Gray et al v. Toyota Motor Sales, U.S.A., Inc. et al
Filing
29
MEMORANDUM AND ORDER granting 14 Motion to Dismiss. For the foregoing reasons, Defendant's motion to dismiss is GRANTED. Plaintiffs may file an Amended Complaint, in accordance with the rulings in this Order, within thirty (30) days of the date of this Order. So Ordered by Judge Joanna Seybert on 8/25/11. C/ECF (Valle, Christine)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
------------------------------------X
WILLIAM S. GRAY, AUTO PARTNERS, LLC,
SUNRISE AUTOMOTIVE, LLC d/b/a
SUNRISE TOYOTA & SUNRISE SCION,
Plaintiffs,
-against-
MEMORANDUM AND ORDER
10-CV-3081 (JS)(ETB)
TOYOTA MOTOR SALES, U.S.A., INC.,
Defendant.
------------------------------------X
APPEARANCES:
For Plaintiffs:
David A. Rosenfeld, Esq.
Joseph Russello, Esq.
Samuel H. Rudman, Esq.
Robbins Geller Rudman & Dowd, LLP
58 South Service Road, Suite 200
Melville, NY 11747
Jonathan Paul Whitcomb, Esq.
Diserio Martin O'Connor & Castiglioni LLP
One Atlantic Street, 8th Floor
Stamford, CT 06901
Scott M. Harrington, Esq.
Diserio, Martin, O'Conner & Castiglioni LLP
50 Main Street, Suite 1000
White Plains, NY 10606
For Defendant:
Carl J. Chiappa, Esq.
Nathaniel Scott Boyer, Esq.
Hogan & Hartson
875 Third Avenue
New York, NY 10022
SEYBERT, District Judge:
Plaintiffs William S. Gray ("Gray"), Auto Partners,
LLC
("Auto
Partners")
and
Sunrise
Automotive,
LLC
("Sunrise"
and, collectively, "Plaintiffs") sued Toyota Motor Sales, USA,
Inc. ("Defendant") and Toyota Motor Corp ("TMC").
Plaintiffs
assert several state law claims, as well as claims under New
York's Franchised Motor Vehicle Dealer Act (the "Dealer Act")
and the federal Dealers' Day in Court Act, 15 U.S.C. 1221 et
seq. (the "Day in Court Act").
Plaintiffs voluntarily dismissed
their
Pending
claims
against
TMC.
Defendant's motion to dismiss.
motion
is
granted
and
before
the
Court
is
For the following reasons, that
Plaintiffs
shall
file
an
Amended
Complaint, if at all, within thirty days of this Order.
BACKGROUND
Sunrise
Oakdale,
New
Agreement
is
York.
between
a
franchised
(Compl.
Sunrise
¶
Toyota
4.)
and
Dealer
Pursuant
Defendant
located
to
(the
a
in
Dealer
"Dealer
Agreement"), Sunrise is operated by Auto Partners, a limited
liability company managed by Gray.
(Id. ¶ 16.)
Plaintiffs do
not elaborate on the ownership structure between Plaintiffs in
the Complaint, but they assert in their motion papers that Auto
Partners owned 99% of Sunrise and Gray owned the remaining 1%.
Gray, in turn, also owned 95% of Auto Partners.
Among
contains
ownership
a
clause
without
other
that
provisions,
prohibits
Defendant’s
the
Sunrise
written
2
(Pls. Opp. 16.)
Dealer
from
consent.
Agreement
transferring
(Chiappa
Declaration, Ex. 1, Dealer Agreement Sec. VI.)1
Such consent,
the contract states, shall not be unreasonably withheld.
(Id.)
The Dealer Agreement illustrates some of the factors that would
constitute reasonable reasons for the Defendant to withhold its
consent:
DEALER agrees that factors which would make
DISTRIBUTOR’S
withholding
of
consent
reasonable
would
include,
without
limitation, the failure of a new Owner or
General
Manager
to
meet
DISTRIBUTOR’S
standards
with
regard
to
financial
capability, experience and success in the
automobile dealership business.
(Id.)
