Mt. Clemens Auto Center, Inc. v. Hyundai Motor America

844 F. Supp. 2d 804, 2011 WL 6152877, 2011 U.S. Dist. LEXIS 142362
CourtDistrict Court, E.D. Michigan
DecidedDecember 12, 2011
DocketCase No. 11-14878
StatusPublished
Cited by2 cases

This text of 844 F. Supp. 2d 804 (Mt. Clemens Auto Center, Inc. v. Hyundai Motor America) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mt. Clemens Auto Center, Inc. v. Hyundai Motor America, 844 F. Supp. 2d 804, 2011 WL 6152877, 2011 U.S. Dist. LEXIS 142362 (E.D. Mich. 2011).

Opinion

OPINION AND ORDER GRANTING PLAINTIFF’S MOTION TO REMAND

DAVID M. LAWSON, District Judge.

Before the Court is a motion by the plaintiff to remand this case to state court. The plaintiff, Mt. Clemens Auto Center, Inc. d/b/a Hyundai of Jackson, filed this action in the Jackson County, Michigan circuit court. The plaintiff seeks declaratory and injunctive relief prohibiting the defendant from terminating an automobile dealership agreement until January 31, 2012. The defendant, Hyundai Motor America, removed the case, invoking the Court’s diversity jurisdiction under 28 U.S.C. § 1332(a). There is no question that the citizenship of the parties is diverse, but the plaintiff contends that the defendant has not offered sufficient evidence that it is more likely than not that the amount in controversy exceeds $75,000. The Court agrees, and therefore the motion to remand will be granted.

I.

Plaintiff Mt. Clemens Auto Center is a Delaware corporation with its principal place of business in Jackson, Michigan. Defendant Hyundai Motor America is a California corporation with its principal place of business in Fountain Valley, California. The defendant and the plaintiff entered into a Hyundai Dealer Sales and Service Agreement (“DSSA”) on December 25, 2009, which established the plaintiff as an authorized dealer of Hyundai products. Among other things, the DSSA requires the dealer to “maintain flooring and lines of credit adequate to meet its ongoing obligations.” Def.’s Resp., Ex. A, Deck of Guy Warner, Ex. 2 to Deck, DSSA ¶ 13(B).

On April 14, 2011, the defendant became aware that the plaintiffs floor plan line of credit with JPMorgan Chase Bank had been placed on “Finance Hold.” On May 12, 2011, the defendant sent the plaintiff a letter notifying the plaintiff that it had thirty days, or until June 12, 2011, to rectify the situation or the defendant would enforce its remedies under the DSSA. Tibor Gyarmati, the plaintiffs owner, responded to the defendant’s correspondence on June 10, 2011, informing the defendant that he had finalized a purchase agreement on his Kia franchise, which would result in a cash infusion of $750,000 to $1,000,000 into Hyundai of Jackson, and applied for loans from four different banks.

The DSSA states that the agreement may be terminated by Hyundai on sixty days notice if the “Dealer [fails] to establish or maintain required net working capital or adequate wholesale credit.” Def.’s Resp., Ex. A, Deck of Guy Warner, Ex. 2 to Deck, DSSA ¶ 16(B)(2)(k). If the “Dealer has failed to perform adequately its sales, service or parts responsibilities or to provide adequate dealership facilities,” id. at ¶ 16(B)(3), the dealer will be allowed 180 days to correct the deficiency, and failing that, the DSSA may be terminated “upon sixty (60) days notice or such other notice as may be required by law.” Ibid.

On August 4, 2011, the defendant sent the plaintiff a notice of termination. The letter of termination stated that the plaintiff failed to operate the dealership successfully because the plaintiff did not maintain adequate financing. Hyundai invoked paragraph 16(B)(2)(k) of the DSSA in its letter. Hyundai stated that

[m]ore than forty-five (45) days have passed since [Hyundai]’s deadline to reestablish credit and, despite [Hyundai’s demands that this condition be corrected, Hyundai of Jackson has failed or been unable to correct this condition (a breach of the Agreement). Hyundai of [807]*807Jackson has now continuously failed to maintain adequate wholesale credit for business at its Approved Location since at least April 14, 2011. HMA believes this lengthy, substantial and material breach of the Agreement curtails Hyundai of Jackson’s ability to reasonably serve the interests of the public....

PL’s Mot. to Remand, Ex. 6, Termination Letter at 1-2. Because of the breach of the DSSA, Hyundai said “that the Agreement shall be terminated -within 90 days of your receipt of this letter, which we calculate to be no later than November 7, 2011.” Ibid.

On November 4, 2011, Mr. Gyarmati sent via facsimile to Brian O’Malley, the defendant’s general manager for its central region, a letter indicating that he had received a letter of intent to purchase the dealership assets, and that he wished to sell the assets of Hyundai of Jackson to a yet-to-be-formed entity, which was represented by Richard LaLonde, for approximately $250,000.

Also on November 4, 2011, the plaintiff filed suit in the Jackson County, Michigan circuit court seeking a declaratory ruling on the application of state law and a preliminary injunction preventing termination of the DSSA until January 31, 2012. On the same day, the plaintiff obtained a temporary restraining order from the Jackson County circuit court preventing termination of the agreement.

The defendant removed the case to this Court on the same day. The notice of removal alleges that “[t]he complaint seeks damages in an amount that exceeds $75,000.” Notice of Removal ¶4. That statement is false. The complaint contains no prayer for damages. The complaint asks only for declaratory and injunctive relief, limited to enjoining the dealership termination until January 31, 2012.

II.

The dispute in this case boils down to the interpretation of language in the Michigan Motor Vehicle Dealer Act, Mich. Comp. Laws §§ 445.1561 et seq., which sets forth the minimum advance notice an automobile manufacturer must give its dealer before terminating a franchise agreement. If the cause for termination “relates to the performance of the new motor vehicle dealer in sales or service,” the notice period must be 180 days. Mich. Comp. Laws § 445.1567(3)(d). If the cause for termination is a “general” breach of the dealership agreement, the manufacturer must provide notice “not less than 90 days prior to the effective date of the termination.” Mich. Comp. Laws § 445.1570(a). Finally, if the termination is provoked by insolvency, closure of the dealership for seven consecutive days, the dealership owner’s conviction of a felony, revocation of the dealership license, or fraudulent misrepresentation, the notice period is fifteen days. Mich. Comp. Laws § 445.1570(c)(i)-(v).

The plaintiff contends that its failure to maintain its floor plan line of credit affects its performance in sales and therefore it is entitled to 180 days notice. The defendant says the breach is a general one to which the 90-day notice requirement applies. There is no Michigan decisional law that sheds any light on a construction of the statute that might resolve the dispute.

Before this Court may do so, the defendant, as the removing party, must establish that the Court has subject matter jurisdiction to adjudicate the case. Charvat v. EchoStar Satellite, LLC, 630 F.3d 459, 462 (6th Cir.2010). The parties agree on the basics of that point: a civil action brought in a state court may be removed to federal court if the federal court would have had original jurisdiction, 28 U.S.C. § 1441(a); a party invoking the federal [808]*808court’s jurisdiction has the burden of establishing subject matter jurisdiction, Cleveland Housing Renewal Project v. Deutsche Bank Trust Co.,

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844 F. Supp. 2d 804, 2011 WL 6152877, 2011 U.S. Dist. LEXIS 142362, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mt-clemens-auto-center-inc-v-hyundai-motor-america-mied-2011.