Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—E.D. Ky.: Dealer’s tort, farm equipment dealer law claims crash and burn, (Oct 23, 2014)

By Greg Hammond, J.D.

A motorsports and utility vehicle dealer failed to drive tort and Kentucky farm equipment dealer law claims against Yamaha Motor Corp., U.S.A. across the line from conceivable to plausible, the federal district court in Pikeville, Kentucky has decided. However, the dealer’s breach of contract and implied covenant of good faith and fair dealing claims survived a motion to dismiss (Mountain Motorsports Paving and Construction LLC v. Yamaha Motor Corp., U.S.A., October 20, 2014, Thapar, A.).

Background. Mountain Motorsports Paving and Construction sold Yamaha all-terrain vehicles, utility vehicles, motorcycles, motor scooters, and other products. However, after a theft at the dealership, Mountain claims that Yamaha improperly charged the dealership payments for the stolen vehicles, incorrectly computed fees, and forced Mountain to dramatically increase its credit line to continue operating. In addition, the dealership asserted that Yamaha obstructed its efforts to resell its stock of vehicles and transfer the business, after granting permission to resell the dealership. Mountain filed suit, alleging eight causes of action sounding in contract, tort, and Kentucky statutes governing the retail sale of farm equipment. Yamaha moved to dismiss.

Contract claims. Preliminarily, the court determined that Yamaha’s motion to dismiss on jurisdictional grounds failed, as Mountain sufficiently alleged that the matter in controversy exceeds $75,000 in value. The company’s breach of contract and breach of implied covenant of good faith and fair dealing claims were also deemed sufficient to survive the motion to dismiss. Specifically, the court determined that, because the agreement states that Yamaha may terminate the contract if the dealership fails to maintain adequate lines of credit and Mountain disputes that it failed to maintain such lines of credit, the breach of contract claim survives the motion to dismiss. In addition allegations that Yamaha provided false information to Mountain’s financing institution, resulting in excessive charges, penalties, fees, and damages to the dealership, were sufficient to state a claim that Yamaha “impaired” Mountain’s right to recover its complete profits under the contract.

Tort and state law claims. Yamaha also moved to dismiss Mountains’ tort claims—consisting of misrepresentation, tortious interference with contract and prospective business advantage, and common law unlawful restraint of trade—and claims under Kentucky statutes governing the retail sale of farm equipment. The court dismissed these claims, finding that Mountain failed to allege sufficient facts to establish the necessary elements of each claim. Rather, the dealership’s allegations consisted of conclusory statements and “threadbare” recitations of legal elements that failed to nudge Mountain’s claims across the line from conceivable to plausible.

The case number is 14-76-ART.

Attorneys: James Samuel Doyle (James Samuel Doyle LLP) for Mountain Motorsports Paving and Construction LLC. Barbara B. Edelman (Dinsmore & Shohl LLP) for Yamaha Motor Corp., U.S.A.

Companies: Mountain Motorsports Paving and Construction LLC; Yamaha Motor Corp., U.S.A.

Cases: FranchisingDistribution KentuckyNews