GIUFFRE HYUNDAI, LTD., d/b/a Giuffre Hyundai, Plaintiff-Appellant, v. HYUNDAI MOTOR AMERICA, Defendant-Appellee.
Docket No. 13-1886.
United States Court of Appeals, Second Circuit.
June 25, 2014
Argued: March 20, 2014.
- maintain the Debtor‘s identical equity owners as the owners of the Reorganized Asarco. Id., art. 10.11 (“The equity interests in Reorganized ASARCO shall continue to be held by ASARCO USA Incorporated.“).
Because the Asarco that emerged upon reorganization is not a different entity from the Asarco that entered bankruptcy as the Debtor, Asarco‘s payment of the settlement lacks the basic requirement of subrogation—the existence of a subrogee that is a distinct entity from the subrogor. See U.S. Airways, Inc. v. McCutchen, ——— U.S. ———, 133 S.Ct. 1537, 1546, 185 L.Ed.2d 654 (2013). As the Supreme Court put it in that case, “[s]ubrogation simply means substitution of one person for another; that is, one person is allowed to stand in the shoes of another and assert that person‘s rights against a third party.” Id. at 1546 n. 5 (internal quotation marks omitted). Asarco is still wearing its own shoes; it agreed to pay and paid its own debts. The district court thus properly dismissed Asarco‘s subrogation claims, and correctly concluded that the statute of limitations for subrogation claims has no bearing on this case.
CONCLUSION
We have considered all of Asarco‘s contentions on this appeal and have found them to be without merit. For the foregoing reasons, the judgment of the district court is AFFIRMED.
Frederick Liu, Hogan Lovells U.S. LLP, Washington, DC (John J. Sullivan, Hogan Lovells U.S. LLP, New York, NY, on the brief), for Defendant-Appellee.
Before: STRAUB, SACK, and LOHIER, Circuit Judges.
SACK, Circuit Judge:
The plaintiff, Giuffre Hyundai, Ltd. (“Giuffre“), was an authorized dealer of Hyundai automobiles pursuant to a contract with that company‘s domestic affiliate, Hyundai Motor America (“HMA“). HMA terminated its contract with Giuffre after a New York State court concluded that the dealer had engaged in fraudulent, illegal, and deceptive business practices—a clear breach of the contract terms. Giuffre responded by bringing suit in the United States District Court for the Eastern District of New York seeking to enjoin the termination. Giuffre relied in pertinent part on
BACKGROUND
Giuffre Hyundai was a franchised Hyundai dealer based in Brooklyn, New York. It sold Hyundai cars pursuant to a Dealer Sales and Service Agreement (“DSSA“) with HMA. That contract included provisions stipulating that “HMA has selected [Giuffre] because of the reputation of its Owner(s) and the General Manager ... for integrity and their commitment to fair dealing.” DSSA 10(C)(2). It required Giuffre to refrain from “engag[ing] in any misrepresentation or unfair or deceptive trade practices.” Id. HMA reserved the right to “terminate [the DSSA] immediately” if
[Giuffre] or any Owner, officer, or General Manager of [Giuffre], is convicted of any felony or for any violation of law which in HMA‘s sole opinion tends to adversely affect the operation, management, reputation, business or interests of [Giuffre] or HMA, or to impair the good will associated with the Hyundai Marks.1 Such violations of law may include, without limitation, any finding or adjudication by any court of competent jurisdiction or government agency that [Giuffre] has engaged in any misrepresentation or unfair or deceptive trade practice[.]
Id. 16(B)(1)(b).
Giuffre‘s Conduct and HMA‘s Notice of Termination
In December 2010, New York‘s Attorney General brought a civil suit against Giuffre; its owner, John Giuffre; and three other dealerships he owned, alleging that they had engaged in a pattern of fraudulent and deceptive business practices. See People v. Giuffre Motor Car Co., No. 30163/2010 (N.Y.Sup.Ct.2010).
