Arthur Glick Truck Sales, Inc. v. Hyundai Motor America

Filing 58

OPINION AND ORDER re: 45 MOTION for Summary Judgment . filed by Hyundai Motor America. For the foregoing reasons, Defendant's motion for summary judgment is GRANTED as to Plaintiffs First and Second Claims for Relief and DENIED as to Plaintiff's Third Claim for Relief. Additionally, Plaintiff's entitlement to damages for the lost sale price, subject to its ability to prove such damages at trial, is limited to $350,000. The parties are directed to meet and con fer and comply with Rules 6(A) and 6(B) of the Court's Individual Practices (rev. March 19, 2024) by filing the documents required therein, which include a joint pretrial order, proposed joint voir dire questions, joint requests to charge, joint verdict form, and any motions in limine, on or before October 1, 2024. A pretrial conference has been scheduled for December 4, 2024 at 2:30 p.m. to be held in Courtroom 520 of the White Plains courthouse. The Clerk of Court is respectfully requeste d to terminate the pending motion sequence (Doc. 45). SO ORDERED. (Pretrial Conference set for 12/4/2024 at 02:30 PM in Courtroom 520, 300 Quarropas Street, White Plains, NY 10601 before Judge Philip M. Halpern.) (Signed by Judge Philip M. Halpern on 8/28/2024) (sgz)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
ARTHUR GLICK TRUCK SALES, INC.,
Plaintiff,
-againstHYUNDAI MOTOR AMERICA,

OPINION AND ORDER
22-CV-01213 (PMH)

Defendant.
PHILIP M. HALPERN, United States District Judge:
Arthur Glick Truck Sales, Inc. (“Plaintiff” or “Glick”) initiated this action against
Hyundai Motor America (“Defendant” or “HMA”) on February 11, 2022, asserting the following
claims for relief: (1) violation of Federal Automobile Dealers’ Day in Court Act (“ADDCA”), 15
U.S.C. § 1222 et seq.; (2) violation of the Franchised Motor Vehicle Dealer Act, New York Veh.
& Traf. Law (“VTL”) §§ 460-473 (the “Dealer Act”); and (3) breach of contract. (Doc. 1,
“Compl.”). Defendant filed its answer on March 25, 2022, and the parties thereafter engaged in
discovery, which was extended multiple times, pursuant to a Civil Case Plan and Scheduling
Order (Doc. 18; Doc. 21; Doc. 27; Doc. 30; Doc. 33; Doc. 36).
Defendant served its motion for summary judgment in accordance with the briefing
schedule set by the Court. (Doc. 45; Doc. 46; Doc. 47, “Def. Br.”; Doc. 48, “Sullivan Decl.”;
Doc. 49). 1 Plaintiff opposed Defendant’s motion (Doc. 50; Doc. 51, “Pl. Br.”), and the motion
was fully briefed with the filing of Defendant’s reply papers (Doc. 52, “Reply”; Doc. 53).

1

Citations to the documents referenced herein correspond to the pagination generated by ECF.

Defendant filed a revised Rule 56.1 Statement with Plaintiff’s responses thereto on October 2,
2023, in accordance with the Court’s directive. (Doc. 54; Doc. 55; Doc. 56, “56.1”). 2
For the reasons set forth below, Defendant’s motion for summary judgment is
GRANTED in part and DENIED in part.
BACKGROUND
The Court recites the facts herein only to the extent necessary to adjudicate the extant
motion for summary judgment and draws them from the pleadings, Defendant’s Rule 56.1
Statement and Plaintiff’s responses thereto, and the admissible evidence proffered by the parties.
Unless otherwise indicated, the facts cited herein are undisputed.
HMA manufactures vehicles for the consumer-oriented passenger vehicle market,
including sport utility vehicles, crossover vehicles, sedans, and compact cars. (Compl. ¶¶ 7-8).
Plaintiff’s business is to sell vehicles and is principally owned by Arthur Glick. (Id. ¶¶ 12-16).
HMA and Glick were parties to a series of Hyundai Motor America Dealer Sales and Service
Agreements (the “Dealer Agreement”) from 2006 through 2020, pursuant to which Glick owned
and operated a Hyundai dealership at 48 Bridgeville Rd., Monticello, NY. (56.1 ¶ 1). Section 5
of the Dealer Agreement provides in pertinent part that any change in ownership of the
dealership “requires the prior written consent of HMA, which HMA shall not unreasonably
withhold.” (Id. ¶ 2).
On or about February 19, 2020, Glick entered into an Asset Sale Agreement (the “ASA”)
to sell its business assets, including its Hyundai, Kenworth, and GMC franchises, to Gabrielli
Kenworth, LLC (“Gabrielli”). (Id. ¶ 3). Romolo Gabrielli was to be the Dealer Principal of the
Hyundai dealership if the sale was approved. (Id. ¶ 5). Gabrielli’s obligation to purchase the
2

Defendant filed two versions of its Rule 56.1 Statement. (Docs. 55-56). The Court refers herein to the
later-filed document (Doc. 56) which is titled “[Corrected] Defendant’s Rule 56.1 Statement and
Plaintiff’s Responses Thereto.”

