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PACESETTER MOTORS, INC. v. NISSAN MOTOR CORP.

January 30, 1996

PACESETTER MOTORS, INC., d/b/a Irondequoit Nissan, et al, Plaintiffs,
v.
NISSAN MOTOR CORPORATION IN U.S.A., et al, Defendants.



The opinion of the court was delivered by: LARIMER

 This is a commercial dispute between the owners of an automobile franchise ("Pacesetter") and the Nissan Motor Corporation ("Nissan") as well as Nissan's related financing company, Nissan Motor Acceptance Corporation ("NMAC"). Pacesetter's controlling shareholders, Angelo Ingrassia and Vincent Pellegrino ("plaintiffs"), assert that they were injured and suffered damages as the result of actions taken by Nissan and/or NMAC in response to plaintiffs' attempts to sell or move the Pacesetter dealership. Presently before me is Nissan and NMAC's joint motion for summary judgment. For the reasons set forth below, I grant defendants' motion and dismiss the complaint in its entirety.

 BACKGROUND

 In 1988 Ingrassia and Pellegrino acquired controlling interests in Pacesetter Motors, a Nissan dealership then located at 250 Lake Avenue, Rochester, New York. Soon thereafter they began looking for an alternative site to move the dealership. The 250 Lake Avenue address was unfavorable, in their view, because both the facility and the surrounding neighborhood were rapidly deteriorating, resulting in decreasing sales. In accordance with the Sales and Service Agreement (the "Agreement"), whose provisions governed the relationship between Pacesetter and Nissan, any move or change in ownership was contingent upon Nissan's consent. Such consent was not to be "unreasonably" withheld.

 In September 1988 plaintiffs entered into a contract to purchase a vacant lot located at 785 Ridge Road in Webster, New York, a suburb of Rochester. Plaintiffs intended to move the dealership to this new site. The contract to purchase the lot contained two relevant contingencies: approval by Nissan and approval by Marine Midland Automotive Financial Corporation. There was no other contingency for financing with NMAC or any other financial institution. Nissan did approve the move but plaintiffs believed that they needed mortgage financing before they would be able to build a new facility and complete the move. Therefore, at some time after September 1988, plaintiffs contacted NMAC to discuss financing the purchase and relocation of the dealership.

 Plaintiffs discussed their financial needs with Frank Keenan, the NMAC Boston regional representative. Both sides apparently were enthusiastic about being able to work toward an acceptable financing arrangement.

 Plaintiffs assert that during these weeks of negotiating an oral agreement was reached that NMAC would provide financing, on the terms discussed between plaintiffs and Keenan. On July 25, 1989, Keenan sent to NMAC's Credit Committee (the national body ultimately responsible for all financing decisions) a written request and recommendation for financing the Pacesetter relocation. The Credit Committee made its conditional offer of financing by letter dated August 14, 1989.

 The terms of the August 14th offer apparently differed in part from the terms discussed between plaintiffs and Keenan. While the substance of the financing offer was substantially the same, certain conditions contained in the August 14th offer were unacceptable to plaintiffs. Despite continued attempts to reach a satisfactory agreement, plaintiffs refused to accept NMAC's offer of financing on NMAC's terms.

 Unfortunately for plaintiffs, on May 31, 1989 they had signed an addendum to their sales contract, committing to close on or around July 30, 1989. In fact, plaintiffs' closed on August 10, four days before receiving NMAC's written financing offer. In order to close, plaintiffs borrowed from family and business acquaintances. Plaintiffs allege that they closed prior to obtaining the written offer from NMAC only because they had received oral assurances from Keenan that financing would be forthcoming, on the terms discussed. Due to the lack of NMAC (or any other) financing, the Webster relocation never occurred.

 Following this failed attempt to relocate, plaintiffs then began negotiating to sell the dealership. In April 1991 they successfully negotiated a buy/sell agreement with Michael Piehler ("Piehler"), a well established businessman who already owned a large and successful automobile dealership (offering several different makes) on lake Avenue not far from the Pacesetter site. Piehler offered $ 500,000 for the franchise.

