Wayzata Nissan, LLC v. Nissan North America, Inc.
ORDER granting 6 Motion to Remand to State Court; denying 79 Motion for TRO; denying 79 Motion for Preliminary Injunction (Written Opinion). Signed by Senior Judge David S. Doty on 7/23/2014. (PJM)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 13-3651(DSD/FLN)
Wayzata Nissan, LLC,
Nissan North America, Inc.,
Aaron R. Thom, Esq., Christopher W. Madel, Esq., Amira A.
ElShareif, Esq., Nicole S. Frank, Esq. and Robins,
Kaplan, Miller & Ciresi LLP, 800 LaSalle Avenue, Suite
2800, Minneapolis, MN 55402, counsel for plaintiff.
Brandon L. Bigelow, Esq., Caleb J. Schillinger, Esq.,
William N. Berkowitz, Esq. and Bingham McCutchen LLP, One
Federal Street, Boston, MA 02110; John Rock, Esq., Laura
R. Gurney, Esq. and Rock Law LLC, 120 South Sixth Street,
Suite 2050, Minneapolis, MN 55402, counsel for defendant.
This matter is before the court upon the motions to remand and
Based on a review of the file, record and
proceedings herein, and for the following reasons, the court grants
the motion to remand and denies without prejudice the motion for
This business dispute arises out of the relationship between
Wayzata Nissan and defendant Nissan North America, Inc. (Nissan
Nissan N.A. is a California corporation that manufactures
Compl. ¶¶ 15-16.
On June 26, 1996, Wayzata Nissan and
Nissan N.A. entered into a Dealer Sales and Service Agreement
(DSSA) that allows Wayzata Nissan to purchase and sell Nissan
Id. ¶ 16.
On March 29, 2013, Nissan N.A. informed Wayzata Nissan that
Wayzata Nissan was in default of the sales performance requirements
of the DSSA.
Schillinger Aff. Ex. 8, ECF No. 52.
notified Wayzata Nissan that, if Wayzata Nissan failed to cure the
default, Nissan N.A. would pursue its remedies under the DSSA,
including possible termination of the DSSA.
May 1, 2013, counsel for Wayzata Nissan sent a letter to Nissan
N.A., demanding that Nissan N.A. withdraw the notice of default.
Id. Ex. 9.
In August or September 2013, Wayzata Nissan co-owner Randall
Lammle consulted with an attorney in California about creating a
trust (Trust) in that state.
Lammle Dep. 83:13-16, 84:13-17.
that time, Lammle asked his half-brother, Mark Regan, to serve as
trustee for the Trust.
Regan Dep. 48:13-19.
Regan is a citizen of
Id. at 8:25-9:2.
On November 14, 2013, Wayzata Nissan amended its Member
Agreement to permit transfers of membership units to trusts created
by its members.
See Schillinger Aff. Ex. 12, ECF No. 52.
November 18, 2013, Lammle established the Trust with his wife named
as the sole beneficiary and transferred a 0.5% ownership1 share in
Wayzata Nissan to the Trust.
Trust with a gift of $19,250.
See id. Ex. 13.
Lammle funded the
Lammle Dep. 249:18-250:5.
then purchased the ownership interest from Lammle for $19,000.
Regan Dep. 106:20-25
On November 27, 2013, Wayzata Nissan filed suit in Minnesota
court, alleging violations of Minnesota Statutes § 80E.13(o) and a
breach of the implied covenant of good faith and fair dealing.
Wayzata Nissan alleges that it is a Minnesota limited liability
citizen, (2) Marc Allen, Inc., a Minnesota S-corporation wholly
(4) Regan, a California citizen, as trustee for the Trust.
N.A. timely removed.
On January 8, 2014, Wayzata Nissan moved to
remand this matter to state court.
On June 9, 2014, Wayzata Nissan moved for a preliminary
injunction, seeking to enjoin Nissan from establishing a dealership
in Eden Prairie, Minnesota, approximately 7.7 miles from Wayzata
The court heard oral argument on June 16, 2014, and all
parties appeared through counsel.