2

assets was contingent upon, inter alia, HMA’s issuance and execution of a standard form and
term Dealer Sales and Service Agreement. (Id. ¶ 6).
HMA turned down the proposed transfer of the Hyundai franchise to Gabrielli via letter
dated March 19, 2020, on the grounds that “[Gabrielli] and its principals do not meet HMA’s
normal, reasonable, and uniformly applied standards for the appointment of a new Hyundai
dealer” and “HMA . . . requires that dealer owner applicants have significant and successful
experience owning and operating new car dealerships. The Proposed Owners of the Proposed
Buyers do not meet this requirement. Indeed, while the Proposed Owners have experience
operating heavy-duty truck dealerships, they do not have experience owning or operating a new
car dealership.” (Id. ¶ 7; Sullivan Decl., Ex.10 at HMA_000752). On July 27, 2020, Glick and
Gabrielli entered into a Third Amendment to the ASA which excluded the Hyundai assets and
reduced the purchase price by $350,000. (56.1 ¶¶ 12-15).
On December 8, 2020, Glick notified HMA via email that it was terminating the HMA
franchise, stating “[h]aving not heard from you and given certain time constraints, [Glick] has
had to make the difficult decision of terminating the Hyundai franchise effective close of
business on December 9, 2020.” (56.1 ¶ 9; Sullivan Decl., Ex.17).
This litigation followed.
STANDARD OF REVIEW
Pursuant to Federal Rule of Civil Procedure 56, a court “shall grant summary judgment if
the movant shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed R. Civ. P. 56(a). “A fact is ‘material’ if it ‘might
affect the outcome of the suit under the governing law,’ and is genuinely in dispute ‘if the
evidence is such that a reasonable jury could return a verdict for the nonmoving party.’”

3

Liverpool v. Davis, No. 17-CV-3875, 2020 WL 917294, at *4 (S.D.N.Y. Feb. 26, 2020) (citing
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). 3 “‘Factual disputes that are
irrelevant or unnecessary’ are not material and thus cannot preclude summary judgment.” Sood
v. Rampersaud, No. 12-CV-05486, 2013 WL 1681261, at *1 (S.D.N.Y. Apr. 17, 2013)
(quoting Anderson, 477 U.S. at 248). “The question at summary judgment is whether a genuine
dispute as to a material fact exists—not whether the parties have a dispute as to any fact.”
Hernandez v. Comm’r of Baseball, No. 22-343, 2023 WL 5217876, at *5 (2d Cir. Aug. 15,
2023); McKinney v. City of Middletown, 49 F.4th 730, 737 (2d Cir. 2022)).
The Court’s duty, when determining whether summary judgment is appropriate, is “not to
resolve disputed issues of fact but to assess whether there are any factual issues to be
tried.” McKinney, 49 F.4th at 738 (quoting Wilson v. Nw. Mut. Ins. Co., 625 F.3d 54, 60 (2d Cir.
2010)). Indeed, the Court’s function is not to determine the truth or weigh the evidence. The task
is material issue spotting, not material issue determining. Therefore, “where there is an absence
of sufficient proof as to one essential element of a claim, any factual disputes with respect to
other elements of the claim are immaterial.” Bellotto v. Cty. of Orange, 248 F. App’x 232, 234
(2d Cir. 2007) (quoting Salahuddin v. Goord, 467 F.3d 263, 281 (2d Cir. 2006)).
“It is the movant’s burden to show that no genuine factual dispute exists.” Vermont Teddy
Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 244 (2d Cir. 2004) (citing Adickes v. S.H. Kress
& Co., 398 U.S. 144, 157 (1970)). The Court must “resolve all ambiguities and draw all
reasonable inferences in the non-movant’s favor.” Id. (citing Giannullo v. City of N.Y., 322 F.3d
139, 140 (2d Cir. 2003)). Once the movant has met its burden, the non-movant “must come
forward with specific facts showing that there is a genuine issue for trial.” Liverpool, 2020 WL
3

Unless otherwise indicated, case quotations omit all internal citations, quotation marks, footnotes, and
alterations.

4

917294, at * 4 (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87
(1986)). The non-movant cannot defeat a summary judgment motion by relying on “mere
speculation or conjecture as to the true nature of the facts.” Id. (quoting Knight v. U.S. Fire Ins.
Co., 804 F.2d 9, 12 (2d Cir. 1986)). However, if “there is any evidence from which a reasonable
inference could be drawn in favor of the opposing party on the issue on which summary
judgment is sought, summary judgment is improper.” Sood, 2013 WL 1681261, at *2 (citing Sec.
Ins. Co. of Hartford v. Old Dominion Freight Line Inc., 391 F.3d 77, 83 (2d Cir. 2004)).
Should there be no genuine issue of material fact, the movant must also establish its
entitlement to judgment as a matter of law. See Glover v. Austin, 289 F. App’x 430, 431 (2d Cir.
2008) (“Summary judgment is appropriate if, but only if, there are no genuine issues
of material fact supporting an essential element of the plaintiffs’ claim for relief.”); Pimentel v.
City of New York, 74 F. App’x 146, 148 (2d Cir. 2003) (holding that because plaintiff “failed to
raise an issue of material fact with respect to an essential element of her[] claim, the District
Court properly granted summary judgment dismissing that claim”). Simply put, the movant must
separately establish that the law favors the judgment sought.
ANALYSIS
I.