In
2006,
Plaintiffs
attempted
to
sell
franchise to Group 1 Automotive, Inc. (“Group 1”).
the
Sunrise
In October,
Gray entered into a nonbinding letter of intent with Group 1,
pursuant to which Group 1 agreed to purchase Sunrise for: (i)
the
net
value
of
Sunrise’s
assets;
(ii)
$17
million
for
Sunrise’s goodwill; and (iii) the lesser of $15 million or the
appraised
value
operated.
of
the
buildings
and
land
on
which
Sunrise
In furtherance of the proposed sale, Group 1 (which
already operated two Toyota dealerships) requested Defendant’s
consent
to
consummate
the
sale,
1
but
the
Defendant
refused,
The Court may consider the Dealer Agreement on a motion to
dismiss because the agreement is integral to Plaintiffs’
Complaint and there is no dispute regarding its authenticity.
See Faulkner v. Beer, 463 F.3d 130, 134 (2d Cir. 2006).
3
citing Group 1’s unsatisfactory “consumer satisfaction index”
(“CSI”) score.
As a result of Defendant’s refusal, the Group 1
deal fell through.
(Compl. ¶¶ 18-20.)
Plaintiffs maintain that the CSI score was merely a
pretext for Defendant’s refusal, but they do not elaborate on a
possible ulterior motive. (Id. ¶ 21.)
In January 2007, Plaintiffs explored a second proposal
to sell Sunrise, this time to Don Lia (“Lia”).
Gray,
on
behalf
of
Sunrise,
entered
into
an
In February,
Asset
Purchase
Agreement with Lia by which Lia agreed to purchase Sunrise’s
customer and service files, its goodwill and its trade name for
approximately $16 million.
Also in February, Gray, on behalf of
Auto Partners, entered into an Agreement to Sell and Purchase
with Lia, by which Lia agreed to buy the land and buildings for
$15 million.
On
(Id. ¶¶ 23-27.)
or
about
May
4,
consent for the proposed sale.
sixty
days,
and
Gray’s
consent on July 11, 2007.
2007,
Lia
sought
Defendant’s
Defendant did not respond within
counsel
reiterated
the
request
for
Defendant never formally responded to
either request, but a representative of Defendant “advised Lia
that
he
should
withdraw
his
unsatisfactory CSI rating.”
application
on
(Id. ¶¶ 29-30.)
the
basis
of
an
As a result, on
July 24, 2007, Gray sent Lia a letter terminating the proposed
4
sale.
(Id. ¶ 32)
A year later, Plaintiffs tried to sell Sunrise a third
time.
In May 2008, Gray, on behalf of Sunrise, entered into an
Asset Purchase Agreement with an affiliate of Len Stoler, Inc.
(“LSI”).
LSI was able to obtain Defendant’s consent to the
proposed transfer, and it bought Sunrise for $24,250,000.
(Id.
¶¶ 34-37.)
Plaintiffs thereafter commenced this suit, asserting
essentially that Defendant unreasonably withheld its consent to
the Group 1 and Lia sales and that this forced Plaintiffs to
sell Sunrise to LSI for less than what Group 1 was willing to
pay.
They
also
claim
that
they
are
entitled
to
recover
approximately $500,000 in brokers’ commissions they incurred as
a result of their multiple attempts to sell the dealership.
(Id. ¶ 38.)
DISCUSSION
Plaintiffs
Dealer Agreement; (2)
assert
eight
claims:
(1)
breach
of
the
breach of the implied covenant of good
faith and fair dealing; (3) tortious interference with contract;
(4) tortuous interference with a prospective economic advantage;
(5) negligence; (6) fraud; (7) violation of the Dealer Act; and
(8) violation of the Day in Court Act.
For the reasons that
follow, Defendant’s motion to dismiss is granted.
5
Plaintiffs
may file an Amended Complaint in accordance with the discussion
below.
I. The Motion to Dismiss
To survive a Rule 12(b)(6) motion, a plaintiff must
plead sufficient factual allegations in the complaint to “state
a claim [for] relief that is plausible on its face.”
Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955,
1974, 167 L. Ed. 2d 929, 949 (2007).
