H.B. Automotive Group, Inc. v. KIA Motors America, Inc.

Filing 109

MEMORANDUM OPINION & ORDER: For the foregoing reasons, the Motion is GRANTED. The Clerk of Court is respectfully requested to close docket number 97 and to terminate the case. (As further set forth in this Opinion) (Signed by Judge Valerie E. Caproni on 8/22/2016) (kl)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------------------------------------ X
:
H.B. AUTOMOTIVE GROUP, INC, d/b/a KIA :
OF THE BRONX, and MAJOR MOTORS OF :
LONG ISLAND CITY, INC., d/b/a MAJOR KIA :
:
OF LONG ISLAND CITY,
Plaintiffs, :
:
:
-against:
:
KIA MOTORS AMERICA,
Defendant. :
:
------------------------------------------------------------ X

8/22/16

13-CV-4441 (VEC)
MEMORANDUM
OPINION & ORDER

VALERIE CAPRONI, District Judge:
Plaintiffs H.B. Automotive Group, Inc., d/b/a Kia of the Bronx (“Bronx Kia”) and Major
Motors of Long Island City, Inc. d/b/a Kia of Long Island City (“Major LIC”) brought suit
against Defendant Kia Motors America (“KMA”) alleging multiple violations of federal and
state law arising out of their relationship as franchisees and franchisor. Now pending before the
Court is Defendant’s motion for summary judgment on Plaintiffs’ remaining claims under the
New York Franchised Motor Vehicle Dealer Act (“Dealer Act”), N.Y. Veh. & Traf. §§ 460, et
seq., and under state common law (the “Motion”). For the reasons stated below, Defendant’s
Motion is GRANTED.
BACKGROUND
I.

The Parties

Defendant KMA is the exclusive distributor of Kia-brand motor vehicles, parts, and
accessories in the United States. Def. Mem. at 2 (Dkt. 98). Bronx Kia and Major LIC were local
dealerships affiliated with the Major Auto Group, a group of dealerships owned and managed by
brothers Bruce and Harold Bendell. Third Am. Compl. ¶ 5 (“TAC”) (Dkt. 60); Sullivan Aff. Ex.

A-B (“Bendell Dep.”), at 16:6-25 (Dkt. 99-2). Under separate Dealer Agreements with KMA,
Bronx Kia and Major LIC became authorized Kia dealers in 2001 and 1999, respectively.1
II.

The March 2012 “Master Settlement Agreement”

In 2012, KMA and Major Auto Group became embroiled in a number of disputes, which
they resolved in a Master Settlement Agreement (the “MSA”), signed in March 2012, and to
which Bronx Kia, Major LIC, and KMA are parties. Sullivan Aff. Ex. B-1 (Dkt. 99-8); Bendell
Dep. at 43:9-44:9. The MSA provided that time was of the essence and that Bronx Kia would
voluntarily terminate its dealership on September 30, 2013, unless KMA consented to a transfer
of the franchise before that date. If Bronx Kia wanted to transfer the franchise, the parties agreed
that September 1, 2013, was the deadline for Bronx Kia to submit a fully executed asset purchase
agreement (“APA”) to KMA and for any prospective buyer to submit a franchise application
package to KMA. Sullivan Aff. Ex. B-1 at 5. KMA agreed to pay Bronx Kia $50,000 if the
voluntary termination took effect without an approved transfer. Id at 6.
In a separate MSA provision, Major LIC agreed to renovate its Kia facility to satisfy
KMA’s Facility, Image and Dealer Identification Standards. Id at 3-4. An Amendment and
Addendum to its Dealer Agreement set forth a schedule for completing the renovations by June
2013. Sullivan Aff. Ex. B-3 (Dkt. 99-9); Bendell Dep. at 61:14-62:13, 65:8-14.
III.

Bronx Kia’s Attempts to Transfer Its Dealership

One month after entering into the MSA, Bronx Kia submitted materials to KMA
necessary to obtain its consent to transfer the franchise to Jason Argyropoulos. Sullivan Aff. Ex.
B-33 ¶ 2 (Dkt. 99-16); Sullivan Aff. Ex. A-A (“Arygyropoulos Dep.”), at 74:15-75:7 (Dkt. 99-1).

