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LLC v. Hyundai Motor America Corp.

United States District Court, E.D. Louisiana

December 9, 2019

EDDIE TOURELLE'S NORTHPARK HYUNDAI, LLC
v.
HYUNDAI MOTOR AMERICA CORP., ET AL.

         SECTION: “H” (1)

          ORDER AND REASONS

          JANE TRICHE MILAZZO UNITED STATES DISTRICT JUDGE.

         Before the Court is Defendants' Second Motion to Dismiss (Doc. 28). For the following reasons, the Motion is GRANTED IN PART.

         BACKGROUND

         This lawsuit arises out of the franchise relationship between Plaintiff Eddie Tourelle's Northpark Hyundai, LLC and Defendants Hyundai Motor America Corporation (“HMA”) and Genesis Motor America, LLC (“GMA”). Plaintiff alleges that it entered into a Dealer Sales and Service Agreement (“DSS Agreement”) with HMA, which gave Plaintiff the right to purchase and sell Hyundai products at its dealership, including the Hyundai Genesis. In 2015, HMA announced that the Genesis would be spun-off into a new line of luxury vehicles. Plaintiff signed an agreement with HMA to be eligible to purchase and sell the new Genesis line vehicles (“the Participation Agreement”). The Participation Agreement required Plaintiff to upgrade its sales and service facilities in order to sell the Genesis line. To comply with the Participation Agreement, Plaintiff spent $135, 208.50 on renovations and employee training.

         In connection with the re-branding, HMA allegedly made conflicting representations to the Louisiana Motor Vehicle Commission (“LMVC”) regarding whether the Genesis vehicles were manufactured by HMA or GMA. The LMVC found that GMA was the manufacturer/distributor of the new line and that it had failed to secure proper licensing to sell in Louisiana. As a result, HMA and GMA ordered Plaintiff and other Genesis dealers in Louisiana to stop selling the Genesis line. Plaintiff argues that as a result of Defendants' failure to secure proper licensing, it was prohibited from selling Genesis vehicles despite complying with the terms of the Participation Agreement.

         Plaintiff filed suit in state court, bringing claims for breach of contract, negligence, violation of the Louisiana Motor Vehicles Act (LMVA), and violation of the Louisiana Unfair Trade Practices Act (LUTPA) against HMA and GMA. Defendants removed the case to this Court on diversity grounds. Defendants then moved to dismiss Plaintiff's claims, arguing that it had failed to state a claim for which relief could be granted. This Court granted Defendants' motion in part, dismissing Plaintiff's claims for violations of the LMVA, violations of LUTPA, negligence, and breach of contract. Plaintiff's only remaining claim was its claim against HMA for HMA's breach of its obligation to use best efforts under the DSS Agreement. However, the Court also granted Plaintiff leave to amend its Complaint to properly plead the claims that had been dismissed.

         Plaintiff thereafter amended its Complaint (“the Amended Complaint”).[1]Defendants now move again for dismissal of some of Plaintiff's claims.[2] This Court will address each of their arguments in turn.

         LEGAL STANDARD

         To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead enough facts “to state a claim for relief that is plausible on its face.”[3] A claim is “plausible on its face” when the pleaded facts allow the court to “draw reasonable inference that the defendant is liable for the misconduct alleged.”[4]A court must accept the complaint's factual allegations as true and must “draw all reasonable inferences in the plaintiff's favor.”[5] The court need not, however, accept as true legal conclusions couched as factual allegations.[6] To be legally sufficient, a complaint must establish more than a “sheer possibility” that the plaintiff's claims are true.[7] If it is apparent from the face of the complaint that an insurmountable bar to relief exists and the plaintiff is not entitled to relief, the court must dismiss the claim.[8] The court's review is limited to the complaint and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint.[9]

         LAW AND ANALYSIS

         Defendants have moved for dismissal of some of the claims in Plaintiff's First Amended Complaint. Specifically, Defendants seek dismissal of Plaintiff's claims for breach of the Participation Agreement, negligent misrepresentation, negligence, intentional interference with contract, and its claims under various solidary liability theories.