The complaint does not
need “detailed factual allegations,” but it demands “more than
labels
and
conclusions,
and
a
formulaic
recitation
the
Id. at 555.
elements of a cause of action will not do.”
of
In
addition, the facts pleaded in the complaint “must be enough to
raise
a
right
Determining
to
relief
whether
a
above
the
plaintiff
speculative
has
met
his
level.”
burden
Id.
is
“a
context-specific task that requires the reviewing court to draw
on its judicial experience and common sense.”
572 F.3d 66, 72 (2d Cir. 2009).
of
the
elements
of
a
cause
Harris v. Mills,
However, “[t]hreadbare recitals
of
action,
conclusory statements, do not suffice.”
supported
by
mere
Ashcroft v. Iqbal, __
U.S. __, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009).
Additionally, under Federal Rule of Civil Procedure
9(b),
claims
pleading
sounding
requirement.
in
fraud
Under
are
this
6
subject
standard,
to
a
heightened
plaintiffs
must
“allege facts that give rise to a strong inference of fraudulent
intent.”
Cohen v. Cohen, __ F. Supp. 2d __, 2011 WL 1157283, at
*7 (S.D.N.Y. Mar. 29, 2011) (quoting Moore v. PaineWebber, Inc.,
189 F.3d 165, 173 (2d Cir. 1999)).
A. Breach of Contract
Plaintiffs’ claim that Defendant breached the Dealer
Agreement by unreasonably withholding consent rests essentially
on arguments that Defendant’s considering the Proposed Dealers’
CSI scores in determining whether to bless the proposed sales
was either (1) per se unreasonable or (2) a pretext for an
unspecified
ulterior
motive.
Either
way,
Plaintiff’s
allegations do not set forth a plausible claim for relief.
On the first point, the Court rejects Plaintiffs’ bald
assertions that a CSI rating is not an acceptable reason to
withhold
consent.
Customer
goodwill
is
critical
to
any
business, and it is logical for Defendant to be concerned about
its dealers’ ability to satisfy their customers.
See Colonial
Imports Corp. v. Volvo Cars of N. Am., Inc., No. 98-CV-0342,
2001 WL 274808, at *6 (D.N.H. 2001); see also Bill Call Ford,
Inc. v. Ford Motor Co., 48 F.3d 201, 203, 206 (6th Cir. 1995)
(affirming summary judgment after concluding that conditioning a
dealer’s
right
satisfactory
to
levels
transfer
of
on
customer
7
an
applicant’s
satisfaction”
“meeting
was
not
unreasonable
in
light
of
dealer’s
previous
unsatisfactory
performance); Ford Motor Co. v. W. Seneca Ford, Inc., No. 91-CV0784, 1996 WL 685723, at *5 (W.D.N.Y. 1996) (Under New York’s
Franchised Motor Vehicle Dealer Act, “Ford was also justified in
terminating West Seneca for its failure to achieve a sufficient
level of customer satisfaction and service.”);
In re Van Ness
Auto Plaza, Inc., 120 B.R. 545, 550 (Bankr. N.D. Cal. 1990) (“It
is
not
beyond
the
realm
of
reasonable
decisions
for
a
manufacturer of luxury cars to refuse to accept a dealer with
CSI rankings that are average at best and possibly well-below
average.”).
This is particularly true because car dealers are
often the face of a manufacturer, responsible for the ongoing
integrity of the brand.
Plaintiffs’ argument that “neither the
Dealer Agreement nor applicable law permitted” Defendant to use
CSI ratings to withhold consent borders on sophistry (Pls. Opp.
4);
the
consent
Dealer
Dealer
is
Agreement’s
plainly
Agreement
list
of
non-exhaustive.
Sec.
VI
(“DEALER
grounds
for
(Chiappa
agrees
that
withholding
Decl.,
Ex.
factors
1,
which
would make DISTRIBUTOR’s withholding of consent reasonable would
include,
without
limitation,
.
.
.)
(emphasis
added).)
Of
course, by holding here that Plaintiffs have not stated a claim,
the Court does not suggest that Defendant’s refusal to consent
was per se reasonable.
