. Int’l Univ., 495 F.3d 1289, 1295
(11th Cir. 2007) (quoting Twombly, 550 U.S. at 556).
A.

Georgia Motor Vehicle Franchise Act Claims

The first three counts of Jay’s Amended Complaint assert
claims under three separate parts of the Georgia Motor Vehicle
Franchise

Practices

Act

(“Franchise

Act”).

Count

1

asserts

claims under Part 2 of the Franchise Act titled “Motor Vehicle
Dealer’s Day in Court Act.”
of

the

Franchise

Continuation

and

Act

Succession

Count 2 asserts claims under Part 4
titled
Act.”

“Motor

Vehicle

Finally,

Count

Franchise
3

asserts

claims under Part 5 of the Franchise Act titled “Motor Vehicle
Fair Practices Act.”

13

1.

Motor Vehicle Dealer’s Day in Court Act and Motor
Vehicle Franchise Continuation & Succession Act
Claims (Counts 1 and 2)

Jay asserts the following conduct by ASMC in support of
Count 1 of its Amended Complaint:

constructive termination of

the franchise, bad faith operation of the franchise, and bad
faith withholding of benefits in violation of the Motor Vehicle
Dealer's Day in Court Act, O.C.G.A. § 10–1–631 (“Dealer's Act”).
In support of Count 2, Jay alleges that ASMC terminated the
franchise without good cause in violation of the Motor Vehicle
Franchise Continuation and Succession Act, O.C.G.A. § 10-1-651
(“Continuation

Act”).

ASMC

seeks

dismissal

of

these

counts

arguing that neither of the applicable statutes provides a claim
for “constructive” termination of the franchise and that Jay has
not adequately alleged a failure of good faith in the operation
of

the

franchise

or

withholding

of

benefits.

The

Court

addresses these issues in turn.
i.
Jay
franchise

CONSTRUCTIVE TERMINATION OF THE FRANCHISE

claims

that

ASMC

without

good

faith,

constructively
good

cause,

terminated

or

notice

of

the
its

intent to terminate in violation of the Dealer’s Act and the
Continuation Act.

Am. Compl. ¶¶ 40-41, 46.

ASMC argues these

claims of constructive termination in Counts 1 and 2 should be
dismissed because the Franchise continues to operate and the
statutes do not provide, and no Georgia court has recognized, a

14

constructive termination claim under the Acts as pled in Counts
1 and 2.
Contrary
dealership

to

ASMC’s

contemplated

suggestion,
by

the

Jay

Franchise

alleges
is

the

longer

no

that

in

operation due to ASMC’s actions and that ASMC constructively
terminated the Franchise.
argument regarding

Am. Compl. ¶ 6.

Addressing ASMC’s

constructive termination of the franchise,

the Court acknowledges that Georgia courts have not yet decided
whether

a

claim

for

“constructive”

termination

based

on

a

franchisor’s failure to act in good faith is permitted under the
Dealer’s Act as pled in Count 1 or under the Continuation Act
for lack of notice or good cause as pled in Count 2.

Although

Georgia courts have not yet decided whether the Acts contemplate
claims for “constructive” termination, the Eleventh Circuit has
implicitly held that claims for constructive termination based
upon bad faith would be permissible.

In Carroll Kenworth Truck

Sales, Inc. v. Kenworth Truck Co., 781 F.2d 1520 (11th Cir.
1986), the Court concluded that bad faith conduct giving rise to
a

constructive

termination

of

a

franchise

agreement

is

cognizable under a similar Alabama statute, the Alabama Motor
Vehicle Franchise Act, Ala. Code § 8-20-1
Act”).

Id. at 1528-29.

et seq.

(“Alabama

Although the Court did not expressly

state that a constructive termination claim was actionable, such
a finding was necessary to the Court’s holding.

15

The plaintiff

in

that

case

had

alleged

that

its

franchise

agreement

was

constructively terminated in bad faith, and the Eleventh Circuit
found that under the Alabama statute “a jury reasonably could
conclude

[Defendant]

failed

to

act

in

good

faith.”

Id.

Therefore, the Eleventh Circuit remanded the case for the trial
of that claim.

Id.

