The opinion of the court was delivered by: JOEL PISANO, District Judge
Before the Court are cross-motions for summary judgment filed
by the Plaintiffs, Stadium Chrysler Jeep, L.L.C. ("Stadium");
Teterboro Chrysler Plymouth, Inc. d/b/a/ Teterboro CPJ
("Teterboro"); Kobbe & Flannery, Inc., d/b/a/ Tenafly Jeep Eagle
Chrysler Plymouth ("Tenafly"); Wyckoff Chrysler Plymouth, Inc.
("Wyckoff"); and Fleetway Chrysler Plymouth, Inc. ("Fleetway")
(collectively the "Plaintiffs") and Defendant DaimlerChrysler
Motors Company, LLC ("DaimlerChrysler" or the "Defendant")
pursuant to Federal Rule of Civil Procedure 56.
The Plaintiffs' complaint (the "Complaint") alleges violations
of the New Jersey Franchise Practices Act, N.J.S.A. §§ 56:10-13
(Count I), and 10-7 and 13.4 (Count II); violation of the
Automobile Dealer's Day in Court Act, 15 U.S.C. § 1221-25 (Count
III); and common law breach of contract (Count IV), breach of the
implied covenant of good faith and fair dealing (Count V), and
unjust enrichment (Count VI). The Defendant timely filed its
The Court has jurisdiction to consider this matter under
28 U.S.C. § 1331 with respect to Count III, and 28 U.S.C. § 1332
with respect to the remaining state law claims. The Court heard
oral argument on March 29, 2004, and for the reasons set forth
below, the Court grants summary judgment for the Plaintiffs in
part, and for the Defendant in part.
This case involves the termination of the Plymouth brand of
automobiles, which were marketed, manufactured, and distributed
by Defendant DaimlerChrysler until September 30, 2001. Before the
termination, each of the Plaintiffs had entered into Plymouth
Sales and Service Agreements (each referred to as an "SSA"), and
each were authorized dealers of Plymouth vehicles. Defendant's
Local Civil Rule 56.1 Statement of Undisputed Facts, referred to
herein as "Def.'s 56.1 Stmt." at ¶¶ 12, 19, 35, 42, 53;
Plaintiffs's Local Civil Rule 56.1 Statement, referred to herein
as "Pls.'s 56.1 Stmt." at ¶¶ 15, 17, 19, 21, 23. The SSA's
expressly incorporate standard Additional Terms and Provisions
("Additional Terms"). Certification of George Mykulak ("Mykulak
Cert.") Appendix ("App.") F, Engelsdorfer Ex. 12; Certification
of Jason M. Schoenberg ("Schoenberg Cert." Ex. J at ¶ 5; Def.'s
56.1 Stmt. at ¶ 5; Compl. at ¶ 17. The Additional Terms provide
that "[i]n the event of a dispute hereunder, the terms of this
Agreement shall be construed in accordance with the laws of the
State of Michigan." Mykulak Cert. App. F at ¶ 42.
Paragraph 27 of the Additional Terms provides in pertinent
part: "[DaimlerChrysler] at any time may discontinue any or all
models, lines or body styles and may revise, change or modify
their construction or classification. . . . [DaimlerChrysler] at
any time may declare obsolete or discontinue any or all parts,
accessories and other merchandise." Mykulak Cert. App. F at ¶ 27.
Paragraph 28 governs termination of the franchise relationship,
and expressly provides that the SSA "will terminate automatically
without notice from either party on . . . the discontinuance by
[DaimlerChrysler] of the production or distribution of all
[DaimlerChrysler] vehicles listed on the Motor Vehicle Addendum,"
id. at ¶ 28(c)(v), which, according to DaimlerChrysler,
"identifies the line-make sold under the particular [SSA],"
Def.'s 56.1 Stmt. at ¶ 7. The Additional Terms also contain
DaimlerChrysler's repurchase obligations, which pertain to
repurchase of new, unused, and unsold specified vehicles, parts,
accessories, special tools, and signs in the event of a
termination. Mykulak Cert. App. F at ¶ 29.
Beginning in the fall of 1999, DaimlerChrysler publicly
announced "its decision to discontinue the Plymouth brand on a
nationwide basis in late 2001, with the end of 2001 model year
production." Def.'s 56.1 Stmt. at ¶ 55; see also Pls.'s 56.1
Stmt. at ¶ 25. At that point in time, the Plymouth product-line
consisted of five automobiles: the Neon subcompact economy car,
the Breeze mid-size sedan, the Voyager and Grand Voyager
minivans, and the Prowler Roadster. Def.'s 56.1 Stmt. at ¶ 56.