Rather, the Complaint falls short here
8
because
Iqbal
demands
more
than
Defendant acted unreasonably.
conclusory
allegations
that
129 S. Ct. at 1951 (“It is the
conclusory nature of respondent's allegations, rather than their
extravagantly
fanciful
nature,
that
disentitles
them
to
the
presumption of truth.”)
On
the
second
point,
Plaintiffs’
suggestion
that
Defendant’s reliance on CSI ratings was merely a pretext for
refusing consent to the Group 1 and Lia sales suffers from the
same deficiencies discussed already.
To survive a motion to
dismiss,
facts
Plaintiffs
accusation
is
must
founded.
state
Id.
the
(“While
on
legal
which
their
conclusions
can
provide the framework of a complaint, they must be supported by
factual allegations.”).
B. Breach of Covenant of Good Faith and Fair Dealing
Plaintiffs’ claim that Defendant breached the implied
covenant of good faith and fair dealing is duplicative of their
breach of contract claim and must be dismissed.
Plaintiffs’
argument that this claim is merely an alternative theory of
their
case
is
unavailing;
the
claims
are
not
“in
the
alternative” when they are based on the exact same allegations.
See, e.g., Bradbury v. PTN Pub. Co., Inc., No. 93-CV-5521, 1998
WL 386485, at *8 (E.D.N.Y. 1998).
Rather, as Defendant notes,
Plaintiffs' claims are redundant and the implied covenant claim
9
must fail.
This is true even though the Court has already
dismissed the breach of contract claim.
Ins. Co.,
See Odingo v. Allstate
251 A.D.2d 81, 672 N.Y.S.2d 727, 1998 N.Y. Slip Op.
05416 (1st Dep’t 1998) (dismissing implied covenant claim as
duplicative when breach of contract claim was also dismissed).
Plaintiffs
argue
that
the
“bad
faith
nature”
of
Defendant’s conduct sets their implied covenant claim apart from
their
breach
of
contract
claim.
For
the
reasons
mentioned
already in its discussion of Plaintiffs’ pretext allegations,
the Court agrees with the Defendant that Plaintiffs have not
See supra at 5.
satisfactory alleged “bad faith.”
C.
Tortious Interference with Contract and Tortious
Interference with Prospective Economic Advantage
Counts III and IV of the Complaint allege tortious
interference
with
contract
prospective
economic
and
tortious
advantage,
interference
respectively.
with
Claims
a
for
tortious interference with a contract fail where, as here, the
Defendant
is
accused
simply
of
exercising
its
right
not
to
See Tri-County Motors, Inc.
approve the proposed transactions.
v. Am. Suzuki Motor Corp., 494 F. Supp. 2d 161, 175 (E.D.N.Y.
2007)
(manufacturer
“can
incur
no
liability
for
tortious
interference by simply exercising its right to not approve the
sale
transaction”
between
seller
10
of
a
franchise
and
a
prospective
seller).
To
the
extent
Plaintiffs’
claim
for
tortious interference of prospective economic advantage can be
construed
as
one
for
tortious
interference
of
a
prospective
contract, this claim fails because Plaintiffs have not alleged
conduct on the level of a “crime or independent tort.”
Corp.
v.
Noonan,
3
N.Y.3d
182,
190,
818
N.E.2d
Carvel
1100,
785
N.Y.S.2d 359 (2004).
D. Negligence
Plaintiffs’ negligence claim must be dismissed because
(See Compl. ¶ 74.)
it is wholly premised on a contractual duty.
“Merely charging a breach of a ‘duty of due care’, employing
language familiar to tort law, does not, without more, transform
a
simple
breach
of
contract
into
a
tort
claim.”
Clark-
Fitzpatrick, Inc. v. Long Island R. Co., 70 N.Y.2d 382, 390, 521
N.Y.S.2d 653 (1987).
E. Fraud
Plaintiffs’
their
allegations
fraud
fall
far
claim
must
short
of
be
the
dismissed
heightened
because
pleading
standard required by Federal Rule of Civil Procedure 9(b).
FED.
R. CIV. P. 9(b) (“In alleging fraud or mistake, a party must
state with particularity the circumstances constituting fraud or
mistake.”).
