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Grow's Marine, Inc. v. American Honda Motor Co.

April 9, 2010

GROW'S MARINE, INC. AND BABBITT'S SPORTS CENTER, LLC, PLAINTIFFS,
v.
AMERICAN HONDA MOTOR CO., INC., DEFENDANT.



The opinion of the court was delivered by: Gordon J. Quist United States District Judge

HON. GORDON J. QUIST

OPINION

Plaintiffs, Grow's Marine, Inc. ("Grow's") and Babbitt's Sports Center, LLC ("Babbitt's"), have sued Defendant, American Honda Motor Co., Inc. ("AHM"), alleging claims of violation of the Michigan Dealer Act ("MDA"), M.C.L. § 445.1561, et seq., and tortious interference with a contract and/or advantageous business relationship.*fn1 All claims arise out of AHM's refusal to approve Babbitt's as a replacement Honda dealer for Grow's. Count I of the first amended complaint alleges a claim for a declaratory judgment that AHM violated the MDA, and Counts II and III allege claims for damages under the MDA for Grow's and Babbitt's, respectively. Finally, Counts IV and V each allege a tortious interference claim for Grow's and Babbitt's.

AHM has moved for partial summary judgment on the portion of Count I as it relates to Babbitt's and Count III, alleging Babbitt's claim for damages under the MDA, on the basis that Babbitt's is not an existing new motor vehicle dealer and thus lacks standing to sue under the MDA. AHM also seeks summary judgment on the tortious interference claims alleged in Counts IV and V on the basis that under its dealer agreement with Grow's, it has the right to reject a proposed transfer of ownership and thus cannot be held liable for tortious interference. Grow's has filed a motion for summary judgment on Counts I and II, arguing that there is no genuine issue of material fact that AHM violated the MDA. Although Grow's has requested oral argument on its motion, the Court concludes that oral argument would not be helpful on these particular motions.

For the reasons set forth below, the Court will grant AHM's motion and deny Grow's motion.

BACKGROUND

In 2003, Grow's became an authorized Honda dealer for the sale and service of Honda motorcycles, all terrain vehicles, and motor scooters in the Muskegon, Michigan area. The Sales and Service Agreement that the parties executed provides that AHM must consent in writing before Grow's can transfer the Honda dealership to a new owner or new management. On October 1, 2007, Grow's and Babbitt's signed a Purchase Agreement, pursuant to which Grow's agreed to sell and Babbitt's agreed to buy Grow's Honda and Yamaha franchises. At that time, Babbitt's was already a Kawasaki, Polaris, Arctic Cat, and Bombardier powersports competitor in the Muskegon area. The Purchase Agreement recognized that the sale was contingent upon approval of all manufacturers for the dealerships being sold.

On October 16, 2007, Grow's submitted the Purchase Agreement to AHM for its review and consideration. On October 17, 2007, AHM sent Babbitt's principal, Eddie Babbitt, a letter and various forms that Babbitt's would have to complete in order for AHM to consider the request for approval. AHM received the application forms and other information from Babbitt's on November 15, 2007, but the material was incomplete. (Nicholson Aff. ¶ 5.) AHM sent a letter to Babbitt's on November 19, 2007, requesting additional information and documents that were required for consideration of the application. (Id.) Babbitt's furnished the additional information on December 14, 2007. (Id. ¶ 6.) On February 8, 2008, AHM sent a letter to Grow's by Federal Express and fax rejecting Grow's proposed transfer to Babbitt's. On February 11, 2008, Babbitt's sent additional information to AHM requesting that AHM reconsider its rejection of the transfer, but AHM did not reverse its decision.

On July 9, 2008, AHM sent a letter to Grow's confirming that Grow's wished to submit a new proposal regarding Grow's proposed transfer of the dealership to Babbitt's. The new proposal called for Babbitt's to operate the Honda dealership from a different location than the one identified in the previous proposal. (Id. ¶ 9.) On July 9, Richard G. Sly, on behalf of Grow's, sent a letter to AHM stating that Babbitt's was not proposing a new location and renewing its request that AHM approve the previous proposal. (Id. ¶ 10.) On July 23, 2008, AHM sent a letter to Grow's confirming that Grow's wanted AHM to review the proposed transfer of the Honda dealership to Babbitt's. (Id. ¶ 11.) The following day, AHM sent a letter to Babbitt's identifying the documents and information that AHM would need to review the proposed transfer. (Id. ¶ 12.) Babbitt's furnished the requested information and documents to AHM on August 4, 2008. On October 3, 2008, AHM sent a letter by Federal Express and fax denying the proposed transfer and stating its reasons for the denial. Thereafter Grow's filed the instant lawsuit.

DISCUSSION*fn2

AHM's Motion for Summary Judgment

As noted above, AHM seeks summary judgment on Babbitt's claims under the MDA, which are set forth in Count I (claim for declaratory judgment by both Grow's and Babbitt's) and Count III, in which Babbitt's seeks damages under the MDA. AHM contends that these claims must be dismissed because Babbitt's does not meet the definition of a "new motor vehicle dealer" under the MDA and thus lacks standing to assert a claim under that statute. AHM also seeks summary judgment on the tortious interference claims asserted by Grow's and Babbitt's in Counts IV and V on the ground that AHM is not a third party to the Purchase Agreement and thus cannot be liable for tortious interference.

Turning first to the tortious interference claims, Grow's has not responded to AHM's motion, and Babbitt's concedes in its response that AHM is a party to the Purchase Agreement (for purposes of giving written approval to the transfer). Indeed, as AHM correctly argues, the Sixth Circuit's decision in Cook v. Little Caesar Enterprises, Inc., 210 F.3d 653 (6th Cir. 2000), forecloses a tortious interference claim in this case. In Little Caesar, the court of appeals affirmed the district court's grant of summary judgment to defendant on the plaintiff's tortious interference claim because, as in the instant case, the franchise agreements gave the defendant-franchisor the right to approve or disapprove any sale of the franchises by the plaintiff-franchisee, and the purchase agreement conditioned the transaction upon approval by the defendant-franchisor. See id. at 659. The court held that because the defendant was a party to the contract, the plaintiff could not establish that the defendant was a "third party." Id. at 660. Here, as in Little Caesar, because AHM is a party to the Purchase Agreement by reason of the requirement that AHM consent to the transaction, there is no basis for a tortious interference claim. Therefore, Counts IV and V will be dismissed.

With regard to Babbitt's claims under the MDA, the Michigan Court of Appeals has held that the MDA affords standing to existing new motor vehicle dealers such as Grow's but not to prospective new motor vehicle dealers such as Babbitt's. See Pung v. Gen. Motors Corp., 226 Mich. App. 384, 387, 573 N.W.2d 80, 81-82 (1997) (noting that the "legislative scheme . . . clearly reflects a legislative intent to protect existing dealerships, but not prospective new dealers"). Babbitt's does not dispute that it lacks standing to sue under the MDA. It argues, however, that it is a required ...


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