Before the transfer, Lammle owned a 20% ownership share in
Wayzata Nissan. Compl. ¶ 17.
considering the merits of an action.
Crawford v. F. Hoffman-La
Roche Ltd., 267 F.3d 760, 764 (8th Cir. 2001).
A plaintiff may
move to remand an action removed to federal court if “it appears
that the district court lacks subject matter jurisdiction” at any
time before entry of final judgment.
28 U.S.C. § 1447(c).
removing party bears the burden to establish the existence of
Altimore v. Mount Mercy Coll., 420
F.3d 763, 768 (8th Cir. 2005).
The court “resolve[s] all doubts
about federal jurisdiction in favor of remand.”
Transit Cas. Co.
v. Certain Underwriters at Lloyd’s of London, 119 F.3d 619, 625
(8th Cir. 1997) (citation omitted).
Jurisdiction under 28 U.S.C. § 1332 requires an amount in
“Complete diversity of citizenship exists where no
defendant holds citizenship in the same state where any plaintiff
OnePoint Solutions, LLC v. Borchert, 486 F.3d
342, 346 (8th Cir. 2007) (citation omitted). Wayzata Nissan argues
that complete diversity is lacking because both Regan - as trustee
of the Trust that owns 0.5% of Wayzata Nissan - and Nissan N.A. are
See U.S. Bank Nat’l Ass’n v. Polyphase Elec.
Co., No. 10-4881, 2011 WL 3625102, at *1 (D. Minn. Aug. 17, 2011)
(“[T]he trustee’s citizenship is what matters for the purposes of
diversity jurisdiction.” (citation omitted)).
Nissan N.A. responds that the court should disregard Regan’s
citizenship because the transfer to the Trust was (1) ultra vires
under Wayzata Nissan’s 2009 Member Agreement, (2) void ab initio
under the terms of the Purchase Agreement between Lammle and the
Trust and (3) the product of collusion.
Nissan N.A. first argues that the transfer to the Trust was
ultra vires under Wayzata’s Member Agreement.
After the November
14, 2013, amendment, the Member Agreement provided that:
[A] Member may transfer up to 10% of his
Membership units to a trust if (i) the trust
was created by that Member, (ii) the primary
beneficiary of the trust is one or more
immediate family members of the Member, (iii)
the trustee becomes a party to this Agreement
by executing and delivering an appropriate
consent to [Wayzata Nissan], and (iv) if any
franchise agreement to which [Wayzata Nissan]
is a party requires consent of a manufacturer
for the transfer of Membership interests, such
Membership interests are transferred to the
Schillinger Aff. Ex. 12, ECF No. 52, at WN00000060 (emphasis
attempted sale, assignment or other transfer of [membership] units
in contravention of the terms of this Agreement shall be void and
shall not be recognized on the books of” Wayzata Nissan.
7 at WN00000065-66.
Nissan N.A. argues that the DSSA required its approval before
any transfer of membership interests and that Lammle failed to
obtain such approval before transferring the membership interest to
Wayzata Nissan responds that the transfer at issue -
from a minority owner to an outside trust - did not require such
The court agrees.
The DSSA provided that Wayzata Nissan
“agrees that any change in the ownership of [Wayzata Nissan] ...
requires the prior written consent of [Nissan N.A.], excepting only
changes in the record or beneficial ownership interests of Other
Owner(s) not effecting a change in majority control or interest.”
Id. Ex. 1 at 2.
Wayzata Nissan argues that Lammle is an “Other
Owner” and that, as such, is free to transfer his ownership
interest without the approval of Nissan N.A.
Nissan N.A. responds
that the only transfers excluded from the general written consent
requirement are transfers between two existing owners.
Under California law,2 “[i]n the interpretation of contracts,
the duty of the court is to ascertain the intent of the parties.
The DSSA provides that it “shall be deemed to have been
entered into in the State of California, and all questions
concerning the validity, interpretation or performance of any of
its terms or provisions ... shall be governed by and resolved in
accordance with the internal laws of the State of California.”