First Claim for Relief: Violation of the ADDCA
Plaintiff’s First Claim for Relief asserts a violation of the ADDCA in connection with

Defendant’s allegedly unreasonable refusal to consent to the proposed transfer to Gabrielli.
(Compl. ¶¶ 43-51). The ADDCA provides in pertinent part that “[a]n 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 . . . .” 15 U.S.C. § 1222. The term “good faith” is statutorily defined

5

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.
§ 1222(e).
“Courts in the Second Circuit have noted that ‘good faith’ under the ADDCA ‘has a
narrow, restricted meaning.’” Action Nissan, Inc. v. Nissan N. Am., 454 F. Supp. 2d 108, 118
(S.D.N.Y. 2006) (citing Bronx Chrysler Plymouth, Inc. v. Chrysler Corp., 212 F. Supp. 2d 233,
245 (S.D.N.Y. 2002)). To assert a claim under the ADDCA, “[a] dealer must show[] that the
manufacturer coerced the dealer, and that the coercion was calculated to achieve a wrongful
objective.” Kings Autoshow, Inc. v. Mitsubishi Motors of N. Am., Inc., No. 22-CV-07328, 2023
WL 5200398, at *11 (E.D.N.Y. Aug. 14, 2023); see also Empire Volkswagen Inc. v. World-Wide
Volkswagen Corp., 814 F.2d 90, 95-96 (2d Cir. 1987) (“Failure to act in good faith under the
[ADDCA] can be found only ‘where there is evidence of a wrongful demand enforced by threats
of coercion or intimidation.’”); Lazar’s Auto Sales, Inc. v. Chrysler Fin. Corp., 83 F. Supp. 2d
384, 388 (S.D.N.Y. 2000) (“summary judgment will be granted unless Plaintiff introduces some
evidence that [defendant] made a wrongful demand and then enforced it by threats or coercion
or intimidation.” (emphasis in original)). “A wrongful demand may be inferred ‘from all the
facts and circumstances’ even in the absence of evidence that a formal, explicit demand was
made.” Bronx Chrysler Plymouth, Inc., 212 F. Supp. 2d at 245 (citing Marquis v. Chrysler Corp.,
577 F.2d 624, 634 (9th Cir. 1978)). “Of course, lack of good faith does not mean simply
unfairness or breach of a franchise agreement. If the manufacturer has an objectively valid
reason for its actions, the plaintiff cannot prevail without evidence of an ulterior motive.” Action
Nissan, Inc., 454 F. Supp. 2d at 118 (internal citations and quotations omitted).

6

Here, Plaintiff alleges that Defendant failed to act with “good faith” with respect to the
provision of the Dealer Agreement requiring Defendant not to unreasonably withhold consent to
change in ownership. (Pl. Br. at 13). Defendant contends that the claim fails because there is no
evidence that Defendant made any wrongful demands that were enforced by threats of coercion
or intimidation. (Def. Br. at 15). Plaintiff argues that “[t]he circumstances of this case, as well as
HMA’s course of conduct leading up to the March 19 Denial Letter, demonstrate that HMA
coerced Glick by using a pretextual reason to reject the proposed sale and franchise transfer
between Glick and Gabrielli.” (Pl. Br. at 14). Plaintiff further contends that the “facts and
circumstances” demonstrate that an issue of fact exists as to “whether HMA sought the wrongful
demand of terminating Glick’s franchise without complying with the requirements of New York
State law.” (Id. at 18-19). Specifically, Plaintiff asserts that Defendant used its authority over the
proposed transfer as a means for circumventing the statutory requirements for terminating a
franchise. (Id.).
Even assuming arguendo that Defendant had the ulterior motive to terminate Plaintiff’s
franchise, Plaintiff does not offer evidence of any coercive conduct enforcing a wrongful demand
made by Defendant. Plaintiff generally references the “circumstances of this case” and a “course
of conduct leading up to the March 19 Denial Letter” (Pl. Br. at 14), but does not identify any
specific conduct that was coercive. Nor does Plaintiff explain what Defendant was coercing
Plaintiff to do. C.f. Action Nissan, Inc., 454 F. Supp. 2d at 120 (denying summary judgment as to
ADDCA claim where the franchisor’s allegedly threatening or coercive behavior included
repeated threats to terminate the franchise agreement unless the dealer relocated and frustration
of the dealer’s attempts to relocate through purposeful obfuscation and delay in approving both
relocation sites and repairs to its existing facility). “[A] complete failure of proof concerning an