"DaimlerChrysler tied its decision to discontinue the remaining
Plymouth models to a concurrent expansion of the Chrysler brand"
Id. at ¶ 59. To this end, in 2000, DaimlerChrysler began
"transitioning all existing Plymouth models but one into the
Chrysler brand . . ." Id. at 70. Under this transition plan,
Neon would be the only remaining Plymouth as of the effective
date of the discontinuation, and then it would become an
exclusive Dodge model. Id.
In connection with the termination of Plymouth,
"DaimlerChrysler developed a compensation plan to offer to
terminated Plymouth dealers that would provide them the option of
accepting lump sum compensation payments in lieu of returning
vehicles, parts and tools." Def.'s 56.1 Stmt. at ¶ 81.
DaimlerChrysler informed Plymouth dealers of the compensation
plan in two separate August 2001 mailings. Id. at ¶ 83. On or
about August 13, 2001, DaimlerChrysler issued letter which
acknowledged to Plymouth dealers that individual sales and
service agreements imposed repurchase obligations upon it in
connection with the discontinuance, and that state law may modify
those obligations. Id. at ¶ 83(A); Pls.'s 56.1 Stmt. at ¶¶
26-27; Schoenberg Cert. Ex. Z (Aug. 13, 2001 letter). With the
August 13 mailing, DaimlerChrysler included a sample copy of the
Plymouth Discontinuance Repurchase/Compensation Agreement (the
"Discontinuance Agreement"). Def.'s 56.1 Stmt. at ¶ 83(A); Pls.'s
56.1 Stmt. at ¶ 26.
On or about August 30, 2001, DaimlerChrysler issued a letter
which detailed the various options of Plymouth dealers
("Repurchase Instruction Letter"). Def.'s 56.1 Stmt. at ¶ 83(B);
Pls.'s 56.1 Stmt. at ¶¶ 28-29; Schoenberg Cert. Ex. AA (Aug. 30,
2001 letter). The Repurchase Instruction Letter stated that
[e]ssentially, the Plymouth Discontinuance
Repurchase/Compensation Agreement provides that
[DaimlerChrysler] will offer [Plymouth dealers] the
option to either receive a one-time compensation
payment of three thousand and 00/100 ($3,000) dollars
for each eligible new, unused, unsold and undamaged
Plymouth vehicle in your inventory (other than
Plymouth Prowlers), or you may request
[DaimlerChrysler] to repurchase all eligible 2001
model Plymouth vehicles, unless otherwise required
under state law.
Schoenberg Cert. Ex. AA at 1. Plymouth dealers were also offered
a lump-sum compensation payment of five thousand dollars ($5,000)
in lieu of "repurchase of eligible unique Plymouth parts and
accessories under the terminated Plymouth Agreement," and three
thousand dollars ($3,000) in lieu of the repurchase of any
Plymouth special tools. Id. The Repurchase Instruction Letter
also indicated that acceptance of lump sum compensation required
release of all other claims against DaimlerChrysler for
compensation relating to the discontinuance of Plymouth. Def.'s
56.1 Stmt. at ¶ 85; Pls.'s 56.1 Stmt. at ¶¶ 29-30; Schoenberg
Cert. Ex. Z at 3. "Specifically excluded from this release are
(1) amounts owing by [DaimlerChrysler] to DEALER as the result of
this agreement, and (2) amounts that may be owing by
[DaimlerChrysler] to DEALER in the ordinary course of
business. . . ." Schoenberg Cert. Ex. Z. At 3.
On or about September 30, 2001, the effective date of the
termination, Plymouth was officially discontinued. Def.'s 56.1
Stmt. at ¶ 93; Pls.'s 56.1 Stmt. at ¶ 31. By this time,
DaimlerChrysler had expanded their Chrysler and Dodge lines to
include discontinued Plymouth models. Def.'s 56.1 Stmt. at ¶ 93.
The liability and damages phases of this litigation have been
bifurcated, and at this stage, the only issues before the Court
relate to liability. Any arguments of counsel that involve
damages will not be addressed by the Court.
A. Summary Judgment Standard
Summary judgment is appropriate under Rule 56(c) of the Federal
Rules of Civil Procedure when "the pleadings, depositions,
answers to interrogatories, and admissions on file, together with
the affidavits, if any, show that there is no genuine issue of
material fact and that the moving party is entitled to judgment
as a matter of law." Fed.R.Civ.P. 56(c). On a motion for
summary judgment, the moving party must first show that no
genuine issue of material fact exists. Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). An issue is genuine "if the
evidence is such that a reasonable jury could return a verdict"
for the non-moving party. Healy v. N.Y. Life Ins. Co.,
860 F.2d 1209, 1219 n. 3 (3d Cir. 1988). "The substantive law governing
the dispute will determine which facts are material and only
disputes over those facts `that might affect the outcome of the
suit under the governing law will properly preclude the entry of
summary judgment.'" Simmerman v. Corino, 804 F. Supp. 644, 649
(D.N.J. 1992) (quoting Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986)).
