Coyle Nissan, LLC v. Nissan N. Am., Inc.

COYLE NISSAN, LLC, Plaintiff, v. NISSAN NORTH AMERICA, INC., Defendant.

Case No. 4:18-cv-00075-TWP-TAB

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF INDIANA NEW ALBANY DIVISION

March 26, 2020

ORDER ON DEFENDANT'S MOTION TO DISMISS

This matter is before the Court on a Motion to Dismiss filed pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) by Defendant Nissan North America, Inc. ("NNA") (Filing No. 49). Also pending before the Court is NNA's Motion for Oral Argument on the Motion to Dismiss, (Filing No. 63), and Motion for Leave to File Response to Notice of Supplemental Authority, (Filing No. 65). Plaintiff Coyle Nissan, LLC ("Coyle") initiated this action asserting claims for breach of contract, breach of fiduciary duty, and other statutory and common law claims against NNA, arising out of the parties' automobile manufacturer-dealer relationship. NNA asks the Court to dismiss all claims asserted against it with the exception of the breach of contract claim. For the following reasons, NNA's Motion to Dismiss is granted in part and denied in part, the Motion for Oral Argument is denied, and the Motion for Leave to File Response is granted.

I. BACKGROUND

The following facts are not necessarily objectively true, but as required when reviewing a motion to dismiss, the Court accepts as true all factual allegations in the complaint and draws all inferences in favor of Coyle as the non-moving party. See Bielanski v. County of Kane, 550 F.3d 632, 633 (7th Cir. 2008).

Coyle is an Indiana limited liability company that operates an automobile dealership in Clarksville, Indiana. Clarksville is located within the Southern District of Indiana and is a few miles north of Louisville, Kentucky. NNA is a distributor of new Nissan motor vehicles and automotive products (Filing No. 46 at 1). On July 11, 2012, NNA and Coyle entered into a Nissan Dealer Sales and Service Agreement ("Dealer Agreement") (Filing No. 46-1). When the parties entered into the Dealer Agreement, Coyle's dealership facilities in Clarksville did not meet NNA's facility requirements, so NNA required Coyle to locate and acquire other real estate approved by NNA for the construction of a new Nissan dealership Coyle was to build. The Dealer Agreement granted Coyle the right to operate from its existing facilities as a temporary location until permanent facilities could be established. It also established a timeline for certain activities to be accomplished to transition from the temporary facilities to the approved permanent facilities. Coyle was required to identify a new dealership site that would meet NNA's facility requirements by September 1, 2013; acquire that site by March 1, 2014; begin facility construction by July 1, 2014; complete construction of the new facilities and cease dealership operations at its temporary facilities by June 30, 2015. Id. at 8-9.

The Dealer Agreement contained the following provisions. Coyle had to obtain NNA's approval of the new site. The Dealer Agreement defined an "approvable site" as an "exclusive, separate and distinct (stand-alone)" NNA dealership facility of a size, appearance, and layout requiring NNA's approval. Id. at 9. NNA called its facility guidelines the "Nissan Retail Environmental Design Initiative" or "NREDI." Id. After Coyle built an NREDI-compliant facility a variety of incentives would be available from NNA (Filing No. 46 at 3).

In September 2013, Coyle identified a parcel of land of sufficient size to allow for the construction of a NREDI facility. The land had significant visibility from Interstate 65. Beforesubmitting its formal proposal to NNA, Coyle discussed with NNA the potential proposed site, but NNA verbally rejected it. Id. at 3-4. Coyle then obtained an option on an undeveloped piece of property east of Interstate 65, which NNA also rejected. NNA indicated it preferred a location to the west of Interstate 65. Id. at 4.

Coyle commissioned a site analysis performed by the Anderson Economic Group. The site analysis report considered three prospective sites for the new dealership location. The report's conclusion was that Coyle's preferred site was the best option. Id.; Filing No. 46-2. Coyle then formally submitted its original site proposal to NNA on September 17, 2013 (Filing No. 46 at 4; Filing No. 46-3). NNA again rejected Coyle's proposal by correspondence dated November 27, 2013, indicating the site was not approvable and would not be considered by NNA (Filing No. 46-4). NNA informed Coyle that it had performed its own market analysis by a qualified economic analysis firm, but NNA did not share its analysis with Coyle despite numerous requests from Coyle to do so. (Filing No. 46 at 4.)