1

Prior to October 26, 2013, Bronx Kia was an authorized Kia dealer pursuant to a Dealer Agreement dated
February 26, 2001. Dougherty Decl. ¶¶ 3, 6 (Dkt. 100); Dougherty Decl. Ex. A (Dkt. 100-1). Prior to March 18,
2015, Major LIC was an authorized Kia dealer pursuant to a Dealer Agreement dated April 28, 1999. Dougherty
Decl. ¶¶ 4, 7; Dougherty Decl. Ex. B (Dkt. 100-2).

2

KMA rejected that application, citing poor customer satisfaction records, inadequate facilities
proposals, and Argyropoulos’ lack of successful dealership experience. Sullivan Aff. Ex. B-55
(Dkt. 99-25); Arygyropoulos Dep. at 166:25-167:6. Bronx Kia submitted a second application
seeking consent to transfer the franchise to a business substantially owned by Arygyropoulos,
which KMA also denied, for essentially the same reasons. Sullivan Aff. Ex. B-64 (Dkt. 99-29).
Subsequently, Bronx Kia filed suit in New York State court seeking damages for KMA’s refusal
to consent to either of those proposed transfers. See Dkts. 1-2. That lawsuit was removed to
federal court. Dkt. 1.
On August 27, 2013, four days before the purchase proposal deadline in the MSA, Bronx
Kia requested a forty-five day extension in anticipation of a third transfer proposal, this time
from Milea Auto Group (“Milea”). Sullivan Aff. ¶¶ 7-8 (Dkt. 99). KMA denied the request for
an extension. Id. The next day, Bronx Kia filed motions for a temporary restraining order and a
preliminary injunction and submitted a proposed APA for Milea to KMA. Sullivan Aff. Ex. B69 (Dkt. 99-32); Sullivan Aff. Exs. A-D (“Dougherty Dep.”) at 108:19-23 (Dkt. 99-4); Dkt. 7.
Judge Furman denied the motions for a temporary restraining order and a preliminary injunction.
Dkts. 13, 25; Sullivan Aff. Exs. C, D (Dkts. 99-41, 99-42). Milea submitted an incomplete
application package to KMA on September 11, 2013. Sullivan Aff. Ex. B-71; Dougherty Dep. at
116:22-117:11. On September 16, 2013, KMA requested the missing information from Milea
and notified it that “any review” of its proposal was “solely for the purposes of determining
whether [the Proposal] could form part of an acceptable settlement.” Sullivan Aff. Exs. B-72, B74 (Dkts. 34, 35); Sullivan Aff. Ex. E (Dkt. 99-43). The following week, KMA rejected Milea’s
application, citing missing and below-average customer satisfaction scores from Milea’s other
dealerships and an unacceptable facility proposal. Sullivan Aff. Ex. B-76 (Dkt. 99-36). With its
notice of rejection, KMA reiterated that it believed it had no obligation to review or respond to
3

the APA or Milea’s application because the application was received after the September 1
deadline contained in the MSA. Id. As per the terms of the MSA, Bronx Kia’s Dealer
Agreement terminated on October 26, 2013, and KMA paid Bronx Kia $50,000.2 Dougherty
Decl. ¶ 6; Dougherty Decl. Ex. D (Dkt. 100-4).
IV.