Plaintiffs
apparently
believe
that
Defendant
fraudulently concealed the reasons for its refusal to consent to
11
the Group 1 and Lia sales.
(See Pl. Opp. 12.)
Among other
shortcomings, Plaintiffs do not identify the representatives of
Defendant
responsible
Plaintiffs.
See
for
conveying
Manhattan
Defendants’
Motorcars,
Inc.
v.
refusal
to
Automobili
Lamborghini, S.p.A., 244 F.R.D. 204, 216 (S.D.N.Y. 2007).
Even
if they had, the Court highly doubts that these allegations
would have amounted to a plausible claim for relief.
F.
New York’s Franchised Motor Vehicle Dealer Act
Plaintiffs
assert
claims
under
two
sections
of
the
Dealer Act: Section 463(2)(k) and Section 466.
1.
As
Plaintiffs’ Section 463 Claim is Time-Barred
is
relevant
here,
Section
463(2)(k)
makes
it
unlawful for a manufacturer to “unreasonably withhold consent to
the sale or transfer” of a franchised dealership and requires a
manufacturer who refuses consent to provide specific reasons for
its decision within sixty days of the franchise’s request for
consent.
This provision has a 120-day statute of limitations,
which provides that “[u]pon receipt of notice and reasons for
the franchisor's withholding of consent, the franchised motor
vehicle dealer may within one hundred twenty days have a review
of the manufacturer's decision . . . .”
Defendant
argues
that
Plaintiffs’
N.Y. V.T.L. § 463(2)(k).
claim
is
time-barred,
and
Plaintiffs counter that the limitations period has not yet run
12
because Defendant has never provided specific reasons for its
refusal to consent to the Group 1 and Lia sales
(Pls. Opp. 14).
Plaintiffs’ Section 463 claims are time-barred.
As to
the Group 1 sale, the Complaint is plain that Defendant refused
to
consent
“on
the
purported
basis
that
satisfaction
index
Group
1
had
(“CSI”)
an
unsatisfactory
consumer
rating.”
(Compl. ¶ 20.)
Plaintiffs do not specify the date, but the only
reasonable inference is that it was on or before January 25,
2007, the date on which Plaintiffs signed a letter of intent
(Id. ¶ 24.)
with Lia, the next prospective buyer.
filed
this
action
on
June
25,
2010,
well
after
Plaintiff
the
120-day
limitations period had expired.
As
to
the
Lia
sale,
the
Complaint
states
that
“[a]lthough [Defendant] did not formally respond to” Plaintiffs’
request
that
for
he
consent,
should
Defendant’s
withdraw
his
unsatisfactory CSI rating.”
representative
application
(Id. ¶ 30.)
on
“advised
the
basis
of
Lia
an
No date is given, but
it was presumably on or before July 24, 2007, the date on which
Plaintiffs
Complaint
squashed
suggests
the
anticipated
sale.
(Id.
32.)
The
that
Defendant
provided
its
notice
and
reasons to Lia and not to Plaintiffs, but the only reasonable
inference from Plaintiffs’ allegations is that Lia relayed this
information to them, in turn causing Plaintiffs to send the July
13
24 letter ending the transaction.
Section 463 does not specify
the manner or content of the notice and reasons, however, and
the Court is not aware of cases holding that the limitations
period
is
not
triggered
by
Plaintiffs’
alleged
facts.
Accordingly, as with the Group 1 sale, Plaintiffs’ Section 463
claim arising out of the Lia sale was filed too late.
2.
Plaintiffs’ Section 466 Claim is Dismissed
Plaintiffs’ Section 466 claim is insufficiently pled
and
must
be
Plaintiffs’
dismissed.
allegations,
Before
turning
however,
the
to
the
Court
adequacy
resolves
of
the
parties’ disagreement as to this section’s limitations period
because this issue will likely arise if Plaintiffs amend their
Complaint.
Section
466
is
silent
as
to
its
statute
of
limitations.
Defendant claims the proper period is 120 days or,
in the alternative, three years and Plaintiffs argue it is six
years.
