No summary judgment in New York dealer dispute

... but does the manufacturer owe a fiduciary duty? Aaron Zerykier of Farrell Fritz PC reports a decision on 14 July by Justice Emerson in the Supreme Court of Suffolk County, New York. Two Audi dealers, aggrieved by the appointment of a new dealer in a bodering market area which had been assigned to them, sued Audi and one of its executive alleging, among other things, breaches of fiduciary duty and breach of contract.

The court summarily dismissed the claims for what the article calls "tortuous interference" (many American lawyers seem to have trouble with the word "tortious": the interference might well have been tortuous too, but that surely discloses no legal remedy) and aiding and abetting breach of fiduciary duty against the executive. A corporate officer cannot generally be held liable for his actions on behalf of the corporation if he is acting in good faith. There are exceptions to that rule, but the evidence did not suggest that they applied in this case.

As for the claim for breach of fiduciary duty claim against the manufacturer, the court considered that this might well have some legs. There were issues of fact about the nature and extent of the manufacturer’s relationship with the plaintiff dealership which may, exceptionally, have created a fiduciary relationship. The breach of fiduciary duty claim did not merely repeat the breach of contract claim because a fiduciary duty may arise independent of the contract. The court declined to give summary judgment dismissing the claims for breach of contract and breach of the implied covenant of good faith and fair dealing, because there was an issue of fact whether the manufacturer exercised the discretion it had in its relations with its dealers in bad faith.

A judgment of a court in the US declining to decide a case without a trial is rarely likely to be interesting. Here, however, there are several interesting points, not least the question whether a manufacturer owes its dealers a fiduciary duty. Were that the case in English law, things would be fundamentally different from the way they are - and perhaps if interested parties succeed in persuading the Commission that dealer agreements should be treated as, or like, commercial agency agreements, it might not be so very far-fetched!

Legend Autorama, Ltd. et al v. Audi of Amer., Inc. et al., Sup Ct, Suffolk County, July 14, 2011, Emerson, J, Index No. 38667/08.