7

essential element of the nonmoving party’s case necessarily renders all other facts immaterial.
The moving party is ‘entitled to a judgment as a matter of law’ because the nonmoving party has
failed to make a sufficient showing on an essential element of [its] case with respect to which [it]
has the burden of proof.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Plaintiff’s failure to
produce any evidence of coercive conduct or a wrongful demand constitutes a failure of proof
and is insufficient to create a genuine dispute of material fact. See Gray v. Toyota Motor Sales,
U.S.A., Inc., 806 F. Supp. 2d 619, 627 (E.D.N.Y. 2011) (dismissing ADDCA claim based on
defendant’s refusal to consent to proposed franchise transfers where Plaintiff failed to allege that
defendant engaged in coercive, intimidating, or threatening conduct); Gen. Motors Corp. v.
Dealmaker, LLC, No. 07-CV-00141, 2007 WL 2454208, at *5 (N.D.N.Y. Aug. 23, 2007)
(dismissing ADDCA claim where “[e]ven assuming GM wanted to terminate Seaway’s
dealership, there is no allegation supporting a plausible claim of coercion or intimidation, or of
threats of coercion or intimidation.”). 4 Defendant is, accordingly, entitled to summary judgment
dismissing the First Claim for Relief.
II.

Third Claim for Relief: Breach of Contract
Plaintiff’s Third Claim for Relief alleges that Defendant unreasonably withheld consent

to the transfer in violation of Section 5 of the Dealer Agreement which provided that any change
in ownership of the dealership “requires the prior written consent of HMA, which HMA shall not
unreasonably withhold.” (Compl. ¶¶ 58-65; 56.1 ¶ 2). Defendant argues this claim fails because
(i) Defendant’s denial based on Gabrielli’s lack of car dealership experience was reasonable as a

4

See also Fray Chevrolet Sales, Inc. v. Gen. Motors Corp., 536 F.2d 683, 685 (6th Cir. 1976) (“In the
absence of coercion, intimidation, or threats thereof, there can be no recovery through the day-in-court
statute, even if the manufacturer otherwise acted in ‘bad faith’ as that term is normally used.”)(internal
quotations and citations omitted); Mathew Enter., Inc. v. FCA US, LLC, No. 16-CV-03551, 2016 WL
6778534, at *6 (N.D. Cal. Nov. 16, 2016), aff’d, 751 F. App’x 983 (9th Cir. 2018).

8

matter of law; and (ii) the evidence does not support that Defendant had an ulterior motive or
that Defendant would have approved the transfer “but for” such ulterior motive. (Def. Br. at 8).
The Court addresses each argument seriatim.
a. Reasonableness
Here it is undisputed that Romo Gabrielli, the proposed Dealer Principal of the
dealership, did not have experience owning or operating a new car dealership at the time of the
proposed transfer. (56.1 ¶ 8). Defendant refused the proposed transfer on the stated ground that
Gabrielli did not meet its requirement of having experience owning and operating a new car
dealership. (Id. ¶ 7). The Court finds that Defendant relied on a reasonable factor in refusing to
consent to the proposed transfer. 5
In assessing whether consent was unreasonably withheld pursuant to Section 5 of the
Dealer Agreement, cases analyzing the analogous statutory requirement—N.Y. Veh. & Traf.
Law § 463(2)(k) which makes it unlawful to “unreasonably withhold consent” to a transfer—are
instructive. See i.e. Gray, 806 F. Supp. 2d at 623-24 (granting motion to dismiss breach of
contract claim where plaintiff alleged franchisor unreasonably withheld consent to transfer based
on customer satisfaction scores). Specifically, Defendant relies on the “reasonableness” standard
articulated in In re Van Ness Auto Plaza, Inc., which held that withholding consent is reasonable
“if it is supported by substantial evidence showing that the proposed assignee is materially
deficient with respect to one or more appropriate, performance-related criteria.” 120 B.R. 545,
549 (Bankr. N.D. Cal. 1990); see also Pacesetter Motors, Inc. v. Nissan Motor Corp. in U.S.A.,

5

Plaintiff argues that “reasonableness” is a “fact intensive question” that cannot be determined on
summary judgment. (Pl. Br. at 22). But the case Plaintiff relies on, Maltbie’s Garage Co., Inc. v. Gen.
Motors LLC, is inapplicable given that the court held that it was “unable to make this [reasonableness]
determination at the motion to dismiss stage.” No. 21-CV-00581, 2021 WL 4972738, at *5 (N.D.N.Y.
Oct. 26, 2021) (emphasis added).

