JANE TRICHE MILAZZO, District Judge.
Before the Court is Defendants' Second Motion to Dismiss (Doc. 28). For the following reasons, the Motion is GRANTED IN PART.
This lawsuit arises out of the franchise relationship between Plaintiff Eddie Tourelle's Northpark Hyundai, LLC and Defendants Hyundai Motor America Corporation ("HMA") and Genesis Motor America, LLC ("GMA"). Plaintiff alleges that it entered into a Dealer Sales and Service Agreement ("DSS Agreement") with HMA, which gave Plaintiff the right to purchase and sell Hyundai products at its dealership, including the Hyundai Genesis. In 2015, HMA announced that the Genesis would be spun-off into a new line of luxury vehicles. Plaintiff signed an agreement with HMA to be eligible to purchase and sell the new Genesis line vehicles ("the Participation Agreement"). The Participation Agreement required Plaintiff to upgrade its sales and service facilities in order to sell the Genesis line. To comply with the Participation Agreement, Plaintiff spent $135,208.50 on renovations and employee training.
In connection with the re-branding, HMA allegedly made conflicting representations to the Louisiana Motor Vehicle Commission ("LMVC") regarding whether the Genesis vehicles were manufactured by HMA or GMA. The LMVC found that GMA was the manufacturer/distributor of the new line and that it had failed to secure proper licensing to sell in Louisiana. As a result, HMA and GMA ordered Plaintiff and other Genesis dealers in Louisiana to stop selling the Genesis line. Plaintiff argues that as a result of Defendants' failure to secure proper licensing, it was prohibited from selling Genesis vehicles despite complying with the terms of the Participation Agreement.
Plaintiff filed suit in state court, bringing claims for breach of contract, negligence, violation of the Louisiana Motor Vehicles Act (LMVA), and violation of the Louisiana Unfair Trade Practices Act (LUTPA) against HMA and GMA. Defendants removed the case to this Court on diversity grounds. Defendants then moved to dismiss Plaintiff's claims, arguing that it had failed to state a claim for which relief could be granted. This Court granted Defendants' motion in part, dismissing Plaintiff's claims for violations of the LMVA, violations of LUTPA, negligence, and breach of contract. Plaintiff's only remaining claim was its claim against HMA for HMA's breach of its obligation to use best efforts under the DSS Agreement. However, the Court also granted Plaintiff leave to amend its Complaint to properly plead the claims that had been dismissed.
Plaintiff thereafter amended its Complaint ("the Amended Complaint").
To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead enough facts "to state a claim for relief that is plausible on its face."
Defendants have moved for dismissal of some of the claims in Plaintiff's First Amended Complaint. Specifically, Defendants seek dismissal of Plaintiff's claims for breach of the Participation Agreement, negligent misrepresentation, negligence, intentional interference with contract, and its claims under various solidary liability theories.
In considering Defendants' First Motion to Dismiss, this Court dismissed all of Plaintiff's allegations for breach of contract except one. The Court held that Plaintiff had sufficiently alleged a breach of the DSS Agreement's requirement that HMA use its "best efforts" to provide Plaintiff with Hyundai Products. The provision of the DSS Agreement that Plaintiff alleges HMA breached states that "HMA will use its best efforts to provide Hyundai Products to [Plaintiff] subject to available supply from FACTORY, HMA's marketing requirements, and any change or discontinuance with respect to any Hyundai Product."
In its First Amended Complaint, Plaintiff now states that the Participation Agreement "specifically contemplated that sales of Genesis Products from HMA to Northpark would be governed by the terms and conditions set forth in the [DSS Agreement]" and that HMA therefore breached its obligation under the Participation Agreement to use "best efforts" to provide Plaintiff with Genesis products.
