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TLMS MOTOR CORP. v. TOYOTA MOTOR DISTRIBS.

October 18, 1995

TLMS MOTOR CORP., an Illinois Corporation, RAND J. PETERSON, ALF McCONNELL and WILLIAM MADISON, Plaintiffs,
v.
TOYOTA MOTOR DISTRIBUTORS, INC., TOYOTA MOTOR SALES, U.S.A., INC. and TOYOTA MOTOR CREDIT CORPORATION, Defendants.



The opinion of the court was delivered by: ASPEN

 MARVIN E. ASPEN, Chief Judge:

 Plaintiffs TLMS Motor Corporation ("TLMS"), Rand J. Peterson, Alf McConnell, and William Madison bring this five-count complaint against Toyota Motor Distributors ("Toyota Distributors"), Toyota Motor Sales ("Toyota Sales"), and Toyota Motor Credit Corporation ("Toyota Credit"). Presently before this court is Defendant Toyota Credits motion to dismiss Counts I, III, and V. For the reasons set forth below, Toyota Credit's motion is granted in part and denied in part. *fn1"

 I. Background

 Plaintiffs allege that from November 1990 to November 1991 they negotiated with Craig Bernard, the owner of a Toyota, Lincoln-Mercury, Subaru dealership in Waukegan, Illinois, for the sale of his franchise. *fn2" In order to induce Plaintiffs to purchase the dealership, Defendants are alleged to have:

 
artificially manipulated TLMS'[s] pro formas to meet Toyota's technical capitalization requirements. Defendants at all times harbored the intent to coerce TLMS and its principals into providing additional capital funds and guaranties for the Dealership shortly after the closing of the transaction with Bernard.

 Complaint P 11. Plaintiffs allege that Defendants misrepresented the number, cost, and financing of vehicles that would be made available to TLMS, in addition to the capitalization and guarantee requirements of the dealership. Id. PP 13-14. Plaintiffs also claim that Defendants altered historical and projected expenses of the dealership in order to persuade TLMS and the individual investors to purchase the operation. Id. P 13.

 Soon after TLMS purchased the dealership from Bernard in 1991, Plaintiffs began investigating ways to expand TLMS's credit limit with Toyota Credit. Toyota Distributors and Toyota Sales allegedly represented to TLMS that Toyota Credit would exceed the $ 1.5 million line of credit so long as Plaintiffs remained "in trust." Id. P 17. Although Toyota Credit did extend TLMS's credit line to over $ 2 million in February 1991, Plaintiffs allege that in April 1992 Toyota Credit placed a "finance hold" on TLMS, notwithstanding TLMS's better than expected sales performance. This finance hold prevented TLMS from receiving any new deliveries of Toyota vehicles during the peak car sales season, and Plaintiffs contend that the hold was imposed to coerce plaintiff McConnell into investing more money into the dealership and signing a personal guarantee. Id. PP 17-18. In addition, Plaintiffs allege that Toyota Distributors and Toyota Sales threatened to force a sale of the franchise if McConnell did not accede to their demands, and that Toyota Credit frustrated attempts by TLMS to secure additional credit from the First Colonial Bank of Lake County. Id. PP 18-22, 24-29. As a consequence of this concerted effort against TLMS, Plaintiff's allege that the franchise lost sales and eventually had to be sold at liquidation value.

 Plaintiffs then brought suit against the various Defendants under the Illinois Motor Vehicle Franchise Act ("MVFA"), 815 ILCS 710/1-710/14 (West 1993 & Supp. 1995) (Count I), the Franchise Disclosure Act, 815 ILCS 705/1-705/44 (West 1993) (Count II), the Automobile Dealers Day in Court Act ("ADDCA"), 27 U.S.C. §§ 1221-1225 (Count III), breach of the covenant of good faith and fair dealing (Count IV), and common law fraud (Count V). Defendant Toyota Credit now moves to dismiss Counts I, III, and V.

 II. Motion to Dismiss Standard

 A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) should not be granted "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claims which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957); Chaney v. Suburban Bus Div. of the Regional Transp. Auth., 52 F.3d 623, 627 (7th Cir. 1995). At this stage in the litigation we take as true all factual allegations made in the complaint, and construe all reasonable inferences therefrom in the plaintiff's favor. Murphy v. Walker, 51 F.3d 714, 717 (7th Cir. 1995).

 III. Discussion

 A. Count I (MVFA)

 Toyota Credit contends that it does not fit within any of the provisions of the MVFA, and thus Count I against it should be dismissed. In their complaint Plaintiffs contend that by misrepresenting TLMS's credit line, placing a finance hold on TLMS's credit, coercing McConnell into putting up additional capital and a personal guarantee, and interfering with TLMS's ability to secure a loan from First Colonial, Toyota Credit violated 815 ILCS 710/4(b), (e)(5) and 815 ILCS 710/7. ...


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