If the moving party can show that no genuine issue of material
fact exists, the burden then shifts to the non-moving party to
present evidence that a genuine issue of fact exists. Celotex
Corp., 477 U.S. at 324. In determining whether a genuine issue
of material fact exists, the Court must view the facts in the
light most favorable to the non-moving party and extend all
reasonable inferences to that party. Matsushita Elec. Indus. Co.
v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Stephens v.
Kerrigan, 122 F.3d 171, 176-177 (3d Cir. 1997). In making this
determination, the Court shall not "weigh the evidence and
determine the truth of the matter," but only needs to determine
whether a genuine issue necessitates a trial. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). In order to
satisfy this standard, however, the non-moving party "must do
more than simply show that there is some metaphysical doubt as to
the material facts. . . ." Matsushita, 475 U.S. at 586-87
(citations omitted). Instead, the non-moving party must prove
beyond a "mere scintilla" of evidence that a genuine issue of
material fact exists. Big Apple BMW v. BMW of N. Am.,
974 F.2d 1358, 1363 (3d Cir. 1992). In addition, "a party cannot rely upon
self-serving conclusions, unsupported by specific facts in the
record." Laresca v. Am. Tel. & Tel., 161 F. Supp.2d 323, 327
(D.N.J. 2001) (citing Celotex Corp., 477 U.S. at 322-23).
B. New Jersey Franchise Practices Act Counts I and II
Originally enacted in 1971, the New Jersey Franchise Practices
Act (the "NJFPA"or the "Act") imposes obligations upon a motor
vehicle franchisor and franchisee in the event of termination or
modification of the franchise relationship. N.J.S.A. 56:10-1
through 10-15. Under the NJFPA, a "franchise" is defined as "a
written arrangement . . . in which a person grants to another
person a license to use a trade name, trade mark, service mark,
or other related characteristics, and in which there is a
community of interest in the marketing of goods or
services. . . ." N.J.S.A. 56:10-3(a). A "franchisor" is "a person
who grants a franchise to another person;" a "franchisee" is "a
person to whom a franchise is offered or granted." N.J.S.A.
56:10-3(c), (d). Section 10-13 further defines a "motor vehicle
franchise" as "a franchise for the marketing of new motor
vehicles." N.J.S.A. 56:10-13. A "motor vehicle franchisor" is
defined as "a "franchisor engaged in the business of
manufacturing or assembling new motor vehicles, who will, under
normal business conditions during the year, manufacture or
assemble at least 10 motor vehicles, and his motor vehicle
distributors." Id. Similarly, a "motor vehicle franchisee means
every franchisee actively engaged in the business of buying,
selling or exchanging new motor vehicles who has an established
Under the NJFPA, it is a violation for a franchisor to
terminate a franchise "without good cause." N.J.S.A. 56:10-5.
However, 1991 amendments to the Act, which were effective January
18, 1992, more specifically defined the obligations of motor
vehicle franchisors, and replaced the good cause inquiry in the
event of a termination of the franchise. These amendments
included passage of sections 13.2 through 13.4, the principal
statutory provisions being disputed before this Court. NJFPA
section 13.4 provides in pertinent part that
the termination, cancellation or discontinuation of
a series, line, brand or class of new motor vehicle
marketed by a motor vehicle franchisor as a distinct
series, line, brand, or class shall be deemed to be
the termination, cancellation or nonrenewal of the
motor vehicle franchise of a motor vehicle franchise
of a motor vehicle franchisee holding a franchise
which includes that series, line, brand or class,
even if that series, line, brand, or class of new
motor vehicle is part of a motor vehicle franchise
which includes other series, lines, brands, or
classes of new motor vehicles.
N.J.S.A. 56:10-13.4 (emphasis added). The section further states
[n]otwithstanding the provisions of this section, a
franchisor may change, add or delete models,
specifications, model names, numbers or identifying
marks or similar characteristics of the new motor
vehicles it markets, if those changes, additions or
deletions do not result, directly or indirectly, in
the termination, cancellation or discontinuation of a
distinct series, line, brand or class of new motor
Id. (emphasis added).
Where termination occurs "as a result of a termination or
cessation of a part of the franchisor's business operations
throughout the United States, which is not any part of any change
in the ownership, operation or control of all or any part of the
franchisor's business," the NJFPA imposes repurchase obligations
on the franchisor, which includes the repurchase of unused,
undamaged an unsold inventory, and special tools and signs
required by the franchisor. N.J.S.A. 56:10-13.2. Other
terminations of motor vehicle franchises trigger the payment
obligations of section ...