As described below, the Alabama statute

interpreted by the Eleventh Circuit in Carroll Kenworth Truck
Sales, Inc. is essentially indistinguishable from the Georgia
statute in this case.
The Alabama Act, like the Georgia Franchise Act, defines
good

faith

as

“[h]onesty

in

fact

and

the

observation

of

reasonable commercial standards of fair dealing in the trade.”
Ala. Code § 8-20-3(7); see also O.C.G.A. § 10-1-622(8) (same
definition).

The terms of the Alabama Act are similar to the

Georgia Franchise Act, and both require good faith, good cause,
and

notice

in

terminating

a

franchise

or

dealer

agreement.

Compare Ala. Code § 8-20-4.1 (“Every dealer agreement . . .
shall impose on the parties the obligation to act in good faith
and to deal fairly.”) and Ala. Code § 8-20-5 (“[n]o manufacturer
shall cancel, terminate . . . any franchise relationship with a
licensed
[satisfies

new
the

motor

vehicle

statute’s

dealer

notice

unless

the

requirements,

manufacturer
acts

in

good

faith, or has good cause for the termination]”); with O.C.G.A. §
10-1-631(a) (Dealer’s Act requires franchisor to act in good

16

faith in “termination” of a franchise) and
651(a)

(“no

franchisor

shall

cancel,

O.C.G.A. § 10-1-

terminate

.

.

.

any

franchise with a dealer unless the franchisor [satisfies the
statute’s

notice

termination]”).

requirements
Therefore,

and

if

has

cause

for

franchisor

a

good

forces

the

termination of a franchise agreement in bad faith or without
good cause and/or notice, the Court finds the franchisee has a
claim even if the franchisor did not explicitly use the magic
words: “we terminate the franchise.”
contrary,

which

is

unsupported

authority, is rejected.

by

ASMC’s argument to the

any

binding

or

persuasive

Accordingly, this aspect of Count 1 of

Jay’s Amended Complaint states a claim upon which relief may be
granted,

and

Count

2

states

a

claim

for

constructive

termination.
ii.

BAD FAITH OPERATION OF BUSINESS, BUSINESS
TRANSACTIONS, & WITHHOLDING OF BENEFITS

As part of Count 1, Jay alleges two additional violations
of the Dealer Act.

First, Jay alleges that ASMC failed to act

in good faith in operating the Franchise, failing to report
Jay’s true customer satisfaction scores and ratings, and in its
business transactions with Jay.
claims

on

violation
agreement.

the
tied

basis
to

a

that

Jay

specific

ASMC seeks to dismiss these
did

not

plead

obligation

in

a
the

good

franchise

The Court finds this argument unpersuasive.

17

faith

The

Dealer

Act

generally

imposes

“in

a

duty

connection

of

good

with

the

faith

on

operation

a
of

franchisor
a

dealer’s

business pursuant to a franchise” or “in any of its business
transactions with a dealer.”

O.C.G.A. § 10-1-631(a)(1).

The

Court finds that Jay has adequately pled this aspect of its
claim under Count 1, and, therefore, it survives ASMC’s motion
to dismiss.
Second, Jay contends that ASMC “intentionally and in bad
faith

withheld

assistance

from

inventory
[Jay].”

and
Am.

advertising

Compl.

¶

44.

and

marketing

This

claim

is

properly pled and brought under the Dealer Act, O.C.G.A. § 10-1631(a)(2),
benefits

which

in

any

declares
of

violates the statute.

its

that

a

franchisor’s

withholding

business

transactions

with

a

of

dealer

ASMC presents no arguments in support of

the dismissal of this aspect of Jay’s claim under Count 1.
For all of the reasons previously stated, the Court denies
ASMC’s motion to dismiss the claims asserted in Counts 1 and 2.
2.

Georgia Motor Vehicle Fair Practices Act Claims
(Count 3)

In Count 3 of its Amended Complaint, Jay asserts claims
under the Georgia Motor Vehicle Fair Practices Act, O.C.G.A. §
10-1-660 et seq. (“Fair Practices Act”).
First, Jay alleges that, in violation of O.C.G.A. § 10-1661, ASMC attempted to and did require and/or coerce Jay to: (1)

18

order and accept delivery of Suzuki vehicles that Jay did not
voluntarily order and that were not advertised by ASMC in Jay’s
market;

and

facilities

(2)

for

significantly

the

Franchise

expand

while

and

making

construct
knowingly

new
false

assurances that ASMC would provide a reasonable supply of new
motor vehicles to justify the expansion.
See §§ 10-1-661(b)(1), (4).