The New York Supreme Court, Kings County, eventually granted summary judgment for the Attorney General, ruling that the dealerships had “engaged in fraudulent and illegal business practices[,] ... deceptive acts[,] ... and false advertising” in violation of several New York statutes and the federal Truth in Lending Act,
The court enjoined the dealerships from committing further violations and ordered
HMA apparently learned of the Attorney General‘s suit and the court‘s decision for the first time from an October 2012 article in the New York Post headlined “Car biz slapped for fraud.” Kevin Sheehan and Mitchel Maddux, Car Biz Slapped for Fraud, N.Y. Post, Oct. 1, 2012. On October 3, 2012, an HMA executive wrote to Giuffre, enclosing a copy of the article. The letter notified Giuffre that the court‘s findings “are extremely serious and constitute a breach of [the DSSA].” Letter from Ken Bloech, Regional General Manager, Eastern Region, HMA, to John Giuffre (Oct. 3, 2012). Following an exchange of correspondence among counsel, on December 3, 2012, HMA sent Giuffre a letter indicating that it would terminate the DSSA in ninety days. Letter from Ken Bloech, Regional General Manager, Eastern Region, HMA, to John Giuffre (Dec. 3, 2012) (the “Notice of Termination“). The Notice of Termination asserted that “Giuffre Hyundai is in material and incurable breach of its obligations under the [DSSA]. HMA cannot and will not voluntarily allow its products to be sold and marketed by an organization that has been found to have preyed on the consuming public ... in the manner [Giuffre] did.” Id. at 4.
Proceedings Before the District Court
As the termination date approached, Giuffre filed suit in the United States District Court for the Eastern District of New York, seeking, among other things, “to permanently enjoin HMA from terminating [the DSSA]” and “to declare unlawful HMA‘s Notice of Termination.” Compl., Giuffre Hyundai, Ltd. v. Hyundai Motor Am., No. 13-CV-0520 (E.D.N.Y. Jan. 29, 2013), ECF No. 1. In addition to state and federal statutory and common law claims not relevant here,2 Giuffre asserted that HMA violated
The issues to be determined in [such] an action ... are whether the franchisor‘s notice of termination was issued with due cause and in good faith. The burden of proof shall be upon the franchisor to prove that due cause and good faith exist. The franchisor shall also have the burden of proving that all portions of its current or proposed sales and service requirements for the protesting franchised new motor vehicle dealer are reasonable.
The determination of due cause shall be that there exists a material breach by a
new motor vehicle dealer of a reasonable and necessary provision of a franchise if the breach is not cured within a reasonable time after written notice of the breach has been received from the manufacturer or distributor.
HMA moved for summary judgment, and Giuffre cross-moved for partial summary judgment on its
Moreover, the district court reasoned, New York common law does not require a chance to cure “when ‘doing so would amount to a useless gesture.‘” Id. at *4, 2013 U.S. Dist. LEXIS 67795, at *9 (quoting Grocery Haulers, Inc. v. C & S Wholesale Grocers, Inc., No. 11 Civ. 3130(DLC), 2012 WL 4049955, at *15, 2012 U.S. Dist. LEXIS 131598, at *41 (S.D.N.Y. Sept. 14, 2012) (collecting cases)) (some internal quotation marks omitted). Finding that
On appeal, Giuffre argues that
DISCUSSION
“We review an order granting summary judgment de novo and resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought.” Lederman v. N.Y.C. Dep‘t of Parks & Recreation, 731 F.3d 199, 202 (2d Cir.2013) (internal quotation marks and brackets omitted), cert. denied, ——— U.S. ———, 134 S.Ct. 1510, 188 L.Ed.2d 376 (2014). Summary judgment is appropriate when, “construing the evidence in the light most favorable to the non-movant, ‘there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.‘” Psihoyos v. John Wiley & Sons, Inc., 748 F.3d 120, 123-24 (2d Cir.2014) (quoting
The central issue in this appeal is whether HMA‘s termination of Giuffre‘s franchise complied with New York‘s Vehicle and Traffic Law. In an action seeking to enjoin termination of a franchise agreement under
We therefore proceed to address the merits of Giuffre‘s appeal. We conclude that HMA‘s termination of the DSSA was lawful, that the record presents no genuine dispute as to any material fact, and that HMA was therefore entitled to summary judgment.
New York courts presume that the state‘s legislators were “aware of the law in existence at the time of an enactment and [intended to] abrogate[] the common law only to the extent that the clear import of the language of the statute requires.” B & F Bldg. Corp. v. Liebig, 76 N.Y.2d 689, 693, 563 N.Y.S.2d 40, 564 N.E.2d 650, 652 (1990); accord Arbegast v. Bd. of Educ. of S. New Berlin Cent. Sch., 65 N.Y.2d 161, 169, 490 N.Y.S.2d 751, 480 N.E.2d 365, 371 (1985). Moreover, the legislature itself has instructed that “[w]ords of technical or special meaning are construed according to their technical sense, in the absence of anything to indicate a contrary legislative intent.”