Major LIC’s Attempts to Transfer Its Dealership

Major LIC informed KMA in April 2013 that it would not renovate its dealership facility
despite its prior agreement to do so. Bendell Dep. at 134:23-135:7. In response, KMA declared
a breach but gave Major LIC until October 31, 2013, to cure the breach. Sullivan Aff. Ex. B-16
at 3; Bendell Dep. at 147:17-22. Major LIC took no action, and on November 5, 2013, KMA
issued a Notice of Termination (“NOT”), citing, inter alia, Major LIC’s failure to renovate its
facility. Sullivan Aff. Ex. B-19 (Dkt. 99-11); Bendell Dep. at 170:4-10. By this point, Major
LIC, claiming KMA had breached the MSA in various ways, had already joined Bronx Kia’s
lawsuit against KMA. See Dkt. 14.
Shortly thereafter, following mediation, KMA and Major LIC entered into an Interim
Settlement Agreement (“ISA”) on May 20, 2014. Sullivan Aff. Ex. B-21 (Dkt. 99-12); Bendell
Dep. at 173:11-23. The ISA provided that KMA would evaluate information submitted by
Nikolaos Letsios, a potential purchaser, subject to prescribed terms and conditions. Id. Those
terms and conditions included that Major LIC would “cause Letsios to submit, by no later than
21 days from the date [of the ISA]” a set of documents and information defined as the “Letsios
Information.” Id. at ¶ 4. The ISA specifically provided that KMA would not undertake review
of the Letsios Information unless “all of the information . . . [was] provided to KMA on a timely

2

The Bronx Kia franchise was terminated on October 26, 2013, rather than September 30, 2013, because
KMA agreed to postpone the voluntary termination until Judge Furman decided the Plaintiff’s August 29th motion
for preliminary injunction.

4

basis.” Id. at ¶ 5. Further, the ISA provided, “Major LIC [would] not submit to KMA, or
request KMA’s consent to, any agreement between Major LIC and Letsios unless and until KMA
first agree[d] in writing to the submission of such an agreement.” Id. The ISA also expressly
provided that the “[ISA] is without prejudice to . . . KMA’s position that it has no obligation to
review the Letsios Information and that Major LIC has no right to transfer its Kia assets free and
clear of the notice of termination served by KMA on Major LIC.” Sullivan Aff. Ex. B-21.
Major LIC alleges that KMA violated the ISA by failing to provide Letsios an application
form within 48 hours of the ISA’s ratification, as required by the ISA. Harfenist Decl. Ex. 4-20
(Dkt. 105-6); Sullivan Aff. Ex. B-21. The parties do not dispute that KMA provided Letsios an
application form on May 28, 2014, eight days after adopting the ISA, and that KMA established
a submission deadline of June 9, 2014, for the Letsios Information. Harfenist Decl., Ex. 4-20.
KMA also notified Letsios that it had no obligation to review the information he provided, and
that any review would be conducted solely as a potential means to settle the lawsuit. Id. Letsios
provided the Letsios Information to KMA on or about June 6, 2014. Sullivan Aff. Ex. B-97
(Dkts. 99-39, 99-40); Dougherty Dep. at 180:21-182:3, 182:10-13.
KMA raised two problems with the Letsios Information, which provided the basis for
withholding consent to transfer Major LIC to Letsios. First, KMA determined the Letsios
Information was incomplete because it did not include December 2013 or February 2014
customer service and sales effectiveness data for Letsios’ dealership, City Mitsubishi. Sullivan
Aff. Ex. B-22 (Dkt. 99-13); Sullivan Aff. Ex. 97 (Dkt. 99-40). Letsios acknowledges that
information was not provided but asserts the information was complete for purposes of the ISA
because no customer service and sales effectiveness data existed for the months in question.
Letsios Dep. at 138:23-154:9. Second, KMA found that Letsios’ proposed site plans did not
meet KMA’s showroom and facility standards. Sullivan Aff. Ex. B; Dougherty Dep. at 185:95

21, 191:2-192:7. Letsios does not dispute the contents of the site plans he provided to KMA but
stresses that the designs he submitted were “flexible” in order to make his information more
attractive. Letsios Dep. at 106:12-111:13. Major LIC did not seek nor did KMA give written
consent to an APA between Major LIC and Letsios, and no APA was ever submitted to KMA.
Meyers Decl. ¶ 7 (Dkt. 101).
V.

Motion for Summary Judgment

In their Opposition to this Motion, Plaintiffs voluntarily withdrew a number of claims.3
What remains are: (1) KMA’s alleged violation of the Dealer Act § 466 for refusing to consent to
the proposed sale of Bronx Kia to Milea; 4 (2) KMA’s alleged violation of the Dealer Act § 466
for refusing to consent to the proposed sale of Major LIC to Letsios; (3) KMA’s alleged violation
of the Dealer Act § 463(2)(k) for refusing to consent to the proposed sale of Major LIC to
Letsios; and (4) KMA’s alleged breach of contract for rejecting the APA between Major LIC and
Letsios in violation of the Kia Dealer Sales and Service Agreement.5 See Pls.’ Opp. Mem. at 23. On August 28, 2015, Defendant filed this motion for summary judgment, Dkt. 97, which
Plaintiffs oppose, Dkt. 106.

