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February 1, 2000


The opinion of the court was delivered by: McMAHON, District Judge.


On January 5, 1999, Plaintiffs — corporations under the control of Charles Cartalemi that hold franchises to sell automobiles from various manufacturers — commenced the first above-captioned action in the New York State Supreme Court. There, they sought, inter alia, to enjoin Defendants from terminating dealer financing that Defendant Chrysler Financial Corporation had been providing to all three dealerships. Plaintiffs moved for a preliminary injunction; Defendants countered by removing the action to this Court. On March 2, 1999, this Court released an opinion and order in 99 Civ. 213, denying Plaintiffs' motion for a preliminary injunction against the termination of its dealer financing by CFC. See Lazar's Auto Sales, Inc. v. Chrysler Financial Corp., et al., 1999 WL 123501 (S.D.N.Y. March 2, 1999). Familiarity with that opinion is presumed.

Since that time, CFC has commenced its own action against Plaintiffs seeking to recover amounts due it from the dealerships and from Cartalemi and his wife Joan, pursuant to guarantees that they signed. The two actions have been consolidated. Since last March, the parties have conducted extensive discovery. Now, on a full record, CFC and Chrysler have moved this Court for summary judgment dismissing the actions commenced by Plaintiff Lazar's.

For the reasons set forth below, the motions are granted and the original action (99 Civ. 213) is dismissed.


Summary judgment is appropriate 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). It is the non-moving party's burden to "demonstrate to the court the existence of a genuine issue of material fact." Lendino v. Trans Union Credit Information Co., 970 F.2d 1110, 1112 (2d Cir. 1992). In opposing summary judgment, a party may not rest upon unsupported allegations or denials, or simply claim without support that evidence adduced by the movant in support of the motion is not credible. See, e.g., Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Mycak v. Honeywell, Inc., 953 F.2d 798, 801-802 (2d Cir. 1992).


A. The First Cause of Action (Federal Dealer's Day in Court Act)

The first claim for relief in 99 Civ. 213 is pleaded by Plaintiff Lazar's Auto against both Defendants under the federal Automobile Dealer's Day in Court Act ("ADDCA"), 15 U.S.C. § 1222 et seq. Lazar's claims that Chrysler and CFC are "automobile manufacturers," as defined in 15 U.S.C. § 1221 (a), and that they failed to act in "good faith," as defined in 15 U.S.C. § 1222 (e), in their performance under the June 1985 Dealer Sales and Service Agreement between Lazar's Auto and Chrysler. Specifically, Lazar's Auto contends that CFC, at the behest of and as an agent for Chrysler, retaliated against Lazar's Auto because it refused to accept a franchise "swap" with a competing dealership in the Peekskill/Yorktown area, Salerno Chrysler Plymouth Dodge, Inc. The acts of retaliation attributed to CFC by Lazar's Auto include, inter alia, performing excessive bank cutoffs and floor plan audits; wrongfully rejecting retail installment contracts and lease contracts, resulting in bounced drafts; suspending and then terminating its wholesale credit line; and otherwise interfering with Plaintiffs' relationships with BMW and General Motors.

(a) As against CFC. This claim must be dismissed as a matter of law as against CFC because CFC is not an automobile manufacturer. To put it as simply as possible, CFC does not make cars. It provides financing for persons (in this case, automobile dealers) who want to purchase cars at wholesale for resale at retail. Nor is CFC a party to the 1985 Sales and Service Agreement.

The only way that CFC can be held liable under the ADDCA is if the evidence establishes that it is an agent of Chrysler or is otherwise under Chrysler's control. See Keys Jeep Eagle, Inc. v. Chrysler Corp., 897 F. Supp. 1437 (S.D.Fla. 1995), aff'd without opinion, 109 F.3d 773 (11th Cir. 1997). In the March 2 opinion, this Court noted the near identity between the allegations in Keys Jeep Eagle and those in this matter, as well as the fact that New York and Florida law on the question of agency is identical. (Memorandum. Decision and Order ¶¶ 7-8.) I observed that Plaintiffs would have to establish both that Chrysler was responsible for CFC's apparent authority to conduct the transactions in question and that the Lazar's dealership reasonably relied on the representation of CFC. (Memorandum Decision and Order ¶ 8.)

