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Clark Motor Co., Inc. v. Manufacturers and Traders Trust

July 26, 2007


The opinion of the court was delivered by: Judge McClure



On May 10, 2007, plaintiffs, Clark Motor Company, Inc. ("Clark Motor"), Robert W. Clark, and David Clark, instituted this civil action against defendant, Manufacturers and Traders Trust Co. ("M&T"). In their complaint, plaintiffs seek recovery for breach of contract (Count I), negligent misrepresentation (Count II), negligence (Count III), breach of fiduciary duty (Count IV), and aiding and abetting breach of fiduciary duty (Count V).

On May 31, 2007, defendant filed a "Motion to Dismiss or for Summary Judgment." (Rec. Doc. No. 9.) Additionally, defendant filed a supporting brief, a statement of undisputed material facts, and a request for a hearing on the motion. (Rec. Doc. Nos. 10-11.) Opposing and reply briefs have been filed. Now, for the following reasons, we will deny defendant's request for a hearing and deny defendant's motion to dismiss or for summary judgment.


I. Defendant's Motion for Summary Judgment and Request for a Hearing

Defendant's motion is entitled "Motion to Dismiss or for Summary Judgment." (Rec. Doc. No. 9.) After reviewing the motion, it appears that defendant argues that each claim in the complaint fails to state a claim upon which relief can be granted, but also argues that there exist no disputed material facts with respect to some of the claims and that summary judgment is appropriate in the event we find that plaintiffs have failed to state a claim for relief. To the extent defendant seeks summary judgment and relies on matters outside the pleadings, we find the motion premature. The parties have yet to begin discovery and it is unfair for plaintiffs to be "railroaded" by a motion for summary judgment when they may have not had the opportunity to discover evidence essential to opposing the motion. Celotex Corp. v. Catrett, 477 U.S. 317, 326 (1986) (noting that "[a]ny potential problem with [premature summary judgment motions] can be adequately dealt with under Rule 56(f), which allows a summary judgment motion to be denied, or the hearing on the motion to be continued, if the nonmoving party has not had an opportunity to make full discovery"). Therefore, we will deny defendant's motion to the extent it seeks summary judgment and relies on matters outside the pleadings and will only consider the motion to dismiss aspect of defendant's motion.

Additionally, defendant has filed a "Request for Hearing" on its motion to dismiss or for summary judgment. (Rec. Doc. No. 11.) In light of the fact that we are refusing to consider the summary judgment aspect of defendant's motion and will not be considering any evidence while resolving defendant's motion, we will deny defendant's request for a hearing.

II. Motion to Dismiss Standard

When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the court must view all allegations stated in the complaint as true and construe all inferences in the light most favorable to plaintiff. Hishon v. King & Spaulding, 467 U.S. 69, 73 (1984); Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). In ruling on a motion to dismiss, the court primarily considers the allegations of the pleading, but is not required to consider legal conclusions alleged in the complaint. Kost, 1 F.3d at 183. At the motion to dismiss stage, the court considers whether plaintiff is entitled to offer evidence to support the allegations in the complaint. Maio v. Aetna, Inc., 221 F.3d 472, 482 (3d Cir. 2000). A complaint should be dismissed only if the court, from evaluating the allegations in the complaint, is certain that under any set of facts relief cannot be granted. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Morse v. Lower Merion School Dist., 132 F.3d 902, 906 (3d Cir. 1997); Markowitz v. Northeast Land, Co., 906 F.2d 100, 103 (3d Cir. 1994).

The failure-to-state-a-claim standard of Rule 12(b)(6) "streamlines litigation by dispensing with needless discovery and factfinding." Neitzke v. Williams, 490 U.S. 319, 326-27 (1989). A court may dismiss a claim under Rule 12(b)(6) where there is a "dispositive issue of law." Id. at 326. If it is beyond a doubt that the non-moving party can prove no set of facts in support of its allegations, then a claim must be dismissed "without regard to whether it is based on an outlandish legal theory or on a close but ultimately unavailing one." Id. at 327.

III. Statement of Factual Allegations

The following allegations are taken from the plaintiff's complaint. Plaintiff Clark Motor is a family-owned automobile dealership which sells both new and used automobiles. (Rec. Doc. No. 1, ¶¶ 7-8.) Plaintiff Robert Clark is the president and majority owner of Clark Motor. (Id. ¶ 2.) Plaintiff David Clark is the vice-president and minority owner. (Id. ¶ 3.) Defendant M&T is a bank that provides financing to automobile dealerships. (Id. ¶¶ 4, 9.)

In order to purchase and maintain its inventory of automobiles, Clark Motor obtained floor plan financing from M & T beginning on June 12, 2003, the date the parties entered into a loan agreement. (Id. ¶¶ 8-9.) Under the agreement, Clark Motor would purchase automobiles by borrowing money from M & T, who would charge interest on the loan and then be repaid when Clark Motor sold the automobile. (Id. ¶ 8.) Additionally as a requirement to obtain the financing, M & T required the personal guarantee of plaintiff Robert Clark. (Id. ¶ 11.)

In 2001, Clark Motor hired Sally Smith for the position of office manager. (Id. ¶ 14.) She was responsible for maintaining financial statements, recording and maintaining inventory, and ensuring that payment for sold automobiles was made back to M & T. (Id.) In 2005, Smith began falsifying inventory and financial records in order to take money for her personal use. (Id. ¶ 15.) Specifically, Smith would inflate the number of automobiles purchased so that M & T would provide financing for automobiles that Clark Motor never actually received. (Id. ¶ 17.)

Plaintiffs allege that on December 19, 2006, after uncovering that it had issued floor plan financing in excess of the plan limits set out in the 2003 loan agreement, M & T required Clark Motor to execute a new loan agreement for the financing it was providing. (Id. ¶ 19.) Clark Motor executed the agreement and plaintiff Robert Clark once again gave a personal guarantee. (Id. ¶ 20.) The main difference in the new agreement was that it provided for a substantially increased line of credit. (Id. ¶ 21.)

On January 12, 2007, M & T first inquired about the increase in Clark Motor's inventory. (Id. ¶ 22.) Plaintiffs allege that this was the first time they realized that there were irregularities within their records. (Id.) On approximately January 22, 2007, M & T provided plaintiffs Robert and David Clark with a complete listing of loans that M & T had made to Clark Motor for 2006 and plaintiffs realized that defendant had funded them for more than three-hundred automobiles that they had never owned. (Id. ¶¶ 23-25.) Plaintiffs then confronted Smith, who admitted she had manipulated records so that M & T would ...

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