attempt to draw Conroy, Joan Conroy, and MI Inc. into Count I
as effective plaintiffs for CDL's claim against Nissan under
the Dealer's Day in Court Act — a cause of action that this
Court has held can be brought only by CDL. In either event,
plaintiffs have failed to show that any of the allegations
included in Count II state a cognizable claim against Nissan.
Accordingly, Nissan's motion to dismiss Count II of plaintiffs'
complaint must be granted.
IV. NISSAN'S MOTION FOR SUMMARY JUDGMENT ON COUNT I
In the first count of their complaint, plaintiffs allege
that Nissan engaged in two actions that allegedly violated the
Act. First, they allege that Nissan required them to make
capital improvements in the physical facilities of CDL, under
circumstances that would impair the profitability of the
dealership. Second, plaintiffs allege that Nissan prevented
them from selling or transferring their interest in the
dealership. These actions, viewed either separately or
together, are alleged to constitute a lack of good faith by
Nissan under the Act, thus meriting judgment in favor of
plaintiffs. Defendant, however, has moved for summary judgment
pursuant to Rule 56 of the Federal Rules of Civil Procedure,
arguing that, with respect to both alleged actions, there is
no genuine issue of material fact, and that as a matter of
law, the record in this case shows the absence of any coercive
or intimidating conduct on the part of Nissan.
The Automobile Dealers' Day in Court Act provides automobile
dealers with a cause of action in federal court for damages
sustained "by reason of the failure of [an] automobile
manufacturer . . . to act in good faith  in performing or
complying with any of the terms or provisions of the
franchise, or  in terminating, cancelling, or not renewing
the franchise with said dealer." 15 U.S.C. § 1222. The Act
defines "good faith" as "the duty of each party to any
franchise, and all officers, employees, or agents thereof to
act in a fair and equitable manner toward each other so as to
guarantee the one party freedom from coercion, intimidation, or
threats of coercion or intimidation from the other
party. . . ." Thus, an indispensable element under the Act is a
lack of good faith in which coercion, intimidation, or threats
thereof exist. Ed Houser Enterprises v. General Motors Corp.,
595 F.2d 366, 369 (7th Cir. 1978); Lawrence Chrysler Plymouth,
Inc. v. Chrysler Corp., 461 F.2d 608 (7th Cir. 1972), cert.
denied, 409 U.S. 981, 93 S.Ct. 317, 34 L.Ed.2d 245 (1972).
The Seventh Circuit decision in Houser provides important
guidance in considering Nissan's motion for summary judgment.
In Houser, the dealer alleged that GM threatened non-renewal of
the franchise agreement in an attempt to coerce it to construct
new facilities. 595 F.2d at 369. The Court found, however, that
the dealer was advised prior to entering into the franchise
agreement that GM would not renew the agreement unless new
facilities were built, and that the dealer evidenced his
acceptance of this condition by executing a contract tendered
in consideration of such a provision. Id. at 370. The court
then concluded, as a matter of law that,
It cannot be said, therefore, that the defendant
threatened or coerced or intimidated the plaintiff
to provide new facilities when the basis of the
agreement required such a commitment on the part of
the plaintiff. . . .
In the case at bar, the only allegations of
coercive conduct by the defendant subsequent to
the execution of the agreement consisted of
verbal demands . . . concerning the plaintiff's
plans to correct its facility deficiencies.
Assuming these requests were made with the
authority of the defendant, they cannot be
construed other than as a legitimate inquiry into
the progress the plaintiff had made toward
meeting its obligation under the franchise
agreement. Absent additional facts showing the
defendant otherwise coerced the plaintiff, the
plaintiff has not demonstrated sufficient facts
to accrue a cause of action under the Act.
595 F.2d 370-371 (emphasis added). As a result of this
finding, the Seventh Circuit upheld the trial court's order of
summary judgment on that aspect of the case.
The instant case presents an analogous fact situation to
that provided in Houser. It is uncontroverted that Nissan
required the expansion of CDL's facilities — but this
requirement pre-dated the signing of the franchise agreement.