New York common law will not require strict compliance with a contractual notice-and-cure provision if providing an opportunity to cure would be useless, or if the breach undermines the entire contractual relationship such that it cannot be cured.3 See, e.g., Wolff & Munier, Inc. v. Whiting-Turner Contracting Co., 946 F.2d 1003, 1009 (2d Cir.1991) (compliance with cure provision “is not required where it would amount to a ‘useless gesture‘“); Miller v. Wells Fargo Bank, N.A., No. 13-CV-1541, 2014 WL 349723, at *6 n. 6, 2014 U.S. Dist. LEXIS 14060, at *15 n. 6 (S.D.N.Y. Jan. 30, 2014) (opportunity to cure is not required where futile); 7-Eleven, Inc. v. Khan, 977 F.Supp.2d 214, 230 (E.D.N.Y.2013) (“Under New York law, the law governing this case, a contract may be terminated without notice and opportunity to cure where there is sufficient evidence of fraud, even where contractual provisions require such notice.“); Southland Corp. v. Froelich, 41 F.Supp.2d 227,
In particular, “New York law permits a party to terminate a contract immediately, without affording the breaching party notice and opportunity to cure ... when the [breaching party‘s] misfeasance is incurable and when the cure is unfeasible.” Sea Tow Servs. Int‘l, Inc. v. Pontin, 607 F.Supp.2d 378, 389 (E.D.N.Y.2009) (quoting Needham v. Candie‘s, Inc., No. 01 Civ. 7184(LTS)(FM), 2002 WL 1896892, at *4, 2002 U.S. Dist. LEXIS 15144, at *11-12 (S.D.N.Y. Aug. 16, 2002), aff‘d, 65 Fed.Appx. 339 (2d Cir.2003) (citations omitted)); accord Hicksville Mach. Works Corp. v. Eagle Precision, Inc., 222 A.D.2d 556, 557, 635 N.Y.S.2d 300, 302 (2d Dep‘t 1995) (asserted “right to cure” irrelevant where “there was no evidence in the record to support the proposition that a cure was possible“); see also Delvecchio v. Bayside Chrysler Plymouth Jeep Eagle, Inc., 271 A.D.2d 636, 639, 706 N.Y.S.2d 724, 726 (2d Dep‘t 2000) (employee‘s misfeasance was “not ... curable,” and would not have been subject to a notice-and-cure provision had the contract contained one). When contracting parties agree to a notice-and-cure provision, it is reasonable to assume that they do so with the assumption “that the breaches which would be used to terminate the contract would be curable breaches.” In re Best Film & Video Corp., 46 B.R. 861, 874-75 (Bankr. E.D.N.Y.1985) (emphasis in original) (quoting Corbin on Contracts, 1982 Supplement by Colin K. Kaufman, Part 2, § 1266, at 369-70). It is no less reasonable to presume that the legislature operated under the same expectation in drafting
Even without considering the common law backdrop against which
Turning to the facts of this case, we conclude that the state court‘s judgment established as a matter of law an incurable, material breach of a reasonable and necessary provision of the DSSA. See
Second, the breach here was material and not susceptible of cure. The state
That judgment is conclusive evidence of Giuffre‘s breach of the unambiguous terms of the DSSA, which provides that the Agreement may be terminated if Giuffre “or any Owner, officer, or General Manager of [Giuffre], is convicted of any felony or for any violation of law which in HMA‘s sole opinion tends to adversely affect the operation, management, reputation, business or interests of [Giuffre] or HMA, or to impair the good will associated with the Hyundai Marks.” DSSA 16(B)(1)(b). Setting aside the references to HMA‘s “sole opinion” and “immediate” termination, which Giuffre contends are displaced by the Vehicle and Traffic Law, Giuffre remains in clear breach of the DSSA, which defines the relevant “violations of law” to include “any finding or adjudication by any court of competent jurisdiction or government agency that [Giuffre] has engaged in any misrepresentation or unfair or deceptive trade practice.” Id. Moreover, because the Agreement speaks in terms of adjudicated misfeasance, rather than simple conduct, the breach is not one which subsequent good behavior could correct.
CONCLUSION
For these reasons, we agree with the district court that the judgment of the state court was a “reputation poisoning” incapable of cure. Giuffre Hyundai, No. 13-cv-0520, 2013 WL 1968371, at *4, 2013 U.S. Dist. LEXIS 67795, at *11; see also In re Best Film & Video Corp., 46 B.R. at 875 (“Courts, using their good sense, will be able to tell breaches which excuse the obligation to give notice from breaches which do not.” (quoting Corbin on Contracts, 1982 Supplement by Colin K. Kaufman, Part 2, § 1266, at 369-70)). Having provided Giuffre with the statutorily required written notice of termination ninety days before terminating the DSSA, HMA was under no obligation to further extend its dealings with a franchisee who had been adjudged to have “engaged in fraudulent and illegal business practices[,] ... deceptive acts[,] ... and false advertising.”4
We therefore AFFIRM the judgment of the district court.