9

913 F. Supp. 174, 179 (W.D.N.Y. 1996) (finding that the location of the dealership is an
“appropriate, performance-related criteria” that supported Nissan’s refusal to consent to the
proposed sale) (applying California law). The Van Ness court identified “the extent of prior
experience of the proposed dealer” as one of several factors relevant to assessing the likelihood
of success or performance under the franchise. In re Van Ness Auto Plaza, Inc., 120 B.R. at 547. 6
Further, at least one court in this Circuit found the consideration of a prospective dealer’s
prior experience to be reasonable. See Ford Motor Co. v. W. Seneca Ford, Inc., No. 91-CV00784, 1996 WL 685723, at *6 (W.D.N.Y. Nov. 21, 1996), as amended (Jan. 30, 1997) (finding
rejection of a proposed dealership sale reasonable where one of the proposed buyers did not have
any retail sales experience and the other proposed buyer had low customer satisfaction ratings at
the dealership he managed); see also Bevilacque v. Ford Motor Co., 605 N.Y.S.2d 356, 358
(App. Div. 1993) (finding it was reasonable to withhold consent to a franchise sale where the
prospective purchaser had “limited experience” in automotive industry). Accordingly, the Court
finds that the extent of a prospective dealer’s prior experience operating the type of dealership
that is the subject of the transfer is an appropriate consideration related to performance.
Moreover, the specific circumstances of this case do not render prior car dealership
experience an unreasonable consideration. Plaintiff essentially argues that it was unreasonable to
consider Gabrielli’s lack of car dealership experience given that Mr. Gabrielli had experience

6

At least two courts in this Circuit have relied on Van Ness to support the proposition that a prospective
dealer’s poor “customer satisfaction” score is a reasonable basis on which to turn down a candidate. See
i.e. Gray, 806 F. Supp. 2d at 623; H.B. Auto. Grp., Inc v. Kia Motors Am., No. 13-CV-04441, 2016 WL
4446333, at *5 (S.D.N.Y. Aug. 22, 2016) (“Customer satisfaction scores are valid grounds on which to
refuse a transfer proposal.”).

10

selling trucks 7 and believed this experience would allow him to successfully sell cars. (Pl. Br. at
22). While Mr. Gabrielli may be correct that his experience operating a heavy-duty truck
dealership is transferable to the operation of a car dealership, this fact does not make it
unreasonable for Defendant to require car dealership experience. Indeed, “a reviewing court
should not substitute its judgment for that of the manufacturer/distributor, but only look for a
substantial basis for its determination.” Pacesetter Motors, Inc., 913 F. Supp. at 179 (citing In re
Van Ness Auto Plaza, Inc., 120 B.R. at 546). The advantages of a proposed dealer of a car
dealership having prior experience operating a car dealership are obvious, and the Court is not
persuaded that it was unreasonable under Section 5 of the Dealer Agreement for Defendant to
withhold consent on that basis. 8
b. Pretext Theory
Plaintiff contends that even if Defendant’s denial was reasonable as a matter of law, an
issue of fact exists as to whether Gabrielli’s lack of new car dealership experience was the “true
reason” for the denial, and the fact that its justification was pretextual “nullifies its facial

7

While there is no dispute that Gabrielli did not have prior experience operating a new car dealership,
Plaintiff points out that Gabrielli had experience operating at least six other motor vehicle dealerships.
(Pl. Br. at 22; Sullivan Decl., Ex. 4 (“R. Gabrielli Tr.”) at 62:10-12)). Specifically, Mr. Gabrielli referred
to himself as a “new truck dealer[]” as opposed to a “new car dealer[].” (Id. at 46:5-8). He testified that he
did not have any experience selling new cars other than company vehicles, nor any experience selling
SUVs other than to commercial clients. (Id. at 48:24-49:4, 57:9-15). He further testified that at some point
he had been selling pick-up trucks, including “possibly” the Ford F-150. (Id. at 57:16-58:2, 23:8-13). He
also testified that his Bridgehaven Ford dealership does business in truck sales and that it does not sell
“minivans or other consumer vehicles.” (Id. at 22:20-23:25). Accordingly, the evidence is clear that Mr.
Gabrielli had experience selling trucks to commercial clients and not selling cars to the general public.
(Reply at 7-8).
8

Plaintiff also argues that Defendant’s denial was unreasonable because another automaker, General
Motors, “took no issue with Gabrielli’s purported lack of experience.” (Pl. Br. at 22) (citing R. Gabrielli
Tr. at 12, 32:3-5). Without further context, this unsupported assertion about General Motor’s
determination is not persuasive evidence that Defendant’s determination was unreasonable in this case.