 Although Nissan was initially interested in approving the sale, ultimately it did not. Nissan's stated reason for its denial was the proximity of Piehler's dealership (2 and 1/2 miles) to another already existing Nissan dealership -- Hart Taylor Nissan. Nissan asserts that it did not want two dealerships so close together and that its refusal to approve the sale was within its contractual rights under the Agreement.

 Plaintiffs assert that Nissan's "proximity" argument is but a pretext and that the real reason for Nissan's refusal to approve the sale was Nissan's frustration and anger with Pacesetter. *fn1"

 The next year, in July 1992, plaintiffs sold Pacesetter to another Nissan dealership -- Eastway Nissan -- for $ 250,000. For this Nissan-approved sale, plaintiffs received roughly one-half what Piehler had offered them.

 PACESETTER'S COMPLAINT

 The complaint sets forth 4 causes of action. The first is that Nissan wrongfully refused to approve the sale of Pacesetter to Piehler. The second claim is that Nissan wrongfully interfered with plaintiffs' contractual relationship with Piehler. The third claim is that Nissan and/or NMAC wrongfully refused to finance the Webster lot purchase. The fourth claim is that Nissan and/or NMAC fraudulently induced plaintiffs to close on the Webster lot contract, at significant personal expense, knowing that NMAC would not provide financing. *fn2"

 SUMMARY JUDGMENT STANDARDS

 Summary judgment may be granted when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Rosen v. Thornburgh, 928 F.2d 528, 532 (2d Cir. 1991).

 The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Adickes v. S.H. Kress and Co., 398 U.S. 144, 157, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970). The movant may discharge this burden by demonstrating that there is no evidence to support the nonmoving party's case on which that party would have the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986).

 "Rule 56(e) ... requires the nonmoving party to go beyond the pleadings and by her own affidavits, or by the 'depositions, answers to interrogatories, and admissions on file,' designate 'specific facts showing that there is a genuine issue for trial.'" Celotex Corp., supra, at 324. "The nonmovant... 'may not defeat a motion for summary judgment merely by pointing to a potential issue of fact; there must be a genuine issue of material fact.'" Moller v. North Shore University Hospital, 12 F.3d 13, 15 (2d Cir. 1993)(quoting City of Yonkers v. Otis Elevator Co., 844 F.2d 42, 45 (2d Cir. 1988)).

 NISSAN AND NMAC'S MOTION FOR SUMMARY JUDGMENT

 Nissan and NMAC originally moved for summary judgment in February 1994. After being completely briefed and argued, that motion was continued pending completion of discovery. See Order dated June 20, 1994. Following nearly one year of additional discovery, and the dismissal of plaintiffs' 5th claim (as well as defendant Hart Taylor Nissan), Nissan and NMAC have now renewed their motion and seek dismissal of the four remaining causes of action.

 A. Count 1 - Refusal to Approve the Sale to Piehler.

 Nissan denied approval of the sale of Pacesetter to Piehler allegedly because Piehler's dealership was located too close to Hart Taylor Nissan. Nissan perceived this proximity of two competing dealerships to be inappropriate. According to Nissan, "this clustering of dealerships is not consistent with [Nissan's] long-term market representation plan in Rochester, NY." Letter from Nissan to Ingrassia, May 3, 1991 (denying approval of the Piehler sale).

 Nissan asserts that this determination was well within its contractual rights under the Agreement, which provides that any change in dealer ownership "requires the prior written consent" of Nissan (Agreement at Art. 3), and also that "[Nissan] has the right and obligation to evaluate each prospective dealer, its owner(s) and executive manager, the dealership location and the dealership facilities to ensure that each of the foregoing is adequate to enable Dealer to meet its responsibilities hereunder." (Agreement -- Standard Provisions, at § 15)(emphasis added).

 Plaintiffs acknowledge that Nissan could reject a transfer of the franchise but they rely on that portion of the Agreement which provides that Nissan shall not "unreasonably withhold its consent" to any change in ownership. (Agreement at Art. 3). Plaintiffs contend that Nissan was unreasonable in the rejection. Plaintiffs contend that "proximity" is not a valid criterion for denying approval. Plaintiffs assert that if Nissan really intended "proximity" to be an important criterion, it would have said so explicitly. Rather, plaintiffs assert that Nissan's "proximity" argument is just a pretext and that Nissan "refused to approve the Piehler buy/sell simply because Nissan was ...


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