3

Plaintiffs’ Third Amended Complaint (“TAC”) raised twenty-five causes of action under the Dealer Act,
the Automobile Dealer’s Day in Court Act, 15 U.S.C. § 1221, et seq. (“ADDCA”), and various common law breach
of contract and fair-dealing theories. TAC at ¶¶ 82-233.

4

In its seventh cause of action, Bronx Kia alleges that KMA’s course of conduct, including its disapproval of
the proposed sale to Argyropoulos, “as well subsequent proposed sales of Kia of the Bronx,” unreasonably restricted
the ability of Bronx Kia to transfer its assets under the Dealer Act. TAC ¶ 126. While KMA’s denial of the
proposed sale to Milea is not explicitly referenced anywhere in the TAC, the Court reads “subsequent proposed
sales” to mean Bronx Kia’s proposed sale to Milea.

5

Major LIC alleges KMA breached its Dealer Agreement by its “disapproval of the Asset Purchase
Agreements between Major LIC and the third-party purchasers.” TAC ¶ 235. It is, however, undisputed that no
APA was ever submitted to KMA in connection with the proposal of Major LIC to transfer the dealership to Letsios.
Meyers Decl. ¶ 7 (Dkt. 101). Plaintiffs explicitly maintain in their Opposition that the breach of contract claim as it
relates to the transfer between Major LIC and Letsios remains before the Court, Pl. Opp. at 3, but neither of the
parties argues this claim in the briefs. Because it is undisputed that no APA was ever submitted to KMA for Letsios,
the breach of contract claim is properly dismissed on summary judgment.

6

DISCUSSION
I.

Legal Standard

Summary judgment is appropriate “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits . . . show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
Courts “‘construe the facts in the light most favorable to the non-moving party and resolve all
ambiguities and draw all reasonable inferences against the movant.’” Delaney v. Bank of Am.
Corp., 766 F.3d 163, 167 (2d Cir. 2014) (per curiam) (quoting Aulicino v. N.Y.C. Dep’t of
Homeless Servs., 580 F.3d 73, 79-80 (2d Cir. 2009) (alteration omitted)). The nonmoving party,
however, “must do more than simply show that there is some metaphysical doubt as to the
material facts,” and “may not rely on conclusory allegations or unsubstantiated speculation.”
Jeffreys v. City of New York, 426 F.3d 549, 554 (2d Cir. 2005) (citations and internal quotation
marks omitted). Rather, the nonmoving party must come forward with “specific facts showing
that there is a genuine issue for trial.” Sista v. CDC Ixis N. America, Inc., 445 F.3d 161, 169 (2d
Cir. 2006) (per curiam) (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962);
Donahue v. Windsor Locks Bd. of Fire Comm’rs, 834 F.2d 54, 57 (2d Cir. 1987)). “[I]f the
evidence is such that a reasonable jury could return a verdict for the nonmoving party,” a motion
for summary judgment must be denied. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986).
II.

The Dealer Act

Plaintiffs allege that KMA’s refusals to consent to the proposed transfers to Milea and
Letsios violate the Dealer Act § 466. Section 466 of the Dealer Act provides that “[i]t shall be
unlawful for any franchisor directly or indirectly to impose unreasonable restriction on the
7