In a letter dated December 15, 2014, NNA again denied a second request from Coyle to approve the original site proposal. NNA explained that the Anderson Economic Group study arbitrarily weighed the variables included in its analysis, so NNA rejected its conclusions, instead relying on the expertise of NNA's own consultant as well as its own observations and professional experience (Filing No. 46-5).

After NNA's second denial, Coyle and NNA searched the market but could not find another site that was affordable and large enough to accommodate a NREDI-compliant facility (Filing No. 46 at 5). Throughout the process, NNA offered and executed amendments to the Dealer Agreement with Coyle, extending the deadlines for Coyle to identify an approvable site; complete the acquisition of the site by April 15, 2017; schedule and complete a design consult by May 1, 2017;submit final architectural plans for NNA's approval by July 1, 2017; and commence construction of the new facilities by October 1, 2017. If these conditions were met, the Dealer Agreement would be extended by eighteen months (Filing No. 46-6 at 1-6; Filing No. 46-1; Filing No. 46-4; Filing No. 46-5).

On April 20, 2017, more than three and a half years after Coyle first proposed it, NNA approved the original site for Coyle to build the new permanent facilities. This was the same site that NNA had twice rejected. Because NNA had delayed approval of the site, Coyle was forced to operate for more than three and a half years out of the temporary facility that was inferior and in a location that was undesirable (Filing No. 46 at 5).

Coyle learned that NNA offers a certain incentive program only available to certain dealerships that NNA selects as preferred dealers. NNA has not provided information about this selective incentive program to Coyle or to many other NNA dealerships in the Louisville, Kentucky market area. Because NNA has not informed Coyle how a dealership qualifies for this incentive program, Coyle is not aware of any established criteria to qualify for the selective incentives. Thus, Coyle has not qualified to receive the selective incentives. However, other similarly situated dealerships have qualified for and participated in the incentive program. (Filing No. 46 at 13.)

Coyle has lost actual sales of new NNA motor vehicles to a competing same line-make NNA dealer in the Louisville metropolitan market because the competing dealer was a preferred dealer under the incentive program, which was not known or made available to Coyle. The incentive program allowed the preferred dealer to provide retail customers pricing below Coyle's wholesale price of NNA new motor vehicles through upfront cash payments or quarterly payments made by NNA to the preferred dealer. Id. at 18-19.

II. LEGAL STANDARD

A motion to dismiss under Rule 12(b)(1) challenges the court's subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1). The burden of proof is on the plaintiff, the party asserting jurisdiction. United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2003), overruled on other grounds by Minn-Chem, Inc. v. Agrium, Inc., 683 F.3d 845 (7th Cir. 2012) (en banc). "The plaintiff has the burden of supporting the jurisdictional allegations of the complaint by competent proof." Int'l Harvester Co. v. Deere & Co., 623 F.2d 1207, 1210 (7th Cir. 1980). "In deciding whether the plaintiff has carried this burden, the court must look to the state of affairs as of the filing of the complaint; a justiciable controversy must have existed at that time." Id.

"When ruling on a motion to dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), the district court must accept as true all well-pleaded factual allegations, and draw reasonable inferences in favor of the plaintiff." Ezekiel v. Michel, 66 F.3d 894, 897 (7th Cir. 1995) (citation omitted). Furthermore, "[t]he district court may properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists." Id. (citation and quotation marks omitted).

Federal Rule of Civil Procedure 12(b)(6) allows a defendant to move to dismiss a complaint that has failed to "state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). When deciding a motion to dismiss under Rule 12(b)(6), the Court accepts as true all factual allegations in the complaint and draws all inferences in favor of the plaintiff. Bielanski, 550 F.3d at 633. However, courts "are not obliged to accept as true legal conclusions or unsupported conclusions of fact." Hickey v. O'Bannon, 287 F.3d 656, 658 (7th Cir. 2002).

The complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). In Bell Atlantic Corp. v. Twombly, the United States Supreme Court explained that the complaint must allege facts that are "enough to raise a right to relief above the speculative level." 550 U.S. 544, 555 (2007). Although "detailed factual allegations" are not required, mere "labels," "conclusions," or "formulaic recitation[s] of the elements of a cause of action" are insufficient. Id.; see also Bissessur v. Ind. Uni...