11

‘reasonableness.’” 9 (Pl. Br. at 21-28) (emphasis in original). Defendant responds that “(1) there
is insufficient evidence to support, and ample evidence to contradict, the pretext theory; and (2)
in any event, there is no evidence that HMA would have approved Gabrielli ‘but for’ an alleged
desire to close the point.” (Def. Br at 20). Accordingly, the Court considers whether Defendant’s
stated basis for denying the transfer–lack of car dealership experience–was merely pretext for
Defendant’s ulterior motive—to dissolve the primary market area that encompassed Plaintiff’s
dealership in Monticello.
Plaintiff first points to market studies performed by Defendant in the days leading up to
the March 19 Denial Letter as evidence of its ulterior motive. (Pl. Br. at 7, 25; Sullivan Decl.,
Ex. 7 “Kato Tr.,” Part 6 at 122:1-11; id., Exs. 23-24). Specifically, Plaintiff highlights that one
such study, the market action analysis, included a proposed scenario after dissolving Plaintiff’s
dealership. (Sullivan Decl., Ex. 23 at HMA_002632). Defendant explains that this proposed
scenario stems from a cross-sell analysis which was conducted at the direction of one of its
employees, Dave O’Brien, who thought that Plaintiff might voluntarily terminate its franchise if
the transfer was rejected and wanted to determine whether Plaintiff’s dealership would need to
be replaced. (Def. Br. at 20-21; Reply at 9-10). Mark Kato, a Senior Group Manager for
Defendant, wrote in a March 11, 2020 email that “Dave O’Brian advised that if we deny the
buy/sell he thinks the dealer may [voluntarily terminate] the point.” (Sullivan Decl., Ex. 23 at
HMA_002607; id., Ex. 9 “Grafton Tr.,” Part 5 at 106:21-25). The result of the cross-sell analysis
was a recommendation that if Plaintiff voluntarily terminated its Monticello dealership, the point
should be dissolved because other Hyundai dealers were adequately covering the area. (Sullivan
9

Courts have considered similar pretext theories in the context of withholding consent to a franchise sale
or transfer. See i.e. Gray, 806 F. Supp. 2d at 627 (finding that “Plaintiffs’ suggestion that Defendant’s
reliance on CSI ratings was merely a pretext for refusing consent” was insufficiently pled); see In re Van
Ness Auto Plaza, Inc., 120 B.R. at 550 (“The reasons stated by Porsche for withholding consent were not
pretexts to mask other reasons for withholding consent.”).

12

Decl., Ex. 23 at HMA_002608). Defendant’s explanation for this cross-sell analysis is supported
by its employees’ testimony. (Def. Br. at 20-21; Pl. Br. at 7; Sullivan Decl., Ex. 23 at
HMA_002607; id., Ex. 5 “O’Brien Tr.,” Part 5 at 102:12-103:4, 105:10-16; Kato Tr., Part 5 at
117:8-11).
Relatedly, Plaintiff argues that the fact that Defendant’s studies evaluated its performance
is evidence of an ulterior motive because a franchise seller’s performance is irrelevant to
determining whether to approve a proposed transfer. (Pl. Br. at 7, 25; Sullivan Decl., Ex. 24 at
HMA_00068-69). Defendant responds that Plaintiff’s performance is standard background
information included in a market action analysis (Reply at 10; Kato Tr., Part 5 at 107:3-25;
Grafton Tr., Part 5 at 99:2-21; Sullivan Decl., Ex. 11 “Broussard Tr.,” Part 6 at 120:8-18), as
well as necessary information for a cross-sell analysis which measures the exchange of sales
between various primary market areas. (Grafton Tr., Part 5 at 106:16-18). Ultimately, the fact
that these market studies and evaluations were conducted in the days leading up to the transfer
denial is at least some evidence of Defendant’s purported ulterior motive, even if not evidence
that Defendant acted on that ulterior motive.
Next, Plaintiff argues that the lack of any “written set of policies or guidelines”
supporting the reason for Defendant’s denial is evidence of an ulterior motive. (Pl. Br. at 8).
Specifically, the ownership interest guide at the time did not include the requirement of having
experience “owning and operating new car dealerships.” (Id. at 8-9, 25; Sullivan Decl., Ex. 36).
Plaintiff also takes issue with the varying terminology Defendant has used to describe the
requisite experience (i.e. “car”, “automobile,” “motor vehicle,” and “passenger vehicle”
dealership experience). (Pl. Br. at 9-10, 26). Defendant contends that Plaintiff’s argument
regarding terminology is pure semantics, that it had no statutory or contractual obligation to have

13

a written policy, and that its employees’ testimony shows that Defendant considered prior
experience operating dealerships that sell the types of vehicles that Hyundai sells. (Reply at 8;
Sullivan Decl., Ex. 8, “Hyland Tr.,” Part 2 at 36:18-21, 37:12-38:7; Grafton Tr., Part 2 at 43:815; Kato Tr., Part 6 at 136:4-10; O’Brien Tr., Part 5 at 94:4-15; Broussard Tr., Part 4 at 77:578:17). Although a written policy statement was not required, the Court takes note of the fact that
the experience requirement was not memorialized in writing and that the new version of the
ownership interest guide, issued mere months after the denial, included new language when
describing dealers’ requirements: “demonstrated experience owning and operating other
successful new motor vehicle franchises . . . .” (Pl. Br. at 10; Sullivan Decl., Ex. 37) (emphasis in
original).
Finally, Defendant points out that the steps it took after the denial are inconsistent with its
purported ulterior motive of closing the Monticello location. (Def. Br. at 21-22). Defendant
renewed Plaintiff’s Dealer Agreement effective May 5, 2020. (Sullivan Decl., Ex. 26, “O’Brien
Decl.” ¶ 2). In October 2020, Plaintiff proposed relocating its franchise to a nearby location in
Monticello and Defendant conditionally approved the relocation (although Plaintiff ultimately
decided to terminate the franchise in December 2020). (Sullivan Decl., Ex. 2 “Glick Tr.” at
168:7-13; id., Ex. 29; Kato Tr., Part 6 at 138:4-11; O’Brien Tr., Part 6 at 118-6:20, 119:12-18).
While this conduct is certainly relevant to the factual question at hand, it does not necessarily
preclude a finding that Defendant sought to advance an ulterior motive when denying the
transfer. Based on this record, an issue of fact remains as to whether Defendant’s basis for
denying the transfer was pretext for its ulterior motive of closing the Monticello location.
Defendant contends that, assuming arguendo that there is sufficient evidence of an
ulterior motive, there is no evidence that Defendant would have approved Gabrielli if not for its

