United States District Court, D. Colorado
Michael E. Hegarty United States Magistrate Judge.
Mercedes-Benz USA (“MBUSA”) and Bobby Rahal
Motorcar Company (“BRMC”) seek to dismiss the
First Amended Complaint of Plaintiff European Motorcars of
Littleton, Inc. d/b/a Mercedes-Benz of Littleton
(“MBOL”) pursuant to Federal Rules of Civil
Procedure 12(b)(1) and 12(b)(6). See ECF Nos. 41,
46. Defendants' motions are fully briefed, and the Court
finds oral argument will not assist in their adjudication.
The Court holds that MBOL's requests for a permanent
injunction and a declaratory judgment are moot in light of a
local zoning ordinance prohibiting the conduct MBOL seeks to
enjoin and declare illegal. Regarding the merits of
MBOL's claims for damages, the Court holds that only
MBOL's first cause of action states a claim. Accordingly,
BRMC's motion is granted, and MBUSA's motion is
granted in part and denied in part.
following are factual allegations (as opposed to legal
conclusions, bare assertions, or merely conclusory
allegations) made by MBOL in its Amended Complaint, which are
taken as true for analysis under Fed.R.Civ.P. 12(b)(1)
pursuant to Holt v. United States, 46 F.3d 1000,
1002 (10th Cir. 1995) and under Fed.R.Civ.P. 12(b)(6)
pursuant to Ashcroft v. Iqbal, 556 U.S. 662, 678
has been a franchised Mercedes-Benz automobile dealership
since 1996. Am. Compl. ¶¶ 9, 11, ECF No. 39.
Defendant MBUSA is the North American distributor and
manufacturer representative for the Mercedes-Benz brand of
vehicles. Id. at ¶ 8. To maintain its
reputation, MBOL has consistently made improvements and
investments in addition to those required by MBUSA.
Id. at ¶ 19. Specifically, it recently
purchased new vehicle lifts and upgraded its LED lighting
throughout its dealership. Id. at ¶¶
19-20. MBUSA consistently approved of MBOL's
improvements. Id. at ¶ 23.
in 2015, while MBOL continued to make improvements to its
dealership, MBUSA conducted market studies and eventually
invited Defendant BRMC to establish a new Mercedes-Benz
dealership less than nine miles from MBOL's facility.
Id. at ¶¶ 26-28. MBUSA did not inform MBOL
of its intent to establish a new dealership until July 2016,
when an MBUSA employee traveled to Colorado and informally
notified MBOL's management of MBUSA's plan.
Id. at ¶¶ 29-31. In October 2016, MBUSA
sent MBOL a formal notice pursuant to Colo. Rev. Stat. §
12-6-120.3(1), which stated the exact location of the new
dealership: 13831-13871 E. Arapahoe Pl. Centennial, Colorado
80112. Id. at ¶ 37. This address is nine miles
and two freeway exits north of MBOL's dealership.
Id. at ¶ 39. The notice also identified the new
dealer operator as BRMC. Id. at ¶ 38. MBUSA and
BRMC have taken material steps toward establishing the new
dealership, such as executing a letter of intent.
Id. at ¶¶ 41, 43.
MBUSA establishes a dealership, it enters into an agreement
with the dealer, which governs the parties' relationship.
See Id. at ¶ 13; Passenger Car Dealer Agreement
19, ECF No. 46-1. The agreement gives the dealer an Area of
Influence (“AOI”), which consists of zip codes
and census tracts. Am. Compl. ¶ 13. MBUSA uses the AOI
to judge the dealer's performance. Id.
MBUSA's agreement with MBOL states that MBUSA may
establish new dealerships within MBOL's AOI at any time.
Passenger Car Dealer Agreement 19. However, the addition of a
new dealer “will result in an alteration of adjustment
of [MBOL's] AOI.” Id.
on these factual allegations, MBOL filed its Complaint in
state court on December 6, 2016. Compl., ECF No. 4. On
January 5, 2017, Defendants removed the case to this Court.
