Conklin Fangman Kan. City v. Gen. Motors, LLC

ORDER GRANTING MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

GREG KAYS, JUDGE UNITED STATES DISTRICT COURT

Plaintiff Conklin Fangman Kansas City, LLC, previously sold Buick, GMC, and Cadillac vehicles via a franchise agreement with Defendant General Motors, LLC (“GM”). In 2019, Plaintiff agreed to sell its dealership to a third party, Shawnee Automotive Group, LLC (“Shawnee”), contingent upon GM allowing Shawnee to relocate the dealership. GM denied the request to relocate. Plaintiff later sold the dealership to Shawnee for a lesser price, and claims damages as a result of GM's disapproval of the relocation request.

Now before the Court is GM's motion to Dismiss for Failure to State a Claim. ECF No. 16. For the reasons stated below, the motion is GRANTED.

Standard of Review

A claim may be dismissed if it fails “to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). In ruling on a motion to dismiss, the Court “must accept as true all of the complaint's factual allegations and view them in the light most favorable to the Plaintiff[].” Stodghill v. Wellston School Dist., 512 F.3d 472, 476 (8th Cir. 2008). However, “the Court is not bound to accept as true a legal conclusion couched as a factual allegation.” Warmington v. Bd. of Regents of Univ. of Minn., 998 F.3d 789, 796 (8th Cir. 2021) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

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To avoid dismissal, a complaint must include “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. The Plaintiff need not demonstrate the claim is probable, only that it is more than just possible. Id.

In reviewing the complaint, the Court construes it liberally and draws all reasonable inferences from the facts in Plaintiff's favor. Monson v. Drug Enforcement Admin., 589 F.3d 952, 961 (8th Cir. 2009). The Court generally ignores materials outside the pleadings but may consider materials that are part of the public record or materials that are necessarily embraced by the pleadings. Miller v. Toxicology Lab. Inc., 688 F.3d 928, 931 (8th Cir. 2012). Matters necessarily embraced by the pleadings include “matters incorporated by reference or integral to the claim, items subject to judicial notice, matters of public record, orders, items appearing in the record of the case, and exhibits attached to the complaint whose authenticity is unquestioned.” Zean v. Fairview Health Servs., 858 F.3d 520, 526 (8th Cir. 2017) (quoting Miller, 688 F.3d at 931 n.3). In cases involving contracts, these materials include the contract documents regardless of whether the plaintiff attaches these documents to the complaint. Id. at 526-27.

GM attached a number of documents to the instant motion. Three of these-the Buick GMC Dealer Sales and Service Agreement, ECF No. 17-1; the Cadillac Dealer Sales and Service Agreement, ECF No. 17-2; and the 2015 Dealer Sales and Service Agreement Standard Provisions, ECF No. 17-3-are contract documents necessarily embraced by the pleadings. In addition, Plaintiff concedes that the following documents are “arguably” embraced by the pleadings: Plaintiff's January 17, 2020, complaint before the Missouri Administrative Hearing Commission,

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ECF No. 17-6; Plaintiff's voluntary dismissal of this complaint, ECF No. 17-9; amendments to the Cadillac and Buick GMC asset purchase agreements between Plaintiff and Shawnee Automotive Group, LLC, ECF No. 17-10; and Plaintiff's September 1, 2020, notice to GM that it had sold its assets and terminated the franchises, ECF No. 17-11. Suggestions in Opp'n, ECF No. 29. The Court therefore considers these documents in ruling on this motion to dismiss.^[1]

Factual Background

Plaintiff Conklin Fangman Kansas City, LLC, is a limited liability company organized under Missouri law. Compl. ¶ 1, ECF No. 1. Plaintiff operated a car dealership in located at 3200 Main Street, Kansas City Missouri (“Main Street Site”). Compl. ¶ 3. Defendant GM is a manufacturer, franchisor, and distributor of GMC, Buick, and Cadillac vehicles. Compl. ¶ 4. At some time prior to 2008, GM granted Plaintiff franchises^[2] for Buick, GMC, and Cadillac vehicles. Compl. ¶ 22. At some point thereafter-but before GM's 2008 reorganization-GM requested Plaintiff move the dealership to “Auto Row, ” an area with several other car dealers which is near an interstate highway. Compl. ¶ 16-21. However, Plaintiff was not able to relocate the Conklin Franchises. Compl. ¶ 21.

