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Kissimmee Motorsports, Inc. v. Polaris Sales, Inc.

United States District Court, M.D. Florida, Orlando Division

May 16, 2019

KISSIMMEE MOTORSPORTS, INC., Plaintiff,
v.
POLARIS SALES, INC., Defendant.

          REPORT AND RECOMMENDATION

          THOMAS B. SMITH, UNITED STATES MAGISTRATE JUDGE.

         Pending before the Court is Defendant Polaris Sales and Service, Inc.'s Motion to Compel Arbitration and Stay Action (Doc. 27). After due consideration, I respectfully recommend that the motion be denied.

         Plaintiff Kissimmee Motorsports, Inc. describes itself as a “franchised motor vehicle dealer” as defined in Fla. Stat. § 320.027(1)(c)(1) (Doc. 1, ¶ 2). Under Florida law, a “franchised motor vehicle dealer” is anyone “who engages in the business of repairing, servicing, buying, selling, or dealing in motor vehicles pursuant to an agreement as defined in s. 320.60(1).” Id. “Agreement” “means a contract, … sales and service agreement, or dealer agreement or any other terminology used to describe the contractual relationship between a manufacturer, … distributor, or importer, and a motor vehicle dealer, pursuant to which the motor vehicle dealer is authorized to transact business pertaining to motor vehicles of a particular line-make.” Fla. Stat. § 320.60(1).

         Plaintiff alleges that Defendant Polaris Sales, Inc. is a “distributor” as defined in Fla. Stat. § 320.60(9) because it sold and offered to sell Victory brand motorcycles to new motor vehicle dealers, including Plaintiff (Doc. 1, ¶ 4). Plaintiff's reference to § 320.60(9) is erroneous. That section defines a motor vehicle “manufacturer.” Florida law defines a “distributor” in § 320.60(5) as someone who “sells or distributes motor vehicles to motor vehicle dealers or who maintains distributor representatives.” Id. The distinction is not material to the resolution of this motion.

         On an unknown date, Plaintiff and Defendant entered into a dealer agreement (“Agreement”) whereby Plaintiff became an authorized non-exclusive retail dealer of Defendant's Victory brand of motorcycles. Attached to the complaint is the 2017-2018 version of the Agreement (Doc. 1-1). On January 9, 2017 Defendant announced that it would be winding down its Victory motorcycles brand (Doc. 1-2 at 1). Defendant explained that it had “struggled to establish the market share needed to succeed and be profitable, ” but “[t]he competitive pressures of a challenging motorcycle market have increased the headwinds for the brand.” (Id.). Defendant said it would assist its dealers in the liquidation of their existing inventories while making parts available for ten years (Id.).

         After learning that Defendant was discontinuing the Victory brand of motorcycles Plaintiff sent a letter informing Defendant that it was required to repurchase Plaintiff's inventory including motorcycles, parts, special tools and signage pursuant to Fla. Stat. § 320.64(36)(a) (Doc. 1-3). Plaintiff also claimed that the fair market value of its Victory motorcycle franchise was $400, 000 (Id.).

         In March of 2017, Defendant told Plaintiff it would assist in the liquidation of Plaintiff's inventory while continuing to supply parts if Plaintiff chose to become a service dealer (Doc. 1-4 at 1). Defendant also said that when the Agreement came up for renewal in July of 2018 it would not be renewed (Id.).

         Then, in November 2017 Defendant offered to terminate the Agreement effective December 31, 2017; repurchase Plaintiff's new, undamaged and unsold inventory of Victory motorcycles at original invoice price; repurchase Plaintiff's parts that were new, unused, undamaged, unsold, still in the original packaging, and in an unbroken lot that were in the current parts catalog; repurchase Plaintiff's special tools that were in usable and good condition (except for reasonable wear and tear) at fair market value; repurchase Plaintiff's undamaged Victory motorcycle signs at fair market value; and issue Plaintiff a one-time payment of $30, 000 (Doc. 1-5). Plaintiff's complaint alleges that this offer falls short of what Defendant is required to pay pursuant to Fla. Stat. § 320.64 (Doc. 1).

         The Agreement contains the following arbitration clause which Defendant is moving the Court to enforce:

         SECTION 19: ARBITRATION

a. Place of Arbitration and Applicable Rules. All disputes, controversies, and claims arising out of, or in connection with, the execution, interpretation, performance, nonperformance, or breach of this Agreement (including without limitation the validity, scope, enforceability, and voidability under any statute, regulation, ordinance, or ruling), or termination or non-renewal of this Agreement, or of any provision of this Agreement (including without limitation this arbitration provision, the arbitrability of any issue, and the jurisdiction of the arbitrator), or arising out of or in connection with any claimed duty, right, or remedy (whether arising under this Agreement or any statute, regulation, ordinance, or other rule of law or otherwise) relating to any of the foregoing, will be solely and finally settled by arbitration in Minneapolis, Minnesota, in accordance with the United States Arbitration Act (9 U.S.C. § 1 et. seq.), and the rules of the American Arbitration Association ("AAA") relating to commercial arbitration. There will be one arbitrator who will be a lawyer with at least five years of significant experience related to business law. The arbitration, including without limitation all notices, discovery and exhibits, hearings, deposition, pleadings and other papers, and all proceedings regardless of form, will be treated as confidential by the parties, the arbitrator, and the AAA. For the avoidance of doubt, this confidentiality requirement will supersede any rules of the AAA. The arbitrator will have the right to award, or include in any award, the specific performance of this Agreement; provided, that the arbitrator will not have the right to issue any award, or include in any award, that relief which is more than could be awarded by a federal or state court located in the State of Minnesota. The arbitrator will have the right to hear and decide any and all issues or claims asserted in the arbitration through summary judgment and/or summary disposition motions without the requirement of any evidentiary hearing. TO BE EFFECTIVE, ANY CLAIM FOR ARBITRATION UNDER THIS SECTION 19(A) MUST BE FILED WITH THE AAA WITH A COPY SENT TO POLARIS. Notwithstanding the above, Polaris will have the right to go to any court to prevent or seek the remedy of specific performance for any material breach of this Agreement by Dealer if Polaris believes such breach relates to Sections l(a), 6, 7, 8, 12 or 20(a) or to prevent any fraud or misrepresentation to any consumer. Dealer agrees that in such a case, Polaris will be irreparably harmed and that Polaris would be entitled to the entry of temporary restraining order or injunction relating thereto. To the fullest extent permissible, Dealer waives any requirement for a bond or other security supporting any such temporary restraining order or injunction.

(Doc. 1-1 at 32).

         “The Eleventh Circuit treats a motion to compel arbitration as a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction.” Baptist Hosp. of Miami, Inc. v. Medica Healthcare Plans, Inc., No. 18-cv-25460-UU, 2019 WL 1915439, at *4 (S.D. Fla. April 29, 2019); Mullinax v. United Mktg. Grp., LLC, No. 1:10-cv-03585-JEC, 2011 WL 4085933, at *8 (N.D.Ga. Sept. 13, 2011).

         The Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16 (2006) controls the validity and enforcement of arbitration agreements. Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359, 1367 (11th Cir. 2005). It preempts state law to the extent state law treats agreements to arbitrate differently than other contracts. Id. The FAA “embodies the national policy favoring arbitration and places arbitration agreements on equal footing with all other contracts.” Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006). Agreements to arbitrate are “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. “Federal law ...


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