Notice of Removal, ECF No. 1. MBOL then filed an Amended
Complaint on February 22, 2017. Am. Compl. MBOL asserts five
claims for relief. First, MBOL contends MBUSA unreasonably
approved the new dealership in violation of Colo. Rev. Stat.
§§ 12-6-120.3(1.5) and 120(1)(h). Id.
¶¶ 45-55. MBOL's second claim asserts a cause
of action against MBUSA for fraudulent concealment.
Id. at ¶¶ 56-65. MBOL's third claim
alleges MBUSA breached the implied contractual duty of good
faith and fair dealing. Id. at ¶¶ 66-73.
Fourth, MBOL pleads an independent claim for a permanent
injunction against MBUSA and BRMC. Id. at
¶¶ 74-80. MBOL's final cause of action contends
MBUSA violated Colo. Rev. Stat. § 12-6-120(1)(w)(II)
when it attempted to modify MBOL's AOI without providing
ninety-days' notice. Id. at ¶¶ 80-90.
MBOL seeks (1) to enjoin Defendants from establishing the
dealership, (2) a declaratory judgment stating that MBUSA
violated all three statutory sections, and (3) damages
suffered as a result of MBUSA's statutory violations and
tortious conduct. Id. at 16.
responded to the Amended Complaint by filing its present
motion to dismiss on March 1, 2017. ECF No. 41. BRMC contends
MBOL's fourth claim-the only cause of action against
BRMC-should be dismissed, because a permanent injunction is
not an independent cause of action. Id. at 4-5.
MBOL's response contends BRMC is a proper party, because
BRMC has an obvious interest in the outcome of the
litigation. MBOL's Resp. to BRMC's Mot. to Dismiss 2,
ECF No. 50.
March 8, 2017, MBUSA filed its present motion to dismiss,
which seeks dismissal of MBOL's Amended Complaint in its
entirety. ECF No. 46. According to MBUSA, MBOL does not have
standing to assert a violation of Colo. Rev. Stat. §
12-6-120.3(1.5), MBOL does not sufficiently plead its tort
and contract claims, MBOL's request for a permanent
injunction is not a proper independent cause of action, and
MBOL's final claim does not plead a violation of the
section at issue. Id. at 4-30. MBOL filed its
response on April 5, 2017. MBOL's Resp. to MBUSA's
Mot. to Dismiss, ECF No. 61.
before MBUSA filed its Reply in Support of its Motion to
Dismiss, see ECF No. 68, MBOL filed a motion to
administratively close the case. ECF No. 66. MBOL informed
the Court that the City of Centennial, Colorado recently
repealed an ordinance that permitted MBUSA and BRMC to
establish the dealership at the proposed location.
Id. at 5. Because “the proposed new dealership
cannot lawfully be established at the noticed location,
” MBOL sought administrative closure of the case
“until the factual circumstances ripen to permit the
development and awarding of the proposed dealership.”
Id. On May 26, 2017, the Court held a hearing on
MBOL's motion. After hearing argument from the parties,
the Court denied MBOL's motion for the reasons stated on
the record. See ECF No. 73. The Court took
Defendants' motions to dismiss under advisement.
Dismissal under Fed.R.Civ.P. 12(b)(1)
12(b)(1) empowers a court to dismiss a complaint for
“lack of subject matter jurisdiction.”
Fed.R.Civ.P. 12(b)(1). Dismissal under Rule 12(b)(1) is not a
judgment on the merits of a plaintiff's case, but only a
determination that the court lacks authority to adjudicate
the matter. See Pueblo of Jemez v. United States,
790 F.3d 1143, 1151 (10th Cir. 2015) (recognizing that
federal courts are courts of limited jurisdiction and may
only exercise jurisdiction when specifically authorized to do
so). A court lacking jurisdiction “must dismiss the
cause at any stage of the proceeding in which it becomes
apparent that jurisdiction is lacking.” Id.
