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Franklin Park Lincoln-Mercury, Inc v. Ford Motor Company

October 31, 2011

FRANKLIN PARK LINCOLN-MERCURY, INC.,
PLAINTIFF,
v.
FORD MOTOR COMPANY, DEFENDANT.



The opinion of the court was delivered by: Judge Jack Zouhary

MEMORANDUM OPINION AND ORDER

INTRODUCTION

This is a suit by an automobile dealer against a manufacturer. This Court incorporates by reference the facts as set forth in a previous Order, granting in part and denying in part Defendant Ford's Motion to Dismiss (Doc. No. 41 at 1--3). That Order dismissed Plaintiff Franklin Park's claims under the Automobile Dealer's Day in Court Act, 15 U.S.C. §§ 1221--1226 and most of Plaintiff's claims under the Ohio Motor Vehicle Dealers Act ("OMVDA"), Ohio Revised Code § 4517.01 et seq. (Doc. No. 41 at 12). Two of Plaintiff's allegations survived: (1) breach of common law fiduciary duty; and (2) predatory practice under Ohio Revised Code § 4517.59(A)(15). Pending is Defendant's Motion for Summary Judgment on these remaining claims (Doc. No. 81). This Court has reviewed Defendant's Motion as well as Plaintiff's Opposition (Doc. No. 85), and Defendant's Reply (Doc. No. 87).

STANDARD OF REVIEW

Pursuant to Federal Civil Rule 56(a), summary judgment is appropriate where there is "no genuine issue as to any material fact" and "the moving party is entitled to judgment as a matter of law." This burden "may be discharged by 'showing'-that is, pointing out to the district court-that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When considering a motion for summary judgment, the court must draw all inferences from the record in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The court is not permitted to weigh the evidence or determine the truth of any matter in dispute; rather, the court determines only whether the case contains sufficient evidence from which a jury could reasonably find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248--49 (1986).

CHOICE OF LAW

In diversity, federal district courts generally apply state substantive law. Hanna v. Plumer, 380 U.S. 460, 465 (1965). A district court applies the law of the state in which it sits, Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496 (1941), and is bound by the decisions of the state's highest court. Meridian Mut. Ins. Co. v. Kellerman, 197 F.3d 1178, 1181 (6th Cir. 1999).

There is a dispute whether to apply Ohio or Michigan law to Plaintiff's fiduciary duty claim. This dispute arises because the Sales and Service Agreement ("SSA") contains a choice-of-law provision which construes the agreement "in accordance with the laws of the State of Michigan." (Doc. No. 82-2 at 38). The laws of Ohio and Michigan are generally on equal footing. Compare Anchor v. O'Toole, 94 F.3d 1014, 1023 (6th Cir. 1996) (applying Ohio law), with Vicencio v. Ramirez, 211 Mich. App. 501, 508 (Mich. Ct. App. 1995). However, Defendant favors Michigan and Plaintiff favors Ohio.

Which is it, Ohio or Michigan? This Court first looks to the rule Ohio courts apply to assess the validity of choice-of-law provisions. See Consolidated Jewelers, Inc. v. Standard Fin. Corp., 325 F.2d 31, 35 (6th Cir. 1963). Courts in Ohio follow the rule set forth in the Restatement (Second) of Conflict of Laws § 187 (1971). Schulke Radio Productions, Ltd. v. Midwestern Broadcasting Co., 6 Ohio St. 3d 436, 438--39 (1993). Section 187 states:

The law of the state chosen by the parties to govern their contractual rights and duties will be applied. . . unless either . . . the chosen state has no substantial relationship to the parties . . . or . . . application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state . . . .

Restatement (Second) of Conflict of Laws § 187(2) (1971).

Michigan has a substantial relationship to the parties -- Defendant's principle place of business is in Michigan -- and Plaintiff makes no showing Michigan law is somehow antithetical to Ohio policy or that Ohio has a greater interest in this litigation. Thus, the only question remaining is whether the alleged fiduciary duty violation arose out of the "contractual rights" of the parties.

It does not. A breach of fiduciary duty sounds in tort, Nixon v. Bank One of E. Ohio, N.A., 74 Ohio App. 3d 550, 553 (Ohio Ct. App. 1991), and will only impinge upon "contractual rights" when those duties are memorialized in the contract. Creauro v. Duko, 2005-Ohio-1342, at ¶ 39 (Ohio Ct. App. 2005). The SSA does not memorialize fiduciary duties. Thus, the parties did not choose Michigan law to govern the creation of a fiduciary, or any other tort liability.

Accordingly, this Court must follow Ohio precedent to determine which law applies. Ohio has adopted the "significant relationship" test, laid out in Restatement (Second) of Conflict of Laws § 145 (1971). Morgan v. Biro Mfg. Co., Inc., 15 Ohio St. 3d 339, 342 (1984). This test considers "where the injury occurred, . . . where the conduct causing the injury occurred, . . . place of business of the parties, and place where the relationship, if any, between the parties is centered." Restatement (Second) of Conflict of Laws § 145(2).

Applying these factors, Plaintiff's fiduciary duty claim is governed by Ohio law. First, Plaintiff alleges its dealership in Ohio was injured. Second, the injury was allegedly caused by Defendant's approval of the Rouen/Brondes transaction in Ohio. Third, Plaintiff's principle place of business is Ohio. Finally, the relationship between the parties involves the SSA governing Plaintiff's dealership in Ohio.

DISCUSSION

Plaintiff alleges Defendant violated its fiduciary duty and engaged in predatory and/or discriminatory behavior in violation of the OMVDA. ...


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