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Lee Dodge, Inc. D/B/A Brooklyn Auto Group, Kia D/B/A Brooklyn v. Kia Motors America

August 31, 2011


The opinion of the court was delivered by: Pisano, District Judge.



Before the Court is Defendant Kia Motors America, Inc.‟s ("KMA") motion for summary judgment and relief from the automatic stay. Plaintiffs Lee Dodge Inc. d/b/a Brooklyn Auto Group, Kia d/b/a Brooklyn Auto Group ("Lee Dodge") and Robert A. Lee, Jr. ("Mr. Lee") oppose the motion. For the following reasons, the Court will grant KMA‟s motion.


KMA, which has a regional office located in East Brunswick, New Jersey, distributes new vehicles under the Kia brand. Between May and August of 2010, Mr. Lee, who is the principal and sole owner of Lee Dodge, an automobile dealer located in Brooklyn, New York, sought approval from KMA to become an authorized Kia franchisee in Brooklyn by submitting an "Application for Kia Sales and Service Agreement" (the "Application"). Kia approved the Application subject to two conditions: (1) Lee Dodge was required to obtain floor plan financing, and (2) Lee Dodge was required to commence Kia sales and service operations by October 29, 2010. Lee Dodge obtained a letter of conditional approval from Ally Bank (formerly "GMAC") for floor plan financing on August 11, 2010. Its financing was suspended, however, on October 11, 2010 and Lee Dodge was unable to commence Kia sales and service operations by October 29. KMA informed Mr. Lee on that date that, because Lee Dodge had not fulfilled its conditional obligations, KMA would not issue a fully executed Dealer Sales and Service Agreement.

On November 12, 2010, Plaintiffs filed a Complaint in this Court alleging that KMA had breached its contract approving of Lee Dodge as a Kia franchisee (Count 4) and violated the New York Franchised Motor Vehicle Dealer Act (the "Franchised Dealer Act") (Count 5). In addition, Plaintiffs allege that KMA violated the Automobile Dealer‟s Day in Court Act (the "ADDCA"), 15 U.S.C. § 1221 et seq. (Count 6), breached a covenant of good faith and fair dealing (Count 7), and committed fraud (Count 8). Finally, Plaintiffs assert a claim under a theory of promissory estoppel (Count 9).*fn1 KMA answered on December 7, 2010 and filed a counterclaim for payment on parts and tools delivered to Plaintiffs.*fn2 KMA filed its motion for summary judgment on January 14, 2011, essentially stating that the parties had not realized a franchisor-franchisee relationship because Plaintiffs failed to fulfill the conditions of their agreement and, therefore, its actions were lawful. Plaintiffs respond that there are genuine issues of material fact that preclude summary judgment and that Lee Dodge was and remains a Kia franchise.


To prevail on a motion for summary judgment, the moving party must establish "that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The district court must determine whether disputed issues of material fact exist, but the court cannot resolve factual disputes in a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249-50, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).

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, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986); Stephens v. Kerrigan, 122 F.3d 171, 176-77 (3d Cir. 1997). The moving party always bears the initial burden of demonstrating the absence of a genuine issue of material fact, regardless of which party ultimately would have the burden of persuasion at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). Once the moving party has met its opening burden, the non-moving party must identify, by affidavits or otherwise, specific facts showing that there is a genuine issue for trial. Id. at 324. Thus, the non-moving party may not rest upon the mere allegations or denials of its pleadings. Id. "[T]he plain language of Rule 56[] mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322.

Once the moving party has demonstrated to the court the absence of a material fact at issue, the Supreme Court has stated that 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). In other words, "[i]f the evidence [submitted by the non-moving party] is merely colorable ... or is not significantly probative ... summary judgment may be granted." Anderson, 477 U.S. at 249-50 (citations omitted).

The Supreme Court has specifically recognized that "[o]ne of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupportable claims or defenses, and [ ] that [the rule] should be interpreted in a way that allows it to accomplish this purpose." Celotex, 477 U.S. at 323-24. Thus, "[w]hen the record is such that it would not support a rational finding that an essential element of the non-moving party's claim or defense exists, summary judgment must be entered for the moving party." Turner v. Schering-Plough Corp., 901 F.2d 335, 341 (3d Cir. 1990).


In its statement of material facts not in dispute, (Docket Entry no. 10-4), KMA proffers three documents signed by both parties and dated September 30, 2010: a letter agreement detailing the significance of the October 29 sales and service deadline (the "Letter Agreement"), see Decl. of Melanie Dougherty (Docket Entry no. 10-2) (hereinafter the "Dougherty Declaration), Exh. C, a "Kia Dealer Sales and Service Agreement" (the "Dealer Agreement"), see id., Exh. D, and an "Amendment & Addendum to Kia Dealer Sales and Service Agreement" (the "Addendum"), see id., Exh. E. Plaintiffs do not dispute the authenticity of these documents. Opp‟n at 2.

As explained in the Letter Agreement, the October 29 deadline was paramount. Under the Franchised Dealer Act, a franchisor must provide notice and opportunity to protest to existing dealers for certain new dealer ...

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