Fresno Motors, LLC. v. Mercedes-Benz USA, LLC

Summarized by:

  • Court: 9th Circuit Court of Appeals Archives
  • Area(s) of Law: Tax Law
  • Date Filed: 11-05-2014
  • Case #: 12-15981
  • Judge(s)/Court Below: District Judge Gettleman for the Court; Circuit Judges Wallace and Bybee.
  • Full Text Opinion

Under the California's Vehicle Code section 11713.3(t)(2), a manufacturer cannot be sued for exercising its right of first refusal (“ROFR”) in a timely and lawful manner and is not required to provide proper notice of its intent to exercise ROFR to a proposed transferee of a franchise; Furthermore, section 11713.3(t)(6) allows a proposed transferee to recover incurred expenses resulting from a franchisor usurping its contractual right by exercising a ROFR.

Fresno Motors, LLC (“Fresno”) signed a purchase agreement to acquire a Mercedes-Benz dealership from Asbury Fresno Imports, LLC (“Asbury”). The manufacturer, Mercedes-Benz USA, LLC (“MB”), in accordance with its dealership agreement with Asbury, exercised its right of first refusal (“ROFR”). Fresno brought action against MB, alleging that MB (1) tortiously interfered with its existing contractual and potential economic advantage by failing to send proper and timely notice of its intent to exercise ROFR as required by California's Vehicle Code (“CVC”) section 11713.3(t)(2); (2) fraudulently concealed the acknowledgement agreement with Asbury; (3) held liability for incurred expenses under CVC section 11713.3(t)(6); and (4) engaged in unfair business dealings under California’s Unfair Competition Law (“UCL”). The district court granted summary judgment on all claims in favor of MB. On appeal, the Ninth Circuit Court held that Fresno had no tortious interference claim because MB exercised its ROFR in a timely and lawful manner. The panel further held that CVC section 11713.3(t)(2) does not require notice of intent to exercise ROFR to be given to a proposed transferee. Secondly, the panel determined that there is no merit to Fresno’s claim that Asbury and MB concealed the acknowledgement agreement that contained the right to exercise ROFR. However, the panel determined that Fresno did, in fact, hold an implied right of action under CVC section 11713.3(t)(6), which allows a proposed transferee to recover incurred expenses resulting from a franchisor usurping its contractual right by exercising a ROFR. Lastly, the panel held that because Fresno based its UCL claim on tortious interference and fraudulent concealment, the district court’s ruling of summary judgment must be upheld. AFFIRMED in PART, REVERSED in PART, and REMANDED.

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