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Agar Truck Sales, Inc. v. DaimlerChrysler Vans

August 2, 2006

AGAR TRUCK SALES, INC, PLAINTIFF,
v.
DAIMLERCHRYSLER VANS, LLC, DEFENDANT.



The opinion of the court was delivered by: Sidney H. Stein, U.S. District Judge

OPINION & ORDER

In this action for damages and declaratory and injunctive relief, Agar Truck Sales, Inc. ("Agar"), a motor vehicle dealer in Yonkers, N.Y., claims that the decision of DaimlerChrysler Vans LLC ("DC Vans"), a manufacturer of commercial vans, to discontinue its Freightliner Sprinter line of commercial vans violated (i) the federal Automobile Dealers' Day in Court Act ("ADDCA"), 15 U.S.C. § 1221 et seq.; (ii) the New York State Franchised Motor Vehicle Dealer Act, N.Y. Veh. & Traf. Law § 463 (2006); and (iii) breached a covenant of good faith and fair dealing.

DC Vans has moved to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6). That motion is granted because Agar has not alleged a lack of good faith on the part of DC Vans sufficient to state a claim pursuant to the ADDCA, which defines "good faith" narrowly as "freedom from coercion, intimidation, or threats of coercion or intimidation." See 15 U.S.C. § 1221(e). In addition, the Court declines to exercise supplemental jurisdiction over Agar's state law claims.

I. BACKGROUND

The following facts are drawn from the complaint, the Dealer Agreement between Agar and DC Vans and two letters from DC Vans to Agar.*fn1

DC Vans introduced the Freightliner Sprinter Van, a commercial van, to the marketplace in 2001. (Compl. ¶ 4.) In October of that year, DC Vans entered into a "Dealer Agreement" with Agar that authorized Agar to sell and service the Freightliner Sprinter. (Id. ¶ 8.) The Dealer Agreement provided that Agar would be a "non-exclusive dealer" of the Freightliner Sprinter in Westchester, New York, which was Agar's "Primary Market Area." (Dealer Agreement, art. 3.1(2) and Annex C, Ex. A. to Aff. of Dyan Figuerra-Ducharme dated Jan. 20, 2006 ("Figuerra-Ducharme Aff.").) DC Vans retained the right to "appoint other dealers in the Primary Market Area on terms and conditions deemed appropriate and . . . to distribute, sell and service any other motor vehicles, whether passenger or commercial vehicles, in the Primary Market Area on such terms and conditions deemed appropriate." (Id., art. 3.3.) The agreement also gave DC Vans the right to "discontinue the manufacture, importation or distribution of vehicles at any time and without any obligation to Dealer by reason thereof." (Id., art. 9.13.) The agreement specified that it would expire on September 19, 2005, "unless terminated earlier in accordance with the terms hereof or in accordance with applicable law" and that "[n]either party shall have the right to renew or extend this Agreement after its expiration date." (Id., art. 15.1; see also Compl. ¶ 20.)

Agar alleges that as a Freightliner Sprinter dealer, it made "brand-specific investments in facilities, equipment, tools, signage, sales, training, advertising and promotion in the Freightliner Sprinter brand of products." (Compl. ¶ 14.) It also -- allegedly at the "insistence" of DC Vans -- converted one of its properties into a facility dedicated solely to the sales and service of the Freightliner Sprinter. (Id. ¶ 9.) Less than a year later, however -- on July 19, 2002 -- the President and CEO of DC Vans wrote its U.S. Freightliner Sprinter dealers, including Agar, that DC Vans intended to discontinue the Freightliner Sprinter brand of vans in 2006 and replace that brand with a "Dodge branded Sprinter." (Letter from Tim A. Reuss, President & CEO, DC Vans, to DC Vans Dealer Network (July 19, 2002), Ex. B to Figuerra-Ducharme Aff.; see also Compl. ¶ 17.) The letter read in relevant part as follows:

DaimlerChrysler Vans has made a sincere effort to keep our dealers informed of all activities regarding their franchise. In this continued spirit I feel compelled to advise you of a decision made on Wednesday by the Executive Automotive Council of DaimlerChrysler. The EAC has decided to introduce a Dodge branded Sprinter. This decision is due to:

Overall demand of customers for more service locations [and] Linked pickup, SUV and passenger car sales through the established Dodge brand umbrella.

Effective with the introduction of the replacement model to the Sprinter in approximately 2006, the Freightliner Sprinter will be discontinued. No additional van products will be offered under the Freightliner brand. DaimlerChrysler will honor all DC Vans dealer agreements; all dealers can continue to order vehicles and service tools until the phase-out. Regarding parts supply, this will continue uninterrupted by Freightliner LLC as outlined today in their communication to you. (Id.) The complaint does not specify whether Agar responded to this letter.

In 2003, according to Agar, Mercedes Benz, which produced the Sprinter engine, stated publicly that the new Dodge Sprinter was "vital to Dodge's commercial strategy" and that "it was always DaimlerChrysler's intention to put a Dodge nameplate on the Sprinter and use the Dodge dealer base in the U.S." (Compl. ¶ 18.)

Approximately six months before the expiration of the Dealer Agreement -- on Feb. 28, 2005 -- DC Vans again wrote to its U.S. Freightliner Sprinter dealers, including Agar, restating its decision to discontinue the Freightliner Sprinter in 2006 and offering to buy out Agar's rights under the Dealer Agreement. (Compl. ¶ 19.) It added that if Agar declined the offer it would be terminated pursuant to the terms of the Dealer Agreement. (Id.) That letter stated as follows:

As advised in the DC Vans letter dated July 7, 2002, we intend to discontinue the distribution of the Freightliner Sprinter Van at the end of the 2006 model year. In order to pursue an orderly transition for DC Vans and you, the dealer, we propose to pay you the amount specified below in consideration of your voluntary termination as a dealer as detailed in the attached Termination and Release Agreement. The amount we propose to pay you is $1,700 for each Freightliner Sprinter that you sold during your best calendar year of sales. According to our records, your dealership's best sales year was 2004 when it sold 103 vehicles, which means that we are offering you the amount of $175,100. . . .

In the event you do not choose to accept this offer, DC Vans will provide you with a formal notice of termination at a later date in compliance with your dealer agreement and state law. (Letter from Patrick W. Dougherty, President, DaimlerChrysler Vans LLC, to Thomas Abaruzese, Agar Truck Sales, Inc. (Feb. 28, 2005), Ex. C to Figuerra-Ducharme Aff.) Agar has received "no further written notice from DC Vans concerning the non-renewal or termination of its ...


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