Mathew Enterprise v. Fca US ( 2018 )

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FILED
FOR THE NINTH CIRCUIT
SEP 25 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
MATHEW ENTERPRISE, INC., No. 17-15060
Plaintiff-Appellant, D.C. No. 5:16-cv-03551-LHK
v.
MEMORANDUM*
FCA US, LLC,
Defendant-Appellee.
MATHEW ENTERPRISE, INC., No. 17-17392
Plaintiff-Appellant, D.C. No. 5:17-cv-03251-LHK
v.
FCA US, LLC,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of California
Lucy H. Koh, District Judge, Presiding
Argued and Submitted September 10, 2018
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: WALLACE, RAWLINSON, and WATFORD, Circuit Judges.
Mathew Enterprise, Inc. (Enterprise) appeals from the district court’s judgment
dismissing its claims against FCA US, LLC (FCA) alleging violation of the
Automobile Dealers’ Day in Court Act (ADDCA), 15 U.S.C. §§ 1221-1225; breach
of the implied covenant of good faith and fair dealing under Michigan law; and
violation of California Vehicle Code § 3060. We review de novo dismissals under
Rule 12(b)(6) of the Federal Rules of Civil Procedure. See Segalman v. Sw. Airlines
Co., 895 F.3d 1219, 1222 (9th Cir. 2018).
1. The district court did not err in dismissing Enterprise’s ADDCA claim,
as all actions were authorized by the parties’ agreement, and FCA exhibited no
coercive or intimidating behavior. See Autohaus Brugger, Inc. v. Saab Motors, Inc.,
567 F.2d 901, 910-11 (9th Cir. 1978).
Enterprise argues that FCA violated the ADDCA when FCA: (1) rejected
Enterprise’s proposal to relocate the dealership and (2) insisted that Enterprise either
sign a new lease agreement or pay rent at the increased holdover lease rate provided
in the lease. Neither supports a claim under the ADDCA.
“There is nothing in [the ADDCA] which gives a dealer the right to dictate the
location of its own choosing. Likewise, there is nothing in [the ADDCA] which
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would deprive [FCA] of making business judgment as to locations of its franchises.”
Golden Gate Acceptance Corp. v. Gen. Motors Corp., 597 F.2d 676, 680-81 (9th Cir.
1979) (citations and internal quotation marks omitted). Section 11(d)(ii) of the “Sales
and Service Agreement Additional Terms and Provisions” provides that “[Enterprise]
shall not make any change in the location of Dealership Operations . . . without the
prior written approval of [FCA].” FCA subsequently used its business judgment to
deny Enterprise’s relocation request, and Enterprise’s complaint does not allege any
coercive measure taken by FCA that deviates from the express contractual terms.
Therefore, Enterprise failed to allege bad faith plausibly. See Brugger, 567 F.2d at
910-11; see also Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (requiring the pleading
of plausible allegations).
Paragraph 25 of the lease permitted application of the holdover lease rate absent
renewal or a new agreement. Implementation of mutually, agreed-upon contractual
terms does not constitute a lack of good faith. See 15 U.S.C. § 1221(e); see also
Golden Gate, 597 F.2d at 680 n.8.
2. The district court committed no error in dismissing Enterprise’s good faith
and fair dealing claim. Michigan law governs the parties’ agreement, and “Michigan
does not recognize a cause of action for breach of the implied covenant of good faith
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and fair dealing.” In re Leix Estate, 797 N.W.2d 673, 683 (Mich. Ct. App. 2010)
(citation omitted).
3. Enterprise’s claim under California Vehicle Code § 3060 was properly
dismissed because it failed to allege any facts that FCA, under any reasonable
interpretation of the statute, “terminate[d] or refuse[d] to continue” the franchise. Cal.
Veh. Code § 3060.
AFFIRMED.
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