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Santander Consumer USA Inc. v. Zeigler Chrysler Dodge Jeep-Downer's Grove LLC

United States District Court, N.D. Texas, Dallas Division

June 26, 2017

SANTANDER CONSUMER USA, INC., Plaintiff/Counter-Defendant,



         Before the Court is Plaintiff/Counter-Defendant Santander Consumer USA Inc.'s (Chrysler Capital)[1] Rule 12(b)(6) Motion to Dismiss Defendant's Counterclaims. Doc. 14. For the reasons that follow, the Court GRANTS in part and DENIES in part Chrysler Capital's Motion.



         A. Factual Background[2]

         Defendant/Counter-Plaintiff Zeigler Chrysler Dodge Jeep-Downers Grove, LLC (Zeigler) operates an automobile dealership that sells new and used vehicles to consumers in the Chicago area. Doc. 4, Def.'s Answer, Affirmative Defenses, Countercl., and Jury Demand 10 [hereinafter Zeigler's Countercl.]. Chrysler Capital buys automobile retail installment sales contracts from automobile dealers such as Zeigler. Doc. 1-1, Pl.'s Orig. Pet. ¶ 6 [hereinafter Chrysler Capital's Orig. Pet.]. Zeigler points out that it can only offer certain incentives, such as 0% financing, if the funding source is Chrysler Capital. Doc. 4, Def.'s Countercl. 10. Therefore, to remain competitive, it needs access to funding through Chrysler Capital. Id.

         In March 2013, Chrysler Capital and Zeigler entered into the Non-Recourse Master Dealer Agreement (the Non-Recourse Agreement). Doc. 15, Pl./Counter-Def. Santander Consumer USA Inc.'s Br. in Supp. of its Rule 12(b)(6) Mot. to Dismiss Def.'s Countercls. ¶ 1 [hereinafter Chrysler Capital's Br.]; Doc. 17, Def./Counter-Pl.'s Resp. in Opp'n to Pl./Counter-Def.'s Mot. to Dismiss 3 [hereinafter Zeigler's Resp.]; Doc. 4-2, Non-Recourse Master Dealer Agreement [hereinafter Non Recourse Agreement]. The Non-Recourse Agreement governs Chrysler Capital and Zeigler's participation in a financing program (the Program) that provides customers the ability to obtain financing for the purchase or lease of automobiles from Zeigler. Doc. 4, Zeigler's Countercl. 14; Doc. 4-2, Non-Recourse Agreement 2.

         When operating under the Non-Recourse Agreement, Zeigler would enter into retail installment sales contracts with customers and then sell and assign those contracts to Chrysler Capital. Doc. 17, Zeigler's Resp. 3-4; Doc. 4-2, Non-Recourse Agreement 2. Before selling the contracts, Zeigler had to submit the applications to Chrysler Capital. Doc. 4, Zeigler's Countercl. 11; Doc. 4-2, Non-Recourse Agreement 2. Chrysler Capital could approve, reject, or condition its approval of an application. Doc. 4-2, Non-Recourse Agreement 2.

         In late 2015, Chrysler Capital allegedly represented that it had identified 27 sales by a single salesperson that it considered “suspicious.” Doc. 4, Zeigler's Countercl. 19. Chrysler Capital claimed, according to Zeigler, that the identified salesperson had located potential customers with unsatisfactory credit, assisted them with fraudulently cleansing their credit, and then helped them apply for financing with Chrysler Capital. Id. But Zeigler alleges that it was told that Chrysler Capital had no actual evidence of this activity. Id.

         As a result of uncovering “suspicious” activity, Chrysler Capital stopped accepting applications for new financing transactions from Zeigler and blocked Zeigler's access to information related to current or pending applications without notice. Id. at 20. Chrysler Capital claims it had the authority to do so under Section 15(d) of the Non-Recourse Agreement. Doc. 15, Chrysler Capital's Br. ¶ 12. Section 15(d) states:

Chrysler Capital may immediately suspend the Program without notice if it determines that there has been a pattern of fraudulent or suspicious activity, excessive Chargebacks, or excessive losses on Contracts. Upon such suspension, the Parties shall negotiate in good faith on further assurances to permit Chrysler Capital, in its sole discretion, to lift the suspension.

Doc. 4-2, Non-Recourse Agreement § 15(d).

