NISSAN MOTOR ACCEPTANCE CORP. v. INFINITI OF ENGLEWOOD, LLC
2:18-cv-17228
D.N.J.Jun 26, 2023Background
- Nissan North America (NNA) sells through standardized Dealer Agreements that required dealers to maintain floorplan (wholesale) financing and to keep dealerships open for business; failure could justify termination.
- Three dealers at issue: Infiniti of Englewood, LLC (Englewood), Nissan of Hawthorne, LLC (Hawthorne), and Elite Nissan of Bergenfield, LLC (Bergenfield).
- December 2018: the dealers’ floorplan lender (NMAC) audited and suspended financing after discovering “sales out of trust.” NNA served notices of default and later notices of intent to terminate for failure to maintain financing and for ceasing operations.
- Dealers sued under the New Jersey Franchise Practices Act (NJFPA) for unlawful “stuffing” (requiring dealers to accept unwanted vehicles), wrongful termination without good cause, and breach of the implied covenant of good faith and fair dealing; Englewood also challenged NNA’s denial of relocation requests.
- NNA moved for summary judgment on all counts. The court denied summary judgment across the board, finding genuine disputes of material fact on whether NNA required or attempted to require unwanted vehicles, causation/damages, whether NNA had good cause to terminate, and whether NNA breached the implied covenant.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether NNA “required or attempted to require” dealers to accept unwanted vehicles (NJFPA §56:10-7.4(g)) | NNA engaged in “stuffing” and used threats/pressure (texts and emails) to force inventory on dealers | No evidence of coercion; dealers could cancel orders and were offered return procedures; “require” should mean compulsion/coercion | Denied MSJ — court found a genuine dispute of fact; “require” need not imply threats; texts/emails could permit a reasonable juror to find attempt/requirement |
| Whether dealers proved damages causally linked to NNA’s conduct | Dealers’ expert and record show principals lost over $25M and that NNA’s conduct (including stuffing) led to lost financing and eventual losses | Damages are speculative and unconnected; Englewood’s losses caused by landlord eviction, not NNA; expert did not opine on Englewood | Denied MSJ — genuine dispute whether NNA’s conduct caused the dealers’ financial injury and whether damages can be reasonably estimated |
| Whether NNA had “good cause” to terminate (material breaches by dealers as complete defense under NJFPA) | Dealers argue NNA’s wrongful conduct may have caused dealers’ failures, so material-breach defense not available if franchisor’s illegal acts preceded and precipitated the breaches | NNA says dealers undisputedly breached (lost financing; closed for 7 days), which constitutionally establishes good cause and bars NJFPA claims | Denied MSJ — where record shows dispute about which party’s wrongful conduct came first, material-breach defense cannot be resolved on summary judgment |
| Whether NNA breached the implied covenant of good faith and fair dealing | Dealers: NNA’s alleged illegal stuffing and bad-faith use of termination/relocation discretion frustrated dealers’ contractual expectations | NNA: dealers identify no contract term breached; standard provisions permit NNA discretion; choice-of-law favors California, which limits implied-duty claims | Denied MSJ — applying California law, court found disputed facts about whether NNA exercised discretionary powers in bad faith and frustrated dealers’ rights |
Key Cases Cited
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment standard governs genuine disputes of material fact)
- Celotex Corp. v. Catrett, 477 U.S. 317 (movant’s initial burden and shifting burdens at summary judgment)
- General Motors Corp. v. New A.C. Chevrolet, Inc., 263 F.3d 296 (3d Cir.) (material breach/good-cause analysis under NJFPA)
- DiProspero v. Penn, 183 N.J. 477 (statutory interpretation: courts should not read into statutes qualifiers the legislature omitted)
- Goldwell of New Jersey, Inc. v. KPSS, Inc., 622 F. Supp. 2d 168 (D.N.J.) (denying summary judgment where it was unclear which party breached first and whether franchisor’s conduct caused the franchisee’s failure)
- Marino v. Industrial Crating Co., 358 F.3d 241 (3d Cir.) (on summary judgment courts may not weigh credibility; draw inferences for nonmoving party)
- McCollum v. XCare.net, Inc., 212 F. Supp. 2d 1142 (N.D. Cal.) (discretionary contractual power gives rise to implied duty not to act in bad faith)