(citing Full Life Hospice, LLC v. Sebelius, 709 F.3d
1012, 1016 (10th Cir. 2013)). A Rule 12(b)(1) motion to
dismiss “must be determined from the allegations of
fact in the complaint, without regard to mere [conclusory]
allegations of jurisdiction.” Groundhog v.
Keeler, 442 F.2d 674, 677 (10th Cir. 1971). The burden
of establishing subject matter jurisdiction is on the party
asserting jurisdiction. Pueblo of Jemez, 790 F.3d at
1151. Accordingly, MBOL in this case bears the burden of
establishing that this Court has jurisdiction to hear its
Dismissal Pursuant to Fed.R.Civ.P. 12(b)(6)
survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.'”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). Plausibility, in the context of a motion to dismiss,
means that the plaintiff pleaded facts which allow “the
court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id.
Twombly requires a two prong analysis. First, a court
must identify “the allegations in the complaint that
are not entitled to the assumption of truth, ” that is,
those allegations which are legal conclusions, bare
assertions, or merely conclusory. Id. at 679-80.
Second, the Court must consider the factual allegations
“to determine if they plausibly suggest an entitlement
to relief.” Id. at 681. If the allegations
state a plausible claim for relief, such claim survives the
motion to dismiss. Id. at 680.
refers “to the scope of the allegations in a complaint:
if they are so general that they encompass a wide swath of
conduct, much of it innocent, then the plaintiffs ‘have
not nudged their claims across the line from conceivable to
plausible.'” Khalik v. United Air Lines,
671 F.3d 1188, 1191 (10th Cir. 2012) (quoting Robbins v.
Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008)).
“The nature and specificity of the allegations required
to state a plausible claim will vary based on context.”
Kan. Penn Gaming, LLC v. Collins, 656 F.3d 1210,
1215 (10th Cir. 2011). Thus, while the Rule 12(b)(6) standard
does not require that a plaintiff establish a prima facie
case in a complaint, the elements of each alleged cause of
action may help to determine whether the plaintiff has set
forth a plausible claim. Khalik, 671 F.3d at 1191.
analyzing the merits of MBOL's claims for relief, the
Court must first address the extent to which MBOL's
claims are moot because of the City of Centennial's
zoning ordinance, which prohibits the establishment of the
dealership at the proposed location. The Court holds that
MBOL's requests for prospective relief are moot in light
of the ordinance. However, because MBOL asserts justiciable
claims for damages, the Court will address the merits of
MBOL's claims for relief. With the exception of
MBOL's first cause of action, the Court dismisses each of
Mootness and MBOL's Fourth Claim for Relief: Permanent
the parties do not dispute that this case is justiciable,
“a court may raise the issue sua sponte.”
McClendon v. City of Albuquerque, 100 F.3d 863, 867
(10th Cir. 1996); Brown v. Buhman, 822 F.3d 1151,
1165 (10th Cir. 2016) (“No matter how vehemently the
parties continue to dispute the lawfulness of the conduct
that precipitated the lawsuit, the case is moot if the
dispute is no longer embedded in any actual controversy about
the plaintiffs' particular legal rights.” (quoting
Already, LLC v. Nike, Inc., 568 U.S. 85 (2013))).
“A case becomes moot when factual developments render a
claim ‘no longer live and ongoing, ' such that a
decision on the merits will not ‘affect the behavior of
the defendant toward the plaintiff.'” Rezaq v.
Nalley, 677 F.3d 1001, 1008 (10th Cir. 2012) (quoting
McAlpine v. Thompson, 187 F.3d 1213, 1216 (10th Cir.
1999)). “The crux of the mootness inquiry in an action
for prospective relief is whether the court can afford
meaningful relief that ‘will have some effect in the
real world.'” Id. (quoting Rio Grande
Silvery Minnow v. Bureau of Reclamation, 601 F.3d 1096,
1110 (10th Cir. 2010)). If a party has already received the
relief it seeks, that request for relief is subject to
sua sponte dismissal. United States v.