franchised motor vehicle dealer relative to transfer, sale . . . or termination of a franchise . . . .”
N.Y. Veh. & Traf. § 466(1). The Act continues that “[i]t shall be deemed an unreasonable
restriction upon the sale or transfer of a dealership for a franchisor . . . directly or indirectly to
prevent or attempt to prevent a franchised motor vehicle dealer from obtaining the fair value of
the franchise . . . .” Id. at § 466(2). Major LIC claims that by refusing to consent to the Letsios
transfer, KMA also violated section 463(2)(k) of the Dealer Act, which makes it unlawful “for
any franchisor to unreasonably withhold consent to the sale or transfer of an interest . . . to any
other person or party by any franchised motor vehicle dealer . . . .” Id. at § 463(2)(k).
Dealer franchise rights can be waived in a “valid release or settlement agreement.” See
Veh. & Traf. § 463(2)(l); see also Sportique Motors, Ltd. v. Jaguar Cars, Inc., 195 F. Supp. 2d
390, 398 (E.D.N.Y. 2002) (enforcing waiver of dealer’s rights), aff’d, 55 F. App’x 580 (2d Cir.
2003). Under the Dealer Act, “it is not unreasonable to refuse a request to sell after a franchise
is already subject to termination.” V.M. Paolozzi Imports, Inc. v. Am. Honda Motor Co., No.
7:12-CV-1052 (FJS) (ATB), 2015 WL 7776926, at *9 (N.D.N.Y. Dec. 2, 2015), appeal
dismissed (Mar. 30, 2016) (emphasis in original); see also Ganley v. Mazda Motor of Am., Inc.,
367 F. App’x 616, 625-26 (6th Cir. 2010) (collecting authorities under various states’ franchise
laws for the proposition that refusal to approve a sale after notice of termination is not
unreasonable because “there is little left to sell”); H-D Michigan, LLC v. Sovie’s Cycle Shop,
Inc., 626 F. Supp. 2d 274, 279 (N.D.N.Y. 2009) (holding that a dealer has no right to transfer the
franchise “free and clear” of a pending notice of termination).
A. There Is No Genuine Dispute of Material Fact That KMA’s Refusal to Consent
to the Proposed Transfer of Bronx Kia Was Permissible
Bronx KIA argues that KMA unreasonably refused to permit the transfer of the franchise
to Milea in violation of the Dealer Act. Bronx Kia does not dispute, however, that it was

8

properly subject to termination as of September 1, 2013, by the terms of the MSA. See Pl. Opp.
at 3-5. There being no genuine dispute as to that fact, as a matter of law KMA’s refusal to accept
the Milea transfer was not unreasonable because a dealer properly subject to termination does not
have a free and clear right to transfer.
The parties explicitly agreed that the MSA was a valid settlement agreement for purposes
of Section 463(2)(l) of the Dealer Act. Sullivan Aff. Ex. B-1. The parties also agreed that Bronx
Kia would voluntarily terminate its Dealer Agreement, effective September 30, 2013, but that:
Bronx Kia shall have until September 1, 2013 (the “Submission Deadline”) to (i)
submit to KMA a fully executed, binding and bona fide written asset purchase agreement
(a “Proposal” [or “APA”]) to sell all or substantially all of its Kia-related assets to a third
party which is an Unaffiliated Proposed Purchaser (as hereinafter defined), and (ii) cause
such Unaffiliated Proposed Purchaser to submit to KMA a complete application package
....
Id. In the MSA, KMA agreed to “not unreasonably withhold its consent to a Proposal within the
meaning of Section 463(2)(k)” of the Dealer Act. Id. Thus, in the MSA, Bronx Kia agreed to
specific deadlines by which it would seek KMA’s approval to transfer its franchise, and KMA
agreed to be bound by section 463(2)(k) in making its decision to accept or refuse a transfer as
long as the terms and deadlines were met.
Bronx Kia did not abide by the terms of the MSA in submitting the proposal to transfer
the franchise to Milea. Plaintiffs do not dispute that, although Bronx Kia submitted an APA for
the proposed Milea transfer to KMA on August 28, 2013, Milea did not submit any of its
application materials until September 11, 2013. Pl. Opp. at 5. Thus, the Milea proposal was late
under the terms of the MSA. KMA nevertheless considered the proposal, although KMA made
clear to Bronx Kia that its review of the Milea proposal was being done in an attempt to settle the
litigation, not because it was required to do so by the MSA. Sullivan Aff. Ex. B-76; Sullivan
Aff., ¶¶ 8, 9, 11. Bronx Kia contends that KMA nonetheless “waived its right to object on