The Court concludes that the proper period is three
years based on New York Civil Practice Law and Rules Section
214(2), which provides that actions “to recover upon a liability
. . . created or imposed by statute” must be commenced within
three years.
N.Y. C.P.L.R. 214(2); see Gaidon v. Guardian Life
Ins. Co. of Am., 96 N.Y.2d 201, 208, 750 N.E.2d 1078, 1082, 727
N.Y.S.2d 30, 34 (2001).
Amorosi v. South Colonie Independent
School District, cited by Defendant in support of its 120-day
14
argument, is inapplicable.
9 N.Y.3d 367, 880 N.E.2d 6, 849
N.Y.S.2d 485 (2007).
That case concluded simply that the New
York
one-year
Education
against
Law’s
school
districts
limitation
trumped
the
period
for
three-year
limitations
period otherwise applicable to discrimination claims.
case,
the
Education
claims.
court
Law
concluded
provision
that
made
9 N.Y.3d at 373.
it
the
unambiguous
applicable
to
actions
In that
text
of
the
discrimination
That case did not consider a statute
that is silent as to its limitations period and it does not,
contrary to Defendant’s claim, stand for the idea that “[w]here
a
specific
specific
(and
type
applies.”
shorter)
of
action”
(Def. Br. 19.)
unpersuasive.
limitations
the
period
shorter
exists
period
for
a
automatically
Plaintiffs’ six-year argument is also
New York’s C.P.L.R. Section 214(2) applies to
most statutory causes of action.
See Gaidon, 96 N.Y.2d at 208.
Section 466 is not, contrary to Plaintiffs’ claim, a cause of
action “for which no limitation is specifically prescribed by
law.”
N.Y. C.P.L.R. 213(1).
The proper limitations period may be relevant to an
Amended
Complaint.
Plaintiffs’
Section
plausible claim.
It
In
466
the
meantime,
allegations
the
for
Court
failure
to
Section 466(1) provides:
shall
be
unlawful
15
for
a
franchisor
dismisses
state
a
directly
or
indirectly
to
impose
unreasonable restrictions on the franchised
motor vehicle dealer relative to transfer,
sale, right to renew or termination of a
franchise,
discipline,
noncompetition
covenants,
site-control
(whether
by
sublease, collateral pledge of lease or
otherwise),
right
of
first
refusal
to
purchase, option to purchase, compliance
with subjective standards and assertion of
legal or equitable rights with respect to
its franchise or dealership.
Thus
the
harm
sought
to
be
remedied
by
this
provision
is
“unreasonable restrictions” on a dealer’s right to, among other
things, transfer, sell or renew its franchise.2
Plaintiffs’ case
is essentially that Defendant imposed unreasonable restrictions
on their ability to transfer Sunrise by withholding its consent
to the Group 1 and Lia sales on the basis of low CSI ratings.
As discussed already, imposing a CSI threshold is not a per se
unreasonable restriction on a dealer’s right to transfer his
franchise
and,
without
more,
state a claim for relief.
Plaintiffs’
allegations
do
not
In so ruling, the Court discounts
Plaintiffs’ allegations of pretext because, as discussed above,
they are too conclusory to be credited.
2
Section 466(2) provides that a restriction that prevents a
dealer from obtaining the fair value of its franchise will be
deemed unreasonable.
To the extent Plaintiffs rely on this
provision, their claim fails because they have not alleged a
plausible claim that Defendant tried to prevent them from
obtaining fair value for Sunrise or that the price they
eventually obtained from LSI was not fair value.
16
G.
Federal Dealers’ Day in Court Act
Plaintiffs also assert a claim under the Day in Court
Act.
Specifically, they claim that Defendant violated Section
1222 of that act, which provides in part that:
An automobile dealer may bring suit against
any automobile manufacturer . . . by reason
of
the
failure
of
said
automobile
manufacturer . . . to act in good faith in
performing or complying with any of the
terms or provisions of the franchise. . . .
“Good faith” is defined under the Day in Court Act as:
the duty of each party to any franchise, and
all officers, employees, or agents thereof
to act in a fair and equitable manner toward
each other so as to guarantee the one party
freedom from coercion, intimidation, or
threats of coercion or intimidation from the
other party. . . .