         According to Zeigler, Chrysler Capital then requested that Zeigler repurchase the disputed contracts. Doc. 4, Zeigler's Countercl. 22. Chrysler Capital claims it had the authority to make the request under Section 7(a) of the Non-Recourse Agreement, Doc. 1-1, Chrysler Capital's Orig. Pet. ¶¶ 11, 14. Section 7(a) states:

Chrysler Capital shall have the right to require [Zeigler] to purchase from Chrysler Capital a Contract that [Zeigler] has originated . . . Further, Chrysler Capital may in its sole discretion require [Zeigler] to re-purchase all outstanding Contracts originated by [Zeigler] and assigned to Chrysler Capital if Chrysler Capital determines that there has been a pattern of fraudulent or suspicious activity.

Doc. 4-2, Non-Recourse Agreement § 7(a).

         When Zeigler refused to repurchase the disputed contracts, Chrysler Capital allegedly called one or more of Zeigler's customers and told them that Zeigler was involved in fraudulent activity. Doc. 4, Zeigler's Countercl. 21. These communications allegedly caused customers confusion and uncertainty regarding the status of their transactions with Zeigler. Id. Chrysler Capital also allegedly withheld funds owed to Zeigler based on the contracts at issue. Id.

         Zeigler alleges that several months after Chrysler Capital froze the Program, it formally demanded that Zeigler repurchase 50 vehicle financing contracts that Zeigler had originated for Chrysler Capital under the Non-Recourse Agreement. Id. at 22. Zeigler refused and contends that Chrysler Capital uses its unique position in the marketplace to attempt to force Zeigler to assume the credit risk on certain contracts without providing a loan-by-loan analysis. Id. Furthermore, Zeigler asserts that Chrysler Capital refused to negotiate in good faith regarding lifting the suspension of the Program. Id. Zeigler maintains that Chrysler Capital intended to cause the financial harm from which Zeigler suffers. Id. at 23.

         B. Procedural Background

         On October 7, 2016, Chrysler Capital filed this action in state court, asserting breach of contract. Doc. 1-1, Chrysler Capital's Orig. Pet. ¶ 15. Zeigler removed the state court action to this Court on November 28, 2016. Doc. 1, Notice of Removal. On December 9, 2016, Zeigler answered, asserted affirmative defenses, and brought counterclaims against Chrysler Capital. Doc. 4, Zeigler's Countercl. Zeigler asserted counterclaims for: (1) breach of contract; and (2) tortious interference with prospective contracts.[3] Id. at 24-25.

         Chrysler Capital then filed a 12(b)(6) Motion to Dismiss Zeigler's counterclaims for failure to plead facts sufficient to state a claim on which relief may be granted. Doc. 14, Pl./Counter-Def. Santander Consumer USA Inc.'s Rule 12(b)(6) Mot. to Dismiss Def.'s Countercls.; Doc. 15, Chrysler Capital's Br. Zeigler filed a Response (Doc. 17), and Chrysler Capital filed a Reply (Doc. 20). Thus, the Motion is ripe for the Court's review.


         LEGAL STANDARD[4]

         Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a pleading that states a claim for relief must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Rule 12(b)(6) authorizes a court to dismiss a plaintiff's pleading for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). In considering a Rule 12(b)(6) motion to dismiss, “[t]he court accepts all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.” In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (quoting Martin K. Eby Constr. Co. v. Dall. Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004)). The court will “not look beyond the face of the pleadings to determine whether relief should be granted based on the alleged facts.” Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999).

         To survive a motion to dismiss, a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. When well-pled facts fail to achieve this plausibility standard, “the complaint has alleged-but it has not shown-that the pleader is entitled to relief.” Id. at 679 (internal quotation marks and alterations omitted).



         A. Breach of Contract

         “Texas recognizes the right of contracting parties to agree to choice of law.” Tel-Phonic Servs., Inc. v. TBS Intern., Inc., 975 F.2d 1134, 1142 (5th Cir. 1992). “Texas courts permit choice-of-law agreements and the default position is that they are enforceable.” Cardoni v. Prosperity Bank, 805 F.3d 573, 581 (5th Cir. 2015). In the Non-Recourse Agreement, the parties state that it “shall be governed by and construed in accordance with the laws of the State of Texas.” Doc. 4-2, NonRecourse Agreement § 18(o). The parties do not challenge the enforceability of the contract's choice-of-law provision and assume only Texas ...

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