The record contains no evidence to support a finding that CFC acted as Chrysler's agent — or even at its behest — in any respect concerning Lazar's Auto. Although many months have passed since the preliminary injunction motion was made and much discovery has transpired, Lazar's Auto has not turned up any of evidence to support its speculation that Chrysler used CFC to try to put Lazar's Auto out of business so that it could transfer the lucrative Jeep-Eagle franchise to its favored dealer, Salerno, as part of the implementation of Chrysler's "Project 2000." Plaintiffs have not directed this Court's attention to a single item of evidence to support their belief that someone at Chrysler directed, requested, or even suggested that CFC help Chrysler implement Project 2000, heighten its financial scrutiny of Plaintiff, or suspend or terminate Lazar's credit facilities. For that reason alone, the claim of agency could never be submitted to a jury, and the first cause of action must be dismissed as against CFC on the ground that it is not an automobile dealer.

Even if there were evidence that CFC was Chrysler's agent for ADDCA purposes, no competent evidence creates a disputed issue of material fact concerning CFC's alleged failure to act in "good faith" within the meaning of the ADDCA in its dealings with Lazar's Auto. As discussed in the March 2 opinion, "good faith" has a narrow and restricted two-pronged meaning under the ADDCA. See Empire Volkswagen, Inc. v. World-Wide Volkswagen Corp., 814 F.2d 90, 95 (2d Cir. 1987). First, the Plaintiff must demonstrate that an "automobile manufacturer" coerced, intimidated or threatened him. Second, the plaintiff must prove that any coercion or intimidation was designed to achieve some improper or wrongful objective. Indeed, summary judgment will be granted unless Plaintiff introduces some evidence that CFC made a wrongful demand and then enforced it by threats or coercion or intimidation. See Quarles v. General Motors, 597 F. Supp. 1037 (W.D.N.Y. 1984), aff'd, 758 F.2d 839 (2d Cir. 1985).

No such evidence has been produced. Plaintiff contends that the business practices that CFC clamped down on were perfectly acceptable for 12 or 13 years prior to the period when Chrysler allegedly wanted to put Lazar's out of business pursuant to "Project 2000." From that, Lazar's claims a jury could infer that CFC's sudden insistence on adherence to contractual standards constituted bad faith. Assuming arguendo that CFC tolerated shoddy business practices in the past, that would not preclude it from demanding strict adherence to the terms of the contract in the future. The 1985 Master Security Agreement between Lazar's Auto and CFC's predecessor in interest so states, at Section 8.6; so does the 1994 Security Agreement and Master Credit Agreement between Lazar's Auto and CFC's predecessor in interest. Thus, under the terms of the contracts themselves, Plaintiff's premise is wrong.

Moreover, as the Court discussed in the March 2 opinion, in each and every instance that Lazar's cites as an example of CFC's bad faith, CFC had a legitimate business reason to take action against the dealer. When Cartalemi breached Section 7.0 of the Security Agreement by refusing to give CFC access to the dealer's books and records, CFC had a contractual right to refuse to extend credit to Lazar's. When Lazar's bounced checks, CFC had a contractual right to step up its bank audits of the dealer's finances. When CFC received contracts that failed to comply with the requirements of truth in lending laws, it had the right to "bounce" the contracts until the errors were corrected — and there is no evidence that either the contracts were correct as initially submitted, or that CFC failed to honor them once the errors were fixed. When a "book audit" showed that CFC was not being paid on a timely basis for the vast majority of cars sold by all three of Plaintiff dealerships, CFC had the right — the conceded right (see Cartalemi Dept. at 128) — to perform more frequent inventory audits. Lazar's Auto and Mr. Cartalemi have not produced a shred of evidence, despite months of discovery, that even suggests let alone proves, that this Court's conclusions of ten months ago were erroneous.

Plaintiff's contention that CFC permitted Salerno to sell Jeeps in violation of Lazar's exclusivity agreement is frivolous. That there was a Jeep on Salerno's property one day — which I will assume for purposes of this motion — neither establishes that it was for sale nor that CFC had anything to do with the fact that it was there. No other evidence ...

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