         A. Breach of Participation Agreement

         In considering Defendants' First Motion to Dismiss, this Court dismissed all of Plaintiff's allegations for breach of contract except one. The Court held that Plaintiff had sufficiently alleged a breach of the DSS Agreement's requirement that HMA use its “best efforts” to provide Plaintiff with Hyundai Products. The provision of the DSS Agreement that Plaintiff alleges HMA breached states that “HMA will use its best efforts to provide Hyundai Products to [Plaintiff] subject to available supply from FACTORY, HMA's marketing requirements, and any change or discontinuance with respect to any Hyundai Product.”[10] This Court specifically noted that Plaintiff had not pointed out a similar provision in the Participation Agreement, and therefore Plaintiff had not sufficiently alleged a breach of the Participation Agreement.

         In its First Amended Complaint, Plaintiff now states that the Participation Agreement “specifically contemplated that sales of Genesis Products from HMA to Northpark would be governed by the terms and conditions set forth in the [DSS Agreement]” and that HMA therefore breached its obligation under the Participation Agreement to use “best efforts” to provide Plaintiff with Genesis products.

         Defendants move for dismissal of this claim, arguing that no provision of the Participation Agreement supports this allegation. Plaintiff opposes, pointing to the following provisions of the Participation Agreement in support of its argument that the Participation Agreement “clearly contemplated” that the terms of the DSS Agreement, including the “best efforts” clause, would govern the parties' relationship regarding the Genesis vehicles:

1. “Nothing in this Agreement removes, modifies, discharges or releases any of [HMA's] obligations under the [DSS Agreement] or any other agreement between Dealer and HMA.”
2. “Dealer must at all times remain in full compliance with this Agreement and the [DSS Agreement].”
3. “HMA reserves the right to withdraw Dealer's authorization to sell and/or service the Genesis Branded Products at any time in the event the Dealer fails to adhere to any of its obligations under this Agreement or the [DSS Agreement].”
4. HMA may “create and offer a separate Genesis Dealer Sales and Service Agreement . . . for the Genesis Branded Products.”
5. “To the extent of any conflict between the [DSS Agreement] and this Agreement, this Agreement shall control with respect to Genesis Branded Products.”[11]

         While these provisions certainly indicate that the parties contemplated that the two agreements would work together to define the parties' relationship, they do not support Plaintiff's position. None of these provisions indicate that HMA undertook the same obligations to provide Genesis products that it had previously undertaken in the DSS Agreement in relation to Hyundai products. This Court declines to read into the Participation Agreement an obligation that is simply not there. Accordingly, Plaintiff's claim for breach of the Participation Agreement is dismissed.

         B. Negligence Claims

         In its original Complaint, Plaintiff alleged a claim of state law negligence against Defendants. This Court held that the negligence allegations in the Complaint failed because Defendants do not owe a general duty to Plaintiff, either because of their relationship or by statute, to obtain certain licensing or offer certain vehicles for sale. The Court found that those duties arose out of the Agreements between the parties and sounded in contract.

         Plaintiff's Amended Complaint now seeks to reassert a negligence claim against both HMA and GMA. Plaintiff alleges that Defendants were negligent in failing to ensure that all licensing requirements had been met, providing confusing representations about whether the vehicles were Genesis or Hyundai, and failing to fulfill their obligations to allow Genesis automobiles to be sold in Louisiana. The Amended Complaint states that “Defendants owed a legal duty to conform to a standard of conduct imposed by the law for the protection of automobile dealers and consumers against unreasonable risks of harm.”[12]

         Defendants argue that these claims should again be dismissed for the same reasons as already articulated by this Court. This Court agrees. Plaintiff's defense essentially amounts to a disagreement with this Court's prior order. An amended complaint is not the proper vehicle to make such an argument, and anyway, this Court is not compelled to change its prior holding. Plaintiff has not identified a tort duty to support a claim of ordinary negligence. Its negligence claims are again dismissed.

         C. Negligent ...


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