9

timeliness grounds” by reviewing Milea’s September 11 application. Pl. Opp. at 5. While
Plaintiffs dispute the extent to which KMA notified them that the review was optional, it is clear
that KMA had no obligation under the terms of the MSA to consider Milea’s application to
purchase Bronx Kia’s dealership.
The September 1, 2013, submission date for Bronx Kia’s proposed transfer was part of a
valid settlement agreement under the Dealer Act. Accordingly, as of September 1, 2013, Bronx
Kia was properly subject to termination on September 30, 2013, because no prospective buyer
had submitted an application for transfer by the deadline. KMA, therefore, was not
“unreasonable” within the meaning of Section 466 when it refused to consent to the Milea
transfer because Bronx Kia was already subject to termination. See V.M. Paolozzi Imports, Inc.,
2015 WL 7776926, at *9 (“Defendant could not have been unreasonable in refusing to consider a
prospective sale . . . because each of Plaintiff Dealerships’ franchises was properly subject to
termination . . . .”); H-D Michigan, LLC, 626 F. Supp. 2d at 279 (“[i]t was not unreasonable for
[the franchisor] to refuse a transfer request where, as here, the . . . request was made after the
franchise was already the subject of a termination notice.”) (emphasis in original).
In any event, KMA relied on reasonable factors in declining to consent to the Milea
transfer. Milea does not dispute that its application was not complete and that its customer
satisfaction scores for at least two of its other dealerships were below zone and regional
averages. Sullivan Aff. Ex. B-77 at 1-3 (Dkt. 37). Customer satisfaction scores are valid
grounds on which to refuse a transfer proposal. See In re Claremont Acquisition Corp., Inc., 186
B.R. 977, 987 (C.D. Cal. 1995), aff’d, 113 F.3d 1029 (9th Cir. 1997) (holding, under statute with
“unreasonable” refusal to consent language, that below average customer satisfaction scores are
reasonable grounds for declining to consent to transfer); Gray v. Toyota Motor Sales, U.S.A., 806
F. Supp. 2d 619, 623-24 (E.D.N.Y. 2011) (granting Rule 12(b)(6) motion to dismiss where
10

plaintiff alleged franchisor unreasonably withheld consent to transfer based on customer
satisfaction scores);; 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 . . . to refuse to accept a
dealer with CSI rankings that are average at best and possibly well-below average.”). As such,
even though KMA had no obligation to review the Milea proposal, its refusal to consent to the
transfer to Milea was not unreasonable under section 466 of the Dealer Act. Moreover, Bronx
Kia has presented no evidence to create a genuine dispute of material fact that KMA reviewed
the Milea proposal in bad faith or that its refusal was unreasonable.6 Accordingly, Defendant’s
motion for summary judgment is granted with respect to Bronx Kia’s claim arising from
Defendants refusal to consent to the Milea transfer.
B. There Is No Genuine Dispute of Material Fact That KMA’s Refusal to Consent
to the Proposed Transfer of Major LIC Was Permissible
Major LIC argues that KMA unreasonably refused to permit it to transfer its franchise to
Letsios, in violation of the Dealer Act. There is no dispute that Major LIC was properly subject
to termination as of November 5, 2013 by the terms of the MSA because, inter alia, it had
breached its contractual duties to renovate its facility. Sullivan Aff. Ex. B-19. There being no
genuine dispute as to that fact, as a matter of law KMA’s refusal to accept the Major LIC transfer
was not unreasonable because, as indicated supra, a dealer properly subject to termination does
not have a free and clear right to transfer.

6

Bronx Kia equates a lack of effort on KMA’s part to obtain further information from Milea to bad faith.
“Milea . . . was not given the ‘time of day’ by KMA. This lack of effort was demonstrated by KMA’s failure to: 1)
make any inquiries concerning his application; 2) reach out to him other than in letters; 3) engage in any dialogue
with him; and 4) refuse his several entreaties to meet with him to discuss his vision for the Bronx franchise.” Pls.’
Opp. Mem. at 17. Plaintiffs cite no precedent for the proposition that it is bad faith for a franchisor, which is faced
with a proposed franchisee who has a substantial, disqualifying characteristic (to wit, poor consumer satisfaction
scores) to refuse to engage with that prospective purchaser.