Defendants move for dismissal of this claim, arguing that no provision of the Participation Agreement supports this allegation. Plaintiff opposes, pointing to the following provisions of the Participation Agreement in support of its argument that the Participation Agreement "clearly contemplated" that the terms of the DSS Agreement, including the "best efforts" clause, would govern the parties' relationship regarding the Genesis vehicles:
While these provisions certainly indicate that the parties contemplated that the two agreements would work together to define the parties' relationship, they do not support Plaintiff's position. None of these provisions indicate that HMA undertook the same obligations to provide Genesis products that it had previously undertaken in the DSS Agreement in relation to Hyundai products. This Court declines to read into the Participation Agreement an obligation that is simply not there. Accordingly, Plaintiff's claim for breach of the Participation Agreement is dismissed.
In its original Complaint, Plaintiff alleged a claim of state law negligence against Defendants. This Court held that the negligence allegations in the Complaint failed because Defendants do not owe a general duty to Plaintiff, either because of their relationship or by statute, to obtain certain licensing or offer certain vehicles for sale. The Court found that those duties arose out of the Agreements between the parties and sounded in contract.
Plaintiff's Amended Complaint now seeks to reassert a negligence claim against both HMA and GMA. Plaintiff alleges that Defendants were negligent in failing to ensure that all licensing requirements had been met, providing confusing representations about whether the vehicles were Genesis or Hyundai, and failing to fulfill their obligations to allow Genesis automobiles to be sold in Louisiana. The Amended Complaint states that "Defendants owed a legal duty to conform to a standard of conduct imposed by the law for the protection of automobile dealers and consumers against unreasonable risks of harm."
Defendants argue that these claims should again be dismissed for the same reasons as already articulated by this Court. This Court agrees. Plaintiff's defense essentially amounts to a disagreement with this Court's prior order. An amended complaint is not the proper vehicle to make such an argument, and anyway, this Court is not compelled to change its prior holding. Plaintiff has not identified a tort duty to support a claim of ordinary negligence. Its negligence claims are again dismissed.
In its Amended Complaint, Plaintiff now asserts a claim for negligent misrepresentation. To state a claim for negligent misrepresentation, Plaintiff must allege that:
Plaintiff's Complaint alleges that Defendants had a duty to supply correct information to it and that they breached that duty by misrepresenting the following facts: (1) that Genesis vehicles were validly licensed for sale in Louisiana; (2) that Genesis vehicles were Genesis luxury cars and not high-end Hyundai cars; and (3) that dealers who upgraded their dealerships to comply with the Participation Agreement would be guaranteed a Genesis dealership. Plaintiff alleges that it relied on these representations to its detriment.
Defendants argue that Plaintiff's allegations fail to state a claim for negligent misrepresentation for several reasons. First, Defendants argue that there is no duty of care owed by GMA to Plaintiff because there is no contractual relationship between them. The Louisiana Supreme Court, however, has expressly recognized that there may be a tort duty to supply correct information in cases where privity of contract is absent.
Second, Defendants argue that Plaintiff cannot sustain a claim for negligent misrepresentation on the basis of the statements identified. Defendants argue that the first statement—that Genesis vehicles were validly licensed for sale in Louisiana—was alleged to have been made only by HMA and therefore cannot support a negligent misrepresentation claim against GMA. This argument fails in light of paragraph 30 of the Amended Complaint, which states that GMA did not become a licensed distributor in Louisiana despite holding itself out as such and representing to Plaintiff that it would obtain all necessary licenses.
Next, Defendants argue that second and third statements—that the automobiles branded as Genesis were Genesis branded cars and not Hyundai cars and that dealers who upgraded their dealerships in compliance with the Participation Agreement would receive a Genesis point—cannot support a claim for negligent misrepresentation because they were contradicted by other information in Plaintiff's possession and therefore cannot have been justifiably relied on. Defendants point out that the Amended Complaint alleges that the vehicle certificates of origin and window stickers identified HMA as the manufacturer of the vehicles at issue. Further, the Participation Agreement expressly stated that HMA could terminate the Agreement at any time and does not guarantee that Plaintiff would be offered a "Genesis Dealer Agreement" in the future. Even so, this Court must view the allegations of the Complaint in a light most favorable to Plaintiff and finds that a determination of whether its reliance was reasonable is inappropriate at this stage. Accordingly, Defendants' arguments for the dismissal of Plaintiff's negligent misrepresentation claims fail.