Fisher, 805 F.3d 982, 989 (10th Cir. 2015) (“A
claim is moot if a party has already obtained the only relief
it seeks.”); McClendon, 100 F.3d at 867
(“Because mootness is a matter of jurisdiction, a court
may raise the issue sua sponte.”).
the issue before the Court is whether the repeal of the
zoning ordinance accomplished for MBOL any of the types of
relief it seeks. MBOL requests three forms of relief-a
permanent injunction prohibiting Defendants from approving
and establishing the proposed dealership, a declaratory
judgment stating that MBUSA violated the Colorado Dealer Act,
and damages resulting from MBUSA's violations of Colorado
law. Am. Compl. 16. The Court holds that the repeal of the
zoning ordinance afforded MBOL the relief it seeks on its
requests for a permanent injunction and declaratory judgment.
Accordingly, these requests are moot.
an injunction, MBOL admits that “[t]he primary
objective of [its] Complaint is to preclude the establishment
of a new Mercedes-Benz dealership at 13831-13871 East
Arapahoe Road.” MBOL's Mot. for Admin. Closure 4,
ECF No. 66. Moreover, MBOL and MBUSA do not dispute that the
City of Centennial took specific action to prohibit the new
dealership at the proposed location. Id. at 2
(“[R]ecent legislative developments in the City of
Centennial have confirmed that MBUSA and BRMC cannot lawfully
establish and develop the new Mercedes-Benz dealership at the
proposed Centennial location.”); MBUSA's Resp. to
MBOL's Mot. for Admin. Closure 3, ECF No. 69 (stating
that the City of Centennial repealed an ordinance that would
have permitted the proposed dealership). Therefore, when the
City of Centennial repealed the zoning ordinance and
precluded the establishment of the dealership, MBOL
“obtained the only relief it seeks” on its claim
for a permanent injunction. Fisher, 805 F.3d at 989.
In other words, regardless of whether this Court grants an
injunction, MBUSA and BRMC are presently unable to build and
operate the dealership at the proposed location. Indeed, MBOL
acknowledges the lack of a live controversy when it states
that “MBUSA wants to continue this litigation based on
the theoretical possibility that the City Council will
someday change its mind and reconsider its decision to revoke
the ordinance.” MBOL's Reply in Support of Motion
for Admin. Closure 2. ECF No. 72. The Court does not have
jurisdiction to issue injunctions that will have effects in
the real world only on the happening of a theoretical
possibility. See S. Utah Wilderness All. v. Smith,
110 F.3d 724, 727 (10th Cir. 1997) (“A federal court
has no power to . . . declare principles of law which cannot
affect the matter in issue in the case before it.”).
MBOL's request for a permanent injunction is moot. The
Court dismisses MBOL's fourth cause of action, which
requests only a preliminary injunction, and the Court grants
BRMC's motion to dismiss.
Court also holds that MBOL's request for a declaratory
judgment is moot. “[I]n the declaratory judgment
context, it is critically important to determine whether the
plaintiff has named, as defendants, individuals or entities
that are actually situated to have their future conduct
toward the plaintiff altered by the court's declaration
of rights.” Jordan v. Sosa, 654 F.3d 1012,
1026 (10th Cir. 2011). MBOL seeks a declaratory judgment
stating that MBUSA unreasonably approved the new dealership
and gave insufficient notice of the approval. Am. Compl. 16.
However, because of the ordinance, the requested judgment
would not affect MBUSA's future conduct toward MBOL. If
the Court were to issue a declaratory judgment stating that
MBUSA unreasonably approved the location of the new
dealership, MBUSA would not be permitted to build the
dealership. If the Court declined to issue a declaratory
judgment, MBUSA would still be unable to build the dealership
as a result of the City of Centennial's ordinance.