11

KMA had no obligation to review the proposed transfer to Letsios under the Dealer Act
or by the terms of the ISA. Under the Dealer Act a refusal to consent to a transfer is not
unreasonable when the franchisee is properly subject to termination. See H-D Michigan, LLC,
626 F. Supp. 2d at 279.
Nor did the ISA impose a duty on KMA to review the Letsios transfer. It is undisputed
that the first paragraph of the ISA states, “[t]he Mediator has proposed that a settlement of this
matter include a sale of Major LIC’s Kia assets to Nick Letsios[]. The purpose of this Agreement
is to establish the terms and conditions pursuant to which KMA will evaluate that settlement
proposal by reviewing the information described below.” Sullivan Aff. Ex. B-21. The ISA also
expressly provides that the “[a]greement is without prejudice to . . . KMA’s position that it has
no obligation to review the Letsios Information and that Major LIC has no right to transfer its
Kia assets free and clear of the notice of termination served by KMA on Major LIC.” Id. The
ISA, as part of a mediated settlement between KMA and Major LIC, did not obligate KMA to
approve a sale to Letsios. The purpose of the ISA was to establish the terms and conditions by
which KMA would evaluate the proposed sale to Letsios. Nowhere in the ISA did KMA waive
its right to refuse to approve a post-termination transfer.
Furthermore, it is undisputed that KMA reviewed the Letsios proposal and found it to be
substantively deficient. Letsios’ information was incomplete because it failed to include sales
effectiveness data and customer satisfaction reports for two months for Letsios’ City Mitsubishi
Dealership.7 KMA also found its facility proposals did not adequately demonstrate how Kia’s

7

Letsios asserts that to the extent customer satisfaction data was missing from the Letsios Information, it
was due to the fact that no customer satisfaction reports were filed during the relevant months (i.e., the reports did
not exist), not because he failed to submit the data. Letsios Dep. at 150:5-19. Putting aside whether that is an
adequate excuse for the missing data, the Letsios Information as submitted provided KMA a basis to refuse to
consent to the transfer.

12

showroom would coexist with Letsios’ existing Mitsubishi showroom. Sullivan Aff. Ex. B-22.
In order to have approved Letsios, KMA needed to review a corresponding APA, which Major
LIC never submitted. Dougherty Decl. ¶ 17. These were all reasonable bases to disapprove the
Letsios transfer. Thus, even if KMA had an obligation to review Letsios’ application, it had no
obligation to approve it, and it had several reasonable reasons to reject the transfer. Major LIC
has presented no evidence to create a genuine dispute of material fact that KMA reviewed the
Letsios proposal in bad faith or that its refusal to consent was unreasonable.8 Accordingly,
summary judgment is granted with respect to Major LIC’s claims arising from the proposed
transfer from Major LIC to Letsios.
In sum, KMA agreed to review the Milea proposal and Letsios Information only as
potential means of settling this lawsuit. As both Plaintiffs were properly subject to termination at
the time of their proposed transfers, KMA had no obligation under the Dealer Act to consent to
either transfer.
CONCLUSION
For the foregoing reasons, the Motion is GRANTED. The Clerk of Court is respectfully
requested to close docket number 97 and to terminate the case.
SO ORDERED.
_________________________________
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VALERIE CAPRONI
I
United States District Judge

Date: August 22, 2016
New York, NY

8

KMA does not dispute that it sent the application forms to Letsios six days later than agreed in the ISA,
but that delay does not make KMA’s refusal to consent to the transfer unreasonable. First, Major LIC, as a party to
the ISA, knew exactly what information Letsios needed to submit regardless of when KMA sent Letsios the
application forms. That being the case, KMA’s delay did not seriously prejudice Major LIC and Letsios’ ability to
submit a complete proposal. Second, although Major LIC contends that the delay prevented Letsios from later
clarifying the “misunderstandings” about his application upon which KMA, in part, based its refusal to consent to
transfer, KMA objected to the Letsios Information on substantive grounds and was under no obligation to request
clarifying information from Letsios. In all events, the dispute is not material because KMA had no obligation to
consider the Letsios information in the first instance.

13