SUMMARY JUDGMENT GRANTED IN HARD-FOUGHT
DEALERSHIP FRANCHISE CASE
NVL, Inc. v. Volvo Car USA LLC, Docket BER-L-4341-18, 2022 N.J. Super. Unpub. LEXIS 1956 (N.J. Super. Ct. Law Div. Oct. 17, 2022) (unpub.)
After a 4-year battle, HKMP Partner Paul Daly, with the assistance of Associate Patrick Hagerty, led Volvo Car USA LLC (“Volvo”) to a long-awaited victory, securing summary judgment in a suit arising from the termination of a Letter of Intent (LOI) for opening a dealership in Long Beach, California.
In 2014 Volvo entered the LOI with auto-dealer wunderkind Hooman Nissani, who owned five dealerships in the Long Beach, California area before he was 40. Volvo offered Nissani generous financial incentives to assist with construction costs. Further, when Nissani proposed changing the location of the dealership, Volvo agreed and offered additional incentives in view of anticipated increased construction costs. However, after three years, Nissani made little progress towards opening the dealership. He had not complied with any of the deadlines for architectural plans, construction permits, or construction. Volvo had worked with Nissani with respect to these issues and repeatedly adjusted the time frames to accommodate Nissani.
At last, in July 2017, Nissani provided construction plans, but had not yet obtained any building permits. In response to Volvo’s insistence, Nissani provided a schedule for opening the dealership. His proposal pushed the opening date off until May 2018, three years after the initial contemplated opening date. At about this time, Volvo learned of the opportunity to open a dealership in Las Vegas with another established company. The relationship with Nissani was eventually terminated and the incentive funds were reallocated to the other company.
Nissani filed a complaint alleging, inter alia, breach of contract, bad faith, fraud, and lost profit damages exceeding $7 million. Plaintiff alleged that the decision to terminate the agreement and re-allocate the funds to Las Vegas was a breach of the implied covenant of good faith and fair dealing. He also alleged that Volvo had never in fact intended to open a dealership with plaintiff and instead sought to tie plaintiff up and stop him from opening other luxury brand dealerships.
The Hon. Robert Wilson, JSC, reviewed the extensive record and found that there was no evidence upon which a reasonable jury could find that Volvo acted in bad faith, or was engaged in any fraudulent practice. He found that the record amply demonstrated that Volvo had in good faith tried to get Nissani to open a dealership. He upheld the LOI’s termination provisions and covenant not to sue and rejected plaintiff’s arguments that the covenant not to sue was unconscionable.
As of this writing, Nissani has not appealed the judgment.