Am. Compl. ¶¶ 48-49.

ASMC seeks to dismiss these claims

because Jay failed to identify any term or provision of the
parties’ dealer agreement in connection with these claims and
failed to allege conduct amounting to coercion or attempts to
coerce.

The

plain

terms

of

the

statute

require

that

the

franchisee prove that the franchisor “compel[led] or attempt[ed]
to compel by threat or use of force” the franchisee to give up
rights
O.C.G.A.

it
§

had

by

virtue

10-1-661(a).

of

Jay

the
has

franchise

adequately

relationship.

alleged

such

a

claim.
Jay alleges that ASMC forced it into the “choice of either
not buy[ing] any Suzuki vehicles at all or buying the ‘leftover’
less sellable Suzuki vehicles,” by refusing to fill Jay’s orders
for

sellable

sellable
Am.

inventory

Compl.

Hobson’s

vehicles

¶¶

on

21-22,

choice,”

and

“condition[ing]

impermissible
24,

which

extraneous

26.

Jay

means

that

option: to take or leave the cars.

19

receipt

calls
it

Id. ¶ 22.

more

requirements.”

this

had

of

only

a

“continual
one

actual

In other words,

Jay claims ASMC forced it to either have inventory unsuited to
its market or no inventory at all.
allegations

adequately

state

a

The Court finds that these

claim

under

O.C.G.A.

§

10-1-

661(a)-(b)(1).
Jay also alleges that ASMC expressly required it to modify
and expand its facilities to maintain the Franchise.
¶ 19.

Am. Compl.

Because Jay’s choice was either to expand or lose the

Franchise, it alleges that it was coerced into the expansion
without

proper

assurances

by

ASMC.

These

allegations

sufficiently state a claim under O.C.G.A. § 10-1-661(b)(4).
Jay

additionally

alleges

claims

662(a)(1), (5), (7), (9), & (11).

under

O.C.G.A.

§

10-1-

See Am. Compl. ¶¶ 50-54.

As

to these claims, ASMC seeks dismissal generally, but ASMC fails
to make any specific argument as to why these claims should be
dismissed.

Therefore,

the

Court

declines

to

dismiss

these

claims at this stage in the proceedings.
For

the

reasons

stated

above,

ASMC’s

motion

to

dismiss

Count 3 of Jay’s Amended Complaint is denied.
B.

Federal Civil RICO (Count 4)

In Count 4 of his Amended Complaint, Jay asserts a federal
civil RICO claim pursuant to 18 U.S.C. § 1961 et seq., claiming
ASMC

engaged

intentionally

in

mail

false

misrepresentations

to

and

wire

sales
Jay

fraud

numbers

starting

20

in

when

it

and

other

2005

and

communicated
material

continuously

thereafter.

Am. Compl. ¶ 55-60; Pl.’s Resps. to Civil RICO

Interrogs. No. 1, ECF No. 16-1 [hereinafter RICO Interrogs.].1
Based on these predicate acts, Jay alleges RICO violations under
18 U.S.C. § 1962(a)-(c).

ASMC contends Jay’s RICO claim should

be dismissed because it fails to state a claim for relief under
the RICO statute, specifically failing to plead the requirements
of § 1962(a)-(c).
“[A]ny person injured in his business or property by reason
of a violation” of § 1962 may bring a civil action for damages
in federal district court.

18 U.S.C. § 1964(c).

“To state a

claim under RICO a plaintiff must allege each of the following
four elements: (1) conduct (2) of an enterprise (3) through a
pattern (4) of racketeering activity.”

Durham, 847 F.2d at 1511

(internal quotation marks omitted).
ASMC
corporation

qualifies
and

the

as

an

other

“enterprise”

dealers

with

because

which

ASMC

it

is

a

allegedly

worked are also legal entities associated in fact with ASMC,
their franchisor.

18 U.S.C. § 1961(4); RICO Interrogs. No. 3.

1

Jay submitted its RICO Interrogatories required by Local Rule 33.3
after ASMC filed its Motion to Dismiss. Because Jay originally filed
its action in state court, it did not file these Interrogatories with
its complaint as required by the Rule. Local Rule 33.3 requires RICO
Interrogatories “[f]or the purpose of aiding the court and the RICO
defendants in ascertaining the validity and scope of RICO claims.”
M.D. Ga. R. 33.3.
Because the purpose of the interrogatories is to
expound upon the complaint in a RICO action, the Court considers the
interrogatories as did ASMC in its Reply. Def. American Suzuki Motor
Corp.’s Reply in Supp. of its Mot. to Dismiss Pl.’s First Am. Compl.
9-10 & n.5, ECF No. 19.

