Arthur Glick Truck Sales, Inc. v. Hyundai Motor America

Background

Arthur Glick Truck Sales, Inc. operated a Hyundai dealership under dealer agreements with Hyundai Motor America. The agreements required Hyundai’s prior written consent for a change in ownership and stated that consent could not be unreasonably withheld.

Glick agreed to sell its business assets, including the Hyundai franchise, to Gabrielli Kenworth, LLC. The proposed dealer principal, Romolo Gabrielli, had experience operating heavy-duty truck dealerships but did not have experience owning or operating a new-car dealership. Hyundai rejected the proposed transfer, stating that Gabrielli and its principals did not meet Hyundai’s standards for appointing a new dealer. Glick later amended the sale agreement to exclude the Hyundai assets and reduced the purchase price by $350,000. Glick then terminated the Hyundai franchise.

Glick sued Hyundai under the federal Automobile Dealers’ Day in Court Act, the New York Franchised Motor Vehicle Dealer Act, and the dealer agreement. Hyundai moved for summary judgment, asking the court to resolve the claims without a trial because it argued that no genuine dispute of material fact required a jury’s consideration.

Federal dealership-law claim

The court granted summary judgment to Hyundai on Glick’s claim under the Automobile Dealers’ Day in Court Act. That law requires evidence that the manufacturer used coercion, intimidation, or threats to enforce a wrongful demand. The court assumed, for purposes of analysis, that Hyundai might have had an improper motive, but found that Glick had not produced evidence of coercive conduct or identified what Hyundai coerced Glick to do. The court therefore granted summary judgment on the First Claim for Relief.

Breach-of-contract claim

The court denied summary judgment on Glick’s claim that Hyundai breached the dealer agreement by unreasonably withholding consent to the transfer. The court held that Hyundai relied on a reasonable factor when it considered Gabrielli’s lack of experience operating a new-car dealership. Prior experience operating the type of dealership involved in the transfer was an appropriate performance-related consideration, and Glick’s evidence did not show that this consideration was unreasonable as a matter of law.

But the court found a genuine factual dispute about whether Hyundai’s stated reason was a pretext—that is, a stated reason masking another motive. Hyundai had conducted market studies shortly before rejecting the transfer, including analysis of what might happen if Glick voluntarily terminated the franchise. The evidence also showed that an Hyundai employee recommended dissolving the dealership location if Glick terminated the franchise. Although Hyundai later renewed Glick’s agreement and conditionally approved a possible relocation, the court held that a jury could still consider whether the possible dissolution of the location influenced the transfer decision. The court therefore denied summary judgment on the Third Claim for Relief.

New York Dealer Act claim

The court granted summary judgment to Hyundai on Glick’s claim under Section 466 of the New York Dealer Act. The court treated the claim as challenging Hyundai’s requirement that proposed transferees have prior car-dealership experience, rather than simply challenging Hyundai’s refusal to consent to this particular transfer. Because the court had already found that considering prior car-dealership experience was reasonable, it held that Glick had not shown that the requirement was an unreasonable restriction on its ability to transfer the franchise. The court also stated that Glick’s pretext theory did not apply to this statutory claim.

Damages and disposition

The court granted Hyundai’s request to limit Glick’s compensatory damages for the lost sale price to $350,000. The parties agreed that removing the Hyundai franchise from the sale reduced the purchase price by that amount. Glick identified other possible valuations, but the court limited the lost-sale-price damages to the undisputed $350,000 amount, subject to Glick’s ability to prove those damages at trial.

In conclusion, Judge Philip M. Halpern granted Hyundai’s summary-judgment motion as to Glick’s First and Second Claims for Relief and denied it as to the Third Claim for Relief. The court directed the parties to complete pretrial submissions and scheduled a pretrial conference.