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Nissan World, LLC v. Market Scan Information Systems

June 5, 2007

NISSAN WORLD, LLC, DENVILLE NISSAN INC., PARKWAY FORD, INC., STATELINE FORD, INC. D/B/A FORD : & HYUNDAI WORLD, FORD WORLD, LLC D/B/A CONDIT FORD, TOYOTA WORLD, LLC D/B/A CONDIT TOYOTA, AND LAKEWOOD TOYOTA D/B/A TOYOTA WORLD OF LAKEWOOD, PLAINTIFFS,
v.
MARKET SCAN INFORMATION SYSTEMS, INC. AND WELLS FARGO FINANCIAL LEASING, INC., DEFENDANTS.



The opinion of the court was delivered by: Greenaway, Jr., U.S.D.J.

OPINION

Defendant Market Scan Information Systems, Inc. ("Defendant"), a California-based corporation in the business of providing computer hardware and software systems, has filed the instant motion to stay this litigation pending arbitration, pursuant to the arbitration agreement in its contracts with Plaintiffs Nissan World, LLC; Denville Nissan, Inc.; Parkway Ford, Inc.; Stateline Ford, Inc. d/b/a Ford & Hyundai World; Ford World, LLC d/b/a Condit Ford; Toyota World LLC d/b/a Condit Toyota; and Lakewood Toyota d/b/a Toyota World of Lakewood ("Plaintiffs"), a group of affiliated New Jersey automobile dealerships. Defendant claims that the Federal Arbitration Act, 9 U.S.C. §§ 1-16 (1947) ("FAA"), requires that litigation be stayed pending arbitration when the issue in question is subject to arbitration. Moreover, Defendant claims that Plaintiffs agreed to arbitrate any disputes with Defendant pursuant to paragraph 10 of the agreements between them. (Def.'s Br. 2.) For the reasons stated below, the motion will be granted.

PROCEDURAL HISTORY

On June 2, 2005, Plaintiffs filed a complaint in the United States District Court for the District of New Jersey against Defendant and co-defendant, Wells Fargo Financial Leasing, Inc. ("Wells Fargo"). The complaint alleged breach of contract, breach of the covenant of good faith and fair dealing, promissory estoppel, and common law fraud, and sought specific performance, declaratory judgment, and preliminary injunctive relief against Defendant, while seeking declaratory judgment and preliminary injunctive relief against Wells Fargo.

On August 12, 2005, Wells Fargo filed a counterclaim against Plaintiffs to recover payments, and a cross-claim against Defendant for breach of contract and fraud. On August 29, 2005, Defendant filed the instant motion. This motion is contested by Plaintiffs and Wells Fargo.

STATEMENT OF FACTS

Plaintiffs individually entered into identical Customer Purchase Orders and Non-Exclusive License Agreements (the "Agreements") with Defendant on January 10, 2002, for the use of Defendant's Market Scan Trio II System, a combination of computer equipment, software, and support service. (Compl. ¶ 14.) The Agreements were to run for a period of 39 months, and were to be financed by Wells Fargo. (Compl. ¶ 16-17.)*fn1 According to the Agreements, Defendant Market Scan agreed to reimburse Plaintiffs for certain balloon payments (the "Balloon Payments") if Plaintiffs renewed their respective leases at equal or greater value, for an additional 39-month period. (Compl. ¶ 18.) The aforementioned Agreements state:

Thank you for selecting our Market Scan Trio II System. This will confirm that, upon expiration of the 39-month Lease Agreement with Wells Financial as Lessor, for your new Market Scan Trio II System, you will have the following options:

1. Renew the Lease Agreement, at equal or greater value, for an additional 39-month term, at which time new hardware and software will be provided and Market Scan Information Systems, Inc. will reimburse you for the End of Lease Loyalty Option Payment.

(Compl. ¶ 18.)

In addition, the Agreements contain an arbitration provision. Paragraph 10 provides:

Any controversy or claim arising out of or relating to this Agreement, or breach thereof, shall be settled by arbitration in Los Angeles County, California in accordance with the Rules of the American Arbitration Association, and judgment upon any award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

(Def.'s Br. 2.)

Plaintiffs filed a complaint in this court against Defendant and Wells Fargo based on a dispute regarding the Balloon Payments. Wells Fargo brought a counterclaim against Plaintiffs and a cross-claim against Defendant. The agreements between Wells Fargo and Plaintiffs, as well as those ...


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