14

alleged desire to close the Monticello location. 10 (Def. Br. at 24). Defendant supports this
proposition with employee testimony that Gabrielli’s lack of experience was the sole basis for
withholding consent and that the cross-sell analysis was not a factor in that decision. (Id. at 22).
Plaintiff responds that an issue of fact exists as to whether Defendant would have approved the
transfer but for its ulterior motive to dissolve the Monticello location. (Pl. Br. at 24, 28). The
Court agrees with Plaintiff. Even considering the employee testimony, the documentary evidence
shows that (i) Defendant considered the voluntary termination of Plaintiff’s franchise as a
possible outcome of denying the proposed transfer and (ii) Defendant’s employee recommended
that, if that termination came to fruition, Defendant should dissolve the Monticello dealership.
The Court cannot determine on this record whether the recommendation to dissolve the
Monticello dealership motivated, in whole or in part, Defendant to deny the transfer.
Accordingly, a genuine issue of material fact remains as to Defendant’s basis for
withholding consent to the transfer. The Court, therefore, cannot determine whether Defendant’s
withholding of consent was unreasonable under Section 5 of the Dealer Agreement. Defendant’s
motion is denied as to the Third Claim for Relief.
III.

Second Claim for Relief: Violation of Section 466 of the Dealer Act
The Dealer Act provides that, “[i]t shall be unlawful for any franchisor, notwithstanding

the terms of any franchise contract . . . [t]o unreasonably withhold consent to the sale or transfer
of an interest, in whole or in part, to any other person or party by any franchised motor vehicle
dealer or any partner or stockholder of any franchised motor vehicle dealer.” N.Y. Veh. & Traf.

10

Defendant asserts that where, as here, a statute prohibits actions based on proscribed motives and the
defendant’s action was based on mixed motives, plaintiff must establish that defendant would not have
made the same decision “but for” the unlawful conduct. (Def. Br. at 24-26 (citing Comcast Corp. v. Nat’l
Ass’n of Afr. Am.-Owned Media, 589 U.S. 327, 332 (2020))). Defendant further contends that New York
courts interpret statutes to be consistent with common-law rules unless the statute provides otherwise. (Id.
(citing Transit Comm’n v. Long Island R.R. Co., 235 N.Y. 345, 354-55 (1930)).

15

Law § 463(2)(k). The Dealer Act further provides that “[i]t shall be unlawful for a franchisor
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.” N.Y. Veh. & Traf. Law §
466(1).
Plaintiff’s Second Claim for Relief alleges that “Defendant unreasonably restricted
Plaintiff’s ability to transfer the Dealership assets to Gabrielli” in violation of Section 466 of the
Dealer Act. (Compl. ¶ 55). Defendant argues that Plaintiff’ s allegations are more properly made
under Section 463(2)(k) of the Dealer Act, but, are barred by the applicable 120-day statute of
limitations. (Def. Br. at 26-29). Defendant further argues that permitting Plaintiff to use Section
466 to “evade” Section 463(2)(k)’s statute of limitations violates well-established principles of
statutory construction. (Id.). Although Plaintiff’s Second Claim for Relief may be better housed
as a violation of Section 463(2)(k), the Court considers Plaintiff’s claim as asserted—a violation
of Section 466—which is not precluded on limitations grounds. 11 (Pl. Br. at 19-20).
“By the language of [N.Y. Veh. & Traf. L. § 466(1)], the New York Legislature prohibits
a franchisor from ‘directly or indirectly impos[ing] unreasonable restrictions on the franchised
motor vehicle dealer relative to transfer . . . of a franchise.’” CMS Volkswagen Holdings, LLC v.
Volkswagen Grp. of Am., Inc., 25 F. Supp. 3d 432, 443 (S.D.N.Y. 2014), vacated and remanded
on other grounds, 669 F. App’x 602 (2d Cir. 2016); Gray, 806 F. Supp. 2d at 626–27 (“[T]he
11

Other Courts in this Circuit have considered a franchisor’s refusal to consent to transfer of a franchise
as violations of both Sections 463(2)(k) and 466. See H.B. Auto. Grp., Inc., 2016 WL 4446333, at *5; see
also Gray 806 F. Supp. 2d at 627.