Next, Defendants move for dismissal of Plaintiff's claim that GMA interfered with HMA's obligation to use best efforts under the DSS Agreement. Defendants argue that under Louisiana law, an intentional interference with contract claim cannot be maintained against a corporate entity.
In 9 to 5 Fashions, Inc. v. Spurney, the Louisiana Supreme Court recognized for the first time a narrow claim for tortious interference with contract based on "a corporate officer's duty to refrain from intentional and unjustified interference with the contractual relation between his employer and a third person."
Plaintiff argues that while the court's holding in Spurney was narrow, it does not bar an action for tortious interference against a corporate entity. It points out that some courts hold that to bring a tortious interference with contract claim the plaintiff need only show that the defendant had a duty not to interfere with the Agreements. Indeed, the Fifth Circuit has stated that "[w]here the Louisiana appellate courts have found a viable cause of action for tortious interference with a contract, the courts have identified a narrow, individualized duty between the plaintiff and the alleged tortfeasor."
In its Amended Complaint, Plaintiff alleges facts attempting to hold GMA and HMA solidarily liable for its damages under several theories, including veil-piercing, alter ego, single business enterprise, assumption of liability, estoppel, de facto merger, and mere continuation. Defendants argue that Plaintiff has not alleged facts sufficient to support a claim under any of these theories. This Court will consider each in turn.
"Under Louisiana's choice-of-law rules, the law of the state of incorporation governs a request to pierce the corporate veil."
In support of its claim that GMA should be liable under an alter-ego theory, Plaintiff alleges that HMA wholly owns GMA and that the companies maintain the same management and operate from the same corporate location. It also alleges that the Defendants' misleading comments regarding which company is the manufacturer of the Genesis brand vehicles warrants piercing the corporate veil. While this Court doubts seriously that these allegations are sufficient to satisfy the first prong required to allege an alter-ego claim under California law, Plaintiff makes no attempt to satisfy the second. There is no allegation that would support a finding that some inequity would result from holding GMA or HMA liable for its acts alone. Accordingly, Plaintiff has not alleged a claim under any alter-ego doctrine.
Plaintiff's claims under the theories of assumption and estoppel are set out in a single paragraph:
At the outset, the parties disagree regarding whether these claims should be governed by California or Louisiana law. Plaintiff argues that the law of the state of incorporation—California—should apply. Defendants argue that Louisiana law should apply because these are contractual issues that have nothing to do with corporate form.
Under Louisiana law, "[a]n obligor and a third person may agree to an assumption by the latter of an obligation of the former."
To bring a claim for equitable estoppel, a plaintiff must allege "(1) representation by conduct or word, (2) justifiable reliance in representation, and (3) change in position to detriment because of reliance."
Finally, Plaintiff next seeks to hold Defendants solidarily liable under several successor liability theories, including implied assumption of liability, de facto merger, and mere continuation. Under both California and Louisiana law, the general rule of successor corporate liability is that, when a corporation purchases the principal assets of another corporation, it is not liable for the seller's debts or liabilities unless:
"However, the threshold requirement to trigger successor liability . . . is that one corporation must have purchased all the assets of the other."
For the foregoing reasons, Defendants' Motion is GRANTED IN PART. Plaintiff's claims for breach of the Participation Agreement, negligence, intentional interference with contract, and solidary liability are DISMISSED WITH PREJUDICE.
Plaintiff's claims for breach of the DSS Agreement against HMA, breach of the warranty of fitness against HMA, and negligent misrepresentation against HMA and GMA remain.