21

Notably, “a single entity can be both the defendant and the
‘enterprise’

in

which

the

defendant

participated.”

Johnson

Enters. of Jacksonville, Inc. v. FPL Grp., 162 F.3d 1290, 1317
n. 66 (11th Cir. 1998).
“Racketeering

activity”

includes,

among

other

predicate

acts, acts indictable under the mail and wire fraud statutes, 18
U.S.C. §§ 1341, 1343, on which Jay predicated its claims.
U.S.C. § 1961(1)(B).

18

Mail or wire fraud “occurs when a person

(1) intentionally participates in a scheme to defraud another of
money or property and (2) uses the mails or wires in furtherance
of that scheme.”
quotation

Johnson Enters., 162 F.3d at 1317 (internal

marks

omitted).

“[C]onduct

forms

a

pattern

[of

racketeering] if it embraces criminal acts that have the same or
similar purposes, results, participants, victims, or methods of
commission,

or

otherwise

are

interrelated

characteristics and are not isolated events.”

by

distinguishing

Durham, 847 F.2d

at 1512 (quoting Sedima S.P.R.L. v. Imrex Co., 473 U.S. 479, 497
n.14 (1985)).

Jay alleges that ASMC’s conduct included making

misrepresentations and false statements to Jay regarding sales
figures, advertising, vehicle supply, and business operations
through

mail

and

wire

transmissions,

including

emails.

Jay

claims the false representations by ASMC and its various named
employees

and

representatives

through

the

mails

occurred continuously from 2005 to at least 2009.

22

and

wires

See e.g., Am.

Compl.

¶ 9.

Based on these allegations, the Court concludes

that Jay has alleged each essential element of a civil RICO
claim.
Jay has also sufficiently pled the specific conduct that
violates 18 U.S.C. § 1962(a)-(c).
of

§

1962(a),

pattern

of

“which

prohibits

racketeering

Jay first claims a violation
investing

activities

the

in

proceeds

an

of

a

enterprise.”

Liquidation Comm’n of Banco Intercont’l, S.A. v. Renta, 530 F.3d
1339, 1352 (11th Cir. 2008).

Jay alleges that ASMC used or

invested the proceeds ASMC gained from Jay by inducing Jay and
similarly situated dealers, through a pattern of reporting false
sales

data,

to

invest

in

the

Franchise

and

purchase

Suzuki

products, and ASMC used or invested back into ASMC the income
derived from this conduct.

RICO Interrogs. No. 6.

Second, Jay

contends ASMC violated § 1962(b), which holds liable those who
“through a pattern of racketeering activity . . . acquire or
maintain, directly or indirectly, any interest in or control of
any enterprise.”

18 U.S.C. § 1962(b).

Jay claims that through

its racketeering activities, ASMC maintained its interest and
control of Jay and other dealerships by inducing Jay and others
to

maintain

their

dealerships

and

purchasing Suzuki vehicles from ASMC.
18, 30; RICO Interrogs. No. 7.

franchises

and

continue

E.g., Am. Compl. ¶¶ 14-

Jay also claims a violation of

18 U.S.C. § 1962(c), “which prohibits a person associated with

23

‘an enterprise’ from participating, ‘directly or indirectly,’ in
the

enterprise’s

activity.’”

affairs

‘through

a

pattern

of

racketeering

Douglas Asphalt Co. v. Qore, Inc., 657 F.3d 1146,

1151 (11th Cir. 2011).

Contrary to ASMC’s assertion that Jay

did not set forth the individuals employed and associated with
the enterprise who participated in the enterprises affairs, Jay
did so both in its RICO Interrogatory Responses and its Amended
Complaint.

Am. Compl. ¶¶ 9, 13-14, 31; RICO Interrogs. No. 3.

Finally, ASMC challenges whether Jay has established the
requisite

causation

for

its

RICO

action, a plaintiff must satisfy

claims.

In

18 U.S.C.

a

civil

RICO

§ 1964(c), which

requires (1) an injury to “business or property,” and (2) “that
such injury was ‘by reason of’ the substantive RICO violation.”
Williams v. Mohawk Indus. Inc., 465 F.3d 1277, 1282-83 (11th
Cir.