16

harm sought to be remedied by [Section 466] is ‘unreasonable restrictions’ on a dealer’s right to,
among other things, transfer, sell or renew its franchise.”); see also Smith Cairns Subaru, Inc. v.
Subaru Distrib. Corp., 981 N.Y.S.2d 638 (Sup. Ct. 2013). “[T]his section does not refer to a
franchisor ‘withholding’ consent. . . .” CMS Volkswagen Holdings, LLC, 25 F. Supp. 3d at 443.
Accordingly, the question is not whether Defendant’s decision to withhold consent to the transfer
was unreasonable, but whether Defendant’s requirement that proposed transferees have prior car
dealership experience constitutes an unreasonable restriction on Plaintiff’s ability to transfer its
franchise. The Court finds that it was not.
Plaintiff contends that Defendant acted unreasonably under Section 466 by basing its
denial on the lack of new car dealership experience. (Pl. Br. at 21-22). But Plaintiff fails to
explain how Defendant’s imposition of the prior car dealership experience requirement
unreasonably restricted its ability to transfer. (Def. Br. at 28-29). As discussed in detail supra, it
was not unreasonable for Defendant to consider a prospective dealer’s prior car dealership
experience. See i.e. Gray, 806 F. Supp. 2d at 627 (dismissing Section 466 claim). Moreover,
Plaintiff’s pretext theory is premised on Defendant allegedly having ulterior motivations for
withholding consent to the transfer and is not applicable to this statutory claim. Accordingly, the
Court finds that summary judgment is warranted as to the Second Claim for Relief.
IV.

Computation of Damages
Defendant seeks, in the alternative, an order that Plaintiff’s compensatory damages are

limited to $350,000. (Def. Br. at 29). Pursuant to Federal Rule of Civil Procedure 56(g), “[i]f the
court does not grant all the relief requested by the motion, it may enter an order stating any
material fact—including an item of damages or other relief—that is not genuinely in dispute and
treating the fact as established in the case.” “The decision of the Court to enter an order limiting

17

relief under Rule 56(g) ‘is a matter of discretion.’” D’Iorio v. Winebow, Inc., 68 F. Supp. 3d 334,
356 (E.D.N.Y. 2014).
Here, it is undisputed that the only category of damages Plaintiff is seeking is the lost sale
price of the dealership (except for attorneys’ fees, costs, disbursements, and interest). (56.1 ¶ 10).
Plaintiff and Gabrielli executed the “Third Amendment” to the ASA on July 27, 2020 which
excluded the Hyundai assets. (Id. ¶¶ 12-13). Plaintiff admits that “the amount that the price of the
operating assets were reduced as a result of the removal of the Hyundai franchise was $350,000.”
(Id. ¶ 15). Plaintiff offers an alternate calculation of $550,000 based on the value allocated in the
prior version of ASA. (Id. ¶ 16; Pl. Br. at 29). Plaintiff also argues that it had another buyer
willing to purchase the franchise for $450,000. (Pl. Br. at 29). The Court agrees with Defendant
that Plaintiff’s compensatory damages are limited to the undisputed amount that it lost in the sale
to Gabrielli. 12 (Reply at 13). Accordingly, the Court grants Defendant’s application to limit
Plaintiff’s entitlement to compensatory damages for the lost sale price to $350,000.
CONCLUSION
For the foregoing reasons, Defendant’s motion for summary judgment is GRANTED as
to Plaintiff’s First and Second Claims for Relief and DENIED as to Plaintiff’s Third Claim for
Relief. Additionally, Plaintiff’s entitlement to damages for the lost sale price, subject to its
ability to prove such damages at trial, is limited to $350,000.
The parties are directed to meet and confer and comply with Rules 6(A) and 6(B) of the
Court’s Individual Practices (rev. March 19, 2024) by filing the documents required therein,

12

See V.S. Int’l, S.A. v. Boyden World Corp., 862 F. Supp. 1188, 1197 (S.D.N.Y. 1994) (“In assessing
damages, it is axiomatic that a party injured by a breach of contract must be placed in the same economic
position in which he would have been, had the contract been fully performed . . . [A] plaintiff must prove
the existence of damages with certainty in order to recover for breach of contract . . . New York law does
not countenance damage awards based on [s]peculation or conjecture.”) (internal quotations omitted).

18

which include a joint pretrial order, proposed joint voir dire questions, joint requests to charge,
joint verdict form, and any motions in limine, on or before October 1, 2024.
A pretrial conference has been scheduled for December 4, 2024 at 2:30 p.m. to be held in
Courtroom 520 of the White Plains courthouse.
The Clerk of Court is respectfully requested to terminate the pending motion sequence
(Doc. 45).
SO ORDERED.
Dated: White Plains, New York
August 28, 2024

_______________________________
Philip M. Halpern
United States District Judge

19