Volkswagen of America, Inc. v. Maverick Auto Group 2 LLC
2:13-cv-00802
E.D. Cal.Nov 20, 2013Background
- Volkswagen of America (Plaintiff) and Maverick Auto Group 2 dba Volkswagen of Fairfield (Fairfield) entered a Dealer Agreement on Jan 12, 2011; Hassanally executed a personal guaranty for Fairfield’s obligations.
- Dealer Agreement required Fairfield to complete a Volkswagen “White Frame” dealership renovation by Jan 12, 2013 and provided a $600,000 capital contribution from Volkswagen contingent on completion.
- Plaintiff sent multiple notices (2012–2013) extending deadlines, demanding progress, and eventually demanding repayment after Fairfield failed to provide adequate assurances of timely completion; Fairfield did not repay the $600,000.
- Fairfield alleged that Volkswagen made additional material promises (relocation of a Napa dealership and increased vehicle allocations) that were part of the parties’ agreement and that Volkswagen failed to perform those obligations.
- Plaintiff sued for breach of contract (against Fairfield) and breach of guaranty (against Hassanally) and moved for judgment on the pleadings under Rule 12(c); the court denied the motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Plaintiff is entitled to judgment on the pleadings on breach of contract | Contract terms are clear; Fairfield repudiated by failing to provide adequate assurances | Fairfield alleges additional material terms (Napa relocation, increased allocation) and raises affirmative defenses showing VW’s nonperformance | Denied — factual disputes exist about material contract terms and VW’s performance |
| Whether parol evidence/integration clause bars Fairfield’s extrinsic terms | Written agreement controls; integrated contract forecloses extrinsic terms | Integration clause does not necessarily bar parol evidence for additional noncontradictory terms or conditions precedent | Denied — extrinsic evidence may be admissible; factual issues preclude judgment |
| Whether VW’s demand for adequate assurances was proper under commercial code reasonableness standard | Demand was valid; suit seeks repayment of capital contribution, not to enforce statutory standards | Adequacy and reasonableness are factual inquiries; statutory reasonableness may be relevant | Denied — reasonableness and adequacy raise factual issues (and other factual disputes exist) |
| Whether Plaintiff is entitled to judgment on breach of guaranty against Hassanally | Hassanally signed guaranty; guaranty obligates repayment once Fairfield breaches | Hassanally’s liability depends on Fairfield’s liability; if material factual disputes defeat contract claim, guaranty claim fails | Denied — guaranty claim cannot succeed if breach of contract claim is unresolved |
Key Cases Cited
- Ventress v. Japan Airlines, 603 F.3d 676 (9th Cir.) (standard for judgment on the pleadings)
- Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542 (9th Cir.) (pleadings are accepted as true on Rule 12(c))
- Gen. Conference Corp. of Seventh-Day Adventists v. Seventh-Day Adventist Congregational Church, 887 F.2d 228 (9th Cir.) (affirmative defenses generally preclude judgment on the pleadings)
- Sicor Ltd. v. Cetus Corp., 51 F.3d 848 (9th Cir.) (integration clause is one factor in parol evidence analysis)
- Macco Const. Co. v. Farr, 137 F.2d 52 (9th Cir.) (violation of licensing statute does not automatically void contracts absent clear legislative intent)