Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—Cal. App.: Dismissal of Nissan auto dealer’s claims over dealership purchase upheld, (Nov 7, 2014)

By Linda O’Brien, J.D., LL.M.

A summary judgment ruling against an automobile dealer’s claims of fraud, concealment, negligence, and unfair business practices in the purchase of the dealership was upheld by the California Court of Appeal in San Diego (Boese v. Nissan North America, Inc., November 6, 2014, McDonald, A.).

Nissan North America is an automobile manufacturer of Nissan brand vehicles. In March 2008, Leo Boese, through his companies, Lebo Wheels and Lebo Development, purchased the assets and associated real property of a Nissan dealership located in Riverside, California. Boese also entered into a dealership agreement with Nissan, authorizing him to own and operate the dealership. In May 2008, Nissan received the preliminary results of a market study conducted by a third party vendor of the Los Angeles metropolitan area, which recommended that the Boese dealership be relocated. Nissan had notified all Los Angeles area dealers, including Boese’s seller, of its plan to conduct a market study. In November 2009, Nissan notified Boese of the market study results but did not require him to move his dealership.

Boese filed suit against Nissan, alleging fraud, concealment, negligent misrepresentation, and unfair business practices under California’s Unfair Competition Law (UCL). The trial court granted Nissan’s motion for summary judgment, and Boese appealed.

Fraud. The court found that the plaintiff presented no evidence showing that Nissan made any false statements of material fact. It was undisputed that (1) statements by Nissan representatives that prior dealerships at the Riverside location suffered from poor management and (2) the dealership agreement contained no statements about the desirability of the dealership location other than providing its street address and square footage. Moreover, Nissan submitted Boese’s deposition, in which he admitted the truth of Nissan’s statements and presented reports that showed the Riverside dealership suffered losses under the seller’s management.

Concealment. Boese did not show that Nissan had a fiduciary or contractual relationship with him prior to his purchase of the dealership and execution of the dealer agreement in March 2008, the court determined. Boese’s argument that Nissan had a duty to disclose the pending market study prior to his purchase of the dealership was rejected. The court noted that it was undisputed that there was no relationship between Nissan and the plaintiff that imposed a duty on Nissan to disclose information to him prior to his purchase and dealer agreement with Nissan before March 2008, since there was no contract or transaction between the parties on which such a duty to disclose could be based.

Negligence. Additionally, Boese failed to allege sufficient facts that Nissan owed him a duty of care to disclose the existence of the pending market study in October 2007, according to the court. Nissan established that it did not owe Boese any duty to disclose the pending market study before March 2008 and therefore carried its burden that the plaintiff could not establish a necessary element of his negligence cause of action.

UCL. Finally, Boese’ assertion that there were triable issues of material fact regarding his unfair business practices claim that precluded summary judgment was also rejected. The court determined that his UCL claim was entirely derivative of his other causes of action on which there were no triable issues of material fact. Thus, his claim failed for lack of proof of essential elements and Nissan was entitled to summary judgment as a matter of law, the court concluded.

The case is No. D065778.

Attorneys: Richard J. Ritchie (Callahan, Thompson, Sherman & Caudill) for Leo R. Boese, Lebo Wheels, Inc., and Lebo Development, LLC. Gregory R. Oxford and John A. Crose, Jr. (Isaacs Clouse Crose & Oxford) and Marjorie Ehrich, Blaine H. Evanson, and Bradley J. Hamburger (Dunn & Crutcher) for Nissan North America, Inc.

Companies: Lebo Wheels, Inc.; Lebo Development, LLC; Nissan North America, Inc.

Cases: FranchisingDistribution StateUnfairTradePractices CaliforniaNews