15. U.S.C. § 1221(e).
Plaintiffs argue that Defendant’s refusal to consent
to the Group 1 and Lia sales constitutes a lack of good faith.
The Court disagrees.
As used in the Day in Court Act, good
faith “has a narrow, restricted meaning.”
Inc. v. World-Wide Volkswagen Corp.
1987).
To
prevail,
a
“dealer
Empire Volkswagen
814 F.2d 90, 95 (2d Cir.
must
demonstrate
that
the
manufacturer exercised coercion or intimidation or made threats
against
the
objective.”
dealer
to
achieve
Id. (citations omitted).
17
an
improper
or
wrongful
Here, Plaintiffs have not
alleged
coercive,
intimidating
or
threatening
conduct
on
Defendant’s part.
II. Amending the Complaint
In
their
opposition,
amend the Complaint.
Plaintiffs
requested
leave
to
Leave to amend should be freely given,
see, e.g., Alexandre v. Town of Hempstead, __ F.R.D. __, 2011 WL
2181461,
at
*4
(E.D.N.Y.
following rulings,
Jun.
4,
2011),
and
subject
to
the
Plaintiffs may amend their Complaint within
thirty days of this Order.
Gray
and
Auto
Partners
are
not
signatories
to
the
Dealer Agreement and therefore do not have standing to bring
claims for breach of contract or breach of the implied covenant
of good faith and fair dealing.
infer
their
third-party
Plaintiffs implore the Court to
beneficiary
status
under
the
Dealer
Agreement, but the contract’s plain language belies any intent
to confer a benefit on Gray or Auto Partners.
beneficiary
exists,
however,
only
if
the
“A third-party
parties
to
that
contract intended to confer a benefit on him when contracting;
it is not enough that some benefit incidental to the performance
of the contract may accrue to him.”
McPheeters v. McGinn, Smith
& Co., Inc., 953 F.2d 771, 773 (2d Cir. 1992) (citations and
internal
quotations
omitted).
Here,
the
Dealer
Agreement’s
“Standard Provisions”--which are incorporated into the Dealer
18
Agreement--contain a “no third-party provisions” clause (Chiappa
Decl., Ex. 2, Standard Provisions Art. XXVI.I), and Plaintiffs
have
not
pointed
to
anything
to
overcome
the
text
of
not
assert
that
clause.
Gray
and
Auto
Partners
also
may
claims
under the MVA Act because they are not “franchised motor vehicle
See N.Y. V.T.L. § 469; see also id. § 462 (defining
dealers.”
“franchise motor vehicle dealer”).
Co.,
cited
by
Plaintiffs,
is
not
Bevilacque v. Ford Motor
to
the
contrary.
There,
although the court permitted a dealer’s minority shareholder to
remain in the case, the defendants in that case had not moved to
dismiss the shareholder.
125 A.D.2d 516, 520, 509 N.Y.S.2d 595,
600 (2d Dep't 1986).
Likewise, Gray and Auto Partners may not assert claims
under the Day in Court Act.
See Vincel v. White Motor Corp.,
521 F.2d 1113, 1120 (2d Cir. 1975) (“When, as here, a dealership
is doing business in corporate form, the statute contains no
hint that it intends a departure from the established principle
that the locus of the right of action is the corporation.”);
Bronx Chrysler Plymouth, Inc. v. Chrysler Corp., 212 F. Supp. 2d
233, 243 (S.D.N.Y. 2002)
Defendant also argues that Gray and Auto Partners do
not have standing to assert negligence and fraud claims.
19
(Def.
Br. 21.)
The Court refrains from considering these issues here.
It will address them, if appropriate, if Defendant raises them
in response to an Amended Complaint.
CONCLUSION
For
the
dismiss is GRANTED.
foregoing
reasons,
Defendant’s
motion
to
Plaintiffs may file an Amended Complaint,
in accordance with the rulings in this Order, within thirty (30)
days of the date of this Order.
SO ORDERED.
/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
Dated:
August
25 , 2011
Central Islip, New York
20
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