2006)

(per

curiam)

(quoting

§

1964(c)).

Jay

asserted

specific harm and injury to its dealership business by reason of
ASMC’s

inducing

advertising,
vehicles,

Jay

to

expanding

in

invest
its

reliance

in

the

showroom,

on

Franchise,

and

ASMC’s

including

purchasing

false

Suzuki

statements

and

misrepresentations to its financial and reputational detriment,
culminating in the dealership’s closing.

Am. Compl. ¶¶ 6-7, 10-

19, 37-38; RICO Interrogs. No. 10.
Defendant
appropriate

will

time

to

certainly

have

demonstrate

24

the
that

opportunity
no

evidence

at

the

exists

supporting Jay’s allegations.

However, the Court concludes that

Jay’s Amended Complaint sufficiently states RICO claims against
ASMC.

Accordingly, the Court denies ASMC’s motion to dismiss as

to Jay’s RICO claims.
C.

Fraud (Count 5)

Jay also asserts a fraud claim against ASMC under Georgia
law.

In order to establish fraud under Georgia law, a plaintiff

must show five elements: “(1) false representation by defendant;
(2)

scienter;

(3)

intent

to

induce

the

plaintiff

to

act

or

refrain from acting; (4) justifiable reliance by the plaintiff;
and (5) damage to the plaintiff.”

Ades v. Werther, 256 Ga. App.

8, 11, 567 S.E.2d 340, 343 (2002).
Jay’s fraud claim is predicated on the following alleged
misrepresentations:

(1)

ASMC

was

increasing

the

number

of

vehicles to be distributed (Am. Compl. ¶ 7); (2) ASMC would
increase

its

national

and

regional

marketing

and

advertising

efforts to promote Suzuki vehicles (id. ¶¶ 7-10); (3) ASMC would
significantly increase Suzuki sales and Jay could and should
achieve sales growth (id. ¶¶ 8-10, 12-13); (4) ASMC and its
representatives reported false sales numbers to Jay (id. ¶¶ 1214,

35-36);

customer

(5)

ASMC

satisfaction

promulgated
ratings

misleading

and

wrongly

satisfaction review scores (id. ¶ 31).

scores
stated

of

Jay’s

customer

Jay claims ASMC made

these representations to benefit financially and to induce Jay

25

to continue investing in the Franchise, promoting the Suzuki
brand, and purchasing Suzuki vehicles from ASMC.
62.

Id. ¶¶ 13-16,

Further, Jay contends that while ASMC intended for Jay to

believe

these

statements,

fulfilling them.

ASMC

knew

Id. ¶¶ 10-11.

it

had

no

intention

of

Jay also alleges that ASMC knew

that Jay did not and could not have known ASMC’s representations
were false, id. ¶ 15, and that ASMC knew Jay was contemplating
selling or terminating the Franchise when it made the mentioned
representations,

id.

¶

16.

Finally,

these

representations

induced Jay to act to its detriment by continuing the Franchise,
continuing

to

buy

vehicles

from

ASMC,

spending

money

on

advertising, and entering into a new Dealership Agreement in
2007, among other things.

Id. ¶¶ 16-19.

As a result, Jay

incurred monetary damages and damages to its reputation.

Id. ¶¶

19, 23, 25-28, 33, 37, 64.
ASMC argues that this claim should be dismissed because
Jay’s claim is based on promissory statements about what ASMC
would or would not do in the future and such statements or the
failure

to

correct

that

fulfill
as

a

them

cannot

general

rule

constitute
“actionable

fraud.

ASMC

is

fraud

cannot

be

predicated upon promises to perform some act in the future.”
Buckley v. Turner Heritage Homes, Inc., 248 Ga. App. 793, 795,
547 S.E.2d 373, 376 (2001) (internal quotation marks omitted).
And, “actionable fraud [does not] result from a mere failure to

26

perform promises made.”
However,

“[a]n

Id. (internal quotation marks omitted).

exception to the general rule exists where a

promise as to future events is made with present intent not to
perform or where the promisor knows that the future event will
not take place.”

Id.

Based on the allegations summarized above, the Court finds
that

Jay

knowing

has
them

alleged
to

be

that

ASMC

false,

made

with

no

false

representations,

intention

to

perform.