Therefore, the Court holds that the requested declaratory
judgment would do nothing more than advise the parties of the
legality of MBUSA's conduct; it would not settle
“some dispute which affects the behavior of the
[D]efendant toward the [P]laintiff.” Rio Grande
Silvery Minnow, 601 F.3d at 1110.
hearing on MBOL's Motion for Administrative Closure,
MBUSA argued that MBOL's claims are not moot, because
absent a ruling from this Court, it will continue to pursue
the proposed dealership, which will include petitioning the
City of Centennial to change its zoning ordinance. Therefore,
MBUSA contends that a ruling from this Court will, in fact,
affect the conduct of the parties. However, a case is not
justiciable merely because the requested relief will affect
the conduct of the parties generally. Instead, the
court's ruling must affect the defendant's conduct
“toward the plaintiff.” See Id. That
MBUSA will continue to seek financing, attempt to change the
City of Centennial's ordinance, and accomplish other
tasks incident to opening a dealership does not alter
MBUSA's conduct toward MBOL. Although the establishment
of a new dealership would arguably alter MBUSA's conduct
toward MBOL, the requested relief would not presently affect
MBUSA's ability to establish the dealership. See
Transwestern Pipeline Co. v. Fed. Energy Regulatory
Comm'n, 897 F.2d 570, 575 (D.C. Cir. 1990) (“A
case is moot if events have so transpired that the decision
will neither presently affect the parties'
rights nor have a more-than-speculative chance of affecting
them in the future.” (emphasis added)).
the Court is not convinced by MBUSA's argument that there
are many uncertainties in the dealership-establishment
process, the presence of which does not render all protest
litigation moot. MBUSA is correct that there are many steps
to establishing a dealership, such as receiving adequate
financing. However, unlike the mere potential that every bank
will reject financing for the dealership, the City of
Centennial has specifically decided not to permit the
dealership at the proposed location. Just as it would be
entirely speculative to assert that a bank who rejected
BRMC's financing application would reverse course and
issue a loan to BRMC, it is entirely speculative to contend
that the City of Centennial will choose to amend its
ordinance and permit the dealership at the specified
location. See Jones v. Temmer, 57 F.3d 921, 923
(10th Cir. 1995) (“[D]efendants assert that the claims
are not moot because the Colorado legislature remains free to
reinstate the old law at a later date. We view this
possibility as too conjectural and speculative to avoid a
finding of mootness.”); see also Granite State
Outdoor Advert., Inc. v. Town of Orange, Conn., 303 F.3d
450, 451-52 (2d. Cir. 2002) (“[T]here is no reason to
think that, having completely revised its regulations through
proper procedures, the Town has any intention of returning to
the prior regulatory regime.”).
the Court holds that MBOL's claims for prospective relief
are moot in light of the City of Centennial's ordinance,
which prohibits the new dealership at the proposed
location. As such, MBOL's requests for a
permanent injunction and a declaratory judgment are dismissed
as moot. However, because MBOL's first, second, third,
and fifth claims for relief also seek damages as a result of
MBUSA's conduct, the Court will analyze the merits of
Defendants' arguments for dismissal only as they relate
to MBOL's request for damages.
First Claim for Relief: Violation of Colo. Rev. Stat.
§§ 12-6-120(1)(h) and 120.3(1.5)
alleges that MBUSA unreasonably approved the new dealership
location in violation of Colo. Rev. Stat. §
12-6-120(1)(h) and § 12-6-120.3(1.5). Am. Compl.
¶¶ 45-55. Section 12-6-120(1)(h) declares it
unlawful “[t]o violate any duty imposed by, or fail to
comply with, any provision of section 12-6-120.3 . . .
.” Section 12-6-120.3(1.5) provides:
A manufacturer shall reasonably approve or disapprove of a
motor vehicle dealer facility initial site location or
relocation request within sixty days after the request or
after sending the notice required by subsection (1) of this
section to all of its franchised dealers and former dealers
whose franchises were terminated, cancelled, or not renewed
in the previous five years due to the ...