Schillinger Aff. Ex. 1, ECF No. 52, at 49.
interpretation ..., nevertheless the meaning is to be obtained from
the entire contract, and not from any one or more isolated portions
Lemm v. Stillwater Land & Cattle Co., 19 P.2d 785, 788
(Cal. 1933) (citations omitted).
“Although the intention of the
parties is to be ascertained from the writing alone, if possible
circumstances under which it was made, and the matter to which it
Hess v. Ford Motor Co., 41 P.3d 46, 51 (Cal. 2002)
(second alteration in original) (citations and internal quotation
marks omitted). “In construing a contract, the question whether an
uncertainty or ambiguity exists is one of law ....”
Brant v. Cal.
Dairies, 48 P.2d 13, 16 (Cal. 1935).
Here, the DSSA unambiguously provides that no notice to Nissan
N.A. was required for the transfer from Lammle to the Trust.
Specifically, the transfer at issue was a “change in the record
or beneficial ownership interests of Other Owner(s),” as Lammle was
an Other Owner under the DSSA.
See Schillinger Aff. Ex. 1, ECF No.
52, at 3; see also id. at 2, 5 (outlining two categories of owners
- Other Owner(s) and Principal Owner(s) - and listing Saliterman as
the only Principal Owner). Further, the transfer did “not effect
a change in majority control or interest,” as Saliterman maintained
his ownership interest and remained the majority owner of Wayzata
Nissan after the transfer.
See id. at 2.
Nissan N.A.’s attempt to limit the excluded transfers to those
between two Other Owners is unavailing.
No such requirement is
included in the section of exclusions, and the court will not read
an ambiguity into the plain language of the contract. Further, the
DSSA expressly excludes from the notice provision transfers by a
(excluding “changes in the record or beneficial ownership interest
of Other Owner(s)” (emphasis added)). Thus, Nissan N.A.’s argument
that the exclusion applies only to transfers between two “Other
Owners” is untenable.
As a result, the court finds that no notice
to Nissan N.A. was required before transfer to the Trust and the
transfer was not ultra vires.
Void ab Initio
Nissan N.A. next argues that the transfer to the Trust was
void ab initio under the purchase agreement (Purchase Agreement)
entered into by Lammle and the Trust.
ECF No. 52.
See Schillinger Aff. Ex. 14,
The Purchase Agreement provided that:
Notwithstanding any representations to the
contrary with respect to the sale contemplated
by this Agreement (the “Sale”), no consent of
any franchisor is required under any franchise
agreement and the Sale will not place [Lammle]
contractual obligation to any third party. If
the sale would place either [Lammle] or
[Wayzata Nissan] in breach, the sale is void
Id. at ¶ 9(c).
A contract that is “void ab initio” is one that
“never went into effect.”
In re Millers’ & Mfrs. Ins. Co., 106
N.W. 485, 493 (Minn. 1906).
Nissan N.A. argues that notice was
required before any transfer to the Trust and because no such
notice was given, the transfer placed Wayzata Nissan into breach of
As already explained, however, no notice to Nissan N.A.
As a result, the transfer was not void ab initio,
and such an argument is unavailing.
Finally, Nissan N.A. argues that the court should disregard
the citizenship of the Trust because the transfer to the Trust was
intended to divest the court of jurisdiction. Specifically, Nissan
N.A. argues that such a transfer is akin to a collusive assignment,
Under 28 U.S.C. § 1359, “[a] district court shall
not have jurisdiction of a civil action in which any party, by
assignment or otherwise, has been improperly or collusively made or
joined to invoke the jurisdiction of such court.”
Bartnick v. Reader Co., 487 F.2d 1021, 1021 (8th Cir. 1973) (per
curiam) (“[A]n appointment solely to create diversity jurisdiction
will not be recognized by federal courts.”). Further, although not
explicitly enumerated by statute, the court may examine whether
jurisdiction are the product of collusion.
See, e.g., Attorneys
Trust v. Videotape Computer Prods., 93 F.3d 593, 595 (9th Cir.