Accordingly, Jay states a claim for fraud under Georgia law.
The

Court

also

rejects

ASMC’s

adequately allege scienter.

contention

that

Jay

did

not

Since Jay has sufficiently alleged

a cause of action for fraud, ASCM’s motion to dismiss that claim
is denied.
D.

Negligent Misrepresentation (Count Six)

Finally, Jay makes a claim of negligent misrepresentation
against ASMC.

The tort of negligent misrepresentation consists

of three elements: (1) the defendant negligently supplied false
information to foreseeable persons; (2) such persons reasonably
relied

upon

economic

that

harm

information;

proximately

and

(3)

resulting

such

persons

suffered

from

such

reliance.

Hardaway Co. v. Parsons, Brinckerhoff, Quade & Douglas, Inc.,
267 Ga. 424, 426, 479 S.E.2d 727, 729 (1997).
ASMC seeks to dismiss this claim on the basis that Jay
failed to plead the first element required for the tort, arguing

27

that Jay’s negligent misrepresentation claim asserts a willful
misrepresentation and makes no mention of negligence by ASMC.
Construing all reasonable inferences in Jay’s favor, as required
at this stage of the proceedings, the Court finds that Jay’s
negligent

misrepresentation

claim to its fraud claim.
Jay

cannot

prevail

misrepresentation

on

claim

claim

is

pled

as

an

alternative

Although the Court acknowledges that

both

a

fraud

claim

the

elements

because

and
of

a

negligent

each

claim

potentially conflict, the Court finds that Jay has stated an
alternative claim for negligent misrepresentation under Georgia
law.
III. Statute of Limitations
ASMC also seeks dismissal of all of Jay’s claims to the
extent they are barred by the applicable statute of limitations.
The applicable statute of limitations for each of Jay’s claims
is four years.

O.C.G.A. § 10-1-625 (Franchise Act); Rotella v.

Wood, 528 U.S. 549, 552 (2000) (RICO); Anthony v. Am. Gen. Fin.
Servs.,

Inc.,

287

Ga.

448,

461,

697

(citing O.C.G.A. § 9–3–31) (Fraud).
of

limitations

are

tolled

until

S.E.2d

166,

176

(2010)

Furthermore, the statutes
Jay,

exercising

reasonable

diligence, would have discovered the conduct giving rise to the
claims.

O.C.G.A.

§

10-1-625

(Franchise

Act);

Pac.

Harbor

Capital, Inc. v. Barnett Bank, N.A., 252 F.3d 1246, 1251 (11th
Cir. 2001) (RICO); Hamburger v. PFM Capital Mgmt., Inc., 286 Ga.

28

App. 382, 387–88 & n. 21, 649 S.E.2d 779, 784 & n.21 (2007)
(Fraud).

Moreover,

dismissal

of

a

claim

“on

statute

of

limitations grounds is appropriate only if it is apparent from
the face of the complaint that the claim is time-barred.”

Tello

v. Dean Witter Reynolds, Inc., 410 F.3d 1275, 1288 (11th Cir.
2005) (internal quotation marks omitted).
Jay filed its original Complaint in this action on July 28,
2011.

Notice of Removal Attach. 1, Complaint, ECF No. 1-1, at 5

of 17.

Jay alleges that it did not know and could not have

known ASMC’s representations were false at the time they were
made.

Am. Compl. ¶ 15.

Further, Jay states that it did not

become aware that the sales numbers had been falsely reported
until December 2, 2009.

Id. ¶¶ 34-35.

Therefore, it is not

apparent from the face of the Amended Complaint that the claims
asserted against ASMC are barred by the statute of limitations.
The Court hastens to add, however, that its ruling does not mean
that

ASMC

may

not

eventually

prevail

on

its

statute

of

limitations defenses, but at this stage of the proceedings, the
Court cannot find that Jay’s claims should be dismissed based on
the statute of limitations.
CONCLUSION
As previously explained, the Court denies ASMC’s Motion to
Dismiss (ECF No. 9).

The stay in this action is hereby lifted.

The parties shall submit a joint proposed scheduling discovery

29

order, consistent with the Court’s order dated October 5, 2011
(ECF No. 6), by March 9, 2012.
IT IS SO ORDERED, this 9th day of February, 2012.

s/Clay D. Land
CLAY D. LAND
UNITED STATES DISTRICT JUDGE

30