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During GM's reorganization, it withdrew the Conklin franchises, but regranted them to Plaintiff in 2009. Compl. ¶ 22, ECF No. 1. It is not clear whether the parties maintained these franchises continuously through 2015. However, in September 2015, the parties signed two franchise agreements. Under one agreement, GM granted Plaintiff a franchise for Buick and GMC vehicles. Buick GMC Dealer Sales and Service Agreement, ECF No. 17-1. Under the other, GM granted Plaintiff a franchise for Cadillac vehicles. Cadillac Dealer Sales and Service Agreement, ECF No. 17-2. The parties agreed these franchises (“GM Franchises”) would become effective on November 1, 2015 and would expire on October 31, 2020. ECF No. 17-1, 17-2. These agreements incorporate the terms of the Dealer Sales and Service Agreement 2015 Standard Provisions. ECF No. 17-3 (“Dealer Sales and Service Agreement”).

Under the Dealer Sales and Service Agreement, if Plaintiff desired to sell one of the GM Franchises to another car dealer, it was first required to obtain GM's approval. Dealer Sales and Service Agreement, ¶ 12.2, ECF No. 17-3. Likewise, Plaintiff required GM's approval to change the dealer operator. Id. The Dealer Sales and Service Agreements also restricted Plaintiff's ability change its location:

If Dealer wants to make any change in location(s) or Premises . . . Dealer will give General Motors written notice of the proposed change, together with the reasons for the proposal for General Motors evaluation and final decision in light of dealer network planning considerations. No change in location . . . will be made without General Motors['] prior written authorization pursuant to its business judgment

Nothing herein is intended to require the consent or approval of any dealer to a proposed relocation of any other dealer

Id. ¶ 4.4.2, ECF No. 17-3; Compl. ¶ 35, ECF No. 1.

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The Dealer Sales and Service Agreements defined GM's “dealer network planning considerations” as follows:

Because General Motors distributes its Products through a network of authorized dealers operating from approved locations, those dealers must be appropriate in number located properly, and have proper facilities to represent and service General Motors Products competitively and to permit each dealer the opportunity to achieve a reasonable return on investment if it fulfills its obligations under its [Dealer Sales and Service Agreement]. Through such a dealer network, General Motors can maximize the convenience of customers in purchasing Products and having them serviced. As a result, customers, dealers, and General Motors all benefit.

To maximize the effectiveness of its dealer network, General Motors agrees to monitor marketing conditions and strive, to the extent practicable, to have dealers appropriate in number, size and location to achieve the objectives stated above. Such marketing conditions include General Motors sales and registration performance, present and future demographic and economic considerations, competitive dealer networks, the ability of General Motors existing dealers to achieve the objectives stated above, the opportunities available to existing dealers, the alignment of Line-Makes, ^[3] General Motors dealer network plan, and other appropriate circumstances.

Dealer Sales and Service Agreement ¶ 4.1, ECF No. 17-3; Compl. ¶ 35. The Dealer Sales and Service agreement states that it is to be governed according to Michigan law. Id. ¶ 17.12.

On October 16, 2019, Plaintiff entered into an Asset Purchase Agreement with Shawnee Automotive Group, LLC (“Shawnee”). Compl. ¶ 13; See also First Am. to Cadillac Asset Purchase Agreement ¶ A, ECF No. 17-10 (“Cadillac Amendment”); First. Am to Buick GMC Asset Purchase Agreement ¶ A, ECF No. 17-10 (“Buick GMC Amendment”). Plaintiff agreed to sell all of its assets to Shawnee, including the GM Franchises. Compl. ¶ 12-14. Plaintiff and Shawnee agreed that Shawnee would move the GM Franchises from the Main Street site across the state

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line to 7000 West Frontage Road, Merriam, Kansas (“Proposed Relocation Site”). Compl. ¶ 1214, ECF No. 1; See also Cadillac Amendment ¶ B; Buick GMC Amendment ¶ B. The Proposed Relocation Site, on Auto Row, was a more favorable business location than the Main Street Site, and would not have interfered with the relevant market area of other Buick, GMC, or Cadillac dealers. Compl. 16-20, 37-50. Plaintiff's and Shawnee's agreement (“Shawnee Asset Purchase Agreement”) was contingent on GM approving the relocation of the GM Franchises to the Proposed Relocation Site. Compl. ¶ 14.

Plaintiff and Shawnee then requested GM approve the sale of the GM Franchises to Shawnee, approve the appointment of Doug Kinney, Shawnee's principal, as Dealer Operator of the GM Franchises, and approve moving the GM Franchises to the Proposed Relocation Site. See Compl. ¶ 23.

On December 20, 2019, GM sent a letter to Doug Kinney, Shawnee's principal. Compl. ¶ 23. GM approved Plaintiff's...