Moreover, after a careful review of the record in this case,
the Court finds no evidence of Nissan coercing CDL to expand
its facilities.*fn5 Upon completion of a one-year Datsun
franchise agreement, and upon Conroy's representation that
construction of the new facility was virtually complete, Nissan
entered into a five-year Sales and Service Agreement with CDL.
Under the holding in Houser, Nissan's requirement that CDL
expand its facilities before CDL could receive the five-year
agreement that it desired, thus, does not constitute coercion
under the Act. See also Milos v. Ford Motor Co., 317 F.2d 712,
717 (3d Cir. 1963).
The second of Nissan's actions alleged to be in violation of
the Act is Nissan's prevention of CDL "from being able to sell
or transfer their interest in the dealership." [Complaint,
¶ 4(b)]. Although Nissan argues that the record does not
support this claim, for purposes of Nissan's motion for summary
judgment, the Court must consider all disputed facts in favor
of plaintiff. Nissan nonetheless asserts that even if it did
prevent CDL from selling its assets, as alleged, summary
judgment should be entered against CDL because CDL cannot show
that Nissan used any coercion, as required under Houser.
CDL's attempt to sell or transfer its interest in the
dealership was instigated, not by Nissan, but as a result of
CDL's loss of its floor plan financing for its new car
inventory. Thus, there is no allegation that Nissan coerced
CDL into terminating its franchise. The only allegation of bad
faith and coercion relates to Nissan's alleged attempt to
prevent CDL from transferring the franchise. But since the
decision regarding the granting of a franchise is solely
within the purview of the auto manufacturer, it is impossible
for CDL to show that Nissan exerted any coercion; for, in
essence, there was nothing to coerce.
Nissan's actions are indistinguishable from those cases
where existing franchisees challenged a manufacturer's denial
of the franchisee's attempt to transfer the franchise to a
particular applicant. Fray Chevrolet Sales, Inc. v. General
Motors Corp., 536 F.2d 683, 685 (6th Cir. 1976); Spitler
Chevrolet, Inc. v. General Motors Corp., 1980-1 Trade Cases ¶
63,225 at 78,101 (E.D.Mich. 1980); McDaniel v. General Motors
Corp., 480 F. Supp. 666, 677 (E.D.N.Y. 1979); Frank Chevrolet v.
General Motors Corp., 304 F. Supp. 307, 316 (N.D.Ohio 1968),
aff'd, 419 F.2d 1054 (6th Cir. 1969). In all the above-cited
cases, except Frank Chevrolet, the courts granted defendants'
motions for summary judgment on the theory that plaintiffs had
failed to show a "wrongful demand" by the manufacturer and
therefore could not prove coercion under the Act. This Court is
unwilling to engraft this additional element of proof onto the
burden that a plaintiff already must meet under the Act. To
focus on the "wrongfulness" of a particular demand diverts the
Court's attention from the salient question of coercion and
opens a new area of inquiry uncalled for by the Act itself.
Moreover, there is no need to conduct such an inquiry. The
seminal case in the above line of decisions, Frank Chevrolet,
focused on the key fact. In considering a claim that Chevrolet
had refused to approve of the granting of a franchise to a
prospective purchaser, the court held that, "since the
franchise was not the plaintiff's property to sell but
Chevrolet's power to extend, Chevrolet's action cannot be
deemed coercive." 304 F. Supp. at 315-316. This same fact
underlies the decision in the instant case. CDL could not be
coerced to present the conveyance of
something over which it had no control. Accordingly, Nissan's
motion for summary judgment as to Count I must be granted.
In summary, CDL's motion for leave to amend its complaint is
denied as to its "popular model" claim [Proposed Complaint,
Count I, ¶ 4(c)] and granted as to the warranty claim [Proposed
Complaint, Count III];*fn6 Nissan's motion to dismiss Conroy
from Count I and to dismiss Count II in its entirety is
granted; and Nissan's motion for summary judgment as to Count I
is granted. It is so ordered.