1996) (“Even though the case at hand is a destruction of diversity
case, we will survey the cases which refer to creation of diversity
because the informing principles are much the same.”).
As a threshold matter, the court notes that the Eighth Circuit
is silent as to whether the transfer of assets to a party - as
opposed to the assignment of claims - is properly analyzed under
the collusive assignment doctrine. But see Spillers v. Chevron USA
Inc., No. 11-2163, 2013 WL 869387, at *3 (W.D. La. Mar. 6, 2013)
(“While the assignment of a five percent interest in the underlying
property, as compared to the assignment of a claim, may distinguish
... the instant matter, the Court finds that it is a distinction
without difference.” (citation omitted)).
Even if the collusive
assignment doctrine applies, however, remand is warranted.
analyzing whether an assignment is collusive, the court examines
several factors, including
were there good business reasons for the
assignment; did the assignee have a prior
interest in the item or was the assignment
timed to coincide with commencement of
litigation; was any consideration given by the
assignee; was the assignment partial or
complete; and was there an admission that the
motive was to create jurisdiction.
Attorneys Trust, 93 F.3d at 595-96 (citations omitted). “In short,
federal courts basically focus upon the reality of the transaction
itself to determine whether the assignee is truly the real party in
interest, or merely a strawman or collection agent.”
& Cas. Co. v. City of Jamestown, No. A3-98-91, 1998 WL 1776578, at
*1 (D.N.D. Dec. 31, 1998) (citation omitted).
Here, Nissan N.A. argues that the transfer to the Trust
occurred only nine days before the instant matter was filed and
that the dispute between Wayzata Nissan and Nissan N.A. had already
arisen at the time of the transfer.
Such suspicious timing,
however, is outweighed by the other collusive assignment factors,
and the court finds that Nissan N.A. has not met its burden to
establish the existence of diversity jurisdiction.
Wayzata Nissan has proffered a reasonable explanation for the
transfer: that Lammle transferred the assets as a means of estate
Moreover, the transfer of the assets to the Trust was a
bona fide transfer rather than illusory, as the Trust is now a
party in interest and an actual member of Wayzata Nissan.
Nat’l Surety Corp. v. Inland Props., Inc., 286 F. Supp. 173, 183-84
(E.D. Ark. 1968) (“If the assignment or transfer is a bona fide,
actual transaction whereby the transferee or assignee becomes the
real party in interest, section 1359 is not applicable even though
the transfer or assignment may have been motivated in whole or in
part by a desire to create diversity of citizenship for purposes of
litigation.” (citations omitted)).
Nissan N.A. further argues that Wayzata Nissan had a motive to
avoid federal court. Specifically, Nissan N.A. argues that Wayzata
Nissan was a defendant in a separate matter in this District, in
misrepresentations” under oath.
See Kia Motors Am., Inc. v.
Wayzata Nissan LLC, No. 06-156, ECF No. 390 (D. Minn. Oct. 17,
Such a theory, however, is entirely speculative and does
not amount to “an admission that the motive [of the transfer] was
to [destroy] jurisdiction.”
Attorneys Trust, 93 F.3d at 596
(citations omitted). Keeping in mind that all doubts about federal
jurisdiction must be resolved in favor of remand, the court finds
that Nissan N.A. has not established the requirements of the
collusive assignment doctrine.
See Transit Cas. Co. v. Certain
Underwriters at Lloyd’s of London, 119 F.3d 619, 625 (8th Cir.
Therefore, Nissan N.A. has not met its burden to establish
federal jurisdiction, and remand is warranted.3
Accordingly, based on the above, IT IS HEREBY ORDERED that:
The motion to remand [ECF No. 6] is granted;
The motion for preliminary injunction [ECF No. 79] is
denied without prejudice.
LET JUDGMENT BE ENTERED ACCORDINGLY.
Dated: July 23, 2014
s/David S. Doty
David S. Doty, Judge
United States District
Having determined that it lacks jurisdiction over this
matter, the court denies the motion for preliminary injunction
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